Retailers find more uses for blockchain — including payments
CHICAGO – As blockchain use cases grow, retailers are seeing more reasons to use the distributed ledger technology for payments.
In much the same manner banks are learning more about blockchain payments by using the distributed ledger technology for other services — and Facebook is jumping in with Libra, a cryptocurrency developed with the support of mainstream payment companies — retailers are finding use cases for blockchain including consumer payments or rewards redemption.
“Blockchain is the underlying technology that allows bitcoin and other cryptocurrencies to operate, and there is much activity in this area and we see a lot of adoption of retailers being able to accept cryptocurrency payments,” said Nikki Baird, vice president of retail innovation at software lab Aptos.
“But that, by far, is not the most exciting part of what is going on in retail with blockchain,” Baird said Wednesday at the annual RetailX conference.
Still, many of blockchain’s key traits — the public/private key, the smart contracts and the ledger to record all ownership transfers — work well for other retail services that ultimately could have a part in payment acceptance and security.
One of those is the operation of loyalty programs that use distributed ledger to help confirm the identity of the customer.
Some companies pay their consumers in “coins” to be able to access and use their data as the foundation for a blockchain-based loyalty program. The retailers and brands using that type of program would use the coins as a way to reward customers for their data, allowing them to redeem the coins at the retailer’s stores, Baird said.
A fitness company called Boltt is using blockchain to deliver coins to customers as rewards for reaching certain fitness levels, Baird added. “They can set up the program with other retailers so that customers can redeem Boltt coins at places like Starbucks, for example,” she said.
Marketplaces for gift cards can also use blockchain to track transactions in which users swap gift cards or choose to redeem them at retailers.
In the B2B arena, IBM is using blockchain to manage underlying smart contracts and payments for various industries.
“Consumer identity is a less-mature application for blockchain, though it is one of the most interesting,” Baird said.
Verified.me is the joint venture of Canadian banks that is using blockchain to verify consumer information when a bank account is being opened. Among its various use cases, one is partnering with a telco in Canada, where customers they can buy a phone or open a new line, with their identity being verified by the banks.
Such a process falls in line with other companies or government entities testing blockchain to create digital identities for customers or residents, Baird said.
Other areas in which retailers are starting to use blockchain include product information and safety records, supply chain visibility, anti-counterfeit and product authentication processes, and marketing through social media influencers.
Multi-channel retailers in the U.S. tracking the development of blockchain will be assessing its value as a complement to other global technologies for payments and identities taking hold. Blockchain’s potential to secure data and lower transaction-management costs and organize product-related information could come into play with various future retail tech deployments.
“Everyone is looking to China because it is a country heavy in mobile payments and also the use of facial recognition for security,” said Daniel Lucht, global research director at Research Farm.
But what is popular in payments technology in China will have a slower adoption rate in the U.S., mainly because of privacy concerns related to facial recognition and some security gaps in mobile, Lucht said.
However, the emergence of online grocery ordering and pickup in Europe, especially France, may become more common in the U.S., though it has already passed the “boom” stage in Europe, Lucht added.
And it also seems likely that the emergence of Amazon Go stores and its general concept of bypassing traditional checkout may be slowed by various circumstances beyond the fact that the stores have started accepting cash.
“There is a massive cost to set up a store like Amazon Go,” Lucht said. “And they have to be set in relatively small spaces because the computer needs and connections are not suitable for larger spaces.”
As currently structured, the Amazon concept would work in a quick-serve setting, but not a traditional department store or discount retailer warehouse.
It remains to be seen whether Amazon would or could license out its technology for others to use, mainly because it is not clear whether third parties would have to share data with Amazon, Lucht added.