Etihad has today launched an app that will convert its loyalty points into cash using your mobile device or tablet or computer and a virtual VISA card.
This has huge implications not just for frequent flyers in general and Etihad and its loyalty partners such as Virgin Australia in particular, but for merging consumer loyalty programs into physical in-store as well as virtual on-line purchasing processes.
Think of an EFTPOS terminal where you don’t just selected credit, cheque or savings, but loyalty before entering your pin, or transferring that password from your mobile or tablet, on which you have been ticking off your groceries list.
The implications of this need to be considered carefully, as they no doubt will be in such places as the Reserve Bank of Australia, the Australian Taxation Office, retail banks, credit card companies and other airlines in general.
What Etihad is about to do is increase the money supply with the alternative and limitless and borderless minting of loyalty points, with an exchange rate the can be set at whim and applied non-uniformly to the holders, depending on his or her status or worth to the issuing airline, bank, gaming company, or whatever.
Qantas has already transformed its loyalty program, as have other major carriers abroad, from being a rewards program to an exceptionally profitable data based program generating selling opportunities to both its frequent flyer members and third parties like grocery chains and hotels and other goods and services providers buying as many Qantas points as it chooses to mint at whatever price it is prepared to wholesale them.
However it is also important to wait for more detail from Etihad as to precisely how it will work, as the initial announcement refers to a PointsPay VISA card which is not referenced at this stage on the international VISA web site.
And the key to understanding where Etihad is coming from is Loylogic, the Zurich headquartered company that earlier this month launched an app that allows gamers to play on-line using airline points.
Loyalty Play Holdings has launched PlayWithPoints.com, the world’s first loyalty points based online casual skill game destination. Members of Scandinavian Airlines’ EuroBonus program, Etihad’s Etihad Guest program, AirBaltic’s BalticMiles program and Etisalat’s More Rewards program can now use their miles and points to compete in casual game tournaments to win travel and non-travel related prizes.
It is understood that Etihad will deal with the details of this latest app, announced today for general consumer purposes, early next week, but there seems no reason to doubt that it is proposing to make real something that has been discussed among those retailers and banks looking at the merging of mobile devices with payment systems for some time.
Making those systems capable of mining frequent flier points as well as a consumer’s credit lines or cash balances is a very big extra step for electronic purchasing whether at an EFTPOS terminal or a mobile device or tablet reader.
This is what Loylogic said of today’s Etihad launch:
PointsPay®, a Loylogic Company, today unveils its new global innovation: a mobile-based payment system for the loyalty industry with a launch exclusive to Etihad Airways. By converting miles or points into usable point-of-sale (POS) currency, PointsPay® enables members to redeem their loyalty earnings at millions of merchants worldwide.
For many years the loyalty industry has been seeking a solution that enables points or miles redemption at any merchant’s POS. The innovative, patent-pending PointsPay® process now provides a mobile wallet that bypasses the need for any integration with merchants’ POS systems. As a result, members of participating loyalty programs will be able to use their accumulated points and miles at virtually any in-store and online merchant.
This is what Etihad said, and Yes, it does leave some details unresolved.
ETIHAD AIRWAYS LAUNCHES A WORLD INNOVATION – ETIHAD GUEST MILES TO BECOME A GLOBAL CURRENCY
Etihad Guest, Etihad Airways’s award winning loyalty program, is offering its members an innovative new way to convert their Etihad Guest Miles into cash to spend anywhere, anytime.
This is delivered through PointsPay® an exclusive, real-time transaction solution that gives Etihad Guest Members unlimited freedom to spend in-store or online at millions of outlets worldwide.
Members simply use the PointsPay® application (available now as an iPhone app and shortly also via the PointsPay website) to exchange their Etihad Guest miles for funds to be added directly to their PointsPay® Visa prepaid card before using the card either in-store or online. For online shopping, they don’t even need a physical card, as the system produces a Virtual PointsPay ® Visa card for them to use directly on the web.
The PointsPay® application is safe to use as it incorporates robust security standards including automatic information encryption, password protection and notifications whenever miles are converted to credit.
Before the end of January, all existing Etihad Guest Members will be given the opportunity to be selected to be amongst the first group of members accessing this new feature. More and more members will be given access to the application over the course of the first quarter of 2012, with the application being available to the entire membership by the end of April 2012.
PointsPay® application is developed by PointsPay Inc., a Loylogic Company. Loylogic specialises in loyalty program innovations.
Peter Baumgartner, Etihad Airways Chief Commercial Officer, said: “This is a break-through innovation for the airline and loyalty industry, transforming our Etihad Guest miles into a global currency and we are very pleased to deliver this new solution to the world.”
Whatever the finer details, it seems a lot of things in the functionality of airline loyalty schemes are definitely changing soon.
4 Comments
Ben, what’s the innovative bit? The fact that the points interchange can be done using an APP?
Or is it the fact that points can be put on a prepaid Visa card?
thanks
No one has ever made it possible to turn my points to groceries at a check-out (say 20,000 points for a $200 shop), or use them to get cash out. (say 10,000 points for $100.) Not that I have any Etihad points.
This is going to make wireless security for your points a big issue. Imagine your phone app being hacked while you weren’t even using it and your points balance being monetized.
I think it is interesting to see how brave Etihad is doing with FF points business. By allowing the FF points to convert like a currency into credit, that would directly value each FF point into a monetary value.
Now, other airlines (especially Qantas I would think) would be a little nervous, as shareholders would start question the monetary amount liable for those unused FF points. My understanding is airlines like Qantas only have to report a monetary value of unclaimed FF points issue, without telling how many points issued and the conversation rate. Once Etihad established a rate of conversation, other frequent flyers will starting asking why my 10000 FF points in Etihad can exchange for US$xx worth of goods, whereas your 10000 FF points can exchange for half of the value of giftcards etc etc.
In reading this i was almost gobsmacked. I Quote “”"”PointsPay®, a Loylogic Company, today unveils its new global innovation: a mobile-based payment system for the loyalty industry with a launch exclusive to Etihad Airways. By converting miles or points into usable point-of-sale (POS) currency, PointsPay® enables members to redeem their loyalty earnings at millions of merchants worldwide.
For many years the loyalty industry has been seeking a solution that enables points or miles redemption at any merchant’s POS. The innovative, patent-pending PointsPay® process now provides a mobile wallet that bypasses the need for any integration with merchants’ POS systems. As a result, members of participating loyalty programs will be able to use their accumulated points and miles at virtually any in-store and online merchant.”"”
Point 1. A new global innovation: converting miles or points into usable point-of-sale (POS) currency. What is new about that! If a point issued being 1 point is equal to 1 dollar then 1 point can be redeemed for $1. Its only an API that tells the system to settle funds into MERCHANTS BANK ACCOUNT whom has received points collected as cash!
Point 2 For many years the loyalty industry has been seeking a solution that enables points or miles redemption at any merchant’s POS.
Not sure who these loyalty research companies are whom are still searching but this solution has been about for years. If any company would like a solution feel free to contact me.
To Ben Sandilands, there are a few companies in the world now whom you can collect points from retailers, these stay in an individual wallet, and are redeemed back at the stores you collected them from, a percentage of all points earned go into a sub wallet which can be redeemed for fee supermarket goods, free fuel, the list goes on.
My last comment is this post may be world inovation for just the company, but i would recommend they sack there researchers and get a good loyalty consultant.