Mastercard Awarded Patent For Blockchain Coupon Verification System
Payment processing giant Mastercard was recently granted a patent for a blockchain-based system that authenticates coupons during point-of-sale processing to prevent fraudulent copies. The initial patent application was submitted in November 2016, and was just approved on Thursday. The proposed system offers a way to not only reduce coupon and voucher fraud, but also to improve targeted discounts for individual customers, which can help to improve customer loyalty and recurring revenues.
The system works by assigning individual customers blockchain addresses, which will contain additional information about their valid discount offers, and checking coupons against that data during the point-of-sale process. For those companies utilizing the system, their point-of-sale devices will be equipped with software to interface with the blockchain network and check whether the provided coupons are valid for that customer.
After a coupon is verified and the transaction is completed, the system automatically removes the coupon or coupons from that customer’s wallet (identified by his or her blockchain address), and places it in a “burn address”, which keeps track of unauthorized coupons. This system prevents users from trying to redeem the same coupon multiple times. Multiple types of invalid coupons may be stored in burn addresses, such as already-used coupons, expired coupons, or coupons that are only valid at certain retail locations.
While this coupon verification system was designed with fraud prevention in mind, it also offers benefits for individual customers. If retailers don’t have to worry about coupon re-use fraud, they can offer a both higher value discounts to customers, as well as a higher volume of coupons. This type of fraud is the primary bottleneck for scaling discount offers and loyalty programs, and this system can eliminate that bottleneck.
Other payment processing companies are leveraging blockchain technology to improve their operations and reduce fraud. For example, American Express recently deployed a Hyperledger blockchain network for use with their Membership Rewards program, aiming to give retailers more flexibility to offer product-specific promotions to customers.