Blockchain Loyalty Point Distribution via Smart Contracts
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Solution Overview
Problem
Traditional payment networks face increased costs and limitations due to secure protocols and infrastructure costs, which are further exacerbated by programs like loyalty points, especially when limited to few merchants.
Innovation Solution
A system for multi-merchant loyalty point partnerships using a distributed database, where a partnership smart contract is created and propagated on a blockchain, enabling transactions and loyalty point adjustments across multiple merchants.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional payment network infrastructure and secure protocols are implemented, then transaction security and reliability are ensured, but network costs and fees charged to merchants increase significantly
Solution Approach 1:
The patent introduces a distributed ledger (blockchain) as an intermediary layer between merchants and the payment network. This ledger autonomously records and validates transactions, eliminating the need for expensive traditional payment network infrastructure and secure protocols while maintaining transaction reliability through cryptographic verification and consensus mechanisms.
Solution Approach 2:
The system enables merchants to autonomously manage loyalty point partnerships and transactions through smart contracts deployed on the distributed ledger. The smart contracts automatically execute transaction validation, loyalty point allocation, and partnership management without requiring payment network intervention, thereby reducing infrastructure costs while ensuring transaction security through decentralized consensus.
2Device complexity
If loyalty points are limited to a few merchants, then program management complexity is reduced, but customer incentive effectiveness and program versatility are limited
Solution Approach 1:
The patent creates a universal loyalty point system where points earned at one merchant can be redeemed at multiple participating merchants through the distributed ledger. The smart contracts enable seamless point transfer and validation across merchant boundaries, allowing a single loyalty program to serve multiple merchants and customers simultaneously, thereby dramatically increasing program versatility without proportionally increasing management complexity.
Solution Approach 2:
The system segments the loyalty point management into independent smart contract modules that can be individually configured for each merchant partnership. This modular approach allows merchants to join or leave the network independently, and enables flexible configuration of point earning and redemption rules for different partnerships, reducing overall program management complexity while maintaining high versatility.
Data Source
AI summary
A blockchain-based multi-merchant loyalty point partnership system may include a blockchain API host that is configured to generate a reward based at least in part on transaction data received from a web site. In one example, a system is configured to receive a loyalty account and transaction data for a completed purchase from a loyalty partner site. A partnership smart contract is executed to validate that the transaction data meets a purchase requirement parameter of the partnership smart contract. A transaction record is stored which indicates that the loyalty account has the transaction data for meeting the purchase requirement parameter. The transaction record is transmitted to consensus participants associated with the blockchain network.