Fiat Standard Loyalty Business
I’ve worked at Mastercard for the last ten years in the San Francisco office, building solutions for card-linked offers to drive merchant loyalty. It’s a fun business where cardholders get merchant offers delivered through their bank, giving them a discount if they make qualifying spends at participating merchants. Below is a sample of these offers/deals from my personal Wells Fargo bank account.

The offers stimulate new customer acquisition, reactivate former customers and increase spending frequency and basket size of existing customers. Overall, the marketing solution is very effective in stimulating additional spending behavior, mainly through credit card payment channels (some debit cards).
Enter Bitcoin
Bitcoin as a medium of exchange hasn’t gotten much attention because Bitcoiners are expected to hold their Bitcoin and there are understandable concerns about triggering taxable events when spending, but let’s put those concerns aside for a minute and consider the business opportunity to increase merchant loyalty on the Bitcoin rails instead of the fiat rails. What’s changing? It’s no exaggeration to say that Bitcoin completely transforms the value proposition, delivering unprecedented levels of economic surplus with efficiencies and use cases that fiat can never match.
Expenses
Providing any fiat merchant offer program is an expensive undertaking, requiring a significant and complex tech stack and team of people to: verify participating merchants, validate the merchant contract, assign offers to cardholders based on projected marketing budgets, detect qualifying spend events, reward cardholders who redeem statements, generate reports for merchants to demonstrate the effectiveness of the program, and reconcile accounts. Most importantly, all consumer spend is routed to the most expensive payment channel (for the merchant); the credit card.
Bitcoin rails eliminates a significant number of steps in this process. Merchants could participate in a model more similar to Google Adwords through a self-service portal, verifying through a Bitcoin commitment to fund a marketing budget in real time (which could also be cancelled in real time – never possible in fiat offering programs). The bank and card processor are no longer involved as intermediaries in the end-to-end solution; they and their associated costs/fees are completely eliminated from the value chain. Most importantly, all redemption transactions are now conducted over the low-cost Lightning Network rails, eliminating not only the direct costs of credit card fees (typically 3% or higher), but also the indirect costs of chargebacks and fraud.
New paradigms
Fiat rails means that consumers who participate in their bank’s merchant offer program typically don’t receive any notification at the point of sale that they have successfully redeemed their rebate, and the rebate itself doesn’t appear on their bank statement until several days later. A bank could invest in a real-time offer redemption solution, but this is too expensive and complicated and would have to be done on a bank-by-bank basis; very few do this, and there is no universal protocol that can be used.
Trade financing for fiat offerings must be done in advance through pre-funding of a dedicated budget, or payment is made under a typical 30-day credit agreement backed by contractual obligations.
Bitcoin rails completely overturns these legacy frameworks. Consumers can not only get notification in real time at the point of sale when they use a bitcoin based offer to get that inner peace, but they get a discount in real time. Not only that, but “split payments” are supported by technologies like LN Bits and Bolt 12, where the vendor/company offering the bitcoin can also get paid in real time at the same point of sale event. This essentially makes the fiat “billing” step obsolete. Merchants can also change offer values, minimum spend thresholds, and most importantly, inventory remaining offers/discounts (marketing budget) that they want to lock in in real time; such changes are not possible through fiat channels, which require budget commitments weeks in advance. I’ve only scratched the surface of the long list of unfair advantages that Bitcoin brings to the table as a trade offer program, but I’ll leave it there, for now.
Cautions
Reach: The offering program is essentially a two-sided market, and it is important to have as large an audience of consumers as possible to make it profitable for merchants to participate. The Bitcoin audience and what I call the “Bitcoin-curious” audience are still relatively small segments, albeit growing.
Targeting: Fiat merchant offer programs have a silver bullet that is currently unavailable to Bitcoin, at least directly; consumer transaction history. This history allows the merchant to carefully spend their marketing budget on specific consumer segments, such as new, lapsed, and loyal groups. This is an invaluable tool for maximizing return on ad spend (ROAS), and also allows for insightful pre-testing and post-testing “lift” reporting, proving an increase in marketing campaign spend, which is very compelling and useful for merchants who need to justify spending money on offer campaigns.
However, I would argue that these caveats are mitigated by the ability for merchants to attract the Bitcoin segment, even in a broad and non-targeted way, because that segment is so valuable; by converting wealthy, influential, and maniacally dedicated merchants to Bitcoin-friendly merchants. Any merchant in their vertical/category has a first-mover advantage to attract this invaluable segment first.
The example above shows how Bitcoin removes the costs of the legacy system like never before, unlocking much higher margins for traders and providing a more immediate, intuitive and satisfying consumer experience. This long list of unfair advantages provided by Bitcoin-based trading offers cannot be replicated by any competitor operating on fiat rails. This is based on my experience over the last decade working on CLO trader loyalty programs.
Michael Saylor says, “Buy Bitcoin and Wait.” For many of us Bitcoiners, we have the opportunity to not just “wait,” but to actively contribute to hyperbitcoinization. I am making this move with trade proposals, using my knowledge and experience to bring my own Bitcoin proposals to life. I am curious what significant cost reductions and new unique use cases other Bitcoiners may discover by reflecting on their fiat mining experiences and skills and reframing them through the lens of Bitcoin.
This is a guest post by John McCabe. The opinions expressed are solely their own and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.