Multi-Vendor Loyalty Currency Program via Standardized Data Protocol
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Solution Overview
Problem
Loyalty programs face challenges in targeting consumers effectively due to limited interaction and collaboration among participants, restricted feature settings, and lack of uniformity in transaction data handling, which hampers accurate communication and customization opportunities.
Innovation Solution
A loyalty program is implemented within a payment processing system that compares transaction data to a loyalty database to calculate and store loyalty rewards, using a standardized communication protocol to facilitate data transfer and manage loyalty accounts, allowing for customization and access via a customer-facing channel.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If a merchant participates in a co-branded credit card loyalty program with limited features set by the issuing bank, then the merchant can receive basic loyalty program support, but the merchant is precluded from finely targeting desired consumers with customized incentives
Solution Approach 1:
The loyalty program is segmented into multiple independent feature modules (e.g., bonus mile ratios, redemption options, credit limits) that can be individually selected and configured. This allows merchants to choose only the features they need rather than being constrained by a bundled program structure, enabling fine-tuned targeting of desired consumers while maintaining program simplicity through modular assembly.
Solution Approach 2:
The loyalty program features are made dynamic and adjustable rather than fixed. Merchants can modify program parameters such as bonus mile ratios and redemption options based on their specific needs and consumer targeting goals. This dynamic configuration capability allows the program structure to adapt to different merchant requirements without requiring complete program redesign.
2Loss of information
If financial institutions rely on their own limited transaction data records to determine consumer incentives, then they can process transactions independently, but they lack access to the full scope of transaction data needed for effective loyalty program targeting
Solution Approach 1:
The system merges transaction data processing capabilities across multiple financial institutions and participants into a centralized loyalty program platform. This consolidation allows all participants to access the full scope of transaction data through a unified data repository, eliminating data silos while maintaining efficient processing through standardized data formats and centralized management.
Solution Approach 2:
A centralized loyalty program platform acts as an intermediary between financial institutions and consumers, mediating data access and processing. This intermediary consolidates transaction data from multiple sources and provides standardized access to all participants, enabling effective loyalty program targeting without requiring each institution to independently process and share data directly.
3Adaptability or versatility
If each participant in the loyalty program processes transaction data in different formats, then participants can maintain their existing data processing systems, but accurate communication between participants is hampered
Solution Approach 1:
The loyalty program platform implements a universal standardized data format that can handle transaction data from multiple sources with different existing formats. This universal format serves as a common language for all participants, enabling accurate communication and data exchange while maintaining compatibility with various participant systems through standardized mapping and conversion protocols.
Data Source
AI summary
Loyalty programs can be operated within a payment processing system having multiple vendors, thereby providing access to detailed transaction data and with the flexibility for customization of the loyalty programs themselves, by establishing a communication for the transfer of data via a customer-facing channel. When the payment processing system processes a transaction between a merchant and an account holder, in addition to obtaining payment for the merchant from the account via an acquirer and an issuer, respectively, a transaction handler tabulates and stores different types of loyalty currencies in a loyalty reward account associated with the account holder if the account holder is enrolled in a loyalty program and criteria for applying the loyalty program are satisfied. The account holder is provided access to the loyalty account via the customer-facing channel.