Blockchain adoption poised to go mainstream, say founders of HK start-up PassKit
Already a member of IBM’s Global Entrepreneur Programme, creators see use of so-called distributed ledger technology raising efficiency in a wide range of merchant loyalty programmes
Consumers may soon find that earning points to qualify for free cups of coffee or claim airline tickets will be powered by the same technology behind bitcoin and other virtual currencies – blockchain.
“We see a massive opportunity, especially for small businesses across Asia, to reap the benefits from blockchain, which a lot of large enterprises still mainly associate with cryptocurrency,” Paul Tomes, the co-founder and chief executive at start-up Hong Kong mobile application developer PassKit, told the South China Morning Post in an exclusive interview.
Blockchain, which has gained both notoriety and acclaim as the mechanism behind cryptocurrency bitcoin, enables the creation of an online database network where all participants create, share and store records of transactions in a secure and efficient manner, according to a white paper commissioned by the Hong Kong Monetary Authority (HKMA).
The initial applications of this so-called distributed ledger technology outside cryptocurrencies have included post-trade settlements, record checking and management, and cross-border fund transfers, the paper said.
“We see distributed ledger technology improving the use of non-currency assets, such as mileage points from airline loyalty programmes and stamp cards used by coffee shops and other small merchants,” Tomes said.
He pointed out that using credit card points to buy air miles, for example, remain incredibly inefficient as there is “zero trust” between the bank card issuer and the airline, which make use of separate teams to verify and reconcile transactions every month.
With blockchain, faster verification and action on loyalty programme members’ requests can be achieved because each participant – the bank and the airline – maintain their own copy of the database in which the history of transactions are stored.
By extending use of that technology to smaller merchants as part of a larger partner network, a person could be able in future to use, say, a small balance in air miles to purchase a drink or other small item in a convenience store.
In the meantime, PassKit has focused its attention on getting small businesses, such as convenience stores, coffee shops and hair salons to consider the benefits of blockchain.
“For small merchants, they have no way of measuring how successful their paper-based stamp cards are in attracting more business,” Tomes said.
PassKit co-founder and chief technology officer Nick Murray said the company has developed so-called blockchain-as-a-service called “Loopy Loyalty”, which small businesses can subscribe to for about US$15 a month, to create digital stamp cards that work with Apple Pay and Android Pay.
“Our goal is support loyalty as a currency, enabling a community of small businesses to trade loyalty points between their respective incentive programmes,” Murray said.
Information technology giant IBM Corp has recognised the efforts of PassKit, crediting the start-up with pushing a viable blockchain application.
“PassKit is a member of IBM’s Global Entrepreneur Programme,” said Daniel Leung, client technical adviser leader at IBM China/Hong Kong. “PassKit is working with IBM Global Business Services to bring blockchain solutions to market.”
Further guidance for blockchain use by businesses in Hong Kong will be presented by the HKMA during the city’s second annual fintech Week next month.
In March this year, the Hong Kong Monetary Authority joined forces with professional services group Deloitte and five of the city’s top banks to develop a proof-of-concept blockchain platform for trade finance.
Last month, 10 of the world’s largest food industry suppliers, retailers and service providers formed a coalition to revolutionise safety across their industry’s supply chain, using a blockchain technology platform conceived in mainland China.
Consortium members Nestlé, Wal-Mart Stores, Unilever, Dole, Kroger, Golden State Foods, McCormick and Company, Driscoll’s, McLane Company and Tyson Foods have agreed to collaborate with IBM on that initiative, following trials initiated last year on the mainland to step up domestic food safety reform efforts.