Decentralized Loyalty ID Ledger for Low-Cost Multi-Merchant Rewards

Solution Overview

Problem

Payment networks face high costs and limitations due to traditional payment models, including costly secure protocols and infrastructure, and existing loyalty point systems are limited in their applicability and functionality.

Innovation Solution

A decentralized loyalty ID system using blockchain technology for loyalty point distribution, enabling peer-to-peer transactions, multi-merchant partnerships, and enhanced security through smart contracts and decentralized workflows.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If traditional payment network infrastructure and secure protocols are implemented, then transaction security and reliability are improved, but network costs and fees charged to merchants increase

Engineering Contradiction:

Improvetransaction securityVSAvoidnetwork costs

Core Design Contradiction:

ReliabilityVSLoss of energy

Solution Approach 1:

The patent introduces a payment network as an intermediary layer between merchants and financial institutions, which manages transactions, security protocols, and loyalty point distributions. This intermediary handles the complex security and coordination tasks, allowing merchants to benefit from reliable transactions without bearing the full burden of implementing and maintaining expensive security infrastructure themselves.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The payment network infrastructure is designed to perform multiple functions: processing transactions, managing loyalty points, coordinating between multiple merchants, and maintaining security protocols. By consolidating these diverse functions into a single multi-functional platform, the system avoids the need for separate specialized systems for each function, thereby reducing overall infrastructure costs while maintaining reliability.

Inventive Principle:

Principle #6Universality (Multi-functionality)

2Ease of manufacture

If traditional centralized loyalty point systems are used, then implementation is straightforward, but loyalty point usage is limited to a few merchants and functionality is restricted

Engineering Contradiction:

Improvesystem implementationVSAvoidloyalty point usage

Core Design Contradiction:

Ease of manufactureVSAdaptability or versatility

Solution Approach 1:

The loyalty point system is designed as a universal platform that can be used across multiple merchants and various transaction types. The system supports different distribution methods (transaction-based, non-transaction-based), accommodates multiple merchants through decentralized loyalty IDs, and enables flexible redemption options. This multi-functionality allows the same infrastructure to serve diverse needs while maintaining ease of implementation through standardized processes.

Inventive Principle:

Principle #6Universality (Multi-functionality)

Solution Approach 2:

The system segments loyalty points into different types and distributions associated with specific merchants or partnerships, while maintaining a unified underlying infrastructure. Each merchant can have customized loyalty programs with their own rules and rewards, yet all operate on the same technical platform. This segmentation allows versatility in usage while leveraging the efficiency of a standardized implementation approach.

Inventive Principle:

Principle #1Segmentation

3Adaptability or versatility

If decentralized loyalty ID system with blockchain is implemented, then adaptability and functionality are improved, but system complexity increases

Engineering Contradiction:

Improveloyalty point distributionVSAvoidsystem architecture

Core Design Contradiction:

Adaptability or versatilityVSDevice complexity

Solution Approach 1:

The patent introduces a payment network as an intermediary layer between merchants and financial institutions, which manages transactions, security protocols, and loyalty point distributions. This intermediary handles the complex security and coordination tasks, allowing merchants to benefit from reliable transactions without bearing the full burden of implementing and maintaining expensive security infrastructure themselves.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The payment network infrastructure is designed to perform multiple functions: processing transactions, managing loyalty points, coordinating between multiple merchants, and maintaining security protocols. By consolidating these diverse functions into a single multi-functional platform, the system avoids the need for separate specialized systems for each function, thereby reducing overall infrastructure costs while maintaining reliability.

Inventive Principle:

Principle #6Universality (Multi-functionality)

Data Source

PatentUS12561712B2Loyalty point distributions using a decentralized loyalty ID

Publication Date: 2026.02.24 AMERICAN EXPRESS TRAVEL RELATED SERVICES CO INC

AI summary

A blockchain-based loyalty point distribution system may be configured to provide decentralized loyalty IDs. In one example, a system comprising a computing device that is configured to determine that a reward event has been initiated by a user and invoke executable code to display a user interface for selecting a loyalty provider for storing the reward event. The loyalty provider for storing the reward event is identified and the executable code is invoked to display a login page for the selected loyalty provider. A loyalty ID is determined and a customer reward to be written to a blockchain based at least in part on a public key.