Yesterday Visa unveiled a web3 loyalty engagement solution. The objective is to enable brands to easily offer rewards in the real world, online and virtual worlds. At a strategic level, we believe one of the drivers is the adoption of a Visa wallet, a point not particularly mentioned in the announcement.
“Consumers are looking to engage with brands in new ways, and traditional loyalty programs have not evolved over the past decade. Imagine earning a unique digital collectible, whether it’s from purchasing tickets for a sports event or participating in an augmented reality treasure hunt,” said Kathleen Pierce-Gilmore, SVP and Global Head of Issuing Solutions, Visa.
“Our new innovative digital loyalty solution empowers brands to reward customers not only for their transactions but for their active engagement, paving the way for secure, seamless and immersive digital and real-world experiences at their fingertips.”
Apart from digital collectibles, the video accompanying the launch shows consumers earning Visa points that can be redeemed for goods.
Features include digital tickets, token-gated entry, loyalty coins, digital coupons and rewards transactions. Brands can also provide custom branded wallets.
Rather than building a solution from scratch Visa partnered with web3 engagement platform SmartMedia Technologies. Other brands using SmartMedia solutions include Accenture, Amex, Burberry and Vodafone.
The battle for wallets
The primary mention of wallets was Visa providing brands with custom wallets. While loyalty is unquestionably a valuable service to provide in its own right, it is also an important step towards Visa gaining traction in the wallet space.
During a recent event, the Governor of the Bank of Korea raised the fear of Visa launching a stablecoin. However, Visa was an initial backer of Facebook’s Libra but withdrew after regulator pressure. That’s not to say Visa won’t launch a stablecoin, but it has other options. For example, Visa also wants to support tokenized deposits.
It makes sense for Visa to target wallets, a less contentious path than stablecoins that is close to its core competency. After all, today many users make Visa card payments via Apple Pay and Google Pay. Why not via Visa’s wallet? By adding value through loyalty, they can start to build traction.
European banks originally decided to take on Visa and Mastercard by launching a card payment network. However, the European Payments Initiative (EPI) morphed from a card to a wallet solution, ‘wero’. Loyalty is one of the planned wero features at launch.