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.
Please note the Toast team developed the Toast > Punchh integration. As a result, there are minimal configurations that Punchh has access to. Involving Toast support is imperative to solving issues that arise.