Linked Account System with Automatic Sweep Reconciliation

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Solution Overview

Problem

Consumers face limitations with traditional credit and debit cards, including concerns over interest charges, overdraft risks, and lack of rewards, as well as the need for flexible financial instruments that allow purchases from demand deposit accounts without requiring specific bank services.

Innovation Solution

A linked account system that allows cardholders to make purchases using a cash account backed by a credit account, with daily 'open to buy' limits, automatic sweeps to reconcile transactions, and the option for overdraft protection, enabling purchases from any financial institution and offering rewards.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Object-affected harmful factors

If a debit card is used to make purchases from a demand deposit account, then the consumer can avoid interest charges and credit card debt, but the consumer cannot access funds if the account balance is insufficient and cannot earn rewards

Engineering Contradiction:

Improveinterest charges and credit card debtVSAvoidpurchasing power when cash balance is insufficient

Core Design Contradiction:

Object-affected harmful factorsVSAdaptability or versatility

Solution Approach 1:

The patent combines a debit card system with a credit card system into a single hybrid instrument. The card can operate in debit mode when cash is available and automatically switch to credit mode when cash is insufficient, merging the advantages of both card types into one versatile payment tool

Inventive Principle:

Principle #5Merging (Combining)

Solution Approach 2:

The hybrid card serves multiple functions: it acts as a debit card when cash balance is sufficient and as a credit card when cash balance is insufficient. This multi-functionality allows the same card to provide both cash-based purchasing power and credit-based purchasing power without requiring separate cards

Inventive Principle:

Principle #6Universality (Multi-functionality)

2Adaptability or versatility

If a credit card is used to make purchases, then the consumer can access purchasing power beyond immediate cash and earn rewards, but the consumer incurs interest charges and outstanding account balances

Engineering Contradiction:

Improvepurchasing power in excess of immediate ability to payVSAvoidinterest charges on purchases

Core Design Contradiction:

Adaptability or versatilityVSObject-generated harmful factors

Solution Approach 1:

The system dynamically switches between debit and credit modes based on real-time cash balance conditions. The card automatically transitions from credit mode (when cash is sufficient) to debit mode (when cash is insufficient), optimizing the use of available resources and minimizing interest charges by prioritizing cash payments

Inventive Principle:

Principle #15Dynamics

3Ease of operation

If a debit card is used, then the consumer can make purchases with cash account funds, but the consumer cannot use the card if the bank does not offer debit card services

Engineering Contradiction:

Improvepurchases with cash account fundsVSAvoidcompatibility across different banks

Core Design Contradiction:

Ease of operationVSAdaptability or versatility

Solution Approach 1:

The hybrid card system provides universal compatibility by working with demand deposit accounts at any financial institution, not just the issuing bank. The card can access funds from external banks' DDAs through automated clearing house networks, making it universally applicable across different banks regardless of their debit card offerings

Inventive Principle:

Principle #6Universality (Multi-functionality)

4Adaptability or versatility

If overdraft protection is offered with a debit card, then the consumer can continue purchases when cash is insufficient, but the consumer may max out the credit line without awareness and face repayment difficulties

Engineering Contradiction:

Improvecontinuous purchasing capabilityVSAvoidconsumer awareness of credit line status

Core Design Contradiction:

Adaptability or versatilityVSReliability

Solution Approach 1:

The system provides continuous feedback to the cardholder about their cash balance, credit line status, and available purchasing power. The cardholder receives notifications when cash balance is insufficient and when approaching credit limits, enabling informed decision-making and preventing unexpected repayment difficulties

Inventive Principle:

Principle #23Feedback

Data Source

PatentUS8015084B1System and method for linked account having sweep feature

Publication Date: 2011.09.06 CHASE MANHATTAN BANK USA NAT ASSOC

AI summary

A linked account instrument is used to access funds in an existing demand deposit account held at a financial institution. Merchant or other transactions are first processed against a demand deposit account via an electronic authorization network. If the demand deposit account does not have sufficient funds, the transactions may be processed as a credit charge against a designated credit account. The demand deposit account may subsequently be swept at predetermined times in search of funds to defray the overdraft. If adequate funds are present, they will be withdrawn from the demand deposit account, and the credit account will be cleared. Otherwise, the instrument holder's daily purchasing abilities may be temporarily suspended until the credit account is settled. The processing of overdraft amounts may be on a FIFO, smallest-first or other basis.