Amex Patent Seeks to Improve Reward Redemption
American Express could be exploring a way to enable its cardholders to pay with loyalty points on e-commerce sites or mobile wallets, according to a recently released patent application. Filed in August 2014, the application for a “third party digital wallet pay with points” describes a system in which members of its loyalty program can pay directly with loyalty points “in any third party digital wallet.” Integration with a merchant aggregator, such as a digital wallet, would enable users to redeem points at a variety of merchants and brands, as opposed to most existing payment card rewards programs, which limit redemption to certain retailers or brands. Such limitations are partially responsible for the $16 billion in loyalty rewards that go unclaimed each year, according to a 2011 study by Colloquy and Swift Exchange.
Making it easier to redeem loyalty points could help drive spending on American Express payment cards or increase participating in its relatively new U.S.-based coalition loyalty program Plenti by making rewards points more useful and attractive to members. Research conducted last year by Collinson Latitude found that 82 percent of loyalty program members wanted more options when redeeming rewards points, and 79 percent said that online redemption would improve the experience. Enabling consumers to redeem points via mobile wallet, such as Apple Pay or Android Pay, also would give consumers further incentive to adopt and use those services.
Since filing for the patent, American Express has not made any further announcements related to the program. Discover filed a patent application in 2006 for a method of redeeming credit rewards points at the POS, but that system has yet to surface.