Circle signs MoU with HKT for blockchain-based loyalty solutions for Hong Kong merchants

Stablecoin issuer Circle announced on Tuesday that it has signed a memorandum of understanding (MOU) with HKT, a major player in technology, media and telecommunications.

The main objective of this collaboration is to explore opportunities for creating blockchain-based loyalty solutions tailored to Hong Kong’s retail landscape.

Circle-HKT collaboration

According to the blog post, Circle’s expertise in Web3 services, combined with HKT’s merchant network and customer engagement resources, will enable the two companies to develop Web3-based loyalty solutions to improve consumer interactions with merchants, potentially creating more interactive engagement experiences.

In an official statement, Jeremy Allaire, co-founder and CEO of Circle, said:

“We are excited to collaborate with HKT to place our Web3 services at the forefront of innovation in customer loyalty. This collaboration demonstrates our commitment to helping businesses unlock the potential of blockchain technology to create value-driven customer experiences, redefining loyalty programs and providing merchants with the tools they need to thrive in the digital economy.

Well-known companies like American Express and Marriott have seen remarkable engagement and revenue per customer, thanks in part to the strength of their loyalty offerings. These types of programs have also become popular with Generation Z and millennials in Hong Kong. However, consumer expectations of them have evolved over time.

Circle cited a Statista report indicating that the global loyalty market is valued at approximately $5.57 billion, with 70% of consumers indicating that loyalty programs play an important role in their purchasing decisions.

Recognizing the benefits of on-chain loyalty programs over traditional methods, the crypto company launched its “smart contracts platform” in March this year to create in-app on-chain loyalty options, making Earning and redeeming rewards is a seamless process for users.

Loyalty Benefits of Blockchain

A recent Deloitte report highlighted that traditional loyalty and rewards programs are failing to reach their full potential due to several major challenges. These include account inactivity and low redemption rates, which hamper program effectiveness and customer engagement.

Additionally, delays in rewards processing and high transaction costs contribute to inefficiency, further exacerbating problems with system management and customer acquisition. The report also highlights low customer retention as a major concern, suggesting that these programs struggle to maintain ongoing customer loyalty and engagement.

The company believes that blockchain could eliminate many inefficiencies.

“So we know what lies behind this lack of execution efficiency: fragmented and clunky systems that rely on centralized administration requiring the coordination of multiple parties through trusted intermediaries to evolve processes throughout the value chain. Ironically, blockchain addresses this problem by removing trust from the process and decentralizing it.