American Express Unveils Its Position on Cryptocurrencies

Excellent observations about cryptos – American Express entered the cryptocurrency market relatively early, either through a cooperation with the Abra wallet or through a relationship with Ripple (XRP) as early as 2017. However, the corporation does not appear to be in a rush to incorporate cryptocurrency into one of its primary operations. It would rather link cryptos with its edge services.

American Express and Cryptocurrency: Crypto Rewards Instead of Bitcoin Credit Cards

In a January 25, 2022 interview with Yahoo! Finance, American Express CEO Stephen Squeri discussed his company’s cryptocurrency strategy. According to reports, the corporation is not planning to issue cryptocurrency-linked AmEx credit cards “anytime soon.”

According to the CEO of American Express, cryptocurrency does not provide the benefits of a credit card. They do not provide their users with any “litigation rights,” prizes, or extended credit.

Because of its price volatility, Stephen Squeri sees bitcoin (BTC) as “an asset class” rather than a way to allow digital payments like credit cards. “What I’ve said from the beginning is that cryptocurrencies are really an asset class like gold or like silver. Look at Bitcoin – which is a good bellwether – it’s down 50% in two months. How do you call it a currency?”

American Express, on the other hand, would look at methods to trade membership incentives for cryptocurrency.

To go deeper:
>> How to buy crypto with a creditcard?
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Stephen Squeri also mentioned that his organization is already using cards with stablecoins. American Express is also said to be taking a close interest in the evolution of the digital dollar.

Mastercard established a relationship with three cryptocurrency service providers in November 2021: Amber Group and Bitkub in Thailand, and CoinJar in Australia. With this agreement, Mastercard will be able to provide cryptocurrency-powered payment cards to its consumers in these nations. These cards will allow users to instantaneously change their cryptos into fiat money.

Is American Express risking exacerbating its competitive disadvantage by overplaying the caution card? It is still exploring transforming reward points into bitcoin, despite the fact that its competitors are already doing so. This is especially true for the Gemini exchange, which has teamed with Mastercard to give bitcoin and other crypto incentives.

Connecting Blockchain and Rewards

American Express was the most prominent non-tech corporation to reveal details about its blockchain applications in December at the Hyperledger Global Forum in Basel. The cost of running the rewards program was American Express’ single largest expense in 2017, accounting for $8.7 billion. Given the importance of rewards to the organization, the program was recently updated to make it more flexible. As a result, the blockchain incentives initiative addresses a genuine commercial need.

Customers now get points solely based on their entire transaction expenditure. The store might utilize incentives to target a certain brand or product, a specific day of the week, a consumer profile, or something else. But they haven’t been able to do so until now.

Travel and entertainment is a key industry for American Express, accounting for 23% of card expenditure in the United States in 2017. During the same time period, their co-brand card with Delta accounted for around 8% of the billed business. As a result, it’s not surprising that it already has a blockchain partner in the tourism industry. RocketMiles allows passengers to earn points on hotel reservations, and the consumer chooses their preferred rewards program. The hotel booking site is part of the Priceline Group, which also owns Booking.com, OpenTable, and Kayak.

American Express Blockchain rewards – How does it work?

The blockchain solution was created wholly in-house by American Express utilizing Hyperledger Fabric. The firm is a Hyperledger member, which is part of the Linux Foundation.

Personal information such as card member names and card data are not recorded on the blockchain. Instead, American Express tokenizes the information. When a customer makes a purchase, the blockchain records the transaction data. That data might be a product SKU, a time of day, or anything the merchant decides, and these details can be utilized as smart contract triggers.

Recent Hyperledger Fabric versions provide additional privacy features like as Zero-Knowledge Proofs, which allow questions to be answered without exposing precise information. Responding to an inquiry regarding whether or not a transaction involving a specific brand, for example, without giving all transaction information. “This gives us additional privacy alternatives… And ideally, this will allow us to broaden the initiative to include cross-merchant integration.” However, for the time being, the scale-up is utilizing one channel per merchant.

The American Express approach included lowering the degree of coding necessary by businesses. The card firm supplied code and a software development kit, allowing the merchant to execute the program on the node and interface with it via a basic web services API.

American Express entering metaverse?

Recent trademark registrations suggest that payment giant American Express (AXP) is planning a metaverse entrance.
The corporation applied for trademarks for its logos and products, including the Centurion black card and the “Shop Small” initiative. Amex also wants to participate in virtual payments and electronic business transactions for digital media and non-fungible tokens (NFT).
Amex’s applications come as conventional banks and major enterprises want to increase their exposure to the metaverse. JPMorgan recently created a Decentraland lounge and published a paper on how firms might identify possibilities in the expanding metaverse.

With huge payment corporations increasingly attempting to ride on fiat-to-crypto rails, it may only be a matter of time until one can purchase consumer products and services in the metaverse using normal credit cards.