Sponsored by Nayax CoinBridge

Prime Sponsor

Turning points into currency

It has for a long time been a frustration in loyalty, that it is difficult and expensive to link with financial systems. Integration with any payment infrastructure can cost millions and take years to achieve. That is until now

This year’s prime sponsor for the International Loyalty Awards, a leader in the unattended payments industry, has developed a ground-breaking technology to turn loyalty points into cash – for any brand, anywhere in the world, on any payment terminal. The transaction will appear on the POS as a normal card transaction. Loyalty Magazine editor Annich McIntosh talks to Guy Rosenhoiz, General Manager of Nayax CoinBridge about the revolution that is about to come to a place near you.

It has for a long time been a frustration in loyalty, that it is difficult and expensive to link with financial systems. Integration with any payment infrastructure can cost millions and take years to achieve. That is until now
Guy Rosenhoiz

Loyalty Magazine: It is a great pleasure to welcome Nayax CoinBridge as Prime Sponsor of the International Loyalty Awards 2023. Can you explain the background to the company and why you have entered the customer loyalty business?

Guy Rosenhoiz: Nayax has, for the past 19 years, been building a complex and multi-disciplined payment platform that has become the largest provider of unattended payment in the world. Headquartered in Israel, it is dually listed on both the NASDAQ in the US and the Tel Aviv Stock Exchange in Israel. The company provides innovative solutions that take care of the complete payment eco-system, including the distribution and settlement of funds to merchants in a way that appears simple and frictionless for merchants and customers. At the heart of the customer proposition, there is always the customer. Payment is complex, but it must not seem that way for the end user. We must provide something customers need, coupled with a strong value, provided as a simple, and clear proposition.

When a new merchant is onboarded, Nayax simply sends them a ready-to-use POS (point of sale) and it automatically configures, and auto connects to our processing services, and even though this is a very complex technically, it is straightforward for the merchant. The POS is straightaway online and able to accept payments. It is possible for the system to take all kinds of payment methods, including mobile wallets, credit cards, prepayment cards, and gift cards. We support more than 150 payment methods, worldwide.

When a customer has experienced this once, they fall in love with Nayax and as a result the company has been very successful, achieving over the last 4 years and beating every single KPI. There are now 30 business units within Nayax, offering hundreds of product variations, and a very stable 800-person workforce working in 65 countries. We are covered with financial licences in all of them, and we are completely regulated in each region. Nayax has 47,000 B2B customers with 700,000 connected devices across the globe.

So is it this well-established unattended payments system that is at the core of the CoinBridge proposition?

It is important to understand that loyalty is entrenched within Nayax business, it’s our core.  In fact, we already have several loyalty products including Weezmo, which digitises invoices and connects in-store purchases with online campaigns. But it was requests from customers, from brands, that led to us exploring how we could extend our technology to digitise loyalty rewards and points and open up the redemption cycle.

Explain the path that led to the formation of CoinBridge?

Two and a half years ago, we became aware of a loyalty pain being experienced by retailers, especially in Europe and the UK. The brands wanted to take their loyalty programs and extend them outside the brand, so customers could redeem points in other retailers. And let me be clear, this is a MOVEMENT, it wasn’t just  wishful thinking  on the part of one brand.

I am proud to say I invented CoinBridge to meet this need, because it simply couldn’t be done previously, and someone had to provide a solution to a market in need.

To be sure of the demand, we conducted a survey in the UK and learned three important things.

  1. Given the freedom to spend points outside of the rewarding brand, customers actually went back and spent more with that brand.
  2. There was both a higher visitation frequency and higher spending.
  3. As a result, there was greater loyalty and advocacy for the rewarding brand.

In addition, brands providing financial freedom were perceived to be more innovative and socially responsible.

From the brand perspective, the data they are gaining is unprecedented. For the first time they could learn in detail where their customers were redeeming – outside their brand, and even at their competitors. This data is like being given a map of an unknown region. It opened up the possibility for much more cross-selling in a targeted and intuitive way. Furthermore, they can now personalize propositions to customers and even optimize their own business. For example, a coffee shop may learn that while a customer is loyal to them during the week, they buy a completely different brand over the weekend. Or a supermarket may realise that opening up a pharma department would be welcomed by customers who are using their points for these products. This information enables a modification of the brand proposition.

Is it necessary to get permission from other brands for loyalty points to be redeemed in their stores?

No. The CoinBridge solution turns points into currency, through credit card transactions, so the transaction is seamless for the merchant. Conversion is made at the exchange rate decided by the rewarding merchant or loyalty club. They could for example give one cent per point, or ten cents. That is up to the brand, which also decides if there are any restrictions on redemption and spending. The merchant where the points are being spent sees the transaction simply as a card payment.

Where is the CoinBridge solution active currently?

A number of major brands will be announcing they are allowing redemption outside of their brand in the coming months, both in the UK and in mainland Europe, as well as in the United States later this year.

Are they all working in the same way?

Not at all. The solution allows for multiple variations. For instance, a brand can work only with alliance partners, build their own Rewards-to-Cash networks, or even their own virtual gift card network. Our solution is extremely versatile allowing brands to tailor it to their needs. Or perhaps these partners could be persuaded in the future to offer specific benefits to brand customers once they see how many customers are redeeming their points with them. It opens up so many opportunities and business ventures.

Why couldn’t the conversion of points to cash be done in the past?

Previously, to spend points at a different brand, it was necessary to integrate the loyalty app and platform with the POS of each and every merchant. The brand had to be involved in a technologically complex and very costly process, and the spend could easily be tens of thousands, if not hundreds of thousands of euros for just one merchant or chain integration. As an example, we know of one UK retailer who has spent over £1 million on just four integrations. This meant it is prohibitively expensive to integrate a large number of small retailers, or migrate the solution to Europe, and of course it would be a long process. But anyways, this legacy approach of integrating with merchants will never cover all the merchants within a country or worldwide. And that is, by the way, one of the core pains we at CoinBridge solve.

What about banks and payments companies. Why have they not done this in the past?

Payments companies are in the same stuck place in terms of mindset. They are entrenched in payments, and due to their legacy perception are less innovative or are reluctant to think out of the box.

So what exactly is the CoinBridge proposition?

To take any digital asset, whether it is points, rewards or a gift card, and allow the value to be spent anywhere in physical retailers or online, according to the spending policy set by the brand. There is no integration, no permission needed from merchants, and the customer experiences a Tap&Go payment– just like apple Pay and Google Wallet, is easy.

Explain the CoinBridge technology?

It is all about the packaging of the solution. We have taken a complex technology solution and made it easy and simple by using a simple SDK software that is embedded into the existing retailer loyalty app. CoinBridge is not replacing the loyalty app, it is just enabling redemption as cash. It’s like inserting a small e-wallet payment element into the brand’s app. It is complex technology, but like a fridge, it is not necessary to understand how it works to be able to cool a drink.

On top of that we link the retailer’s loyalty platform to our platform with a simple software connector. We have customers who have completed the implementation of both technology elements within a time frame as short as two weeks. After that, all they need to do is testing and prepare their marketing plan before launching to customers with the offer that: if they update their app, they can start spending points wherever they like.

How is the payment processed and by whom?

CoinBridge takes care of the clearing and settlement with the merchant through our issuing license and connection to Mastercard. We also manage the transaction approval process and any regulatory aspects according to the highest payment industry standards. The retailer doesn’t need to do anything and is not involved in these processes, and for the customer, all they need to do is open their brand’s loyalty app and tap the terminal. And on the merchant side, as I have explained, the merchant sees the transaction as an ordinary credit card payment.

Are you encountering any resistance from merchants who are worried that redemption outside of brand will dilute their loyalty offering to customers?

If every single point awarded was redeemed in-store, then obviously this redemption would cost the merchant less, but the fact is that there are millions of euros worth of unredeemed points just sitting there, not generating revenue at all. This is lost loyalty. There is a paradox here. Our research shows that if you give customers greater financial freedom to redeem their loyalty assets they spend more and come back often. And of course, they become a happy and loyal customer.

You mentioned gift cards. How do they fit into the CoinBridge proposition?

This is a bigger potential solution than even we realised we had. As an example, one big retailer with no proper gift card proposition or network, which already engaged with 300 brand chains and merchants in the UK, has never integrated them into a single gift card scheme because it would take them ten years to complete the integration and cost an arm and a leg. Working with CoinBridge, they have now closed the payment loop and will be launching this year, with all 300 brands in the scheme.

You are currently focussed on retail, but are there other areas where the proposition would work? What about travel, or crypto for instance?

We are aware of as many as 60 different verticals where CoinBridge could provide a solution to a market pain, but I am firmly of the opinion that retail is a blue ocean when it comes to loyalty to payments, and plenty big enough to occupy us for a while. There’s a genuine pain there, both on the retailers’ and the consumers’ side.

Having said that, there are three airlines who already approached us, asking to use our solution, one in Dubai, one in Israel, and one in Europe. Their loyalty pain is that there are never enough seats to satisfy airline redemption requirements, so our solution allows them to expand their points redemption opportunity beyond just the airline market and to any merchant worldwide. Providing a wider choice, freedom, and value to their customers.

Who are your competitors?

I always prefer to work in an environment where there are strong competitors because then everyone raises their game, but the truth is, there are no direct competitors to us currently. We have registered ten patents so far which shows how unique and strong our technology is. Nevertheless, I have no doubt that other technology companies will join the market and present their version of solutions alongside CoinBridge. It’ll be fun.

In a nutshell, our advantage is that we have built an issuing company that is able to handle the issuing, settlements, and all other financial aspects. We have created a robust financial infrastructure. We have invested tens of millions of dollars in this process. Any competitor would need to be pretty determined to compete on this level. It would take newcomers more than that to  partake in this game. In addition, I’m happy that we also have the first-mover advantage.

Guy Rosenhoiz: “This is the emergence of a new industry category. It is a moment in history; a paradigm shift in loyalty.

“It is disruption without interruption. Merchants stay the same, but deliver in more ways than they did before.”

What about the financial networks, do they see you as a threat?

Quite the opposite. We are a Mastercard partner in the UK, Europe, and Israel, and they are delighted we are bringing new money onto their network. Retail points, rewards, vouchers, and closed-loop gift card solutions  did not go through the credit card rails, and now with CoinBridge, they are. We are also working with Discover in the US. And of course, we have a European Money Licence (EMI) for Europe and the UK. This is key.

What about gamification and gaming?

It is an interesting fact that more than 50% of the world’s gaming companies are based or have originated in Israel, including some of the largest, and so it is no surprise that they have already approached us for solutions involving the interoperability of awards within a game, and between games, as well as to take all the awards and use them in the physical world, but truly, we are currently focussed on retail. I have built several companies throughout my business career and I know that when disrupting the current order, it is necessary to focus initially on one segment or the world will swallow you whole.

Why did you elect to be Prime Sponsor of the International Loyalty Awards this year?

We want to show our solution to the loyalty industry and explain it properly. Our intention is to slowly diffuse our ideas into the retail industry. We need to start broadening the solution. We are already part of the loyalty industry through Nayax. Now we intend to be the enabler of loyalty into payments. We want to get noticed.




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