Who: Burger King
Where: Russia
When: September 2017
Law stated as at: N./A.
What happened: Burger King, renowned US fast food chain, in partnership with Waves, a Russian blockchain start-up, has launched its own crypto-currency: the WhopperCoin.
By scanning the Burger King receipt through the Waves platform, Russian customers can earn 1 WhopperCoin for each rouble spent on a Whopper sandwich. Once they have collected 1700 WhopperCoins (equivalent to 5 or 6 whoppers), they will then be able to exchange them for a free Whopper.
The platform provided by Waves allows also for transfers between customers and exchanges for other currencies.
Why this matters:
Customer loyalty programmes are often used to provide customers with incentives, such as points or air miles, which can be used towards goods or services. In order to be part of this programme, customers typically register their personal information with the company and are given a unique identifier to be used when making a purchase. Depending on how the scheme is structured, this may also be used for targeted advertising purposes.
The introduction of blockchain technology offers the potential to revolutionise loyalty programmes. By using this technology, the dividing line between rewards and currency becomes blurred. Let’s take the case of air miles: it is possible to collect them and use them to obtain a discounted flight. It might also be possible to transfer our miles to our children to subsidise their holidays. What is not possible under traditional programmes is to exchange them for another currency. However the technology used for the WhopperCoin would allow this.
As for all innovations, many questions remain unanswered; for example: could the WhopperCoin in future allow customers to buy a BigMac, or would they need to exchange it for real money first?
If you feel like surfing the blockchain wave, and want to reward your clients’ fidelity through a loyalty programme based on crypto-currencies, bear in mind that the award credits could be considered as digital currency. As the regulators are paying close attention to cryptocurrencies at the moment, it is advisable to conduct a legal assessment of your scheme, to ensure it is compliant with financial services regulations.
