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Korea’s largest payment processor is now using blockchain to settle reward points


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Wherever mutually untrusting parties have to reconcile data, you have a job for blockchain.

BC Card, South Korea's largest payment processor, is now using blockchain to settle reward points, Chosun reports. In doing so, BC Card has cut the reward-points processing time in half. The process being overhauled here is the one where participating businesses and BC Card itself settle accounts after a customer uses their reward points.

This process used to be done manually. But now the ledger serves as a shared source of truth for BC Card and its affiliates, allowing more automation of the settlement process.

The first benefit is that it cuts the partner settlement time by 50%. The second is that it improves results by eliminating errors and duplications that would previously occur in the manual process, bringing benefits for customers, affiliates and BC Card.

"Blockchain technology has enabled us to handle partner settlement tasks more seamlessly," said Lee Kang Hyuk, BC Card vice president of the business division.

The blockchain in question is a Hyperledger Fabric solution provided by KT, one of South Korea's large telecom providers and the majority owner of BC Card.

Blockchain quintessence

The use of blockchain to settle reward points is among the most quintessential blockchain applications.

This is because the process involves several mutually untrusting parties reconciling their own siloed data and then making payments among each other based on that data. The exact partners involved, and the number of parties involved in this, can vary on a case-by-case basis even within the same rewards program.

Consider the ever-popular frequent flyer points. These systems involve a constantly shifting nest of codeshares, where the same passenger can earn different amounts of the same points when flying on different airlines. It's rounded out by third parties such as frequent flyer card providers that also dole out airline reward points for specific customer purchases.

The complexity of this system is why airlines are wholeheartedly racing towards blockchain for their frequent flyer points, and why it's looking like all loyalty rewards programs could be destined to end up on the blockchain one way or another.

If you're looking for spots likely to experience blockchain disruption, one quick way of doing it is to look at areas with the same reward-points dynamic of mutually untrusting parties who need to reconcile data and payments. You might be surprised at how much ground this covers.

Royalty payments are one such area, just about everything supply chain-related is another and insurance is another likely candidate, especially when policies are sold through third parties.

And that's just the tip of the iceberg.

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