Companies are hoping digital coins can reverse a downward trend in the loyalty market by capturing the attention of younger consumers. Photo: Getty Images
Companies are hoping digital coins can reverse a downward trend in the loyalty market by capturing the attention of younger consumers. Photo: Getty Images
Companies are hoping digital coins can reverse a downward trend in the loyalty market by capturing the attention of younger consumers. Photo: Getty Images
Companies are hoping digital coins can reverse a downward trend in the loyalty market by capturing the attention of younger consumers. Photo: Getty Images

How crypto coins could revolutionise air miles and reward schemes


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Rene Konrad earns bonus miles from four airlines, plus loyalty points from six retailers and credit cards. But the one loyalty programme he is most excited about now offers him something different: digital coins.

Before he jumps on the train to Zurich most mornings, Mr Konrad grabs a bottle of Caffe Lattesso. The 41-year-old can get about 12 Lattessocoins by entering a code from the bottle into a website. In a few months, the accumulated coins, which only became available in April, should become tradeable for other digital tokens, as well as cash.

“I don’t know how many airline miles I lost because I didn’t use them fast enough,” Mr Konrad says. “The fiat money no one can take away from me.”

With more than 1,600 digital tokens already in existence, coin issuers and companies are embracing the tried-and-tested loyalty programmes to differentiate themselves. In February, Tokyo-based e-commerce giant Rakuten said it planned to issue its own rewards coin convertible to cash. EZ Rent-A-Car is letting reward-program members convert points into digital currencies such as Bitcoin. Hewlett Packard Enterprise is trying to figure out how to make tokens work for petrol-station rewards.

They still face an uphill climb. Total loyalty programs’ user growth has slowed to 15 per cent over a two-year period ending 2016, down from 26 per cent in the prior similar period, according to the 2017 Colloquy Loyalty Census, based in part on a survey of about 4,500 American and Canadian consumers. More than half of loyalty memberships in the US are inactive, and about 30 per cent of consumers have abandoned a programme without ever redeeming a point or a mile.

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Companies are hoping digital coins can reverse these trends by capturing the attention of younger consumers. Almost one in five millennials owns digital currencies, according to a survey of 2,001 Americans commissioned by Finder.com.

The changeover could also help boost the bottom line. While unredeemed reward points often sit as liabilities on companies’ balance sheets, digital coins representing those same reward points and convertible into cash likely won’t have to. When redeemed, the coins may even be booked as revenue.

Reducing fees

Then there’s the allure of the blockchain. Today, merchants pay third-party processors like First Data Corp. about $35 billion a year for servicing prepaid or private-label credit cards that are tied to loyalty points, according to Richard Crone, chief executive of payments consultant Crone Consulting. By issuing tokens, merchants could cut up to 80 per cent of the fees, he said. The underlying blockchain technology can help them keep track of transactions.

"You are creating your own card with your own prepaid balances," Mr Crone says. Many major merchants are piloting such programmes this year, and will launch them next year, he said.

Within five to 10 years, 5 per cent of US adults will use crypto loyalty points, and the annual issuance of related tokens should reach $3.6bn, saus Lex Sokolin, global director of fintech strategy for Autonomous Research. Within 10 to 20 years, 15 per cent of Americans are likely to use digital loyalty points, he estimates.

Rakuten could become the biggest provider of blockchain-based loyalty coins. Chief execurtive Hiroshi “Mickey” Mikitani said this year that the company plans to issue a loyalty coin that can be used on its websites and converted to fiat. The e-retailer has already issued $9bn of points in the last 15 years, he said.

Mobile apps

Other companies are not far behind. Startup Qiibee, which worked with about 900 brands including Subway and Burger King on a mobile app, is now placing customers such as Lattesso on blockchain. By the end of the year, 20 brands will likely have issued loyalty coins.

"It doesn’t mean it will replace the mile, it will replace the technology behind it," says Qiibee chief executive Gabriele Giancola. “It’s no more points, it’s a token."

Another startup, the DigitalBits Project, says tokens for its Caddle app, which offers Canadians cash-back rebates from companies like PepsiCo and Mars, could eventually be converted to Ether or Bitcoin.

Others expect blockchain-based loyalty programmes to evolve beyond tradeable coins. Hewlett Packard is working with Streamr to test using blockchain to provide rewards to motorists. In the future, cars may collect their own acceleration data, fuel usage and location information, and let nearby gas companies offer drivers incentives through coupons or loyalty points.

Marketing gimmicks

Tradeable tokens don’t come without some drawbacks. Instead of using them to shop at the issuing company’s stores or website, users could spend them elsewhere.

And some of the first blockchain-based loyalty programs are admittedly more marketing gimmicks than deals. Advantage Rent A Car started a new coin-based loyalty programme in May. Members of its EZ Money loyalty program can get $25 of Bitcoin for earning 5,000 reward points - or spending $5,000 on rentals - a hefty commitment by most measures. The company may adjust the amount.

"The benefit of a programme is when you give customers what they want, they will come and rent from you again," says Advantage chief executive Scott Davido.

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How to vote in the UAE

1) Download your ballot https://www.fvap.gov/

2) Take it to the US Embassy

3) Deadline is October 15

4) The embassy will ensure all ballots reach the US in time for the November 3 poll

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UAE currency: the story behind the money in your pockets
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Jetour T1 specs

Engine: 2-litre turbocharged

Power: 254hp

Torque: 390Nm

Price: From Dh126,000

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Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
Cricket World Cup League 2

UAE squad

Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind

Fixtures

Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE

UAE currency: the story behind the money in your pockets
If you go

 

  • The nearest international airport to the start of the Chuysky Trakt is in Novosibirsk. Emirates (www.emirates.com) offer codeshare flights with S7 Airlines (www.s7.ru) via Moscow for US$5,300 (Dh19,467) return including taxes. Cheaper flights are available on Flydubai and Air Astana or Aeroflot combination, flying via Astana in Kazakhstan or Moscow. Economy class tickets are available for US$650 (Dh2,400).
  • The Double Tree by Hilton in Novosibirsk ( 7 383 2230100,) has double rooms from US$60 (Dh220). You can rent cabins at camp grounds or rooms in guesthouses in the towns for around US$25 (Dh90).
  • The transport Minibuses run along the Chuysky Trakt but if you want to stop for sightseeing, hire a taxi from Gorno-Altaisk for about US$100 (Dh360) a day. Take a Russian phrasebook or download a translation app. Tour companies such as  Altair-Tour ( 7 383 2125115 ) offer hiking and adventure packages.
Tips for job-seekers
  • Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
  • Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.

David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

Nayanthara: Beyond The Fairy Tale

Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni

Director: Amith Krishnan

Rating: 3.5/5

Tree of Hell

Starring: Raed Zeno, Hadi Awada, Dr Mohammad Abdalla

Director: Raed Zeno

Rating: 4/5

The biog

Favourite hobby: taking his rescue dog, Sally, for long walks.

Favourite book: anything by Stephen King, although he said the films rarely match the quality of the books

Favourite film: The Shawshank Redemption stands out as his favourite movie, a classic King novella

Favourite music: “I have a wide and varied music taste, so it would be unfair to pick a single song from blues to rock as a favourite"

UAE currency: the story behind the money in your pockets
Dubai Bling season three

Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed 

Rating: 1/5

While you're here
Lexus LX700h specs

Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor

Power: 464hp at 5,200rpm

Torque: 790Nm from 2,000-3,600rpm

Transmission: 10-speed auto

Fuel consumption: 11.7L/100km

On sale: Now

Price: From Dh590,000

The years Ramadan fell in May

1987

1954

1921

1888

The specs

Engine: 3.5-litre V6

Power: 272hp at 6,400rpm

Torque: 331Nm from 5,000rpm

Transmission: 8-speed auto

Fuel consumption: 9.7L/100km

On sale: now

Price: Dh149,000

 

At a glance

- 20,000 new jobs for Emiratis over three years

- Dh300 million set aside to train 18,000 jobseekers in new skills

- Managerial jobs in government restricted to Emiratis

- Emiratis to get priority for 160 types of job in private sector

- Portion of VAT revenues will fund more graduate programmes

- 8,000 Emirati graduates to do 6-12 month replacements in public or private sector on a Dh10,000 monthly wage - 40 per cent of which will be paid by government

The drill

Recharge as needed, says Mat Dryden: “We try to make it a rule that every two to three months, even if it’s for four days, we get away, get some time together, recharge, refresh.” The couple take an hour a day to check into their businesses and that’s it.

Stick to the schedule, says Mike Addo: “We have an entire wall known as ‘The Lab,’ covered with colour-coded Post-it notes dedicated to our joint weekly planner, content board, marketing strategy, trends, ideas and upcoming meetings.”

Be a team, suggests Addo: “When training together, you have to trust in each other’s abilities. Otherwise working out together very quickly becomes one person training the other.”

Pull your weight, says Thuymi Do: “To do what we do, there definitely can be no lazy member of the team.” 

The biog

Name: Fareed Lafta

Age: 40

From: Baghdad, Iraq

Mission: Promote world peace

Favourite poet: Al Mutanabbi

Role models: His parents 

UAE currency: the story behind the money in your pockets
War and the virus

Sting & Shaggy

44/876

(Interscope)