Tokenized Payment Rewards Negotiation
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Solution Overview
Problem
Current rewards programs for financial transaction cards lack the ability to offer personalized and customized rewards on a purchase-by-purchase basis, failing to effectively compete for customers based on their individual purchasing habits and preferences.
Innovation Solution
A system and method that stores multiple payment account numbers associated with a tokenized financial account number, allowing for user rewards preferences to be received and generating provisional transaction authorization requests to payment authorization servers, which include rewards bids, enabling the selection of the most rewarding payment account for a transaction.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If traditional rewards programs offer fixed rewards rates, then program simplicity is maintained, but ability to personalize rewards based on individual customer preferences and purchasing habits is lost
Solution Approach 1:
The system segments the rewards negotiation process into distinct phases: initial authorization request, provisional authorization with rewards bid, and final settlement. This segmentation allows personalized rewards to be negotiated without requiring complete system redesign, maintaining manageable complexity while enabling adaptability.
Solution Approach 2:
The system performs preliminary actions by establishing customer profiles with purchasing habits and preferences before transactions occur. During authorization, the system pre-negotiates rewards bids based on this pre-collected data, enabling personalization without real-time complexity.
2Measurement precision
If multiple credit cards are monitored for rewards comparison, then customer can maximize rewards returns, but transaction processing time increases
Solution Approach 1:
The system performs preliminary actions by pre-negotiating rewards bids during the authorization phase rather than comparing multiple cards after transaction completion. This allows rewards optimization to be determined before the customer leaves the merchant, minimizing perceived wait time while maintaining accurate comparison across multiple cards.
Solution Approach 2:
The system enables self-service by automatically comparing rewards across multiple cards and selecting the optimal card without requiring manual customer intervention. The system autonomously processes multiple authorization requests and compares rewards, reducing customer effort and time investment.
3Adaptability or versatility
If real-time rewards negotiation is implemented during transaction authorization, then customized rewards can be offered, but processing speed decreases
Solution Approach 1:
The authorization process is segmented into rapid initial verification and separate rewards negotiation phases. The system quickly determines transaction validity, then separately negotiates rewards bids, allowing speed-critical functions to operate independently from customization functions.
Solution Approach 2:
The system implements self-service by automatically negotiating rewards bids without requiring manual customer input or selection. The system autonomously compares multiple card options and selects the optimal rewards offer, eliminating customer decision time while maintaining real-time customization.
4Quantity of substance
If competitive bidding among card issuers is enabled, then customers receive better rewards, but system complexity and negotiation overhead increase
Solution Approach 1:
The system implements dynamic rewards bidding where card issuers can adjust their offers based on real-time factors such as customer value, transaction type, and competitive landscape. This dynamic approach enables better rewards while maintaining manageable complexity through automated algorithms rather than manual negotiation.
Solution Approach 2:
The competitive bidding process operates autonomously without requiring manual intervention from customers or merchants. The system automatically receives, compares, and selects among competing rewards bids, reducing perceived complexity for end users while enabling sophisticated multi-issuer negotiation in the background.
Data Source
AI summary
A method of providing rewards-based payment method selection, the method including: storing payment account numbers (PANs) associated with a tokenized financial account number (FAN), each PAN being associated with a purchase-based rewards program; receiving user rewards preferences; receiving, from a merchant POS terminal, a primary transaction authorization request; generating, based on the primary transaction authorization request and the FAN, a plurality of provisional transaction authorization requests corresponding to one of the PANs; transmitting, to one or more payment authorization servers, the plurality of provisional transaction authorization requests; receiving a plurality of provisional transaction authorizations corresponding to one of the PANs and including a respective rewards bid; selecting, based on the user rewards preferences and the respective rewards bids, a preferred PAN corresponding to a provisional transaction authorization; and transmitting, to the merchant POS terminal and based on the preferred PAN, a transaction authorization message to authorize the attempted transaction.