Loyalty Program Points Exchange for Statement Credits

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Solution Overview

Problem

Existing loyalty programs are costly to administer and fail to effectively reinforce the value of consumer payment devices by not differentiating rewards among specific transactions, merchants, or categories, leading to inefficiencies in reward fulfillment.

Innovation Solution

A loyalty program that allows consumers to pre-select rewards and transactions, exchanging loyalty points for rewards that are credited as statement credits, enabling immediate recognition and reinforcement of loyalty, with merchants able to 'buy down' points costs to differentiate their offerings.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Loss of energy

If traditional cash back rewards are fulfilled as checks or gift cards, then consumers receive their rewards, but the program becomes expensive to administer and fails to reinforce the value of the payment device

Engineering Contradiction:

Improvereward fulfillment costVSAvoidconsumer loyalty reinforcement

Core Design Contradiction:

Loss of energyVSReliability

Solution Approach 1:

The system automatically identifies qualifying transactions and applies rewards through statement credits without requiring manual processing. The consumer's payment device automatically receives rewards for qualifying transactions, eliminating the need for check issuance, gift card fulfillment, or manual redemption processes that traditionally increased administrative costs.

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The patent replaces physical reward fulfillment mechanisms (checks, gift cards, coupons) with an electronic system that automatically credits rewards to the consumer's payment device account. This substitution of mechanical/physical systems with electronic automation reduces administrative overhead and improves efficiency.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

2Ease of manufacture

If statement credits are provided without tying them to particular transactions, then rewards are简单易发, but the connection between the payment device and the reward value is lost

Engineering Contradiction:

Improvereward issuance simplicityVSAvoidtransaction-reward connection

Core Design Contradiction:

Ease of manufactureVSLoss of information

Solution Approach 1:

The system establishes a feedback loop where the consumer can see the direct connection between using their payment device for qualifying transactions and receiving rewards. The statement credit is automatically generated and applied based on transaction data, providing immediate feedback that reinforces the value of using the payment device.

Inventive Principle:

Principle #23Feedback

Solution Approach 2:

The patent introduces an intermediary system (the reward management system) that sits between the transaction processing and the reward issuance. This intermediary automatically matches qualifying transactions with appropriate rewards and applies them as_statement credits, maintaining the connection between transactions and rewards while simplifying the issuance process.

Inventive Principle:

Principle #24Intermediary (Mediator)

3Reliability

If loyalty programs differentiate rewards among specific transactions and merchants, then consumer loyalty is enhanced, but the program complexity increases

Engineering Contradiction:

Improveconsumer loyaltyVSAvoidprogram structure

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent segments the reward program into different categories (merchant-specific rewards, category-specific rewards, and general rewards) that can be automatically applied based on transaction type. This segmentation allows for differentiated rewards without creating a single complex unified system, as each segment can be independently managed and applied.

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The system is designed to handle multiple reward types and differentiation criteria through a single universal platform. The reward management system can universally process various transaction types, merchant categories, and reward structures through standardized processes, reducing overall complexity despite the diversity of reward options.

Inventive Principle:

Principle #6Universality (Multi-functionality)

Data Source

PatentUS11276070B2Transaction evaluation for providing rewards

Publication Date: 2022.03.15 VISA USA INC

AI summary

Loyalty program points are pre-selected by a consumer and exchanged for a corresponding value-added reward also pre-selected by the consumer. The pre-selected reward, which can be a value added back to the consumer payment device, is given when the consumer conducts their pre-selected transaction using their consumer payment device. Loyalty program points can be added back to the consumer payment device, and later exchanged for the consumer pre-selected value-adding rewards, by the consumer's transactional use of their consumer payment device. Consumer pre-selected value-added rewards, for instance, can appear as statement credits to an account associated with the consumer payment device. As such, an incentive exists for the consumer to pre-select a transaction to conduct with their consumer payment device to realize a corresponding pre-selected statement credit for such loyal use of their consumer payment device.