To ensure consistent value across different currencies, we recommend basing your point values on Purchasing Power Parities (PPP) rather than exchange rates. PPP accounts for differences in price levels between countries, providing a fairer comparison of point values.
Understanding Purchasing Power Parity (PPP)
When operating in multiple countries, using exchange rates alone can create unfair reward values. Exchange rates reflect financial markets, but they do not reflect how much goods and services actually cost in each country.
Purchasing Power Parity (PPP) compares the cost of living between countries. It tells you how much of one currency is needed in Country B to buy the same goods that 1 unit of currency buys in Country A.
Using PPP helps ensure that rewards feel fair and consistent in real-world value across regions.
How the Points Configuration Works
In the system, points are always configured as:
1 unit of local currency = X points
You choose how many points equal 1 unit of currency.
Important:
✅ You configure currency → points
❌ You cannot configure 1 point = fixed currency value
Points are derived from the currency value, not the other way around. This means for each supported currency, you define how many points equal 1 unit of that currency.
Step-by-Step: Setting Up Multi-Currency Point Values
1. Choose a Base Currency
Select the primary currency you want to anchor your rewards to.
Example: Canadian Dollar (CAD)
2. Set Your Base Point Value
Define how many points equal 1 unit of your base currency.
Example:
1 CAD = 100 points
This establishes your baseline value.
3. Find PPP Values for Other Currencies
Research the PPP comparison between your base currency and other currencies.
PPP tells you how much local currency equals the same purchasing power as 1 unit of your base currency.
Example PPP values:
0.6 GBP = 1 CAD
18 INR = 1 CAD
4. Convert PPP Value to Points
Example
Since:
1 CAD = 100 points
And PPP tells us:
0.6 GBP = 1 CAD
Then:
0.6 GBP = 100 points
To configure the system (which requires 1 currency unit = X points):
If 0.6 GBP = 100 points
Then:
1 GBP = 100 ÷ 0.6
1 GBP ≈ 166.7 points
5. Round to Practical Denominations
For ease of use, round to a clean number that works operationally.
Example:
1 GBP = 200 points
This makes reward issuance simpler.
Worked Examples
Example 1: Currency with Higher Value than Base Currency
Base Currency: Canadian Dollar (CAD)
Base Points Value: 1 CAD = 100 points
British Pound (GBP) PPP Value: 0.6 GBP = 1 CAD
Therefore, 100 points = £0.60
Rounded: 100 points = £0.50
Final Conversion: 1 GBP = 200 points
Example 2: Currency with Lower Value than Base Currency
Base Currency: Canadian Dollar (CAD)
Base Points Value: 1 CAD = 100 points
Indian Rupee (INR) PPP Value: 18 INR = 1 CAD
Therefore, 100 points = 18 INR
Rounded: 100 points = 20 INR
Final Conversion: 1 INR = 5 points
Planning Your Reward Denominations
Once each currency is configured as:
1 unit of currency = X points
You can easily calculate reward values.
Example configuration:
1 CAD = 100 points
1 GBP = 200 points
1 INR = 5 points
Now reward values can be structured consistently:
Points | CAD | GBP | INR |
1000 | 10 CAD | 5 GBP | 200 INR |
500 | 5 CAD | 2.5 GBP | 100 INR |
200 | 2 CAD | 1 GBP | 40 INR |
This ensures rewards provide comparable purchasing power in each country.
Recommended Practices
Use Clean Denominations
Round your final “1 unit = X points” values to practical numbers for easier calculations.
Review PPP Periodically
Purchasing power changes over time and usually updated annually, but the underlying benchmark surveys that define them only happen every 3 to 5 years.
Review and adjust your configurations as needed.
Communicate Clearly to Users
Make sure users understand:
How points are earned
The approximate value of points
How rewards convert in their local currency