Closed Loop Gift Card Redemption via Intermediary Payment Network
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Solution Overview
Problem
Gift card/codes often go unredeemed due to geographic limitations and personal disinterest, resulting in significant unredeemed funds that can escheat to the state, leading to lost sales opportunities 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 on the card's value, and applying that discount to purchases or providing cash back to consumers, enabling merchants to accept competitor gift cards as payment.
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 the gift card cannot be redeemed at other merchants leading to unredeemed funds and lost sales opportunities
Solution Approach 1:
The patent introduces a payment network as an intermediary between the closed-loop gift card system and the open-loop payment infrastructure. This intermediary enables gift cards from one merchant to be redeemed at another merchant's location by routing the transaction through the network, which validates the gift card balance and processes the payment without requiring direct integration between all merchant systems.
Solution Approach 2:
The system enables gift cards to serve multiple functions: they can be used at the original issuing merchant, at other merchants within the same closed loop, and potentially at unrelated merchants through the payment network. This multi-functionality increases redemption opportunities while maintaining the gift card's core payment function.
2Productivity
If merchants accept competitor gift cards, then sales opportunities increase, but the merchant must integrate with multiple payment systems increasing system complexity
Solution Approach 1:
The payment network acts as a mediator that handles the complexity of interfacing with multiple gift card systems. Instead of each merchant integrating directly with every other merchant's gift card system, the network provides a standardized interface that simplifies the integration process and enables merchants to accept various gift cards through a single integration point.
3Loss of energy
If gift cards have geographic limitations, then the issuing merchant can control where funds are spent, but the recipient cannot redeem the card leading to unredeemed funds
Solution Approach 1:
The system transforms the gift card from a location-specific payment instrument into a universally acceptable payment method across multiple merchants and geographic locations. The gift card maintains its value and functionality while gaining the ability to be redeemed at any merchant participating in the network, eliminating geographic restrictions.
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 from a merchant point of sale an indication of use of a closed loop card/code not issued by the merchant and presented by a consumer, queries and receives a confirmation of an amount of money in an account associated with the closed loop card/code, presents the consumer with an offer to buy the closed loop card/code at a discount price, and upon accepting the offer, closes out the closed loop card/code and pays the discount price to the consumer. Paying the discount price can include applying the discount price to a purchase by the consumer at the merchant. The merchant can provide cash back to the consumer for excess value of the discount price over the consumer's purchase. Merchants can apply more than the discount price.