Points Currencies

One of BigLedger’s most powerful membership features is support for multiple points currencies within a single program or across related programs. This capability enables sophisticated loyalty economics that go far beyond simple point-per-dollar earning schemes. Understanding how to design and implement multi-currency systems is essential for creating flexible, scalable membership programs.

What are Points Currencies?

A points currency is a defined unit of value within your loyalty ecosystem. Just as different countries use different monetary currencies, membership programs can use different points currencies to represent value in various contexts.

Basic Currency Characteristics

Every points currency has these core attributes:

Currency Code: A unique identifier for system use (e.g., LOYPTS, BONUSPTS, GIFTPTS)

Currency Name: The customer-facing display name (e.g., “Loyalty Points”, “Bonus Miles”, “Gift Rewards”)

Status: Active or Inactive flag controlling whether the currency can be earned or redeemed

Earning Rules: How members accumulate this currency (conversion rates, qualifying activities)

Redemption Rules: How members exchange this currency for value (redemption ratios, eligible rewards)

Expiry Rules: How and when points in this currency expire (can vary by currency)

Why Multiple Currencies?

Multiple points currencies enable business scenarios that would be difficult or impossible with a single currency:

Differentiated Expiry: Base points never expire, but promotional bonus points expire after 90 days
Source Tracking: Separate currencies for purchases vs referrals vs engagement activities
Partner Integration: Partner-earned points separate from directly-earned points
Promotional Campaigns: Temporary currency for limited-time campaigns
Gift Economics: Transferable gift points separate from non-transferable earned points
Category Restrictions: Food points only redeemable for dining, merchandise points for retail

Single Currency vs Multi-Currency Programs

Single Currency Model

Many traditional programs use one currency for simplicity:

Example - Coffee Shop Loyalty:

Currency: “Coffee Points”
Earning: 1 point per $1 spent
Redemption: 100 points = 1 free regular coffee
Expiry: Points expire after 12 months of account inactivity

Advantages:

Simple to understand for customers
Easy to communicate
Straightforward liability tracking
Minimal configuration complexity

Limitations:

All points have same expiry rules
Promotions must give more of the same currency (dilutes value perception)
Cannot restrict redemption by point source
Difficult to separate owned vs partner points

Multi-Currency Model

Advanced programs leverage multiple currencies for flexibility:

Example - Travel Rewards Program:

Base Miles: Earned from flights, never expire, redeemable for flights and upgrades
Bonus Miles: Earned from promotions, expire annually, redeemable for flights and merchandise
Partner Points: Earned from hotels/car rentals, convertible to Base Miles at 3:1, expire after 18 months
Gift Miles: Received from other members, same redemption as Base Miles, expire in 90 days

Advantages:

Flexible expiry management
Clear promotional value differentiation
Partner economics separated from core program
Gifting mechanics without cannibalizing earned points
Category-specific redemption options

Complexities:

Customer communication requires clarity
System configuration more involved
Financial liability tracking per currency
Potential for customer confusion if poorly designed

Common Multi-Currency Scenarios

Scenario 1: Base + Bonus Currency Structure

The most common multi-currency approach separates standard earning from promotional bonuses.

Implementation:

Primary Currency - “Loyalty Points”:

Earned on all purchases at base rate (1 point per $1)
Never expires
Full redemption flexibility
Represents core value proposition

Secondary Currency - “Bonus Points”:

Earned during promotions, special events, bonus multipliers
Expires 6 months after earning
Same redemption value as Loyalty Points
Creates urgency to redeem

Business Benefits:

Promotional points create separate liability bucket with shorter duration
Breakage (expiry) is higher on Bonus Points, improving program economics
Members perceive bonus as “extra” value rather than just more of the same
Can set different accounting treatment for bonus vs base points

Customer Experience:

Clear differentiation between “money earned” vs “bonuses received”
Urgency to use bonus points drives redemption behavior
Members feel rewarded when receiving bonus points
Expiry of bonus points less painful than base points expiring

Example Balance Statement:

Your Points Summary:
- Loyalty Points: 12,450 (Never expire)
- Bonus Points: 3,200 (Expire June 30, 2024)
Total Redeemable: 15,650 points

Scenario 2: Category-Specific Currencies

Different currencies redeemable for different product categories.

Implementation:

Retail Chain with Grocery + Pharmacy + Gas Stations:

Grocery Points:

Earned: 1 point per $1 on grocery purchases
Redeemable: Grocery products only
Expiry: 12 months

Pharmacy Points:

Earned: 2 points per $1 on pharmacy purchases (higher margin)
Redeemable: Pharmacy and health products
Expiry: 24 months (encourage medication adherence)

Fuel Points:

Earned: 1 point per $1 on any purchase
Redeemable: Gas station discounts only
Expiry: End of month (creates urgency for frequent fill-ups)

Business Benefits:

Margins protected by category-specific redemption
High-margin categories can offer richer earning
Fuel points drive traffic to gas stations
Cross-category shopping encouraged

Customer Experience:

Choice in redemption category
Perceived value higher when specialized
Frequent fuel purchases drive engagement

Scenario 3: Partner Network Integration

Managing points from partner organizations with conversion mechanics.

Implementation:

Airline + Hotel + Credit Card Partnership:

SkyMiles (Airline owned):

Earned from flights at base rate
Redeemable for flights, upgrades, hotel transfers
Never expire for active members
Conversion: None needed (native currency)

Hotel Reward Points (Partner earned):

Earned from partner hotel stays
Stored separately to track partner liability
Convertible to SkyMiles at 3:1 ratio
Expire 18 months after earning

Card Bonus Points (Credit card partner):

Earned from credit card purchases
Convertible to SkyMiles at 1:1 ratio
Expire 36 months after earning
Can be held unconverted for flexibility

Business Benefits:

Clear separation of airline liability vs partner liability
Conversion creates “friction” that reduces redemption rate
Partners manage their own point issuance
Airline controls conversion ratios to protect margins

Customer Experience:

Flexibility to earn from multiple sources
Choice to convert or hold in original currency
Unified redemption once converted
Transparency on conversion rates

Conversion Example:

Member has:
- 50,000 SkyMiles
- 30,000 Hotel Points (= 10,000 SkyMiles when converted)
- 15,000 Card Bonus Points (= 15,000 SkyMiles when converted)

Unconverted total: 95,000 points across 3 currencies
Potential SkyMiles if all converted: 75,000 SkyMiles

Scenario 4: Transferable vs Non-Transferable Points

Controlling which currencies can be gifted or transferred between members.

Implementation:

Membership Program with Gifting Feature:

Earned Points (Non-transferable):

Earned from personal purchases
Cannot be transferred to other members
Full redemption flexibility
Standard expiry rules

Gift Points (Transferable):

Received from other members or as gifts
Can be transferred to other members
Same redemption value
Shorter expiry (encourages use)

Promotional Codes (Transferable):

Issued via promotional campaigns
Can be shared (one-time use code)
Limited redemption options
Fixed expiry date

Business Benefits:

Prevents “point trading” gray markets
Gift points create viral acquisition (members recruit friends to receive their gifts)
Promotional codes provide marketing flexibility
Liability control through transferability restrictions

Customer Experience:

Ability to gift points to family/friends creates goodwill
Recipients value free points highly (acquisition tool)
Clear rules prevent confusion about what can be shared
Promotional codes feel special and valuable

Currency Conversion Mechanics

When multiple currencies exist, conversion between them is often needed. BigLedger supports two primary conversion models:

Points-to-Points Conversion

Converting from one points currency to another within the membership ecosystem.

Conversion Ratio Example:

3 Bonus Points = 1 Loyalty Point
2 Partner Points = 1 Loyalty Point
1 Premium Point = 2 Loyalty Points

Implementation Considerations:

One-Way Conversion: Typically only convert from lower-value to higher-value currency (prevents gaming)

Conversion Fees: Optional fee (5% of points lost in conversion) to create friction

Minimum Conversion: Require minimum amount (e.g., 1,000 points minimum)

Conversion Limits: Daily or monthly conversion caps

Expiry Impact: Converted points inherit destination currency’s expiry rules

Business Use Cases:

Consolidating points before expiry
Converting partner points to native currency
Combining multiple balances for large redemption
Simplifying member’s portfolio

Example Conversion Transaction:

Before Conversion:
- Bonus Points: 6,000 (expiring in 30 days)
- Loyalty Points: 10,000 (never expire)

Conversion Action:
Convert 6,000 Bonus Points → Loyalty Points at 3:1 ratio

After Conversion:
- Bonus Points: 0
- Loyalty Points: 12,000 (never expire)

Member saved 6,000 points from expiring by converting to 2,000 Loyalty Points

Points-to-Cash Conversion

Converting points to monetary value for flexible redemption.

Redemption Ratio Example:

100 Loyalty Points = $1 cash value
200 Bonus Points = $1 cash value
50 Premium Points = $1 cash value

Implementation Considerations:

Redemption Threshold: Minimum points required (e.g., 5,000 points = $50 minimum)

Redemption Method: Statement credit, bank transfer, check, or cash card

Redemption Frequency: Monthly or quarterly redemption windows

Tax Implications: May need to report as income depending on jurisdiction

Fraud Prevention: Enhanced verification for cash redemptions

Business Use Cases:

“Cash back” reward programs (credit cards)
Flexible redemption when merchandise catalog is limited
High-value rewards for premium members
Alternative to complex reward catalogs

Example Cash Redemption:

Member Balance: 50,000 Loyalty Points
Cash Conversion Rate: 100 points = $1
Available Cash Value: $500

Redemption Options:
1. Apply $500 statement credit to credit card account
2. Transfer $500 to bank account
3. Receive $500 check by mail
4. Load $500 to prepaid debit card

Member chooses statement credit, 50,000 points deducted

Hybrid Conversion (Points + Cash)

Some programs allow members to combine points and cash for higher-value redemptions.

Example - Premium Redemption:

Luxury Hotel Room: $400 per night

Redemption Options:
1. Pure Points: 80,000 Loyalty Points
2. Pure Cash: $400
3. Hybrid: 40,000 Points + $200 cash
4. Hybrid: 60,000 Points + $100 cash

Member chooses option 3: 40,000 Points + $200 cash
Benefits:
- Preserves some points balance
- Makes high-value redemption accessible with fewer points
- Improves program economics (cash portion has no liability)

Multi-Currency Balance Management

Balance Tracking

Each membership maintains separate balances for each active currency:

Member Balance Table Example:

Member: Sarah Johnson (#LOY-443829)
As of: November 18, 2025

Currency         | Current Balance | Lifetime Earned | Lifetime Redeemed | Next Expiry
-----------------|-----------------|-----------------|-------------------|-------------
Loyalty Points   | 12,450          | 48,200          | 35,750           | None
Bonus Points     | 3,200           | 18,900          | 15,700           | 1,200 on Dec 31
Partner Points   | 8,500           | 12,000          | 3,500            | 2,000 on Jan 15
Gift Points      | 1,000           | 5,500           | 4,500            | 1,000 on Nov 30
-----------------|-----------------|-----------------|-------------------|-------------
Total            | 25,150          | 84,600          | 59,450           | -

Transaction Attribution

Each earning or redemption transaction must specify which currency:

Earning Transaction Example:

Transaction ID: TXN-8829301
Date: November 18, 2025
Purchase Amount: $150
Member: Sarah Johnson

Points Earned:
- Loyalty Points: +150 (base earning: $1 = 1 point)
- Bonus Points: +150 (active promotion: double points)
Total Points: +300 points

Redemption Transaction Example:

Transaction ID: RDM-4456092
Date: November 18, 2025
Redemption Value: $25 discount

Points Redeemed:
- Bonus Points: -2,500 (used first due to earlier expiry)
Remaining Balance:
- Bonus Points: 700

Automatic Currency Selection

Programs can implement rules for which currency to use automatically:

First-In-First-Out (FIFO): Redeem oldest points first (minimizes expiry)

First-to-Expire First: Redeem points closest to expiry first (member-friendly)

Lowest-Value First: Redeem lower-value currencies before higher-value (optimizes member’s total value)

Member Choice: Allow member to explicitly select which currency to redeem

Configuration Best Practices

Naming Currencies

Choose names that clearly communicate purpose and value:

Good Names:

“Base Miles” vs “Bonus Miles” (clear differentiation)
“Rewards Points” vs “Gift Points” (functional distinction)
“Cash Back Points” (communicates redemption method)

Poor Names:

“Points A” and “Points B” (no context)
“Gold Points” and “Silver Points” (confusing with tier names)
“Special Points” (vague purpose)

Setting Conversion Ratios

Establish ratios that protect program economics:

Fair Value Exchange: Conversion should reflect relative earning difficulty

If Bonus Points are “easier” to earn (promotions), convert at worse ratio
Example: 3 Bonus Points = 1 Base Point reflects that Bonus Points are promotional

Prevent Gaming: Ensure no conversion path creates free value

Check all conversion loops to prevent arbitrage
Example: If A→B at 2:1 and B→C at 2:1, ensure no C→A path at better than 4:1

Partner Economics: Reflect partner cost in conversion ratio

If partner pays you $0.005 per point issued, ensure conversion doesn’t exceed this cost
Example: If partner points cost $0.005 and your base points cost $0.01, convert at 2:1

Expiry Policy Alignment

Match expiry rules to currency purpose:

Base Currency: Generous expiry (never expire, or activity-based extension)

Promotional Currency: Aggressive expiry (create urgency)

Gift Currency: Moderate expiry (balance urgency with goodwill)

Partner Currency: Partner-dictated expiry (match partner’s policies)

Financial Implications

Liability Tracking

Each currency represents a separate financial liability:

Balance Sheet Impact:

Loyalty Points Liability:
- Outstanding Balance: 12,450,000 points
- Cost per Point: $0.01
- Total Liability: $124,500

Bonus Points Liability:
- Outstanding Balance: 3,200,000 points
- Cost per Point: $0.01
- Total Liability: $32,000

Total Points Liability: $156,500

Breakage Recognition

Points that expire without redemption represent breakage (profit recognition):

Breakage by Currency:

Loyalty Points (Never Expire):
- Expected Breakage: 10% (members become inactive)

Bonus Points (Expire 6 months):
- Expected Breakage: 35% (aggressive expiry)

Partner Points (Expire 18 months):
- Expected Breakage: 25% (moderate expiry)

Higher breakage on promotional currencies improves program economics significantly.

Integration with Reward Mechanisms

Different redemption mechanisms interact with currencies differently:

FI-ITEM Pricing Method

Member-specific pricing can vary by currency:

Redeeming Loyalty Points: 10% discount
Redeeming Bonus Points: 8% discount
Redeeming Premium Points: 15% discount

Pricebook Method

Tier-based pricing typically uses a primary currency:

All redemptions draw from Loyalty Points balance
Bonus Points must be converted to Loyalty Points first

Voucher Method

Vouchers can be purchased with specific currencies:

$10 Gift Voucher: 1,000 Loyalty Points OR 1,500 Bonus Points
Exclusive Experience Voucher: 50,000 Premium Points only (not available for other currencies)

Summary

Multiple points currencies transform simple loyalty programs into sophisticated reward ecosystems:

Strategic Benefits:

Flexible expiry management improves program economics
Partner integration with clear liability separation
Promotional mechanics without devaluing base currency
Category restrictions protect margins

Operational Considerations:

Clear communication essential to prevent confusion
Balance tracking more complex but manageable
Financial reporting by currency provides better insights
System configuration requires careful planning

Customer Experience:

Perceived value higher when currencies are well-differentiated
Flexibility in earning and redemption appreciated
Urgency created by differential expiry drives engagement
Transparency in conversion builds trust

Understanding multi-currency systems is essential for leveraging the full power of BigLedger’s Membership Module. Next, explore how Membership Tiers work with points currencies to create comprehensive loyalty programs.