Loyalty Program Management via Association Network Infrastructure
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Solution Overview
Problem
Small businesses face high costs and limitations in implementing loyalty programs due to the need for unique hardware or software at point of sale, making it difficult for them to compete with larger chains, and open loop programs do not provide merchant-specific rewards or facilitate discounts at the time of purchase.
Innovation Solution
A system and method utilizing a pre-existing association network, such as a credit card network, to track consumer information and process rewards, allowing for merchant-specific and non-merchant specific rewards without requiring special hardware or software at the merchant's point of sale, by registering consumers with a loyalty program, processing transaction messages, and facilitating reward identification.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If a closed loop loyalty program is implemented using traditional merchant-specific databases and hardware, then merchant-specific rewards and real-time discounts can be provided, but the cost and complexity of the system increases significantly
Solution Approach 1:
The patent uses the association network (credit card network) as an intermediary to handle loyalty program transactions. Instead of requiring merchants to implement their own loyalty databases and hardware, the system leverages the existing association network infrastructure to process reward point accrual and redemption, eliminating the need for complex merchant-specific systems while maintaining merchant-specific rewards capability
Solution Approach 2:
The system makes the association network perform multiple functions: it continues to process payment transactions while also handling loyalty program transactions, reward point accrual, and reward redemption. This eliminates the need for separate dedicated loyalty program infrastructure at merchants, reducing complexity while maintaining adaptability
2Reliability
If traditional closed loop loyalty systems are deployed, then loyalty tracking and reward processing can be achieved, but small businesses cannot afford the overhead costs
Solution Approach 1:
The system allows merchants to participate in loyalty programs without actively managing the infrastructure. The association network and program manager handle all loyalty program operations automatically, with merchants simply needing to accept association network payments. This eliminates the need for merchants to invest in or maintain loyalty program systems, making reliable loyalty tracking accessible to small businesses
Solution Approach 2:
The patent combines payment processing and loyalty program management into a single transaction flow through the association network. By merging these functions, the system eliminates the need for separate loyalty program infrastructure, reducing implementation costs while maintaining full loyalty program functionality for merchants of all sizes
3Device complexity
If open loop loyalty programs are used, then system simplicity and low cost are achieved, but merchant-specific rewards and real-time discount capabilities are lost
Solution Approach 1:
The patent segments the loyalty program functionality into different layers: the association network handles transaction processing, while the program manager handles reward logic and merchant-specific configurations. This segmentation allows the system to maintain simplicity at the infrastructure level while enabling complex merchant-specific rewards through software configuration rather than hardware complexity
Data Source
AI summary
A system and method for providing a loyalty program by utilizing a pre-existing association network. When a consumer is registered with the program, the consumer's personal information is stored in a database and associated with a token ID. The token is capable of initiating a transaction message request over an association network when used in conjunction with a merchant transaction system. A program manager is provided that includes an association network interface for receiving over the association network the transaction request message initiated by the token at a merchant, where the transaction request message includes a first set of transaction information regarding a consumer-initiated product purchase transaction. The program manager is then configured to store the first set of transaction information, transmit to the merchant a response message that includes an indication that the token cannot provide tender for a product purchase, and utilize the first set of transaction information to facilitate the identification of one or more rewards for the consumer.