Closed Loop Gift Card Conversion System
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Solution Overview
Problem
Gift cards with closed-loop systems often go unredeemed due to geographic limitations and personal disinterest, resulting in wasted funds that can escheat to the state, with consumers losing the full value of their purchases.
Innovation Solution
A system that allows users to convert closed-loop gift cards into gift codes with no expiration date, which can be used at multiple merchants, by deactivating the original card and offering the funds at a discount to a second user, utilizing a multi-process secure gateway to communicate with closed-loop card processors and facilitate the transfer of funds.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If closed loop gift cards are issued with geographic limitations and merchant restrictions, then the card value is preserved for specific uses, but the card becomes unredeemable when the recipient cannot or does not wish to use it at those specific merchants
Solution Approach 1:
The patent introduces a third-party platform that acts as an intermediary between the closed-loop gift card system and the user. This platform purchases unredeemed closed-loop gift cards from users and resells them or converts them to open-loop gift cards, thereby mediating the transition from restricted to unrestricted usage and preventing value loss
Solution Approach 2:
Instead of requiring users to actively seek out specific merchants to redeem their gift cards, the system inverts the approach by allowing users to sell their unredeemed cards to the platform, which then handles the redemption process. This reversal of the redemption initiative eliminates the geographic and merchant restriction problems
2Reliability
If gift cards are issued with expiration dates and complex fees, then the card issuer protects against indefinite liability, but the cardholder loses access to funds and experiences reduced value
Solution Approach 1:
The platform performs preliminary actions by purchasing the gift cards before their expiration dates or before fees are applied. This advance purchase prevents the cardholder from experiencing expiration or fee-related value loss, while the issuer's liability is already settled through the purchase transaction
3Quantity of substance
If consumers purchase gift cards with full value, then the cardholder has complete funds available, but unredeemed cards result in complete value loss and escheatment
Solution Approach 1:
The platform enables cardholders to 'discard' their unredeemed closed-loop gift cards through the purchase program, while simultaneously 'recovering' the full card value through the platform's payment. This process prevents the complete value loss that would otherwise occur through escheatment, allowing consumers to recover funds from cards they cannot or do not wish to use at the original merchant
Data Source
AI summary
Disclosed herein are systems, methods, and computer-readable storage media for generating a gift code. The system receives an indication from a first user identifying a closed loop card, receives a confirmation of an amount of money in an account associated with the closed loop card, offers to purchase the closed loop card at an amount less than the amount of money in the account associated with the closed loop card, and upon acceptance of the offer, deactivates the closed loop card. The system then offers to sell the amount of money at a discount rate to a second user, receives acceptance of the offer to sell the amount of money at the discount rate, and associates a gift code with the amount of money for use by the second user. Gift codes can have no expiration date. A multi-process secure gateway can confirm the amount of money.