Virtual Rewards Card for Direct Points Payment Split Authorization
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Solution Overview
Problem
Consumers face cumbersome processes when using rewards credit cards, requiring them to log into accounts, convert points to currency, and use currency for payments, which is inefficient and inconvenient.
Innovation Solution
A system and method allowing direct spending of rewards points through a virtual account linked to a rewards account, enabling transactions without first converting points to currency, using a financial institution computing system to manage and process payments, and supporting mobile wallet transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If consumers convert rewards points to currency through traditional processes, then the points can be used for payments, but the process becomes cumbersome and time-consuming
Solution Approach 1:
The system segments the rewards points balance into two representations: points (for tracking and redemption) and equivalent currency value (for transaction processing). This segmentation allows the same underlying value to serve dual purposes - maintaining the rewards program structure while enabling direct payment processing without manual conversion steps.
Solution Approach 2:
The payment network acts as an intermediary between the rewards account and the merchant. The system translates payment requests from currency amounts into equivalent points amounts using a conversion rate, and processes transactions through the existing payment network infrastructure. This intermediary role eliminates the need for consumers to manually convert points while maintaining compatibility with standard payment systems.
2Ease of operation
If a virtual account system is implemented to enable direct points spending, then transaction convenience is improved, but system complexity increases
Solution Approach 1:
The virtual account system is designed to work with existing payment network infrastructure and protocols. It can process transactions using standard payment card numbers and integrates with existing point-of-sale systems, mobile wallets, and online payment platforms. This multi-functionality allows the system to handle both traditional currency transactions and rewards points redemptions through a unified interface.
Solution Approach 2:
The payment network serves as an intermediary layer that handles the complexity of conversion and transaction processing. The consumer interface remains simple - they can spend points directly without understanding the underlying conversion mechanics. The payment network translates between points and currency representations, manages conversion rates, and processes transactions through existing infrastructure, thereby hiding system complexity from the user.
3Adaptability or versatility
If partial authorization is supported for insufficient points balances, then transaction flexibility is improved, but processing complexity increases
Solution Approach 1:
The system segments the transaction amount into two parts: the portion covered by available points and the portion requiring alternative funding. When a consumer attempts to spend more points than available, the system automatically divides the transaction - applying available points to the maximum extent and leaving the remaining balance for other payment methods or future completion. This segmentation enables flexible partial redemptions without requiring complex manual intervention.
Solution Approach 2:
The system allows partial redemption of points balances rather than requiring full balance coverage or complete transaction failure. Consumers can spend up to their available points balance even if it doesn't cover the full transaction amount, and the system processes the partial authorization automatically. This partial action approach provides transaction flexibility while using straightforward processing logic.
Data Source
AI summary
A method includes receiving a payment request for a transaction between a merchant and a customer. The payment request includes a payment token and an amount of the transaction in currency. The rewards account stores a number of rewards points. The method includes authenticating the payment request. The method includes determining a currency conversion value for the rewards points. The currency conversion value is based on a conversion rate and a merchant multiplier. The method includes determining the number of rewards points is not enough to cover the transaction. The method includes identifying a secondary payment source that contains sufficient funds to cover a remaining balance of the transaction. The method includes transmitting an approval message to a merchant computing system.