Fuel Discounting System Immediate Reward Redemption
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Solution Overview
Problem
Existing affinity-type credit card programs fail to provide immediate rewards, leading to delayed redemption and inefficiencies in promoting cross-marketed products like fuel, as rewards are typically posted on monthly statements or require complex redemption processes.
Innovation Solution
A computer-implemented method and system that reads a customer's credit or debit card number to identify the issuer and associate it with a price-per-unit (PPU) discount for fuel, applying the discount immediately at the fuel dispenser and allocating its value between the merchant and issuer, allowing customers to redeem rewards as immediate discounts without additional steps.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of time
If rewards are posted on monthly statements or require complex redemption processes, then the issuer can control and allocate discount values, but the customer cannot receive immediate rewards and must take additional steps to redeem
Solution Approach 1:
The system pre-loads discount values onto the customer's account before the purchase transaction occurs. When the customer presents their card at the fuel pump, the discount is automatically applied without requiring any redemption steps. This preliminary action eliminates both the time delay and operational complexity of traditional reward programs.
Solution Approach 2:
The system enables customers to automatically receive and apply their own rewards without manual intervention. The card reader automatically identifies the customer's account, retrieves pre-loaded discount values, and applies them to the transaction. This self-service mechanism eliminates the need for complex redemption processes while providing immediate rewards.
2Productivity
If discounts are applied immediately at the point of purchase, then customer satisfaction and sales increase, but the settlement and allocation between merchant and issuer becomes more complex
Solution Approach 1:
The system introduces a centralized server as an intermediary that manages the settlement process between fuel merchants and card issuers. The server receives transaction data from card readers, calculates discount allocations based on pre-established agreements, and automatically settles accounts. This intermediary simplifies the complexity by centralizing the settlement logic rather than requiring complex point-of-sale systems at each merchant location.
Solution Approach 2:
The system replaces complex manual settlement processes with automated electronic communication and calculation. Card readers electronically transmit transaction data to the server, which automatically calculates allocations and processes settlements. This substitution of electronic automation for manual mechanical processes reduces complexity while enabling immediate discount application and increased sales productivity.
3Reliability
If traditional cash back programs are used with limitations on use, then the issuer retains control over reward distribution, but the program becomes less effective in driving immediate purchases
Solution Approach 1:
The system applies different qualities to different parts of the reward system: the card issuer maintains centralized control over discount value allocation and settlement terms, while the customer experiences localized immediate benefits at the point of purchase. The fuel merchant receives immediate payment at the posted price without having to front discount costs. This local quality differentiation maintains issuer control while dramatically improving purchase incentive effectiveness.
Data Source
AI summary
A system and method of discounting a price-per-unit (PPU) of fuel during a fueling transaction by a customer at a fuel merchant. In one aspect, the invention identifies an issuer of the customer's credit card, associates the issuer with a PPU discount for the fuel, and discounts the posted PPU by an amount equal to the PPU discount associated with the identified credit card issuer. In another aspect, the invention determines that the customer participates in a reward program with a vendor with whom the fuel merchant has a relationship agreement for providing PPU discounts for fuel in exchange for redeemed reward points from the reward program. The customer's reward points are converted to a PPU discount, and the posted PPU of the fuel is discounted accordingly.