Rewards Account as Direct Funding Source
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Solution Overview
Problem
Existing credit card reward systems restrict how accumulated rewards points can be redeemed, often requiring conversion to currency before use in transactions.
Innovation Solution
A system and method that allow customers to perform transactions directly using rewards points without converting them to currency, by debiting points from a rewards account and completing transactions as needed, with the option to partially fund transactions using both points and currency.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If rewards points are restricted to specific redemption methods (statement credit, cash back, or rewards catalog), then the financial institution maintains control over reward usage, but the customer loses flexibility in how they can use their rewards points
Solution Approach 1:
The rewards account is designed to function as a multi-purpose funding source that can be used for various transaction types including P2P payments, bill payments, and merchant transactions. The system allows rewards points to be redeemed directly for these transactions without requiring conversion to currency or restriction to specific catalogs, making the rewards system universal and adaptable to multiple use cases.
Solution Approach 2:
The system segments the rewards transaction process into distinct components: a rewards account database storing points balances, a transaction processing circuit that validates and executes transactions, and an interface that allows customers to specify rewards usage. This segmentation enables flexible rewards redemption while maintaining systematic control over the complex processing requirements.
2Ease of operation
If rewards points are converted to currency before transactions, then the customer can use rewards for any purpose, but the process becomes more complex and time-consuming
Solution Approach 1:
The system performs preliminary action by pre-establishing the rewards account as a funded account with stored points balances before transactions are needed. The account is set up in advance with the customer's rewards points, eliminating the need for conversion at the time of transaction. When a transaction occurs, the system simply debits the pre-stored points, making the process immediate and simple.
Solution Approach 2:
The invention extracts the conversion step from the traditional rewards redemption process. Instead of converting rewards to currency as an intermediate step, the system takes out this conversion entirely and allows rewards points to be used directly as funding for transactions. This extraction simplifies the process and eliminates the time loss associated with conversion.
3Productivity
If the system allows direct rewards transactions without currency conversion, then the process is simplified, but the system must manage both rewards accounts and traditional currency accounts
Solution Approach 1:
The system merges the rewards account functionality with the traditional account funding system. The rewards account is integrated into the existing account infrastructure, allowing it to function similarly to a currency account in terms of transaction processing. This merging enables direct rewards transactions without requiring a completely separate system, thereby improving productivity while managing complexity through integration rather than duplication.
Data Source
AI summary
Systems, methods, and apparatuses for processing a rewards transaction including an accounts database storing information associated with accounts held by a financial institution including a payment account associated with a customer, a rewards account database storing information associated with reward accounts, including a rewards account associated with the customer, and a processing circuit. The processing circuit is structured to receive transaction details that define a rewards transaction associated with the rewards account, receive a rewards transaction request associated with the rewards account, the rewards transaction request including a rewards amount and recipient details, debit an amount of points from the rewards account maintained by the financial institution and associated with the customer, where the amount of points are less than or equal to the rewards amount, and complete the rewards transaction without converting the rewards amount to currency.