System, Program Product, and Associated Methods to Autodraw for Micro-Credit Attached to Prepaid Card

Abstract

A consumer is prequalified for a line of credit attached to a prepaid card by a lending institution. The lending institution computer makes available draws to the line of credit line in an authorization stream for a proposed purchase using the prepaid card as payment. When the line of credit is accessed, the prepaid card is loaded with an additional value equal to one or more preselected loan increments so that the prepaid card then has a new amount totaling a previous amount plus the amount of value of the one or more preselected loan increments and so that the new amount exceeds or equals the value of a proposed purchase. Next, a new value for the line of credit balance available is determined, accounting for value loaded onto the prepaid card and a preselected loan advance fee for each loan increment loaded onto the prepaid card.

Description

RELATED APPLICATIONS[0001]This application is a continuation of and claims priority and the benefit to U.S. patent application Ser. No. 12 / 417,199, by Ahlers et al., titled “System, Program Product, and Associated Methods to Autodraw for Micro-Credit Attached to a Prepaid Card” filed on Apr. 2, 2009, which claims priority to and the benefit to U.S. Provisional Patent Application Ser. No. 61 / 042,612, by Ahlers et al., titled “System, Program Product, and Associated Methods to Autodraw for Micro-Credit Attached to a Prepaid Card” filed on Apr. 4, 2008, each incorporated herein by reference in its entirety. This application also relates to: U.S. Provisional Patent Application Ser. No. 61 / 016,213, by Sorbe et al., titled “Transfer Account Systems, Computer Program Products, and Associated Methods” filed on Dec. 21, 2007; U.S. Provisional Patent Application Ser. No. 61 / 052,454, by Sorbe et al., titled “Transfer Account Systems, Computer Program Products, and Methods to Prioritize Payment...

AI Technical Summary

Benefits of technology

[0010]According to other embodiments of the present invention, the consumer initiating engagement of approval can include, for example, the consumer opting in to a program with the lending institution using a written correspondence from the consumer, a consumer selection on a website, a telephone conversation with an interactive voice response unit, a telephone conversation with a customer service representative, a mobile phone, or a combination thereof as understood by those skilled in the art. That is, embodiments of the present invention provide numerous flexible and convenient ways to initiate consumer engagement of predetermined prepaid card approval. A line of credit amount, for example, can be established based on direct deposit and preselected underwriting formula, as understood by those skilled in the art, that use the amount of direct deposits, among other factors, to determine the size of the credit line available.

[0012]By prequalifying the consumer for the line of credit responsive to consumer underwriting data and predetermined qualification parameters and making draws to the line of credit available in the authorization stream for a purchase using the prepaid card as payment, embodiments of the present invention advantageously allow a consumer to avoid the planning and hassle associated with determining the amount of a loan prior to proposing a purchase. Previously, a consumer would have to determine the amount of the loan necessary to fund the proposed purchase, then secure the loan, and only then propose the purchase at a merchant using the prepaid card. If the information necessary to determine the amount of the loan exists only at the merchant, multiple trips to the merchant may be required. Under the embodiments of the present invention, however, multiple trips are not required as the amount of the loan is determined, up to the total loan value, in the authorization stream for a proposed purchase using the prepaid card as payment, resulting in fewer rejections of proposed purchases, less embarrassment for consumers, and reduced cost due to fewer abandoned sales as understood by those skilled in the art. Advantageously, under the embodiments of the present invention, the consumer only pays for what is actually drawn.

[0013]By loading the prepaid card in preselected loan increments, embodiments of the present invention advantageously can guarantee a fee structure that is proportional to the amount of credit accessed. By comparison, an overdraft fee charge by a bank for “bounced” check is often larger than the overdraft amount. Instead, the fee structure according to embodiments of the present invention more closely resembles an automated teller machine (ATM) fee from a consumer's point of view as understood by those skilled in the art. In addition, the use of preselected loan increments can often result in value remaining on the prepaid card, allowing for small transactions without generating additional loan fees. For example, after of a load of a preselected loan increment of $50 and subsequent purchase transaction, the balance on the prepaid card ranges from $0.00 to $49.99.

Problems solved by technology

If there are insufficient funds available in the account associated with the prepaid card to cover the amount of the proposed purchase, the authorization request is denied by the prepaid card processor, and the proposed purchase is rejected by the merchant.

Embarrassed and disappointed, many rejected consumers quickly give up and leave the merchant's premises so that even if a loan or credit were readily available with minimal effort, such as, for example, by placing a short phone call to the prepaid card processor or to a lender, the proposed purchase is abandoned.

Loans, including, e.g., payday loans, payday advances, and other short-term cash advances, however, involve hassles of applying for and obtaining the loan prior to the consumer having access to the funds.

If the loan amount is too small, the consumer may need to obtain an additional loan, with additional fees; if the loan amount is too large, the consumer will needlessly pay extra interest.

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