Virtual Currency Discount System with Third-Party Issuer
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Solution Overview
Problem
Existing discount systems using virtual currencies, such as loyalty points or miles, incur significant costs for service providers and customers face frustration with limitations in spending these rewards, leading to a need for a method that provides high-perceived savings value with minimal cost to providers and flexibility for customers.
Innovation Solution
A system that calculates a margin value between daily and base prices, allocates a portion of this margin to an entity like an administrator or charity, adjusting the base price to create a savings value in virtual currency, allowing customers to pay the adjusted base price in actual currency, thereby providing a discount with minimal cost to providers and flexibility in using virtual currency.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of manufacture
If traditional virtual currency discount systems (points, miles) are used, then customer loyalty and perceived value are improved, but service provider costs and operational complexity increase significantly
Solution Approach 1:
The patent extracts the virtual currency management functionality from the service provider's system and relocates it to a third-party issuer. The service provider no longer maintains virtual currency accounts, issuance mechanisms, or redemption infrastructure - these have been taken out and assigned to a specialized currency issuer entity, eliminating the operational burden while preserving the loyalty program benefits
Solution Approach 2:
The patent introduces a third-party currency issuer as an intermediary between the service provider and the customer. This intermediary assumes responsibility for issuing, managing, and redeeming virtual currency, thereby resolving the contradiction by providing the loyalty program infrastructure without burdening the service provider with operational complexity
2Reliability
If service providers maintain virtual currency accounts and bear redemption liability, then customer loyalty is enhanced, but financial burden and income statement expenses increase
Solution Approach 1:
The patent extracts the financial liability of virtual currency redemption from the service provider's balance sheet and transfers it to the currency issuer. The service provider pays only the adjusted base price in actual currency, while the currency issuer absorbs the obligation to redeem virtual currency at face value, thereby eliminating the dual burden of funding both the discount and the redemption liability
Solution Approach 2:
The currency issuer acts as a financial intermediary that assumes the redemption liability. By introducing this intermediary, the service provider converts an expensive model (funding both discount and redemption) into a cheaper model (paying only the adjusted base price), while the intermediary profits from the spread between issuing currency at discounted rates and redeeming at full value
3Ease of manufacture
If customers accumulate non-cash currency, then perceived savings value increases, but spending limitations and customer frustration increase
Solution Approach 1:
The patent makes the virtual currency universal by allowing it to be spent at any merchant participating in the network, not just at the original service provider. The currency issuer accepts virtual currency from multiple sources (airlines, hotels, retailers) and allows redemption across the entire network, transforming restricted loyalty points into flexible, widely-accepted digital cash that eliminates spending limitations
4Productivity
If service providers frequently discount products, then sales volume and market expansion increase, but customer perception of product value decreases
Solution Approach 1:
The patent segments the pricing structure into two distinct components: the adjusted base price paid in actual currency and the virtual currency discount. By separating these elements and presenting them independently to the customer, the system maintains the perception that the full retail price represents true product value while the virtual currency portion represents a separate reward or benefit, preventing devaluation of the product itself
Data Source
AI summary
In particular, systems and methods are provided for delivering a discount using a combination of virtual currency and partner-issued currency. Inventive systems and methods offer a high-perceived savings value to an end-user while maintaining the perception of product value. Further, systems and methods for providing a discount are described which impose little or no cost on the service or product provider. An embodiment of an inventive method includes presenting a display of a price paid by a consumer without access to the virtual currency along with a display of an amount payable by the end-user in actual currency in combination with an amount payable in a combination of virtual currency and partner-issued currency.