Third Party Merchant-Funded Rewards Network Using Prepaid Tokens
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Solution Overview
Problem
Current merchant-funded rewards programs are impractical due to the need for merchants to partner with numerous card issuers and acquiring banks, limiting program flexibility and consumer participation, as well as concerns over data processing and consumer privacy.
Innovation Solution
A third-party administered rewards program using prepaid payment tokens linked to users' payment devices, allowing merchants to manage rewards criteria and deliver rewards directly to consumers without requiring partnerships with multiple issuers or banks, leveraging payment processing networks like VisaNet for transaction data management.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If merchants partner with multiple card issuers and acquiring banks to establish rewards programs, then the rewards program can be implemented, but the device complexity and operational burden increase significantly
Solution Approach 1:
The patent introduces a payment processing network as an intermediary that centralizes the rewards program administration. Instead of merchants directly partnering with multiple issuers and acquiring banks, the payment processing network serves as a single mediator that handles transaction data collection, reward determination, and distribution across the entire network, thereby simplifying the partnership structure while maintaining program reliability
Solution Approach 2:
The patent merges the functions of multiple issuers and acquiring banks into a centralized rewards administration system operated by the payment processing network. This consolidation combines transaction processing, reward calculation, and consumer management into a single unified system, reducing the complexity of managing separate partnerships with numerous financial institutions
2Adaptability or versatility
If merchants establish rewards programs with multiple issuers, then more consumers can potentially participate, but the ease of operation and flexibility decrease
Solution Approach 1:
The payment processing network implements a universal rewards program that serves all consumers across multiple issuers and acquiring banks through a single system. The network's centralized platform handles diverse transaction types and consumer accounts uniformly, maintaining broad adaptability and consumer reach while simplifying operations through standardized processes applicable to all participants
3Reliability
If acquiring banks process transaction data for rewards determination, then rewards can be awarded, but the adaptability and flexibility of reward criteria decrease
Solution Approach 1:
The patent implements dynamic reward criteria that can be adjusted in real-time by merchants through the payment processing network's centralized system. The network's platform allows flexible modification of reward thresholds, percentages, and eligibility rules without requiring changes to underlying banking infrastructure, enabling adaptive reward programs that respond to changing business needs while maintaining reliable automated distribution
Data Source
AI summary
Systems and methods for administering merchant funded third-party administered rewards programs are provided. The system receives information about a transaction made using a payment device and determines whether the payment device is enrolled in the rewards program. If the payment device is enrolled in the rewards program, the system determines if the transaction qualifies for a reward. If the transaction qualifies for the reward, the system determines a rewards value for the transaction. Thereafter, the system determines a prepaid payment token associated with the payment device and instructs an issuer of the prepaid payment token to load the rewards value onto the prepaid payment token.