China UnionPay and IBM jointly use blockchain technology to develop a points trading platform, where users can freely trade UnionPay card points with others

IBM is reportedly working with China UnionPay to create a blockchain-based system for trading loyalty points.

IBM and China UnionPay have developed a platform that allows consumers to trade points they earn from shopping and other rewards with others, according to a proof of concept released today. The concept can be applied to transactions such as airline miles, phone bills or gas card points.

He Shuo, director of China UnionPay's Electronic Payment Research Institute, called the platform a "major breakthrough" in the electronic payment industry in a statement.

He said in a statement:

“Joint research between China UnionPay Electronic Payment Research Institute and IBM has successfully realized the transaction of reward points between banks through blockchain technology.”

The proof-of-concept prototype was built on a private network of the Hyperledger Fabric beta network and highlights how the bank can ensure points can only be traded between accepted partners.

The prototype aims to integrate online and offline channels through blockchain technology, allowing UnionPay cardholders to go to supermarkets and shopping malls equipped with dedicated POS machines and redeem goods with points.

Points networks are being used by banks as a means to attract new customers, boost customer loyalty by opening up incentives between banks and increasing the variety of rewards available.