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IBM launches blockchain-based bank card bonus pilot with China UnionPay

IBM and China UnionPay are experimenting with a bank loyalty scheme using blockchain technology. 26 Sep 2016

Consumers will be able to exchange bonus points under different bank schemes to choose the rewards they want, IBM said. While many banks currently offer points to encourage loyalty to their cards, it has been too difficult and too expensive to date to allow them to move their points between different banks, IBM said.

This has meant that many bonus points go unused, IBM said, either because of strict bonus point policies or a limited selection of goods for consumers to choose.

IBM China Research Lab and China UnionPay E-payment Institute have therefore created a business platform using IBM's own blockchain service to create a network for exchanging bonus points, IBM said.

Blockchain distributed ledger technology is best known for underpinning trading involving the digital currency bitcoin, but it has many other potential uses. Broadly it can be likened to a type of database that, using cryptography, can be operated as a digital public ledger for recording information, such as the transfer of assets between two or more parties.

He Shuo, director of the E-payment Research Institute said: "As a new industry pilot for blockchain technology, this represents a significant business breakthrough and innovation milestone for the electronic payment business. The joint research efforts [have] enabled the successful exchange of bonus points among banks using blockchain technology, which embeds trust into transactions."

The project aims to connect online and offline channels so that China UnionPay card holders can go to an offline supermarket or mall to exchange their bonus points. Bonus points from flight mileage, mobile phone bills, gas cards and food and beverage purchases could all be exchanged and swapped in the future, IBM said.

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