Distributed Ledger Loyalty Payments Across Merchant Networks
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Solution Overview
Problem
Consumers face the inconvenience of carrying multiple loyalty cards and forgetting to use points at specific merchants, while merchants struggle with managing and tracking loyalty points across different networks, leading to a need for a seamless and efficient loyalty points payment system that can be redeemed across various merchants and networks.
Innovation Solution
A decentralized system using distributed ledgers, such as blockchain, to manage and process loyalty points transactions, enabling consumers to earn and redeem points across different merchants through a unified payment network, with smart contracts ensuring transparent and immutable transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If each merchant issues its specific loyalty card in a closed-loop system, then the merchant can track and manage loyalty points for its customers, but consumers are overwhelmed with carrying multiple physical loyalty cards for different merchants
Solution Approach 1:
The patent implements a universal loyalty card system where a single card can be used across multiple merchants participating in the distributed ledger network. The loyalty card contains a unique identifier that can be recognized by any merchant node in the network, allowing the card to serve multiple functions across different merchants rather than requiring separate cards for each merchant.
Solution Approach 2:
The distributed ledger acts as an intermediary between consumers and merchants, eliminating the need for merchants to directly issue and manage physical loyalty cards. The ledger stores and verifies loyalty point balances, converting the system from merchant-centric card issuance to a decentralized verification model where the intermediary ledger handles tracking while consumers use a universal card.
2Reliability
If consumers use standalone devices with physical loyalty cards at merchant POS systems, then loyalty points can be redeemed at the specific issuing merchant, but the system lacks interoperability with merchants outside the issuer's network
Solution Approach 1:
The loyalty card is designed with universal compatibility, containing identifiers and cryptographic keys that work with any merchant node in the distributed ledger network. This allows the same card to redeem points at the issuing merchant as well as at other merchants who have joined the network, providing both reliable redemption and broad interoperability.
Solution Approach 2:
The patent replaces the mechanical closed-loop system where physical cards are manually verified at POS terminals with a digital distributed ledger system. The verification process is substituted from manual card-swiping and database queries to automated cryptographic verification of digital signatures and ledger entries, enabling seamless interoperability across network boundaries.
3Adaptability or versatility
If merchants use traditional centralized loyalty card systems, then they can manage their own loyalty programs, but the system complexity increases with multiple standalone devices and manual tracking processes
Solution Approach 1:
The patent extracts the centralized loyalty card management functionality from individual merchant systems and places it in the distributed ledger network. Each merchant no longer needs standalone devices for card issuance and tracking; instead, they interact with the shared ledger through standardized interfaces, reducing device complexity while maintaining program flexibility through smart contracts.
Solution Approach 2:
Multiple independent merchant loyalty systems are merged into a single distributed ledger infrastructure. The ledger combines the functions of card issuance, point allocation, balance tracking, and verification across all participating merchants, eliminating the need for each merchant to maintain separate complex systems while allowing each to configure their own reward programs.
4Device complexity
If consumers manually track and remember to use loyalty points at specific merchants, then loyalty programs can be maintained with simple systems, but consumer participation decreases due to the burden of manual tracking
Solution Approach 1:
The distributed ledger system automatically performs loyalty point tracking, verification, and redemption without requiring consumer intervention. The system self-manages balance updates, validates point availability, and processes redemptions transparently, eliminating the burden of manual tracking from consumers while maintaining system simplicity through automated protocols.
Data Source
AI summary
Decentralized computer systems and methods are disclosed for establishing and conducting payment processing with loyalty points using distributed ledger. One method includes: receiving a consumer identification, an issuer identification, and transaction information from a point of sale system when the loyalty card is presented for a transaction of a good or service at a merchant, identifying the network node containing distributed ledger associated with the issuer according to received issuer identification prompting, to participants of the shared ledger, to validate whether the consumer distributed ledger has required loyalty points for the transaction; if all of the participants of the shared ledger accepts the transaction, generating, a new immutable entry to the distributed ledger for the transaction with remaining loyalty points in the loyalty card after deducting the points required for the transaction; and sending a transaction approved message to the point of sale system at the merchant.