[Perspective] Why Can’t Credit Card Points Be Redeemed Immediately? How Stablecoin Technology Can Address Three Major Challenges Due to the Difficulty of Synchronizing “Information” and “Value”

Why can’t credit card points be redeemed immediately?

Recently, there has been a news story related to the “2025 deadline.” A few years ago, UNESCO called for the digitization of video tapes, as they would deteriorate over time due to demagnetization. The year 2025 marks the “deadline” for these magnetic media. UNESCO urged people who still have video tapes to digitize their files as soon as possible to preserve precious memories and data.

For modern people, who are accustomed to streaming services, the experience of going to a video store to choose a movie or even rewinding to watch specific scenes has already become a thing of the past, a sign of bygone times.

Just like the evolution of watching videos, the development of financial products follows a similar path.

For Generation Z and Generation Alpha, who have grown up with computers, the internet, and even smartphones, the first exposure to investments or trading assets may not be real estate, stocks, funds, or bonds, but cryptocurrencies such as Bitcoin, Ethereum, or even meme coins.

Cryptocurrencies run on blockchain technology and possess characteristics such as “24/7 availability,” “global trade,” and “instant settlement.” Therefore, this group of digital natives expects financial services to have these features as well.

As these digital natives accumulate more investment experience and begin using traditional financial services and asset allocation, they will likely start asking many “why?” questions.

Recently, while recording a podcast called Web3 Big Westward Advance with journalist Lisa Lin, who focuses on finance, blockchain, and FinTech, she raised a question: “Why can’t the points accumulated on credit cards be used immediately to offset expenses?”

This might be a question that many haven’t seriously thought about, or have already taken for granted. However, for young people like Lisa, this is strange, as in the world she knows, from the internet to blockchain, this should be possible.

Information and Value Can’t Sync! The Three Major Challenges of the Points System

Credit cards, based on different product positioning and attributes, generally have a reward mechanism. It could be cashback to offset the next bill, or points that can be used to redeem goods or offset expenses.

However, because the payment process for credit cards involves multiple parties such as issuing banks, clearing centers, acquiring banks, and merchants, it often takes several days to confirm the transaction and calculate the rewards. Therefore, it is difficult to immediately use the rewards at the time of the transaction.

Currently, most credit card points (rewards) systems face three common challenges:

1. It is impossible to use the rewards immediately when the consumer makes the purchase.
2. It is difficult to transfer and exchange points between different points systems.
3. It is hard for the general public to understand the actual value of each point and whether there is a corresponding value reserve behind it.

This is because each credit card points system is like a private ledger, and the underlying mechanisms are different. For example, if you want to exchange one point from KGI Bank for one point from Far Eastern International Bank, since the value of each point in the two systems may differ, the exchange between the two companies must ensure instant settlement, which involves a large-scale engineering project.

This is why most credit card points systems in the market cannot overcome these three major challenges, making it difficult to synchronize “information” and “value” at the same time.

Common Standards, Common Ledger: The Benefits of Stablecoin Settlement Logic

The example of credit card points redemption reminds me of the use cases of stablecoins for automated, real-time settlement on decentralized ledgers.

The mechanism of cryptocurrency operation is completed through the “consensus mechanism” on the blockchain. When a transaction occurs, within 10 to 20 minutes, miners who validate the transaction on the blockchain reach a consensus on the transaction’s outcome. If more than half of the miners agree, the transaction is recorded on the blockchain, ensuring the real-time and synchronized transfer of “information” and “value” with high stability and accuracy. This process is known as one-time settlement.

In contrast to the way credit cards operate, when a cardholder makes a purchase at a merchant, the transaction undergoes the following five steps before it is completed:

1. The cardholder makes a purchase at the merchant.
2. The merchant sends a transaction authorization to the acquiring bank and clearing center (e.g., Visa).
3. The merchant confirms the transaction amount with the cardholder.
4. The clearing center completes the settlement of the transaction with both the acquiring bank and issuing bank.
5. Once the transaction authorization and settlement are completed, the issuing bank sends the cardholder a bill at the end of the billing cycle.

Credit card transactions involve multiple parties and may take several days to complete. This is because of differences in the standards and ledgers used by different banks and systems.

This example highlights the advantages of a decentralized ledger in blockchain technology, where there is a common standard and a shared ledger.

New Taiwan Dollar Stablecoin as a Reserve! How Can Points Be Played in the Web3 Era?

This is why the issuance of “New Taiwan Dollar Stablecoins” in Taiwan is so important. Earlier this year (2025), the Financial Supervisory Commission held a public hearing to discuss the draft of the “Virtual Asset Platform and Trading Business Act (VASP).” One of the key highlights was the proposal to allow banks to issue stablecoins pegged to the New Taiwan Dollar or US Dollar to provide a stable bridge for cryptocurrency transactions.

If banks can issue New Taiwan Dollar stablecoins, they could use these stablecoins as reserves when issuing credit card points in the future to ensure their value. Points could be issued through smart contracts.

This approach has two major advantages: first, it ensures the actual reserves behind each bank’s points, ensuring the value of the points; second, by using smart contracts, the rules for point redemption can be written into the contract, making the exchange between different banks’ point systems fully automated.

With New Taiwan Dollar stablecoin reserves and points issued through smart contracts, brand points can become modular, allowing banks to combine them according to their business strategies and create various marketing plays.

For example, if 100 points from Bank A can be used to offset a 10 NTD purchase, and 1 point from Bank A can be exchanged for 5 points from Bank C, these rules can be written into a smart contract. When users want to redeem points, the system can automatically execute the exchange instantly and transparently, opening the door to integration with the traditional financial system and fiat currencies.

The advantages of stablecoins as a settlement and clearing tool, as seen in the example of credit card points redemption, highlight the potential for a more immediate, borderless, and transparent financial experience in the Web3 era. This technology ensures the synchronization of “information” and “value” and marks an irreversible trend in financial experiences driven by blockchain technology. In some ways, it is even a basic habit and expectation for the new generation of young people when it comes to finance.