Closed Loop Gift Card Redemption System
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Solution Overview
Problem
Gift card/codes often go unredeemed due to geographic limitations and personal disinterest, resulting in consumers and merchants not benefiting from their full value, with approximately $8 billion in unused funds annually in the U.S., leading to potential sales losses for merchants.
Innovation Solution
A system that allows closed loop gift card/codes to be redeemed at any merchant point of sale by querying the balance through a multi-process secure gateway, offering a discount price for the card/code, and applying that price to a purchase or providing cash back to the consumer, enabling merchants to accept competitor gift cards as payment and transfer remaining value.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If closed loop gift cards are restricted to specific merchants only, then the merchant can maintain control over their payment system, but consumers cannot redeem the cards at desired merchants leading to unredeemed funds
Solution Approach 1:
The patent introduces a payment processing system that acts as an intermediary between closed-loop gift cards and diverse merchants. This system translates restricted gift card values into universally acceptable payment forms, enabling redemption at any merchant while the system manages the complexity of tracking and validating different gift card balances through centralized processing
2Ease of operation
If merchants accept competitor gift cards, then consumers can redeem cards at desired merchants, but merchants may lose potential sales to competitors
Solution Approach 1:
The patent converts the potentially harmful effect of accepting competitor gift cards into a benefit by implementing a discount mechanism. When a merchant accepts a competitor's gift card, they apply a discount to the transaction, ensuring they still capture some value from the sale while enabling convenient redemption for consumers
3Reliability
If gift cards have geographic limitations and expiration dates, then merchants can control their liability and encourage timely redemption, but consumers waste unredeemed funds
Solution Approach 1:
The patent makes gift cards universally redeemable at any merchant through a centralized processing system. By removing geographic and merchant restrictions while maintaining expiration date tracking, the system allows consumers to use gift cards at any location, significantly reducing unredeemed funds while the system continues to manage merchant liabilities through automated balance tracking
Data Source
AI summary
Disclosed herein are systems, methods, and computer-readable storage media for redeeming a closed loop card/code funded with an amount of money. The system receives, at a merchant, an indication from a consumer of a desire to sell a closed loop account not issued by the merchant and receives a confirmation, via a computing device, of an amount of money in the closed loop account. The system presents the consumer with an offer to buy the closed loop account and receives from the consumer an acceptance of the offer. The system processes the closed loop account to yield a processed closed loop account such as by transferring the account to one of the merchant and an entity and applies a benefit to the consumer based on the processed closed loop account.