BAKKT Rewards app will be a game changer
The idea is to introduce two types of vehicles for paying with points. The first would provide a digital credit card that would be accepted anywhere merchants take Google Pay or Apple Pay. Merchant costs wouldn’t change, and they wouldn’t need to make any adjustments to their point-of-sales terminals. The benefits would go to the folks who can turn sleeping rewards to cash.
It’s the second phase that would disrupt the system—and potentially reap huge savings for merchants. But it would require merchants, like your neighborhood bar, to alter their payments process so they’re linked directly to the Bakkt app. Getting stores onboarded will require a big marketing and persuasion effort. Bakkt’s challenge is to show merchants how they can use their savings from going direct—instead of paying the interchange fee of around 2.5% that goes to banks, credit card companies, and the like—to lower prices or provide their own rewards to customers. The numbers are in Bakkt’s favor. What’s unclear is whether retailers are willing to scrap a system that’s been reliable, though expensive, for decades.
Whatever the outcome, the ultimate goal has loads of appeal to those who have sacrificed unused points or can’t buy what they want with the rewards they’ve accumulated. The app would show a pie chart divided into four slices: cash, crypto, rewards, and game points for systems like Microsoft’s Xbox. Folks could not only make purchases with the app using cash or bitcoin but also seamlessly transfer money from one category to another. Bakkt would handle the trading of points for cash, charging users a small fee. Direct payments would cost a tiny fraction of today’s interchange fee.
“It makes sense, because we’re an exchange company,” says Sprecher. The CEO–—who, by the way, just made a bid for eBay–—is a self-described “car nut” who’s not using the rewards garnered from his hobby. “I buy tons of batteries and other stuff from a local auto supply store, and I’ve accumulated all of these points, but I don’t use them,” says Sprecher. The day the CEO can buy dinner by using his auto supply points as cash at a restaurant that accepts direct payment via Bakkt rewards may be the dawn of a revolution in payments.