Distributed Ledger Loyalty Payments for Cross-Merchant Point Redemption
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Solution Overview
Problem
Consumers face the inconvenience of carrying multiple loyalty cards and forgetting to use accumulated points, while merchants struggle with managing and tracking loyalty points across different networks, leading to inefficiencies and increased costs.
Innovation Solution
A decentralized loyalty points payment system using distributed ledgers, such as blockchains, enables consumers to earn and redeem points seamlessly across different merchants and networks, with a shared ledger system that ensures transparent, efficient, and standardized transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If each merchant issues its own specific loyalty card, then the merchant can track and incentivize customer loyalty, but the consumer is overwhelmed with carrying multiple physical loyalty cards for different merchants
Solution Approach 1:
The patent merges multiple merchant-specific loyalty cards into a single unified loyalty card that can be used across multiple merchants. The system combines separate loyalty programs under one card identifier, allowing consumers to accumulate and redeem points from various merchants without carrying multiple physical cards.
Solution Approach 2:
The loyalty card is designed with universal functionality to work across different merchant networks. The card can store and manage loyalty points from multiple merchants, and the system provides versatile redemption options including cash back, discounts, and gift cards, making the single card adaptable to various usage scenarios.
2Reliability
If loyalty points are tracked in a closed-loop system at a specific merchant, then the merchant can maintain control over point allocation and redemption, but the consumer may forget to use loyalty points when shopping at that specific merchant
Solution Approach 1:
The system implements feedback mechanisms that notify consumers about their accumulated loyalty points and redemption opportunities. The unified loyalty card provides real-time or periodic updates to consumers about available points, encouraging them to use points before shopping at participating merchants.
Solution Approach 2:
The system allows consumers to accumulate loyalty points in advance across multiple merchants before redemption. Points are stored and managed proactively in the unified loyalty card, so consumers have points ready and available when they shop, eliminating the need to remember to use points at specific merchants.
3Ease of manufacture
If merchants use standalone devices for loyalty card transactions, then the merchant can process loyalty point redemptions, but the system lacks integration with online and external merchant networks
Solution Approach 1:
The loyalty card system is designed with universal compatibility to work across multiple networks and platforms. The card can be used not only at standalone merchant devices but also online and at external merchants through integrated networks, providing multi-functional access to loyalty points regardless of the transaction channel.
Solution Approach 2:
The patent introduces an intermediary clearinghouse or network layer that connects standalone merchant devices with online platforms and external merchant networks. This intermediary enables seamless communication and point validation across different systems, allowing the loyalty card to function universally without requiring direct integration between all merchants.
4Device complexity
If consumers redeem loyalty points at the issuing merchant only, then the merchant can maintain a simple closed-loop system, but consumers cannot redeem points at other merchants both inside and outside the issuer's network
Solution Approach 1:
The loyalty card system provides universal redemption capability across multiple merchant networks. Consumers can redeem points not only at the issuing merchant but also at other merchants within the same network and at external merchants through partnered networks, significantly expanding redemption flexibility while maintaining manageable system complexity through standardized processing.
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.