Short-Term Authorized Pass for Gift Card Liability Reduction
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Solution Overview
Problem
Gift card redemption rates are low, leading to unredeemed funds remaining as liability for companies, with givers unaware of card usage and recipients facing losses, causing customer dissatisfaction and potential bad publicity.
Innovation Solution
A short-term authorized pass system allows gift givers to create a credit pass from their own account, track usage, cancel if lost, and receive rewards, providing transparency and control over the gift card experience.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional gift cards are issued, then the giver can provide a thoughtful gift, but the money is spent by the giver regardless of whether the gift card is redeemed and unredeemed money remains as outstanding liability
Solution Approach 1:
The patent transforms static gift cards into dynamic authorized passes with real-time tracking and management capabilities. The system allows givers to monitor usage, set expiration dates, and adjust pass parameters dynamically, thereby improving redemption rates and reducing unredeemed liabilities through active management rather than passive issuance.
Solution Approach 2:
The system implements continuous feedback loops where givers receive real-time notifications about pass usage, location, and status. This feedback mechanism enables givers to take corrective actions (such as canceling lost passes or encouraging unused passes to be redeemed), directly addressing the redemption rate problem and reducing financial liability.
2Ease of operation
If traditional gift cards are issued, then the recipient receives a gift, but the giver is unaware of card usage and recipients face losses from lost or unused cards
Solution Approach 1:
The system provides real-time feedback to givers about their authorized passes, including usage status, location data, and expiration information. This eliminates the information asymmetry in traditional gift cards where givers are completely disconnected from card status, enabling them to make informed decisions about their gifts.
Solution Approach 2:
The patent introduces a digital intermediary platform (mobile device-based system) that mediates between the giver and the authorized pass. This intermediary continuously communicates pass status, usage details, and location information to the giver, solving the information loss problem without requiring direct connection between giver and recipient.
3Adaptability or versatility
If gift cards are made redeemable at any time, then recipients have flexibility, but companies face ongoing liability for unredeemed funds
Solution Approach 1:
The system dynamically manages pass validity through configurable expiration dates and conditions. Unlike traditional gift cards with fixed or indefinite validity, authorized passes can be set to expire after specific time periods, upon reaching usage thresholds, or under other customizable conditions, balancing recipient flexibility with company liability management.
Solution Approach 2:
The patent enables parameter changes in pass validity by allowing givers to set and modify expiration dates, usage limits, and activation conditions. This flexibility in parameters allows companies to reduce long-term liability while maintaining adequate redemption flexibility for recipients through adjustable time and usage parameters.
Data Source
AI summary
A short-term authorized pass is disclosed. The method receives a request for a short-term authorized pass to be generated from a credit account of a first party and provided to a second party, the request includes an amount allocated to the short-term authorized pass. A sub-account is generated from the credit account by allocating a part of the credit account to form the sub-account. The credit limit on the sub-account is set to the amount identified by the first party, a virtual account number (VAN) is assigned to the sub-account, and the VAN of the sub-account is linked to the credit account. The short-term authorized pass is generated, using the VAN of the sub-account, and is provided to the second party. However, no funds are taken from the credit account of the first party until the short-term authorized pass is used.