Could American Express be thinking outside the payments box…seemingly, way outside the payments box? It looks like this may be the case.
Cardnotpresent.com reported earlier this week that the U.S. Patent and Trademark Office had recently published a patent application from Amex bearing the title, “Third Party Digital Wallet Pay With Points”—an indication that it could be developing a system that would enable its cardholders to complete purchases at various e-commerce websites with loyalty points earned through participation in its Membership Rewards program. The patent documents, in which it is noted that Amex filed the application in 2014, describe, “a system, method, and computer product for redemptions of reward points to purchase goods and services offered by a third-party digital wallet or merchant aggregator.”
According to an abstract of the patent application published here, the system, method, and computer program covered by the patent “may allow certain transaction account holders to directly pay with their loyalty points in any third-party digital wallet.” Utilizing the system, the abstract indicates, account holders would earn one or more point for every dollar charged on an eligible, enrolled transaction account and then redeem their points for a wide array of rewards, including retail merchandise or travel.
Cardnotpresent.com noted that it is still unclear from the documents whether or not Amex has moved beyond the conceptual stage and has an actual payment acceptance product of this type in the development stages. However, as pointed out on the website, the card network’s unique position as both card issuer and payment network, as well as its partnerships with digital wallet providers like Apple (Apple Pay), mean Amex loyalty points could conceivably be spent online like cash.
“Although many (loyalty) programs have been successful in developing customer loyalty and incentivizing customers to act, they have presented participants with limited opportunities to redeem loyalty points for the products of their choice or have provided participants with limited accessibility and control of their loyalty account,” Amex states in the patent application. “Therefore, a need exists in this industry for a program that expands product choice for loyalty program participants.”
Whether Amex will fill that need, or not, remains to be seen. But given consumers’ ever-growing affinity for loyalty programs, there doesn’t seem to be a non-technical reason why the card network’s idea wouldn’t fly.