Consumer Loyalty Management via Payment Network Intermediation
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Solution Overview
Problem
Current loyalty programs are limited by requiring customers to register and provide personal information for a unique identifier, which can lead to low participation and inefficient tracking and rewards, as well as being merchant-specific, limiting marketing engagement and flexibility.
Innovation Solution
A consumer loyalty management system that uses a consumer loyalty server to provide programless loyalty management services, allowing multiple merchants to offer loyalty-based services without hosting or managing the technology, using transaction-related information to apply stored benefits across various merchants and payment vehicles, and tracking non-purchase behavioral data to enhance loyalty offerings.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If customers register and provide personal information for a unique identifier, then loyalty tracking and rewards can be implemented, but customer participation decreases and the process becomes more complex
Solution Approach 1:
The system automatically identifies customers and applies loyalty benefits without requiring manual registration or providing unique identifiers. The payment processing system itself serves the loyalty function by automatically matching transaction data with consumer profiles and applying stored benefits, eliminating the need for customers to actively participate in enrollment processes
Solution Approach 2:
The system uses the payment network and processor as intermediaries to bridge the gap between merchants and consumers. Instead of requiring direct customer registration with the merchant, the payment system mediates by automatically identifying consumers through their payment instruments and facilitating loyalty program participation through the existing payment infrastructure
2Reliability
If merchants host and manage their own loyalty programs, then program control is maintained, but technological complexity and operational burden increase
Solution Approach 1:
The payment network serves as a centralized intermediary that provides loyalty program infrastructure and processing capabilities. Merchants don't need to build or manage their own loyalty technology; instead, they leverage the payment network's existing systems to offer loyalty programs, transferring the technological burden from individual merchants to the payment infrastructure
Solution Approach 2:
The payment network performs multiple functions including payment processing, consumer identification, loyalty program management, and benefit application through a single unified system. This multi-functional platform eliminates the need for separate loyalty program infrastructure at each merchant, reducing overall system complexity while maintaining program control
3Adaptability or versatility
If loyalty programs are unique to a single merchant, then program specificity is maintained, but marketing engagement and flexibility are limited
Solution Approach 1:
The payment network provides a universal loyalty platform that can be used across multiple merchants and industries. Consumer profiles and loyalty benefits established through one merchant can be applied at other merchants, creating a multi-merchant loyalty ecosystem that increases marketing flexibility without requiring separate program structures for each merchant
Solution Approach 2:
The system merges multiple loyalty programs into a unified framework where consumer data, profiles, and benefits are consolidated in a centralized database. This merging allows different merchants to participate in a shared loyalty infrastructure, enabling cross-merchant marketing engagement while maintaining individual program specificity through configurable parameters
Data Source
AI summary
Technologies for providing consumer loyalty to merchants are provided. Payment transactions are monitored based on communications received from point of sale systems of merchants. Based on loyalty-based rules for the merchant, the purchase transaction can be modified to provide a stored benefit to the consumer. Tracking loyalty-based activity based on payment transactions can reduce the necessity for consumer involvement or registration with a merchant's loyalty program while increasing a merchant's ability to provide the consumer in meaningful marketing engagements.