Japanese e-retailer giant Rakuten Inc. today announced plans to roll out a blockchain-based loyalty system that will incorporate its existing point system.

The new system will take existing Rakuten Points, used to purchase anything on the system from snacks to electronics, and turn them into a cryptocurrency called Rakuten Coin.

The company has shown a long-term interest in blockchain technology and cryptocurrencies when Rakuten invested in and integrated bitcoin wallet service Bitnet Technologies Ltd. in early 2015. This led the company to begin accepting bitcoin for services globally. The company then acquired Bitnet in August and set up a blockchain research and development lab in Belfast, Ireland.

Today, Rakuten Chief Executive Officer Hiroshi “Mickey” Mikitani announced the development of the blockchain-based loyalty system and cryptocurrency while on stage at Mobile World Congress 2018 in Barcelona.

Mikitani described the new development as a “borderless currency” that could be transferred and used anywhere Rakuten customers accessed the service.

Blockchain distributed ledger technology is best known for being the protocol that underlies the globally popular cryptocurrency bitcoin. Many implementations of blockchain technology produce their own tradable assets, which are often used to fuel startups and projects using those blockchains and create the foundation for crowdsale fundraising called initial coin offerings in the industry. Companies have also sought blockchains to record assets such as rewards points and gift cards.

The current loyalty system, Rakuten Super Points, has awarded more than 1 trillion Super Points to users since the program’s launch 15 years ago, totaling $9.1 billion.

Like any other loyalty reward system, the points are generated every time a customer makes a purchase on the platform and can be used to discount future purchases or buy into certain products or services at Rakuten. In this way, the points keep customers on the platform, by providing an incentive for them to use earn points and then use them at Rakuten.

Although Rakuten is a major rival of digital e-retailer Amazon.com Inc., the other company has shown little interest in blockchain technology and cryptocurrency. In this way, Mikitani believes that Rakuten will differentiate itself in the market from its biggest competitor.

“Basically, our concept is to recreate the network of retailers and merchants,” he said. “We do not want to disconnect [them from their customers] but function as a catalyst. That is our philosophy, how to empower society not just provide more convenience.”

Ideally, the Rakuten Coin loyalty system could be rolled out globally to all of Rakuten’s different holdings and services – some of which implement loyalty systems and some that don’t. The company has its biggest market in Japan, where more than 44,000 merchants sell goods to customers, but a digital asset system would transcend local currencies and thus customers and services across the world could access and buy services and products.

There are no details released yet by Rakuten about a launch date when customers can expect this service to go live.

Photo: Rakuten