Reward Currency Exchange System with User-Defined Rates
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Solution Overview
Problem
Existing loyalty programs face challenges in enhancing member utility, satisfying program rules, generating additional revenue, and creating an attractive value proposition due to limitations in reward currency exchange solutions that do not allow users to set their own exchange rates and often require intermediary currencies or violate program rules.
Innovation Solution
A system and method that enable two users to exchange reward currency between different loyalty programs at an exchange rate agreed upon by the users themselves, with electronic offers, acknowledgments, and account balance adjustments, while ensuring compliance with program rules and collecting fees for the exchange.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If a fixed exchange rate system is used for reward currency exchange, then the loyalty program can control profitability, but users cannot set their own exchange rates reducing flexibility and member utility
Solution Approach 1:
Instead of the system setting fixed exchange rates (traditional approach), the patent inverts the control mechanism by allowing users to set their own exchange rates. Users submit offers specifying the exchange rate they are willing to accept, and the system matches compatible offers. This inversion resolves the contradiction by providing user flexibility while the system complexity is managed through automated matching algorithms.
Solution Approach 2:
The patent implements dynamic exchange rates that adjust based on user offers and market conditions. Rather than static fixed rates, the exchange rate becomes a variable parameter determined by the interaction between buying and selling offers. This dynamic mechanism allows the system to adapt to changing user preferences and program conditions, resolving the contradiction between flexibility and complexity.
2Ease of operation
If intermediary currency is used for reward currency exchange, then the exchange process can be facilitated, but additional complexity and potential value loss are introduced
Solution Approach 1:
The patent extracts and eliminates the intermediary currency component from the exchange system. Instead of converting reward currency to an intermediary currency and then to the target reward currency, the system enables direct peer-to-peer exchange between different reward currencies. This extraction simplifies the system structure by removing the intermediate layer while maintaining ease of operation through direct user-to-user transactions.
Solution Approach 2:
While eliminating intermediary currency, the patent introduces a different type of intermediary - the exchange system itself acts as a mediator that matches buyers and sellers, validates offers, and facilitates the exchange. This system-level intermediary replaces the currency-level intermediary, providing the necessary coordination without introducing additional currency conversion steps or value loss.
3Adaptability or versatility
If users can exchange reward currency freely, then member utility is enhanced, but program rules and profitability may be compromised
Solution Approach 1:
The patent implements feedback mechanisms where the system continuously monitors user offers and exchanges against program rules. The exchange system receives feedback from loyalty programs regarding acceptable exchange parameters, and this feedback is used to validate and filter user offers. This feedback loop enables flexible user-driven exchanges while ensuring continuous compliance with program rules and profitability requirements.
Solution Approach 2:
The patent applies preliminary validation and rule checking before exchanges are executed. The system pre-establishes acceptable exchange parameters, rate ranges, and compliance criteria based on program rules. User offers are screened against these pre-defined criteria before being matched and executed, ensuring that flexibility in currency exchange does not compromise rule compliance or program profitability.
Data Source
AI summary
Methods and systems are disclosed for allowing two users to exchange reward currency, such as points, between two different loyalty programs at an exchange rate that is set by and agreed upon by the users themselves. An offer to exchange X points of one loyalty program for Y points of another loyalty program is received from a user and is made available to other users. Another user satisfied with the offered exchange accepts the offer, and the account balances of the two users are adjusted. In some embodiments, a fee is charged to one or both of the users for effecting the trade. The fee is then forwarded to the loyalty programs. In other embodiments, the loyalty programs specify rules that must be complied with before a trade can occur.