The error "Loyalty Redemption Failed" has been found to occur as the result of two possible scenarios.
1. Firewall/Whitelisting. Ensure that the affected location's whitelisting is correct as per: Toast Firewall Requirements
2. This has been seen with other brands in the past. The resolution comes from the Toast team after an update to the Toast database for the affected locations. Punchh's documentation of this is minimal, though it's clear that this process involves an update to the specific credentials on the Toast side.
Keep in mind that the Toast team developed the Toast > Punchh integration. As such, there are minimal settings that Punchh controls for Toast locations. This error is not a Punchh supplied error, meaning that the root of the error would be within the POS/Integration - as such resolution would come from the Toast team.