Crypto Loyalty Programs are Quickly Garnering Interest
Earning cash back has long been the leading choice for the average U.S. consumer. But now, a survey signals a new challenger, as the growing ubiquity of crypto is shifting consumer behavior.
The “Bakkt Loyalty and Rewards 2022 Outlook Study” finds that 72% of Americans who purchased crypto at least one time in the past six months are likely to redeem loyalty points for cryptos. In addition, about half of crypto buyers are interested in earning cryptocurrency instead of points, the study notes, with 51% interested in earning crypto rewards, compared to 56% interested in earning cashback instead of points.
Another interesting point is that 27% of crypto buyers are interested in earning NFTs instead of points, the survey finds.
Nancy Gordon, Chief Product Officer for Loyalty at digital assets platform Bakkt, told GOBankingRates that we are seeing an increasing portion of the population engaging with crypto and looking for ways to enable additional pathways to purchasing digital assets.
“Rewards is an appealing on-ramp into crypto given that it upgrades what has traditionally been a passive store-of-value into an active store-of-value, that has the potential to increase over time,” Gordon said.
The survey also points to the education gap as being the biggest barrier in redeeming cryptos. Financial literacy and consumer understanding is the gap that separates consumers from trading cryptocurrency and taking advantage of the new ways to monetize and spend digital assets, the survey notes. Of the consumers who said they are not likely to redeem points for crypto, 44% responded they lack an understanding of what can be bought with crypto.
Bakkt’s Gordon said that consumers generally understand today’s popular “earn-burn” rewards that are prevalent in airline, hotel and credit card reward programs: accumulate rewards and redeem for goods and services.
“It’s natural that consumers would want to understand what can be bought with crypto once their rewards are redeemed for crypto,” she said. ” As methods emerge for spending crypto in everyday life, education will be key to close the gap.”
Asked about which brands are at the forefront of bridging this educational gap, Gordon said that brands across all sectors including financial services, airlines, hotels, QSRs, entertainment and others are actively identifying their crypto strategy.
“We’ve seen a shift in the conversation from ‘Do I need a crypto strategy?’ to ‘What is my crypto strategy?’ Rewards are quickly becoming one of the first places brands are looking at when activating their crypto strategy,” she said.
The survey also notes a gender disparity: while more than 64% of the crypto-buyer respondent group are more familiar with loyalty point conversion and management than the average U.S. consumer, men in this group had more than 60% familiarity, while women polled had 46% familiarity.
Gordon said that there is a known gender gap as it relates to investing, so it is not a surprise to see this carry over to crypto.
She added, however, that “the gender gap will continue to narrow as women begin to actively take control of their finances, are provided with tailored financial health education that reinforces the importance of investing and are granted access to better fintech solutions.”
Another driver of crypto rewards interest in income level, the survey finds, with 40% of consumers with income over $100,000 likely to redeem loyalty points for crypto.
Bakkt, which went public last year on the New York Stock Exchange, and partnered last October with two financial giants — Mastercard and Fiserv — to expand crypto access to both behemoths’ customers.
The partnership with Mastercard will integrate crypto into its loyalty solutions, enabling its partners to offer cryptocurrency as rewards and create fungibility between loyalty points and other digital assets, as GOBankingRates reported at the time. This means that consumers can earn and spend rewards in cryptocurrency instead of traditional loyalty points and seamlessly convert their crypto holdings to pay for purchases.
“We couldn’t be more excited to partner with Mastercard to combine loyalty and crypto to create new and innovative options for merchants and consumers,” Gavin Michael, CEO of Bakkt, told GOBankingRates last October. “Broad adoption of digital assets is already underway and embedding opportunities for consumers to transact in and earn rewards in crypto, will lower barriers and accelerate the trend.”
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