Note: Descriptions are shown in the official language in which they were submitted.
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
CUSTOMER LOYALTY PROGRAMS
AND SYSTEMS AND METHODS FOR SUCH
PROGRAMS
1. FIELD OF THE INVENTION
The present invention is directed to customer loyalty programs, and to
systems and methods for such programs, that provide a plurality of loyalty
vehicles,
including for example equity investment programs and current incentives, and
that obtain
member tracking data from a plurality of sources, including for example
merchants and
financial networks, such as payment or credit-card networks. In different
embodiments,
the programs, systems, and methods may be used in e-commerce and in on-line
and/or off
line commerce.
2. BACKGROUND OF THE INVENTION
Merchants and credit card companies have developed a number of customer
award programs in attempts to incentivize customers, for example by enhancing
customer
loyalty. Merchants have long offered coupons to customers with the hope that
the
customers will be enticed to purchase a product with the coupon and
subsequently develop
some loyalty to the product or the merchant. More recently, merchants and
credit card
companies have set up programs where customers earn award points through the
purchase
of products or services with a credit card. The award points may then be
redeemed
towards other products or services offered by merchants.
As the Internet has gained in popularity as a shopping destination, similar
customer award programs have been developed. For example, U.S. Patent No.
5,774,870
describes a fully integrated on-line award program wherein a user earns award
points by
purchasing products on the offering entity's web site. The offering entity
keeps track of
these award points, and they may be redeemed by the user to purchase products
from an
on-line award catalog displayed on the offering entity's web site.
Over the years, investment-based customer award programs have also been
offered to customers. For example, U.S. Patent No. 5,297,026 describes a
credit card
based customer loyalty program wherein the offering entity determines the
total amount of
credit card purchases a participating customer has made during a given period,
and credits
an investment account owned by the customer with up to 10% of that total
amount. The
offering entity has complete discretion over how the money allocated to the
customer is
invested. It simply guarantees a percentage return on the investment, or ties
the
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
investment to a published interest rate. The investment is in no way tied to
what products
S the customers have purchased with the credit card.
Another investment-based customer award program is described in U.S.
Patent No. 5,233,514. This patent describes a customer loyalty program wherein
customers receive credit towards the purchase of stock in a given company by
sending in
UPC labels from products that they have purchased from the given company. The
entity
collecting the UPC labels authenticates the UPC labels and maintains an
account that
accumulates the amount of credit the customer has earned. The account is kept
such that
when a customer has accumulated enough credit to purchase a share of stock in
the given
company, the entity purchases the share in the name of the customer.
This scheme also has flaws. First, the rebate mechanism is cumbersome for
both the customers and the offering entity. Customers must remember to cut out
UPC
labels from product packages and mail the labels to the offering entity to
receive any credit
for their purchases; and the offering entity has to authenticate, scan, and
track the UPC
labels. At least in cases where the dollar value represented by a single UPC
label is low,
the cost of maintaining a customer account is likely to be high relative to
the value of the
stock accumulating in the customer's account. Moreover, the customer can
invest only in
the stock of the companies whose products have been bought.
Additionally, these and other existing schemes suffer from inflexible
customer incentives. Customers can typically use their rewards, points, or
other reward
currencies only for purchase of a particular product, or from a fixed product
selection, or
for purchases from only a certain merchant or manufacturer, or for investments
in only
pre-selected equities, or so forth. Once a particular loyalty program has
chosen customer
incentives, they are usually virtually impossible to change without change of
the entire
program.
Further, along with the Internet, financial networks that effect consumer
payments and funds transfers have developed at a rapid rate. Once credit card
transactions
depended on paper receipts and the handling and clearing of these receipts.
Now virtually
all such transactions are electronically processed at the point and time of
sale via payment-
card networks. This processing already generates consumer transaction
information, and
in the future, it is expected that purchase and product details will be
available on these
networks. In view of modern financial and payment-card (such as credit card)
networks
and their expected development, requiring a customer or a merchant to take any
but the
most minimal actions to identify a transaction to a loyalty program is an
anachronism.
2
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
There thus remains a need for improved customer loyalty programs that are
user-friendly, that offer a range of flexible and attractive loyalty vehicles,
that are at most
minimally intrusive to both merchants and customers, and that are structured
to take
immediate advantage of current financial and payment-card networks and their
further
imminent developments.
Citation or identification of a reference in this Section or any section of
this
application shall not be construed that such reference is available as prior
art to the present
invention.
3. SUMMARY OF THE INVENTION
1 S The present invention solves these problems in the prior art, and has for
its
objects the provision of customer loyalty programs that , inter alia, includes
a flexible
range of loyalty vehicles for incentivizing customer loyalty. These loyalty
vehicles may
range from short-term incentives, such as direct and currently available
rebates or rewards,
to long-term incentives, such as investments in securities that provide
deferred but
accumulating yields. Moreover, the present invention also includes, inter
alia, a flexible
range of methods for tracking transactions of program members at participating
merchants
or for products or services of participating manufacturers or suppliers. In
addition to
receiving tracking information directly from the participants, a preferred
embodiment may
issue credit-card-like cards to program members that are recognized by credit-
card point of
sale equipment, and can be processed over credit-card payment networks. When
such a
card is presented during a member transaction, it automatically causes
generation of
transaction tracking information transmitted to the loyalty program. In
further
embodiments, other electronic payment means may be adapted to automatically
generate
tracking information with virtually no specific member action.
Loyalty programs of the present invention may preferably be implemented
by an administrative entity, an administrator, that receives information from
members,
participating merchants and other participants, financial networks, and so
forth, and
transmits instructions to its agents for carrying out the loyalty program.
These agents are
economic actors, such as banks, brokers, transfer agents, escrow agents, and
so forth.
Loyalty programs of the present invention may be preferably performed on
network-attached computer systems operated by the administrator. These systems
maintain databases of at least member, participant, and transaction
information useful for
3
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
performing loyalty-program functions, and they compute incentive movies and
other
amounts due from participants. They also receive computer messages concerning
members and participants, transactions, the state of administrator and member
accounts,
and so forth that are used to update stored data. They also transmit messages
containing
instructions, for example, to send and disburse movies, to buy and sell
securities, to update
accounts, and so forth. Generally, these systems perform the methods of this
invention
under the control of computer programs, which may be made available on
computer-
readable media.
These and other features of the present invention will be better understood
after reading the remainder of this application.
4. BRIEF DESCRIPTION OF THE FIGURES
The present invention may be understood more fully by reference to the
following detailed description of the preferred embodiment of the present
invention,
illustrative examples of specific embodiments of the invention and the
appended figures in
which:
Fig. 1 illustrates a flowchart of loyalty programs according to the present
invention;
Fig. 2 illustrates an exemplary system for practicing the loyalty programs of
the present invention;
Fig. 3 illustrates in more detail the entities with roles in loyalty programs
of
the present invention and their interactions;
Fig. 4 illustrates an exemplary web page of a member of a loyalty program
of the present invention; and
Figs. SA-C illustrate systems and messages in a payment network that
provides input to the present invention.
5. DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT
This invention is described in more detail herein, where: Section 5.1
describes loyalty programs in general; Section 5.2 describes methods and
systems for
loyalty programs; Section 5.3 describes sources of data tracking transactions
of loyalty-
program members; Section 5.4 describes allocation of member rebates, rewards
and other
incentives to loyalty vehicles present in a loyalty program.
4
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
The term "securities" is used herein in its broadest sense to refer to stocks,
bonds and all other instruments of the types regulated in the United States
under the
Securities Act of 1933, 15 U.S.C. ~ 776 and related acts (e.g., the investment
company act,
investment adviser act, and the like). In other jurisdictions, the term
"securities" has a
similar meaning under the prevailing treaty, legal, or administrative regimes.
The term
"fund for investment" or "investment fund" is used in its broadest sense to
refer to an
available amount of money or capital that is committed in order to attempt to
gain a
financial return.
5.1. SUMMARY OF LOYALTY PROGRAMS
The present invention provides a wide range of customer loyalty programs
together with computer systems and computer-implemented methods for their
performance. Generally, loyalty programs are taken herein to mean marketing
arrangements in which tangible or intangible incentives, such as rebates,
points, other
reward currencies or rewards, are provided to purchasers of goods and services
in order to
induce desired future behaviors, such as repeated purchases from merchants,
repeated
purchases of goods and services of merchants, manufacturers or suppliers
(referred to, with
issuing banks below, as program "participants"), repeated use of financial
institutions
(such as banks issuing credit-cards, debit cards, smart cards, payment cards
and other
payment means or devices), increased size of purchase, and so forth.
According to the present invention, loyalty programs are conducted under
supervision of the administrator, which can include one or more administrative
sub-
entities, or other internal arrangements as deemed prudent according to legal
and business
considerations. The administrator provides, creates, invokes, manages or
enters into
contractual or other arrangements, or so forth with other external entities in
order that they
may act as its agents in carrying out the activities necessary for a loyalty
program,
including, inter alia, registering members and participants, receiving
incentives from the
participants, allocating the incentives to various loyalty vehicles on behalf
of the members,
and so forth.
Persons become loyalty-program members and are able to receive program
incentives by registering with the program, preferably after agreeing to its
terms and
conditions (or reaching agreement with the administrator). Members are
typically real
persons, but may include legal persons of all types. Organizations or
individuals
transacting business with customers become loyalty-program participants and
are able to
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
offer program incentives by also registering, preferably after reaching
agreement with the
administrator. Loyalty-program participants may include a wide range of
individuals or
organizations that deal with customers, for example, merchants of goods and
services,
manufacturers, suppliers or importers of goods, providers of services,
financing providers
such as credit card companies and banks, or so forth. Loyalty programs of the
present
invention may, therefore, include either a number of participants of different
types
(merchants, manufacturers, service providers, and the like), or a single
participant (such as
a supplier of credit card of other financial services).
When a loyalty-program member completes a transaction at or with a
loyalty-program participant or another or involving the product or service of
a participant
(collectively known a transactions of interest, or commercial interest, to
participants), the
participant makes agreed-upon incentives available by means of the
administrator to the
account (or benefit) of the member. The administrator obtains information for
determining
incentives, allocates determined incentives to various loyalty vehicles, and
then causes
transfer of the incentives from the participants to the loyalty vehicles for
the use of the
members. Incentives may be intangible or tangible rebates, points, other
reward
currencies, rewards, options or so forth, and are often rebate monies or other
incentive
amounts with or without conditions on their uses. The present invention
provides loyalty
programs with a broad range of novel methods of obtaining information
concerning
incentives due from participants by tracking transactions between members and
participants and member transactions involving the products or services of
participants,
and also with a broad range of loyalty vehicles that provide participants with
targeted
member incentives.
In a further embodiment, the present invention may receive incentive
information from participants, or third-parties, and then allocate the
incentives among one
or more loyalty vehicles. For example, a participant may have immediate access
to
member (and other customer) transaction information, and may then determine
rebates or
incentives due members. Information describing the determined incentives may
then be
forwarded to the administrator, which stores and allocates the incentives,
according to
participant instructions, or member instructions, or both. In this embodiment,
the
administrator provides a specialized, shared, and cost-effective interface to
members,
freeing the participants from individually developing this capability,
In one preferred embodiment, the administrator obtains information
tracking member transactions at or with participants directly from the
participants
6
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
themselves. For example, in embodiments for e-commerce or on-line merchants,
individual member transactions at participants (which, for example have World
Wide Web
(hereinafter, simply "web") sites for their customers) are electronically
tracked by use of
the participants' existing e-commerce or business data processing
infrastructure.
Participants extract member purchase (tracking) information from their
infrastructure, and
transmit it to the administrator, either in real-time or in batches (a batch
including, for
example, transactions for an hour, day, week, or other appropriate interval).
This
embodiment may include credit-card loyalty programs, merchant loyalty
programs,
manufacturer or supplier loyalty programs, and so forth. In particular, the
cards used in the
"credit"-card programs may be widely-accepted credit or payment type cards, or
may be
credit or payment type cards accepted at a single merchant or merchant
association, or
1 S merchant value-type cards.
In another preferred embodiment, the administrator may issue member
identification ("id") cards having physical characteristics so that they may
be recognized
by credit-card, payment-card or other point-of sale ("POS") equipment, and be
processed
over existing financial networks, such as payment-card or credit-card
networks. Here,
transaction-tracking data is generated by the financial networks when members
present
their id cards during transactions at participants. Where the id cards have no
payment
functions, payment may be made by conventional means, such as cash, check,
regular
credit card, or so forth. Since this embodiment is able to track transactions
at legacy
"brick-and-mortar" merchants or manufacturers as well as at on-line merchants
or
manufacturers, it is referred to herein as an "off line" embodiment. In sum,
this invention
contemplates obtaining member transaction-tracking information from a variety
of
sources: directly from the participants, from acquiring banks of participants,
from issuing
banks of members, loyalty program member id cards, directly from credit-card
and other
payment-card networks, and so forth.
More generally, information for transaction tracking may be provided by
other identification means or devices. In particular, a member may be
identified by a
unique account number present on a payment or id-card. In the future, such
identifying
account numbers, or other information, may be carried in electronic or digital
devices that
can be read during a transaction. For example, such information may be
available on so-
called smart cards, in personal digital devices (such as the well-known
Personal Digital
Assistants), in advanced cell phone (for example, as a telephone number), or
on or in other
circuitry that may be scanned or interrogated during a transaction. In the
future, it may be
7
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
possible for a personal digital device to take part in a transaction and the
point of sale, both
S providing payment information (for example, debiting a stored value) and
also initiating a
network transmission to provide transaction tracking information directly to
the present
invention.
In all embodiments, transaction-tracking information preferably includes
information identifying the goods and services that are part of a transaction,
such as by
standard commercial or product codes. With such information, more granular
loyalty
programs can provide, for example, incentives discriminating between or among
different
merchants, between or among different manufacturers or suppliers, between or
among
different merchants at which different manufacturers' or suppliers' goods were
purchased,
and so forth.
1 S Moreover, the present invention provides loyalty programs in which
incentives, such as rebates, points, other reward currencies or rewards,
received by
members can be allocated between or among various loyalty vehicles in a single
loyalty
program in order to reinforce different member behaviors according to the
desires of
different participants. A prefer ed loyalty vehicle includes security
investments, preferably
investments in or through a fund for investment involving a plurality of
securities, more
preferably where shares issued to members comprise or reflect securities of at
least one of
the participants, which, in one embodiment, are allocated, directly or
indirectly, depending
on net purchases made by members at or with participants or involving the
products or
services of participants (also referred to herein as "transactions of
interest"). Such a
loyalty vehicle is expected to incentivize long term loyalty.
Current (or direct) incentives are another type of loyalty vehicle, which may
be offered along with, for example, security investments in a single loyalty
program.
Current (or direct) incentives may include: freely usable rebate monies;
discounts, credits,
points or other reward currencies freely useable towards future purchases;
discounts,
credits, points or other reward currencies targeted towards purchases of
particular goods or
services, or of any goods and services of a particular manufacturer or
supplier, or at a
particular merchant, or of a particular manufacturer or supplier at a
particular merchant, or
so forth.
Carefully targeted current incentives, automatically available to customers
and with low processing costs for merchants and other participants, offer new
marketing
and promotional opportunities. For example, a current incentives vehicle where
incentives
are awarded upon purchase of a particular manufacturer's or supplier's
products or
8
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
services, offers a novel and efficient manner of eliminating cumbersome paper-
based
rebate coupons, which must be individually handled by customers and processed
at
processing centers. Indeed, a loyalty program of the present invention using
membership id
cards that are automatically processed at the point of sale and coupled with
the automatic
identification of purchased products or services makes available the
information with
which to tailor altogether new, efficient, and low cost incentive programs.
Therefore, the present invention is attractive to merchants, manufacturers,
other participants and customers for at least the following reasons:
1. Customers are attracted to the program because it is user-friendly,
providing
simple tracking of their relevant purchases with a minimum of effort on their
part,
1 S regardless of the payment instrument used, in preferred embodiments merely
by
purchasing products or services from one or more of the participating
merchants or
manufacturers, and also providing diversified uses for their rebates and other
incentives, including, in preferred embodiments, equity investments.
2. Further, systems of this invention may provide each member with a
customized
web page that tracks the accumulation and application of such member's rebates
and other incentives, including the performance and composition of any equity
investments made. This page may also have links to web sites of all merchants
or
other participants, or to those most heavily used by the member. Whenever
members log onto this system home page, they are reminded of the merchants and
other participants, the good will extended by the participants toward the
members,
and the fact that the members have an interest in using the participants for
further
transactions.
3. Merchants and other participants are attracted to the program because
members can
develop a specific interest in the participating merchants and other
participants, for
example via equity ownership through a diversified investment fund. Since
members may become owners of the merchant or other participant, merchants and
other participants can thus benefit from a closer relationship with their
customer/owners. In addition, the long-term approach to investing that is
typically
taken by a mutual fund, for example, can reinforce the participants'
relationships
with their customers and can reduce customer attrition.
4. Individual merchants and other participants benefit from the cross
marketing
inherent in the structure or operation of the fund. That is, since the shares
issued to
9
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
members may comprise or reflect the securities of at least one public
participant,
each member may own not only the merchants at which he shops, but also the
shares of other public participants.
5. Through programs of this invention, merchants and other participants are
able to
offer their customers tangible and diverse rewards unlike any others currently
available. In a world of competition ever more defined by lowest price,
merchants,
suppliers and manufacturers are able to reward customer loyalty in an
innovative
way that will forge a long-lasting relationship based on ownership,
partnership, and
good will.
This invention includes a single loyalty program combining many member
1 S types, participant types, means of obtaining member transaction tracking
data, and loyalty
vehicles. It also includes programs more targeted to one or a few types of
members and
participants that obtain tracking data by one or a limited number of means and
offer one or
a few focused loyalty vehicles. In other words, it is to be understood that
the present
invention encompasses the various combinations of the means described for
transaction-
tracking, of the described loyalty vehicles, of the described means for
determining
incentive and rebates, and of the described means for allocating incentives.
However, without being limiting, the following description is directly
primarily to programs with members who are individuals, the programs
anticipated to be
initially of most importance.
5.2. METHODS AND SYSTEMS
The general functioning of the loyalty programs of the present invention,
along with exemplary computer systems, for practicing these methods is now
described.
5.2.1. LOYALTY PROGRAM METHODS
Fig. 1 illustrates the general functioning of loyalty programs according to
the present invention. First, in step 1, the administrator negotiates
registration agreements
with merchants, manufacturers, suppliers, financing organizations, other
commercial
organizations or individuals who seek to become program participants (or with
a single
program participant). These agreements preferably include schedules and other
details of
rebates, points, other reward currencies, rewards, or incentives made
available to loyalty
program members for purchasing or transacting business with a participant or
involving
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
the products or services of a participant, and also schedules for allocating
rebates, rewards,
points, other reward currencies or incentives among loyalty vehicles (if more
than one)
offered by the loyalty program. Public or private merchants or both, selling
either on-line
or off line, or public or private manufacturers, suppliers, service providers,
or any of them,
may become program participants.
Next, in step 3, the administrator registers members. Member registration
collects at least minimal identifying information necessary for legal,
security, and
regulatory purposes, and for simplicity can be performed either on-line, for
example, using
an Internet-attached personal computer, or off line, for example, by using
paper forms. If
identifying cards ("id" cards), payment cards or other cards, identification
means or
devices are used in a loyalty program, member registration also obtains
information
necessary for the banks or other organizations issuing the cards or other
identification
means or devices. The member identifying information carried on the cards or
in other
identification devices is exchanged with their issuers preferably at
registration (or
issuance) time.
In certain embodiments, card (or other member identification devices) are
issued concurrently with new member registration, with by the administrator
directly or by
a bank acting at the request of the administrator. In this case, new member
information
needs to be sufficient to complete the issuance process. An issuing bank,
which is
typically the required issuer if the identification devices are processed by
financial
networks, may, or may not, be a participant in the loyalty program, seeking to
incentivize
use of its payment or other financial services. The administrator, if not
itself a bank, may
itself issue identification devices of other sorts.
In other embodiments, a new member may already have an identification
device, such as a credit card, or a debit card, or a stored-value card, or the
like. The device
may have been issued by a bank or another entity. In these embodiments, new
member
registration need obtain the information identifying the member that is
available from the
device or card. With this information, transactions of such members may be
tracked by the
subsequently described methods.
After successful registration, in step 5, as members transact business at
participants, or involving the products or services of participants, thereby
earning rebates,
rewards, points, or other incentive or reward currencies become due them,
according to the
incentive schedules, which are first established at participant registration
and can be
updated from time-to-time by each participant. Alternatively, the participants
themselves
11
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
may determine incentives from schedules they have internally established. In
step 7,
amounts due are determined from these schedules and from information tracking
member
transactions, and periodically (e.g., in real time, or daily, weekly, monthly,
or other
periodic interval) requests are made to the participants for transfer of these
amounts due.
Again, alternatively, participants may make incentive information periodically
available
for receipt by the system of this invention.
Step 9 allocates rebate, reward or other incentive amounts received to
various loyalty vehicles according to the initially established (and
optionally updated from
time -to time) allocation schedules. If no allocation schedules are provided,
the amounts
due can be allocated according to member request or loyalty-program decision.
Alternatively, incentives may be allocated according both to participant
instructions and
also to member instructions.
Since in a preferred (but not limiting) embodiment, incentives are allocated
at least in part to investments by or through the fund for investment where
shares issued to
members comprise or reflect the securities of at least one public participant,
in step 11, the
administrator directs the purchases and sales of investment securities, and
may issue and
redeem evidences of, or account for, member ownership interests (for example,
shares of a
mutual fund). At step 13, members are incentivized by tracking owned
investments,
selling owned investments, and optionally buying additional investments with
separate
monies.
In another embodiment, rebate and other incentive amounts may be
allocated to direct incentive programs that members may use for additional
transactions.
In an exemplary implementation, each member has a direct incentive account,
which is
updated in step 15 with allocated rebate and other incentive amounts. Members
are then
incentivized by using in step 17 their direct incentives for further
transactions, purchases,
upgrades, and so forth.
Loyalty program activities as just described are managed and supervised by
an administrative entity (simply, an "administrator"), which, although
described herein as
a single functional entity, may actually consist of two or more legal
entities. The
administrator acts, inter alia, by entering into agreements, such as member
and participant
registration agreements; by obtaining member transaction tracking information;
by
requesting incentive amounts, such as monies and other incentive amounts due;
by
receiving incentives either as fungible monetary values or as specialized
incentive values;
by dispensing incentive amounts received, such as allocating monies and other
incentive
12
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
amounts to loyalty vehicles; by managing loyalty vehicles, such as causing
securities to be
bought and sold; and so forth. Since many of the administrator's actions may
be actually
performed by separate agent entities (illustrated in Fig. 3) that provide
information to and
respond to instructions from the administrator, the administrator may manage
and
supervise by monitoring and instructing its agents.
This monitoring and instructing may include: updating information
reflecting accounts held by agents for, inter alia, member transactions,
rebate monies and
other incentive amounts, and so forth; formatting messages to agents with, for
example,
instructions to transfer monies or other incentive amounts, to buy or sell
securities, to
determine present values, and so forth; interpreting messages received from
agents and
updating administrator accounts; responding to queries from members and
participants;
and so forth. In a preferred embodiment, most of these actions are preferably
performed
by administrative computer systems (illustrated in Fig.2) that electronically
communicate
with the agent entities, for example, with the computer systems of these other
entities.
5.2.2. LOYALTY PROGRAM ADMINISTRATION
' Fig. 3 illustrates, in a preferred (and non limiting) embodiment, the
administrator, the entities responsive to (agents of) the administrator for
performing
loyalty programs of this invention, and the interactions (exchange of
information,
instructions, value, and so forth) between the administrator and its agents.
Although in
other legal or regulatory contexts, the agents of the administrator may be
fewer or more
numerous, their combined functioning will be substantially equivalent to the
preferred
embodiment described next.
Administrator 52 negotiates 53 contracts with participants) 51, which
reflect agreement that the participant will provide a scheduled incentive
amount (for
example, a percentage) of the purchase price of products or services bought or
used (or
other measure of transaction value) by members of the loyalty program, and
that the
administrator will allocate the rebate, incentive currency or reward as
specified by the
participant (or by the member), for example, by investing in a diversified
mutual fund
which may purchase shares, inter alia, in the publicly-traded securities of at
least one
participant. The incentive amounts and their allocation may depend on the type
of
product, the merchant, the manufacturer, the supplier, the card issuer or
other parameters
of the member transaction. Both incentive amount and allocation may be updated
from
time-to-time by the participant.
13
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
These contracts may also preferably include: provisions that the participant
agrees to pay the administrator a fee for the administrator's services in
establishing and
operating the loyalty program; provisions concerning the mechanics of
tracking,
calculating, requesting and turning over the incentive amounts and rebate
monies to the
administrator; and so forth. Provisions relating to web site content may also
be included;
for example, mutual hyperlinks between the participant's web site and the
loyalty
program's web site, a statement on the participant's web site that it is a
(merchant,
manufacturer, supplier, financer, or other type of organization) participant
in the system,
and/or a statement on the participant's web site listing the rebate or
incentive schedules
offered to loyalty program members, similar statements on the program's web
site, and so
forth.
The schedule of incentives, rebates, and rewards in a simple embodiment
includes percentages (perhaps, sliding percentages) of the purchase price of
products or
services bought or used by members of the loyalty program that will be
provided as a
rebate or other incentive. In further embodiments where adequate tracking data
is made
available, the rebate or other incentive may depend on which merchant
locations are used,
or on which manufacturer's or supplier's products (or financial products) or
services are
used, or on combinations of these and other factors. Rebates and other
incentives may also
depend on the total amount or on the total number of products in a transaction
so that the
participant may provide volume discounts. Further, if the loyalty program
member also
belongs to another group favored (or disfavored) by a participant, the rebate
or other
incentive may be increased (or decreased). For example, if the loyalty program
maintains
histories of member transactions, a favored group might.be a member who
frequently
transacts business at a participant or involving the products or services of a
participant.
Rebates or rewards may also depend on further factors to achieve particular
marketing
objectives ofparticipants.
In addition, numerous types of incentives may be offered by a program. In
a simple embodiment, an incentive may be an amount of rebate money or other
incentive
that is freely useable by a participant. Alternatively, uses of rebate money
or other
incentives may be restricted to certain merchants, or certain products or
services, or
certain products or services and certain merchants, or so forth. Generally,
usage
restrictions may be represented in the systems of this invention by rules
provided by
participants. Also, incentives may be "currencies" not convertible into money,
including
for example, merchant "points", coupon values, airline miles, and so forth.
Allowed usage
14
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
of such "currencies" is usually strictly limited, often requiring specific
authorization by a
participant for a proposed use.
Administrator 52 also registers 54 potential members 50 prior to their use
of the loyalty system. During registration, which can be easily accomplished
with on-line
forms available on the administrator's web site, potential members assent to
prei~rably
pre-defined program terms and conditions, and provide certain personal,
demographic, and
system-related information. This information may include name, password,
social security
number, address, gender, age, employer, e-mail address, and so forth.
Potential members
may also be requested to supply the details for id cards, such as social
security number and
income, sample signatures, or other information typically required to open a
new
credit/debit card account with an issuing bank. If members will use their
existing payment
cards for program purchases, they may be asked to supply payment card details
such as:
member name as it appears on the payment card; type and brand of payment card
(e.g.,
debit or credit; Visa, MasterCard, Discover, American Express, or so forth);
and the
payment card number. Payment card transaction information is one way by which
the
administrator may track member purchases at participants 51, and to
subsequently request
rebate movies or other incentive amounts due.
If equity investments 63 are available incentive vehicles, member
registration may also provide user-friendly forms for opening a securities
account for the
purchase, sale, transfer, and ownership of securities. Via the securities
registration forms,
members may also provide administrator 52 (or member agents 55) with standing
instructions to receive rebate movies and other incentives earned by the
member and invest
such rebate movies and other incentives (after any necessary redemption for
cash) in
specified manners, for example, in or through a fund for investment that may
purchase the
publicly traded securities of at least one participant. When practiced in the
United States,
these funds can be mutual funds registered under the Investment Company Act of
1940, as
amended, and the Securities Act of 1933, as amended, 15 U.S.C. 78a et seg.,
respectively.
In the event the U.S. Securities and Exchange Commission (SEC), or other
government agency or law, requires separating management relating to a fund
for
investment from other aspects of incentive and program management, the
administrator
may employ the services of one or more member agents SS to receive rebate
movies and
other incentive amounts 58 from participants on behalf of members, and to
invest such
rebate movies and other incentive amounts (less any fee that may be charged by
the
administrator and agent) in or through the fund, perhaps by forwarding such
rebate movies
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
and other incentive amounts to administrator 52 or to escrow or other
administrative
account 56. When practiced in the United States, member agents will be
registered
securities broker/dealers. If member agents are used, the program registration
process may
also obtain information for opening an account with member agents, and for any
standing
instructions 60 to be submitted to the agents to receive the rebate monies and
other
incentive amounts, and to invest the rebate monies and other incentive amounts
in or
through the fund (or otherwise invest in securities), or to forward such
monies and other
incentive amounts to the administrator of the fund or into escrow or other
administrative
account 56 for eventual investment. After opening an account and submitting
standing
investment instructions, a member may have a reduced need for further
interaction with
the member agent.
After registration is successful, members preferably receive highly secure
personal identifiers, such as passwords, certificates, or other secure
identifiers, that provide
access to member account statements and other account information through the
administrator web site. To obtain this information, which is preferably
formatted as
personal member "home" pages, members navigate to the administrator's web site
and
enter their security identifiers.
Generally, home-pages (and dependent pages) display information on
progress in the loyalty program in a manner that will incentivize members in
the ways
sought by the various participants. Promotional offers, advertisements, and
other
information, from both participants and the administrator, may also be
provided on the
member web page. If direct incentives, as explained below, are available, a
page may
display total direct incentives of each type received, how these incentives
have been used,
the benefits gained, and the current status of all available direct
incentives. This latter
information may include, for example, that further purchases of a certain
product from a
participating manufacturer or supplier will be discounted for up to a certain
amount, or on
the next purchase for over $100 at a certain merchant an extra $10 will be
available to the
member, or so forth.
Fig. 4 illustrates in more detail an exemplary member home page for equity
mutual fund investments. The illustrated page includes: a chart of mutual fund
performance versus various benchmarks 400; summary information on the fund
402;
summary information on the member's holdings in the fund 405; information on
credits
410 that the member has received towards the purchase of shares in the fund as
a result of
transactions with participants or involving the products or services of
participants;
16
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
hyperlinks to merchant web sites 415; a button or similar mechanism 420 to
access further
information concerning the member's account; a button or similar mechanism 425
to make
direct investments in the fund; a button or similar mechanism to access a
hypothetical
calculator allowing the member to approximate a future account value based on
possible
future incentives (e.g., the member is able to enter in an incentive value of
$500 per year,
and calculate the "hypothetical value" of his fund holding in 5 years, 20
years, etc. based
on fund performance since inception); a button or similar mechanism 435 to
redeem
shares; and a button or similar mechanism 440 that provides access to more
information
concerning the fund.
Returning to Fig. 3, after member and participant registration, members SO
may carry out transactions 57 with participants or others 51. Commonly,
transactions may
be purchases of goods or services at participating merchants or purchases of
goods or
services of participating manufacturers, suppliers or service providers, use
of credit or
other financial services from participating financial institutions, or use of
an issuing
institution's credit or other card. Advantageously, member transactions may be
performed
over the web (or in other on-line manners), and hyperlinks to participant web
sites may be
provided at several different locations in the administrator web site, e.g.,
in member
registration forms; in a page listing the merchants or other participants; in
the member's
home-page; or in other locations. These hyperlinks may be continually updated
by
administrator 52 to include new participants as the program expands.
Therefore, in one
preferred embodiment, members first access the administrator's web site, and
use its
hyperlinks as a portal to participant web sites to carry out transactions. As
will be
described below, use of the administrator's web site as a portal may provide
for tracking of
a member's transactions at a participant (and determining rebate and other
incentive
information by the administrator system). Alternatively, member may directly
access
merchant web sites, without first navigating to the administrator's web site.
In this case,
the participant can collect and send member transaction information to the
administrator
(either in real time or in periodic batches). In another preferred embodiment,
members are
provided with id cards, or combined payment and id cards, that automatically
provide
tracking information to the administrator when processed by existing credit-
card networks
(or other payment-card or financial networks). The present invention is also
applicable to
other tracking mechanisms as will be described below.
After members have transacted business with participant or business
involving the products or services of participants, rebate and reward monies
58 (or the
17
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
indications of values of points or other reward "currencies") are forwarded by
participants
51. Monies and other incentive amounts may be forwarded by the participants
without
administrator request, as a result of participants' own tracking of member
transactions, or
preferably at administrator request, as a result of administrator tracking
some or all
member transactions. Forwarded monies and other incentive amounts are received
directly
by the administrator 52, or preferably by segregated escrow or other
administrative
accounts 56 for the benefit of members. Segregated accounts are preferred to
provide
heightened program security, and therefore increased attractiveness to
members. The
escrow or other administrative accounts may be managed at an agent bank; the
account
may be an account where the administrator receives interest on the deposited
rebates and
other incentive amounts. Where member agents 55 are employed, participants 51
forward
rebate or reward monies 58 (or the indications of values of points or other
reward
"currencies") to these member agents, which, acting according to standing
member
instructions, either forward the monies and other incentive amounts 59 on to
administrator
52 or on to escrow or other administrative account 56, or directly invest the
monies and
other incentive amounts (not illustrated). The members have the option of
updating 60
their standing instructions to their agents. Member agents are optional if the
administrator
can act as the member agent.
Rebate monies and other incentive amounts are held in the escrow or other
administrative accounts until they are allocated to loyalty vehicles according
to the
member preferences and instructions. Fig. 3 illustrates two preferred loyalty
vehicles,
equity investments 63, particularly equity investments in or through a fund
where shares
issued to members comprise or reflect the publicly traded securities of at
least one
participant, and current incentive programs 62. Administrator 52 manages the
allocation
73 of rebate and reward monies and incentive amounts (or the indications of
values of
points or other reward "currencies") among the various loyalty vehicles, and
also provides
necessary administrative instructions, direction and control of the various
loyalty vehicles
by interaction 64.
For the equity investment vehicle, agents of the administrator, such as
transfer agents and brokers, transfer rebate monies and other incentive
amounts, purchase
shares and securities, receive purchased shares and securities, and perform or
execute
corresponding transfers or sales upon share redemption or disposition,
preferably as book
entries without physical transfer of money, checks, or certificates, except
for settlement
purposes. The administrator manages and directs these agents, and keeps
internal
18
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
information reflecting account status at its agents. Transfer or other agents
preferably
administer funds, transfer monies and record purchases or sales of shares 67
for the
members under the direction of the administrator; brokers (if different), also
under the
direction of the administrator, preferably purchase and sell securities,
particularly
participant securities, on stock exchanges and in other public markets 65 for
transfer 66 to
and from the investments and funds 63. If appropriate, transfer agents and
brokers may be
affiliated, or the administrator may itself perform one or both of these
functions. The
dollar value of the shares equals the dollar value of the rebates and other
incentive
amounts (preferably less any fee that may be charged by the administrator and
as adjusted
by direct sales and purchases) that each member received on his online
purchase of
products or services from or of the participants. Also, members may make
investment
1 S requests 68, which are processed by the administrator and result in
updates to a member's
investments in the loyalty program and directions to the transfer agents and
brokers.
Members communicate, for example by on-line messages, to direct the
administrator, and
thus the transfer agent and/or broker, to process such share purchase and
redemption or
sale forms by buying or redeeming or selling shares and transferring proceeds
67 to the
requesting member. Electronic confirmations are preferably provided to each
member by
the administrator system, for example, on members' web pages and also by e-
mail.
Current incentives 62 are monies, discounts, incentives, points and other
reward currencies available for a member's immediate use, whether or not first
redeemable
for or converted into cash. Optionally, uses of current incentives may be
limited by the
participants in ways to incentivize desired member behaviors. Member current
incentives
may be, preferably, held in member escrow accounts 72 with a banking-type
institution
acting as an agent of the administrator (or with a financial transaction
processor for a
banking-type institutional agent). Member escrow accounts 72 are available for
settling
member transactions 70 (optionally, according to the limitations of the
participants) in a
manner similar to stored-value cards or debit cards. Transfer of monies and
credits in and
out of these accounts is preferably handled, as in the case of equity
investments, as book
entries without the physical transfers. Specifically, under the
administrator's direction and
management, banking-type institutional agents receive rebates, rewards, points
and other
reward currencies allocated from escrow or other administrative account 56 to
current
incentives 62, and then place received rewards, points and other reward
currencies 71 in
accounts 72 for member use.
19
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
Directions from the participants for use of their direct incentives may be,
preferably, represented in the systems of this invention as rules limiting how
accounts 72
may be used for transaction settlement. For example, rules may specify how,
where, for
what, and so forth payment requests would be honored (either when transmitted
in real-
time from the point of sale or during batch processing). If honored, a
specified incentive
amount will be transferred in payment, and the current incentive available
correspondingly
reduced; if not honored, the payment request would be declined. Paying and
declining
payment requests are known functions of payment networks, such as the networks
maintained by credit card associations. These rules may be physically stored
in association
with member incentive accounts so that they would be available during the
processing of
payment requests. Further, it is preferable that the rules associated with
these current
incentive accounts could be updated by administrator 52 in response to
directions from the
participants.
5.2.3. ADMINISTRATIVE SYSTEMS
Routine functions of the administrator are typically performed by
programmed computer systems referred to herein as "administrative computer
systems" or
simply "administrative systems". Discretionary functions, such as negotiating
agreements
with potential participants, are typically performed by the operators of the
administrative
computer systems.
Core functions of the administrative computer systems include: receiving or
obtaining information tracking member transactions at participants; requesting
monies,
rebates, rewards, points and incentives from participants depending on the
tracked member
transactions and on the participant rebate and incentive schedules; allocating
and
dispensing these monies and other incentive amounts to various loyalty program
vehicles,
and managing the loyalty program vehicles. Other administrative system
activities include
managing and directing both member agents in handling member rebate monies and
other
incentive amounts, and also the administrator's own agents which handle, inter
alia,
escrow accounts, current incentive accounts, equity investment accounts (and
other loyalty
vehicle accounts). Also, the administrative computer systems participate in
registering
participants and members, and receive and respond to queries and directions
from
pa~icipants and members.
These functions in preferred embodiment involve extensive electronic
communication with external computer systems, such as systems of, inter alia,
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
participants, members, banks, payment processors, transfer agents, brokers,
and so forth.
S If id or payment cards are used in a program, the administrative computer
systems also
preferably electronically communicate directly with payment network systems or
their
gateway systems. Communication may be in a transaction mode, a batch mode, or
other
convenient communication mode. Where external systems generate member
transaction
tracking information throughout the day, administrative computer systems may
receive
tracking information on a transaction by transaction basis, or the tracking
information may
be transmitted in batches hourly, daily, or with other convenient periodicity.
For example
payment networks, such as credit-card networks, may send member transaction
tracking
messages in real-time during each transaction. Other external systems, for
example, those
of merchants, may generate transaction-tracking information only during
periodic batch
processing cycles, for example, during nightly processing, after which it can
be sent to the
administrative system in batches (that is, aggregating the transaction data).
For agents of
the administrator, usually only periodic communication is required (e.g.,
hourly, daily,
weekly, and so forth) to transfer, for example, instructions on daily
securities transactions,
on transfer of rebate monies and other incentive amounts, or on maintenance of
escrow or
other administrative accounts. The latter communications may be advantageously
structured as file transfers, the files containing net results and net
instructions for the
period. Administrative systems respond to these electronic communications by
updating
system databases and, possibly, generating and transmitting further
instructions and
responses to the external systems.
Fig. 2 illustrates exemplary administrative computer systems 22 and 23 (the
"administrative systems") for implementing the loyalty programs of the present
invention.
Generally, system users 20, for example, members, participants, agents, and so
forth,
interact with (provide information to, receive direction from, and so forth)
loyalty
programs by means of networks 21 and interface systems 22 that communication
with
systems 23, that have databases 26 that store loyalty program data and
processors 24 that
are controlled by computer programs to perform the methods of the loyalty
programs. The
administrative systems 22 and 23 operate under the supervision of
administrator 52 (Fig.
3), which is responsible for the loyalty programs. Although, as Fig. 2
illustrates, any class
of user can communicate via any convenient means of communication, certain
communication means are typically used by certain users. Members, who
typically use
PC-type computers at their remote locations, may access loyalty programs of
this invention
via public networks 41 connected to one or more web servers 37, which are
suitably
21
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
protected by firewalls and controlled by load balancers 38. Participants and
participant
systems, i.e., commerce systems at merchants, manufacturers or suppliers, may
access the
loyalty programs over public networks 41 or through other, perhaps private,
network links
42, such as dedicated communication lines. Public networks 41, of course,
include the
Internet, but also may include various proprietary public network backbones.
Other
networks 42 may include private networks or private specific point-to-point or
switched
links, and may access the administrative systems through other communication
interfaces
36.
The administrative systems communicate with external systems to obtain
member transaction tracking data. In one preferred embodiment, member-tracking
data
may be transmitted from participants' computer systems using one or more of
the above
communication methods. In another preferred embodiment, tracking data is
extracted by
financial payment-processing networks 40 and sent to the administrative
systems
(optionally, transaction-by-transaction). Financial payment networks include
especially
those operated by credit card associations, such as VISA, MasterCard, American
Express,
and so forth.
The administrative systems allocate member rebates/rewards and so forth to
loyalty program incentive vehicles by means of communications with computer
systems of
the administrator's agents. In the case of equity investments, these may be
systems of
financial intermediaries, security brokers, transfer agents, separate member
agents (if
needed, for example, for regulatory compliance), and so forth. These
communications
(instructions and responses) may be transmitted as files using, for example,
the FTP
protocol via FTP servers 39. In the case of direct incentive loyalty programs,
communications may be with banking-type institutions that maintain the direct
incentive
accounts, and are usually performed by means of FTP transfers between FTP
servers.
These communications are used to create accounts, to credit and debit
accounts, to inquire
about account status, and so forth. Other intermediaries, including credit
card processors,
merchant banks, and so forth, may communicate with the administrative system
via public
and private networks, in files transferred by FTP, transaction by transaction,
or by other
means.
In more detail, web servers 37 implement one or more administrator web
sites for members (and participants and others), which are accessible via the
Internet
preferably only through firewalls 38. If system loads require more than one
web server,
load balancers 38 provide balancing between individual web servers.
Application servers
22
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
37 may optionally assist in transfernng formatted information between the web
servers and
one or more database servers 23. Additional firewalls internal to the
administrative
systems may be provided as needed for security.
The one or more database servers 23 preferably are programmed general-
purpose computers that include one or more processors 24 with processor-
accessible
memory (such as RAM), long-term database memory 26 (such as magnetic disk
drives
configured by a database system), and input/output means 25. The input/output
means are
used, among other tasks, to exchange information between database servers 23
and the
communication systems 22 that connect to external communications. Database
memory
26, i.e., configured computer disk storage, stores formatted and encoded items
of
information used to process the programs of this invention, including
information
concerning, inter alia, members 27, participants 28, purchases, rebates,
rewards and other
incentives 29, investments, funds and direct incentive accounts 30, member
accounts 31,
and on-line financial products/services 32, administrative information, such
as payment
card issuers 33, and computer programs 34 for causing processors 24 to perform
the
methods of the implemented loyalty programs. More than one database server may
be
provided if needed for load sharing or reliability.
Stored member information 27 preferably includes for each member: name,
address, e-mail address, copy of authorized signature, unique member
identification such
as a system identification number, a secure personal identifier such as a
password for
accessing the system web site, credit card information, social security
number, preferences
for allocating rebates, rewards and other incentives, and other information
extracted from
the member's completed registration form, and so forth. Upon submitting the
registration
form, the database server 23 creates in the member database 27 records for the
new
member, extracts the information from the registration form, and preferably
assigns a
system identification number to the member. Membership registration is
advantageously
automated to the extent possible by the systems of this invention operating
under the
supervision of the administrator. Member information may be updated upon
member
request, such as requests made through the administrator web site or
automatically
through, for example, credit reports.
Stored participant information 28 preferably includes for each merchant,
manufacturer, supplier, service provider, financial intermediary (such as a
credit card
issuer) and so forth that has agreed to provide rebates or other incentives to
members of
the program: unique identification such as a system identification number,
rebate, reward,
23
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
discount or other incentive schedules that the participant has agreed to
provide to
members, limitations on use of direct incentives, rewards, points, other
reward currencies
or discounts awarded to member purchasers, instructions for requesting and
obtaining
rebate monies and other incentive amounts, and so forth. Participant
registration is also
advantageously automated to the extent possible using information provided at
participant
registration and updated on participant request.
Stored purchase/rebate and other incentive information 29 preferably
includes information, for each member, concerning purchases made at merchants
or
manufacturers or involving the products or services of participants, use of
financing
services, such as credit cards, of financial institutions participating in the
loyalty program,
and other participant transactions. Tracking information received by the
administrator that
includes at least total transaction amounts of members is used to compute and
update this
rebate and incentive information according to the rebate and incentive
schedules of the
participants. This information also preferably includes, for each participant,
rebate
monies, points, other reward currencies, rewards, other incentives or other
incentive
amounts that are due from or have already been received. This latter
information is
updated upon transmission of administrator requests for monies and other
incentive
amounts and upon receipt of information concerning monies and other incentive
amounts
received by member agents, by the escrow or other administrative account, or
directly by
the administrator.
Stored fund and incentive database information 30 preferably includes
information relating to the investments) or funds) offered, in a preferred
embodiment, for
allocation of member rebates to a mutual fund, including fund holdings of the
publicly
traded securities of at least one participant, fund ownership by members, past
and present
fund performance, and so forth. This information may also include other
investment
vehicles, such as individual securities, non-equity securities or security
funds, or so forth,
and ownership by members. In view of, for example, the current portfolio or
security
holdings and recently received rebates and other incentive amounts, the
administrative
system transmits instructions, for example, in files transferred by FTP, to
the computer
systems of its agents to make security purchases or sales. Share purchases are
confirmed
to administrative systems, for example also via FTP server 39, by electronic
messages that
are then used to access and to automatically update the stored investment or
fund
information 30 to reflect the new portfolio composition and ownership by
members.
24
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
In the case of direct incentive loyalty vehicles, the administrative system
transmits instructions to its banking agents holding rebate funds and other
incentive
amounts (for example escrow or other administrative account 56) to transfer
funds or
amounts to member incentive accounts, and receives messages confirming
completion of
its instructions. These instructions and confirmations may be in files
transferred by FTP,
or may be in formats appropriate to interbank transfer networks, or may be
transferred
transaction-by-transaction.
Stored member account information 31 preferably includes information
about the composition of a member's rebates, points, other reward currencies,
rewards,
discounts or other incentives that are due from participants or that have
already been
received, and the composition of outstanding fund or other investment
ownership and
currently-available direct incentive accounts. It may also retain a history of
the member's
past transactions at or with participants or involving the products or
services of
participants and a history of benefits received from the loyalty program. This
information
is updated along with rebate/reward and other incentive information and
investment/incentive information using input from the same sources. It is
queried in
response to, for example, requests for on-line information by members who have
accessed
the administrator web sites. Optionally, this information can be combined with
member
information 27.
Products/services information 32 preferably includes other financial or non-
financial products or services that may be offered to members at the loyalty
program web
site.
Administrative information 33 preferably includes necessary information to
operate the administrative systems, such as system configuration, preferred
networks and
protocols for communicating with various agents and intermediaries, help
information for
customer service representatives and members, and so forth. This information
is updated
when configuration changes, typically under the direct control of system
operators.
Administrative information may also include monies and other incentive amounts
available in the various accounts controlled by the administrator, such as the
escrow
account.
These computation and communication activities of the administrative
computer systems are preferably implemented as computer programs 34 written in
a
computer language, such as C, C++ or Java. Programs are translated into
machine
instructions, and are stored in long-term memory until needed by the
processor, when they
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
are loaded into computer-accessible memory for causing the loyalty program
methods of
S this invention to be performed. If the programs are interpreted, their
execution as machine
language instructions is usually deferred until needed by the processor. These
programs
may initially be distributed to the administrative systems on computer
readable media of
any sort, for example on magnetic disks or tapes, optical disks, or across a
network
connection, such as from an Internet server. These media store these computer
programs
in a suitable encoded form.
The databases of the systems of this invention can be organized as known
in the art. For example, it is preferable for them to be implemented as
relational databases
by using commercially available relational database systems, such as those
from Oracle
Corp. or Sybase, Inc. System databases can alternately be implemented by other
database
systems, or even as files provided by a file system.
It is to be understood that Fig. 2 and the above discussion describes an
exemplary system of the present invention. This invention is not limited to
such a system,
but includes systems of other architectures implementing similar
communications and
computational activities that are known to those of skill in the art.
5.3. SOURCES OF MEMBER TRACKING DATA
This section describes various methods for obtaining data tracking member
transactions at or with participants or involving the products or services of
participants
necessary in order to accomplish the loyalty programs of the present
invention.
Advantageous methods are those that can tap into existing financial data and
financial data
communications with a minimum disruption to existing commercial computer
systems.
As those skilled in the art will recognize in view of the following
description, certain
tracking methods may be more or less preferable depending on the nature of the
members
and participants in a particular loyalty program. Also, it will be recognized
that the present
invention is not limited to the tracking methods described herein, but can
readily be
practiced with other tracking methods that obtain substantially the same
information.
Tracking information may be transmitted to communication interface
systems 22 in various manners. For example, where the data is periodically
obtained by
participants, an appropriate method may be periodic (e.g., daily, weekly, or
so forth)
transmission of a batch of member transactions by known means and employing
normal
business security considerations. Such transmission may be via public,
private, or
switched communication networks using transport protocols such as FTP and so
forth.
26
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
Where the data is transmitted from financial payment networks, messages may be
transmitted transaction-by-transaction from a financial network gateway or
interface.
Received tracking data is used by database servers 23 to automatically
update rebate/reward and other incentive database information 29 and possibly
member
accounts 31. Stored rebate/reward and other incentive database 29 as well as
member
database 27 would be updated to reflect member purchases, and by extension,
rebates,
rewards, points, credits and other incentives earned; participant database 28
may be
updated to reflect the rebate monies and other incentive amounts owed by the
participants
to the administrator and to members. Specifically, the information is updated
to reflect
each individual member's purchases and the rebates, rewards, points, credits
and other
incentives earned based on those purchases, and to reflect the purchases made
at or with a
participant or involving the products or services of a participant and thus
the rebate monies
owed to the administrator by the participant(s). Rebate and incentive amounts
are
computed by processors 24 in view of the stored participant rebate/reward and
incentive
schedules.
Rebate monies and incentive amounts are then electronically requested
from participants, and transferred, for example, by clearinghouse networks or
wire
transfers to administrator or agent accounts with banking or financial
intermediaries.
Transferred rebate monies and incentive amounts are held, as described, in
escrow or other
administrative account 56 (Fig. 3), perhaps in the name of a third-party
escrow agent. If
permitted by law or regulation, these monies and incentive amounts may be held
directly
in administrator accounts. Messages confirming successful transfer are
preferably
messages transmitted to the administrative systems. (Alternately, these
systems may
monitor transfers by periodic account inquiries.)
After rebates, points, other reward currencies and rewards have been
transferred, they are allocated to loyalty vehicles according to member
allocation
instructions (or by default). These instructions are evaluated by computer
systems 23.
Allocated monies and incentive amounts are then transferred to, for example,
equity or
current incentive accounts from escrow or other administrative accounts. All
money and
incentive amount requests and transfers are preferably performed by electronic
communication using existing payment or financial networks, if possible.
Next, member transaction tracking is described.
5.3.1. MERCHANTS/MANUFACTURERS/OTHER PARTICIPANTS
27
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
In one embodiment, participating merchants, manufacturers or other
participants may identify member transactions from their financial systems by
collecting
data identifying, inter alia, the member, the amount of the transaction,
optionally the type
and contents of the transaction, and so forth. This data is then transmitted
to the
administrative systems, either on a transaction-by-transaction basis or in
periodic files
aggregating the transactions during the prior period. For concreteness but
without
limitation, this embodiment is first described in the case where members make
purchases
at on-line merchants.
First, members may access the loyalty-program web site (operated by the
administrator or its affiliates and implemented on the administrative
systems), and, using
hyperlinks, may further access any of the various participating merchants that
are listed on
the loyalty-program web site. The administrative systems then transmit a
loyalty-program
identifier tag to the merchant database server that identifies the transaction
at the merchant
web site as involving a program member. The identifier tag is stored by the
merchant
database server along with the transaction information. Next, on some periodic
basis, the
merchant may query its database server to retrieve all transactions that
include program
identifier tags in order to build a file that preferably includes the total
rebate or other
incentive amount owed to the administrator for that period along with its
breakdown
among the members. This file would be transmitted to administrative systems 22
and 23
(Fig. 2), by, for example, using the FTP protocol and accessing FTP servers
39.
Other identifying methods may be used in this case. For example, the
member may be assigned a special e-mail address at the administrative system,
which is a
requested input when making purchases at on-line merchant web sites. The
merchant
systems may then transmit the details of the purchase to the member's special
e-mail
address for use as described above by the administrator or the administrative
systems.
Rebate monies and other incentive amounts can be automatically forwarded at
the time of
the transaction, or alternatively, be forwarded only on instructions from the
administrative
systems to transfer rebates and/or other incentive amounts.
In a further example, the administrative system web servers 37 may be
configured such that when a member clicks on a merchant on the administrator's
or its
affiliate's web site, a web page co-branded between the administrator and the
merchant is
transmitted. Such web pages can be physically stored on the administrator web
servers or
the merchant's web server. In the case where the administrator web server 37
provides the
co-branded web pages, member purchases on such pages can be directly tracked
by the
28
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
administrative systems 22 and 23. In the case where the merchant's web server
provides
S the co-branded web pages, the merchant's web server tracks member purchases,
and
merchant systems may transmit the details of the purchase to the member's
special e-mail
address for use by the administrator or the administrative systems as above.
Rebate
monies and other incentive amounts can also be either automatically forwarded
at the time
of the transaction, or alternatively, be forwarded only upon instructions from
the
administrative systems to transfer rebates and/or other incentive amounts.
5.3.2. CREDIT CARD ISSUING BANKS
Credit card issuing banks may provide member transaction tracking
information either by being a participant in a loyalty program like a merchant
or
1 S manufacturer, or by providing access to their credit card accounts held by
loyalty program
members.
In a first embodiment, a credit card issuing bank is a participant, and a
member receives rebates, points, other reward currencies or rewards based on
use of an
issued credit card. In this case, during registration, members complete a
credit card
application, which in the preferred embodiment is a co-branded credit card
between the
administrator and a credit card issuing bank (e.g., MBNA). The credit card
issuing bank
has agreed with the administrator to pay rebates or other incentive amounts
based on
purchases made with the card, and can track total amount of purchases made by
each
member using the credit cards by, for example, scanning its already available
credit card
account information for member transaction. Each member's credit card usage
information is transmitted to administrative systems 22 and 23, and the total
rebate or
other incentive amount due the administrator is transferred from the credit
card issuing
bank, either automatically or upon request. These embodiments and alternatives
apply
equally to other forms of payment cards, such as debit cards, stored value
cards or store-
issued credit cards.
Having a credit card as a tracking mechanism allows members to receive
rebates, points, other reward currencies and rewards for purchases of goods
and services
not only at the web sites of on-line merchants but also at the brick-and-
mortar pretences of
off line merchants. In addition, a particular loyalty program may include
participant credit
card issuers with or without merchants/manufacturers as participants. On-line
member
purchases and off line purchases, whether at the participating merchants or
elsewhere, may
be tracked as in the credit card case above. Where there are merchant or
29
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
manufacturer/supplier participants, a member's account details, or at least
the purchase
S amounts at participating merchants or involving the products or services of
manufacturer/supplier participants, must also be transmitted to the
administrative systems
to provide the merchant or manufacturer/supplier tracking information.
Allocation of
rebates, points, other reward currencies or rewards may now depend on whether
participating merchants were used, whether products or services of
participating
manufacturers or suppliers were purchased, whether an issuer credit card was
used, on
whether both participating merchants and an issuer credit card were used, or
on other
combinations possible in view of the detail of the member tracking
information.
In another embodiment, a member's after-acquired or pre-existing credit
cards may be used to make loyalty-program purchases, whether or not an issuing
bank
provides rebates, points, other reward currencies or rewards to a member for
purchases
made with its credit card. Here, card identification by, for example, name,
card number
and expiration date, is provided during member registration (or subsequently),
and this
identification is used to retrieve tracking information from the issuing
bank's payment
information databases or other databases available to the administrator.
Payment
information is normally accumulated at issuing banks (or their processors) for
holders of
their issued cards, and may be searched by card number or secondarily by
merchant. This
information includes at least transaction date/time, merchant and payment
amount, and is
reported on a holder's periodic statement. (Also acquiring banks (or the
processors) may
accumulate similar transaction information, at least for certain statutory
time periods,
which is available by primarily merchant and secondarily by card number.)
In this embodiment, the administrative systems have stored member credit
card information, either because it has been provided upon registration or
because the
credit card was co-branded and applied for upon registration. This credit card
information
may be stored, for example, as part of member database 27 (Fig. 2). To
identify such
member purchases for tracking, database server 23 would periodically (e.g.,
daily, weekly,
monthly, etc.) retrieve member credit card identification and transmit it, for
example by
using FTP server 39, to the issuing banks or other processors, typically
identifying the
issuing bank by digits 2 through 6 of the card number. For example, the
administrator may
supply to the card processors and merchant banks: member name as it appears on
the
registered credit card(s); type of credit card (e.g., Visa, MasterCard,
Discover, or American
Express) as indicated by the first digit of the credit card number; and the
user's account
number typically indicated by the seventh and succeeding digits of the credit
card number.
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
With such information, the issuing banks and other processors (who may receive
from the
S administrator card digit numbers identifying the issuing bank) search their
account
databases for purchases made by the members (and preferably only at merchant
sites). The
purchase information generated by this search is then transmitted back to the
administrative systems via, for example, FTP servers 39. In a preferred
embodiment, only
the purchase information for purchases made at or with participants or
involving the
products or services of participants is then transmitted back to the
administrative systems
via, for example, FTP servers 39. In a further alternative, this activity is
completed on-line
using the administrator system and the computer systems of the merchant banks
and card
processors communicating via the various means 21. This task may also be
performed by
a third-party provider with access to the relevant purchase information. [BB
NOTE:
CHECK REVISIONS TO THIS PARAGRAPH WITH BRETT]
Alternatively, where credit cards are co-branded between a loyalty program
and an issuing bank, the bank already knows which holders are members, and may
make a
record of this in a holder's information. Then, such an issuing bank could
supply tracking
information for such members without input from the administrative systems. In
a further
alternative, acquiring systems can be queried to search for participating
merchant or
manufacturer credit card billing records by providing lists of participating
merchants or
manufacturers. Also, acquiring systems could be queried for member credit card
payment
records.
5.3.3. PAYMENT NETWORKS
In a preferred embodiment, member transactions may be tracked by
payment networks otherwise devoted to credit or debit card processing. In this
embodiment, a loyalty program member would be provided with a credit-card-type
card
that is recognized by the payment card processing system. Such a card,
generically
referred to herein as a loyalty card (or an "id" card), would have a valid and
correctly-
formatted account number as well as such physical features and indicia, such
as a standard
size and a standard-format magnetic stripe, sufficient for it to be recognized
at point-of
sale terminals and other terminals capable of recognizing credit or debit
cards. The basic
function of a loyalty card is to identify a loyalty program member at the
point of the
transaction (also, the point-of sale, or "POS") and at the time of the
transaction (also, the
time-of sale, or "TOS") in order that the payment card processing systems can
automatically generate transaction-tracking data.
31
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
In certain embodiments, loyalty cards have no further functions. However,
it may be preferable for a loyalty card to be provided with additional,
optional convenience
features. For example, a loyalty card may also function as a payment card by
being
associated with either a credit account or a demand account. Also, a loyalty
card can
function as a direct incentive vehicle by being associated with a demand
account charged
(or credited) with value by rebates/rewards or other incentive amounts
allocated by the
loyalty program. This embodiment may advantageously have rules controlling
allowed
debits from the associated demand account, such as by only allowing payments
for the
products of a certain manufacturer made at a certain merchant. In the
following, a loyalty
card with only the basic function is referred to as an id-loyalty card (or
simply as an "id-
only" card); a card with payment features as a payment-loyalty card (or simply
as a "id-
payment" card); and a card with direct incentive features as an incentive-
loyalty card (or
simply as an "id-incentive" card).
For a loyalty program to be able to "issue" even simple id cards, it may be
necessary for the program to become associated with a bank that otherwise
issues standard
credit cards. This is due at least to the operating agreements and membership
agreements
of present payment processing systems. To be able to issue id cards or id-
payment cards
with optional payment features (requiring associated accounts), association
with one or
more banks may be imperative. For another example, id-payment cards may be co-
branded between the loyalty program and a bank that otherwise issues standard
payment
cards. Therefore, in a common but not limiting embodiment, loyalty programs
are
described as being associated with issuing banks that are capable of and
actually issue
loyalty cards to program members upon request. The following description
primarily
addresses this preferred embodiment, and separately describes the functions of
the loyalty
program and of the issuing bank. However, in other embodiments, the loyalty
program
itself would be capable of issuing loyalty cards, and issuing banks are not
necessary. The
following description is immediately applicable to this latter embodiment by
simply
combining the functions of the issuing bank into the administrator of the
loyalty program.
Before describing the gathering of member tracking information using
loyalty cards, basic features of existing payment-card networks are described.
Payment Networks Generally
Fig. 5A illustrates an exemplary payment-card network, including computer
systems of the principal actors and communication links between these systems.
Such a
32
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
network can support processing of either credit or debit cards. Fig. SC, in
which identical
elements have identical reference numbers, illustrates the principal messages
in network
during this payment-card processing. In this latter figure, downward pointed
arrows
represent the advance of time during transaction processing. In both these
figures, double-
headed straight arrows 110-112 represent generally commercial transactions,
while
communication arrows 113-117, 150, 151 and 154-157 represent communications
links or
electronic messages exchanged between computer systems. Entities 100-104
represent the
principal parties, along with their network-connected computer systems, that
participate in
member transactions and from which transaction tracking information is
generated.
Further, financial network 105 represents a payment/clearing network, such as
the
networks of the VISA or MasterCard associations. In accord with commercial
practice,
part of all of the computer systems of loyalty program 100, registered
merchant 102, card
issuer 103, payment gateway 104 and financial network 105, which process
payment
messages and transactions, may by subcontracted to third parties. Therefore,
for example,
payment gateway 104 may represent both a processor computer system, which
handles
messages and some or all of the related account processing, and also an
acquiring bank,
which may have further computer systems for certain account processing it
chooses not to
subcontract. Computer systems for loyalty program 100 and payment gateway 104
may be
similarly configured.
For reference, first, the tracking-information embodiments previously
described in Section 5.3.1 are generally illustrated in Figs. 5A and SC by
messages
represented by the open dashed communication arrows and numbered 113' and
113".
These messages are not part of the present embodiment, but may also occur if a
loyalty
program obtains tracking data according to both embodiments. Message 113'
represents
the embodiment in which tracking data is obtained from registered merchants or
manufacturers 102 and directly transmitted to loyalty program 100. As
described above,
this communication may take place over the Internet, or other communication
network,
transaction-by-transaction or in batches of transactions. Message 113"
represents the
embodiment in which a payment card issuer is registered in a loyalty program
and
electronically transmits member tracking information directly to the
administrative
systems. Generating transaction-tracking information in these embodiments
requires
special software (or software modification) at each of the registered
participants,
merchants, manufacturers or card issuers, which extracts tracking information
during
routine commercial processing and transmits it to the administrative systems.
Special
33
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
operational procedures at each participant may also be needed to periodically
gather and
S transmit this information.
In a more preferred embodiment, member transaction-tracking information
is generated and transmitted to a loyalty program automatically, as an
incident to otherwise
normally occurring processing and requiring no special software or special
procedures or
actions by registered participants. The current embodiment achieves automatic
tracking by
using existing functions of payment-card processing for new purposes, or
alternatively by
adding minimal new enhancement, to existing payment card transaction
processing.
Therefore, any necessary modifications or changes can be made once in payment
processing systems, and need not therefore be individually made at each
participant. This
lowers overall loyalty system costs.
Before describing these enhancements, payment processing is first
described for a sample transaction where a standard credit or debit card is
used. The
following description of the sample transaction is primarily directed to the
payment cards
of mufti-bank card associations, such as VISA or MasterCard. But this example
is not
limiting, because the present invention is also applicable, first, to the well
known
variations of this model where the functions separately described herein are
performed
within one administrative entity (such as the American Express system), and
second, to
further variations that one of skill in the art will appreciate to be
equivalent to the
following.
With reference to Figs. 5A and SB, when card holder 101, having a
payment card issued by card issuer 103, for example an issuing bank, makes,
for example
purchase 11 l, at merchant 102 and offers to make payment with the issued
payment card,
the merchant first obtains authorization at the TOS (time-of sale) to charge
the payment
card with the purchase amount. Using POS (point-of sale) terminal equipment,
the
merchant collects authorization information typically including, at least,
payment card
identifying information preferably read from the card's magnetic strip, pre-
entered
merchant identifying information, and the purchase amount, which can be
manually
entered or automatically transferred from the POS cash register. More advanced
POS
equipment may also "scan" products and make available their identifications,
for example
as universal product codes ("UPCs"), stock-keeping units ("SKUs"), and so
forth. If this
information is transmitted during payment processing, a loyalty program can
advantageously capture and use it for novel and creative loyalty programs. The
collected
authorization information is then transmitted over communication link 114 to
the
34
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
merchant's payment gateway 104 for the type of payment card used. The payment
gateway is usually a bank that has agreed to acquire the merchant's
receivables for this
type of payment card, or the acquiring bank's third-party processor.
Transmission of the
authorization request, and subsequent reception of an authorization response,
between the
merchant and payment gateway is represented in Fig. SC by message
request/response
exchange 150 illustrated as occurring at substantially the time of purchase
111.
Before approving the transaction, the payment gateway (or the acquiring
bank), usually seeks real-time transaction authorization from the card issuing
bank (or its
third-party processor) by transmitting an authorization request over links 11
S and 116,
usually using the intermediation of financial network 105. Message exchange
151
represents the real-time inter-bank authorization request and response
messages. Issuing
bank processing of an authorization request message depends generally on
whether the
payment card is a credit card or a debit card. In the case of a credit card,
the issuing bank
typically checks the card holder's account status, and authorizes the
transaction if the
holder has sufficient credit and there is no evidence of fraud. Credit card
authorization
processing may be done by the issuing bank's processor. Otherwise, the
authorization is
declined. In the case of a debit card, or stored-value card having a fixed
pool of available
funds, the issuing bank must instead check for sufficient funds, and if
approved, mark
necessary funds as held to satisfy the upcoming settlement of the current
transaction.
Evidence of fraud may also be checked.
If the issuing bank authorizes the transaction, a positive authorization
response message 151 is transmitted back to the payment gateway, which then
transmits a
positive approval response message 150 to the merchant's POS terminal. The
transaction
may then be completed. Depending on the agreement between the merchant and the
payment gateway, the payment amount may then be credited to the merchant's
account
(alternatively, the crediting may be done later at settlement time). If the
transaction is not
authorized, the payment gateway receives an authorization response message 151
indicating that the card transaction is declined; and the payment gateway
indicates the
same to the POS terminal. In this case, the card holder must use another form
of payment.
Funds transfer from the issuing bank to the acquiring bank for authorized
transactions typically proceeds by means of a clearinghouse function
implemented in
financial network 105. Either on a transaction-by-transaction basis, or in
periodic (e.g.,
hourly, twice daily, daily, etc.) transaction batches, merchant 102 transmits
capture
messages 154 to its acquiring bank requesting funds due and providing
information on the
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
transaction for which they are due. Net capture messages 155 are then
transmitted by the
S acquiring bank into financial network 105. After performing a clearinghouse
function, the
financial network transmits to issuing bank 103 further capture messages
indicating the
transactions on that bank and requesting the net amount due. Issuing bank
response to the
capture messages effects funds transfer. For a credit card, the card holder's
account may
then be debited; for a debit card, the held funds are removed from the
account.
Payment card processing has known variations to which the present
invention is equally applicable. First, issuing bank 103 and acquiring bank
104 may be the
same (known as "on-us" transactions). For "on-us" transactions, equivalent
functions are
performed internally in the computer systems of one bank that were performed
by different
banks in the example above; that is, transaction authorization functions, or
their
equivalent, are performed at the TOS and settlement functions, or their
equivalent,
between accounts are performed then or later. Because processing is internal,
message
communication links 115 and 116 are now intra-bank, if they physically exist
at all, and
use of a financial network is not always necessary. A further variation is
exemplified by
American Express payment cards. American Express includes internally all the
actors and
communication links of Fig. 5A; that is, American Express functions as the
issuing bank,
the acquiring bank and the financial network. In this case also, authorization
is performed
at the TOS with settlement occurring then or later. The elements of Fig SA may
be
functional and not physical.
Preferred payment networks are those maintained by Visa, MasterCard
International Incorporated (Purchase, N.Y.), American Express, and Discover.
Gathering Tracking Information
The automatic gathering of loyalty-program tracking information is based
upon minimal but novel modification to the above-described payment-card
processing.
Gathering member-transaction tracking information, according to the present
embodiment,
results from a side effect of authorization processing at the TOS. This
processing in
skeleton form sends to the card issuer (or issuing bank) an electronic request
message
seeking payment approval, which then returns to the POS an electronic response
message
indicating, at least, payment approval or refusal. According to the present
embodiment,
the card issuer during authorization processing simply transmits authorization-
time ("auth-
time") message 153 (Fig. SC) to administrative systems 22 and 23 (Fig. 2) of
the loyalty
program, which contains information extracted from the payment authorization
request
36
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
messages 150 and 151. This auth-time message includes minimal tracking
information,
i.e., card holder identifying information, merchant (generally POS)
identifying
information, and the amount of the proposed transaction, which is necessarily
present in
the pre-existing authorization request messages. Preferably, it may also
include, where
available, information identifying the goods or services of the proposed
transaction and
their supplier or manufacturer, or so forth, an indication of transaction
approval or refusal,
and so forth, which permit more fine grained loyalty programs.
Generation of auth-time message 153 has several embodiments. In an
embodiment preferred for low cost and rapid implementation, this message is a
pre-
existing payment-system message, already generated but now used for the
additional
purpose of providing tracking information. This embodiment is described with
reference
to Fig. 5B illustrates portion 118 of Fig. 5A in more detail. Herein, card
issuer 103b is
illustrated as distinct from any third-party information processor 103a (where
the card
issuer is its own processor, this distinction may be only functional). In this
simple
embodiment, card issuer 103b issues id-only cards that are recognized by
standard POS
equipment and appear to the payment network as valid credit cards, but to a
card holder or
merchant appear, physically distinguishable from cards having an actual
payment function
(for example, by not having an embossed account number or showing less than
the
standard sixteen-digit number contained on credit cards). Payment must
therefore be made
by another means (cash, check, credit card, or forth). To identify a purchase,
or other
transaction, to the loyalty program, the member has the participant "swipe"
such an id-only
card, or otherwise enters the id-only card information, into the POS equipment
along with
at least the amount of the purchase. The payment system, in particular the
payment
gateway, then generates authorization request message 151, which arrives
across
transmission link 116 from financial network 105 at processor 103a, which then
performs
authorization processing.
In one alternative of this simple embodiment, the card's payment functions
are disabled by marking the card account information maintained by the systems
of the
processor 103a (of by the systems of the issuer 103b) so that all payment
authorizations for
id-only cards are declined. In this case, an authorization response indicating
denial is
returned to the merchant, and the id-card holder then effects actual payment
by other
means. In existing payment-card systems and with simpler POS equipment, it may
not be
possible to return to the POS a message indicating the true reason for denial.
These
systems may be limited to providing only a single, unqualified approval-denied
indicia.
37
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
Preferably, authorization response messages provided by the payment system are
capable
of carrying, at least, coded reasons for approval denial, and one of the
reason codes is for
the loyalty program and causes display of helpful indicia, for example
indicating that
loyalty-program transaction identification is successful and payment may now
be made.
More preferably, freely definable information may be transmitted in the
authorization response or in a message accompanying the authorization
response. This
information may include incentivizing information, perhaps specific to the
card holder.
Such information could include the estimated rebate/reward or other incentive
just
received. It may also include reminders to the card holder from the loyalty
program
system. Further, it may include promotional offers to the card holder at the
point of sale.
Such offers could be for items related to that just purchased, or to offers
related to the
merchant, or so forth.
Now, turning finally to generation of tracking information, during credit
card authorization denial in pre-existing payment-card networks, processor
103a usually
generates a further message reflecting the denial and including information
about the
denied transaction, and transmits it at authorization time to issuing bank
103b via
communication link 117'. This real-time transmission of denial information
helps the
issuing bank typically identify excessive credit usage by its customers, to
identify and
staunch a developing fraud before losses accumulate, and for other security
reasons. In the
present implementation, the pre-existing denial message is simply sent to the
loyalty-
program administrative systems 22 and 23. In order words, loyalty program100
is made to
appear to processor 103a as the issuing bank 103b for these id-only cards, and
thereby its
administrative systems (possibly along with the formal card issuer 103b)
receive all denial
messages for id-type cards from processor 103a . The information in these auth-
time
denial messages is sufficient for member transaction tracking.
For debit cards, similar authorization-time processing also permits a low
cost and rapid implementation by redirecting pre-existing authorization time
messages to
the loyalty program. To authorize debit-card payment, processor 103a virtually
always
communicates with issuing bank 103b, because it maintains the demand account
records
for its debit card holders. Accordingly, at authorization time, processor 103a
transmits a
message (often known as an "advice" message) over communications link 117 to
issuing
bank 103b advising it of the transaction amount and requesting authorization.
In normal
debit card processing, after checking for sufficient funds, and holding funds
for settlement,
the issuing bank responds to the processor. For debit-type id-only cards, the
loyalty
38
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
program again appears to processor 103a as the issuing bank, and its
administrative
systems receive thereby all advice messages. These are illustrated as auth-
time messages
153 (Fig. 2). Administrative systems 100 then merely save transaction-tracking
information from advice message in its databases, and responds to processor
103a with a
message denying the requested transaction.
These embodiments of low cost and rapidly implementable transaction
tracking at authorization time are not limiting. For example, the computer
systems and
software of the issuing bank or of its processor may be modified to routinely
generate new
transaction tracking messages and transmit them to an appropriate loyalty
program in all
cases. The loyalty program to which the message should be directed may be
identified
from information stored in databases in association with the card numbers.
Use of Payment-Type Cards
Turning now to id-payment cards and f rst to debit-type id-payment cards,
loyalty-program tracking information can easily be obtained as just described
from the pre-
existing advice messages. Advice messages are routinely transmitted at
authorization time
to the issuing bank in order to check on funds availability and optionally to
hold funds for
settlement, and they contain sufficient information for loyalty program
transaction
tracking. These authorization-time messages can, for example, be simply
mirrored to the
administrative systems of loyalty program 100 from processor 103a when they
are
transmitted to issuing bank 103b. Alternatively, they can be re-transmitted
from issuing
bank 103b to loyalty-program administrative systems. Second, for credit-type
id-payment
cards, it may be necessary to minimally supplement authorization processing at
processor
103a to produce a "pseudo-decline-type" message also in case of transaction
approval.
This new "pseudo-decline-type" message would contain at least member and
participant
identification and transaction amount so that the transaction can be tracked
by loyalty
program 100,if such message is also re-transmitted from issuing bank 103b to
loyalty-
program administrative systems.
Incentive cards with a stored-value component may function, in a further
embodiment, similarly to debit-type id-payment cards. These cards are (at
least nominally)
issued by a qualified issuing organization, such as a card-association member
bank, which
also holds the accounts funding these cards for individual member card
holders.
Transaction tracking information may be generated as above by taking advantage
of pre-
existing advice messages, or their equivalent, which may be mirrored from a
processor or
39
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
re-transmitted from the card issuer to provide the tracking information. In
case payment
authorization is declined due to insufficient funds or other cause, the
payment processing
may still be used for identification only purposes, for example by obtaining
tracking
information from pre-existing decline messages, and an appropriate message
returned to
the POS. Using coded, or preferably free-form fields, in the authorization
response
message, the card holder may be politely informed that, for example, although
the holder's
rebate value pool is too low, the current transaction is already poised to
replenish the
rebate value pool. Value is deposited in the debit-type id-card accounts
asynchronously to
payment transaction processing by loyalty program administrative systems when
rebates,
points, other reward currencies or rewards are allocated to direct incentives
for particular
member cardholders. To carry out value updates, the loyalty program may send
update
messages 157 (Fig. SC) to the computer systems of the card issuer, or to those
of its
processor, where the account value is stored and processed.
In an alternative embodiment, use of debit-type id-payment cards can be
restricted to achieve targeted and directed incentive programs. Directed
programs can be
implemented by, for example, attaching rules to each id-payment account, or
group of
accounts. The rules may be examined (or executed) at authorization time in
view of
information transmitted as part of the authorization process (and possibly
also in view of
the past behavior of a cardholder) to determine whether a particular
transaction will be
authorized even if there are insufficient funds. Use of rebates or other
incentives from a
particular merchant can be limited to future purchases at that merchant by
identifying the
sources of funds in an account and authorizing a transaction only if the
merchant
requesting the authorization is a source of sufficient funds. Similarly, use
of rebates or
other incentives from a particular manufacturer can be limited to that
manufacturer's
products if SKU or UPC information is available at authorization time so that
the product
for purchase can be identified. Use of rebates or other incentives can be
limited to
products of a particular manufacturer purchased at a particular merchant. Use
of rebates or
other incentives can be limited to a particular time, by keeping track of an
expiration date
for portions of the account and then debiting the account for that portion
when it has
expired. Similarly, use of rebates or other incentives can be limited to
frequent purchases,
purchasers in certain groups, or so forth.
The description above has considered only the information currently and
commonly available on payment networks. Currently, product identifying
information of
SKU-type of UPC-type is not commonly available on payment networks. This
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
information may become available with the increasing use of smarter, more
capable POS
equipment. When available, it can be extracted from payment network messages
illustrated in Fig. SC and sent to the loyalty system, where it permits more
granular loyalty
programs to be implemented. For example, the electronic or on-line equivalent
of product
coupons may be cheaply implemented without the expense and customer
inconvenience of
handling paper coupons. When the administrative systems track purchases of a
particular
discounted product, the offered reward or rebate could be generated as a
credit to the
member and a debit to the merchant or manufacturer; that is, as an electronic
coupon. The
use of such an electronic coupon may be unrestricted or may be associated with
rules
restricting use of the coupon to particular products as described above. One
of skill in the
art may immediately conceive of further rebate or reward programs possible by
using such
information.
Also, the description above has considered tracking information available at
authorization time. But the present invention is not so limited, and certain
information
may be partially or entirely transferred later in the payment process, for
example, at funds
capture time or in a batch-file transmitted on a periodic basis (daily, weekly
or so forth) to
the loyalty program. Such information is represented by cap-time messages 156
transmitted to loyalty program 100. Although payment authorization generally
needs to be
done at authorization time - authorization for id-only cards is always
declined and
authorization for id-payment cards is checked - transmission of further
transaction details
can be delayed until later. For example, product purchase identification can
be transmitted
to the loyalty program when available and linked with earlier authorization
time
information by, for example, a transaction identifier.
Although described above for off line transactions at physical premises of
merchants, the above methods and systems can also be equally used to track on-
line
transactions made at a merchant's "virtual" premises or through a merchant's
catalog sales
system. For example, an id-only card can be used on-line (or over the
telephone or by mail
or e-mail) in a manner exactly analogous to the off line use described. It can
be presented
first, followed by a payment card for actual payment. Id-payment cards can
also be used
on-line.
Use of Private-Label Cards
The present invention also includes the use of above-described tracking
methods with private-label credit or payment cards. Individual merchants, such
as
41
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
department stores or gasoline distributors, use such private-label credit
cards to extend
credit to their customer only for purchases at their own venues. Since
processing of these
cards usually involves an on-line authorization checking at the TOS by the
merchant's
computer systems, all the above-described loyalty-program tracking methods can
be
straightforwardly applied to these cards.
Additionally, merchants may have stored value cards that have a fixed
value that is debited for purchases. Where the current stored value is stored
centrally on
merchant systems, then authorization time processing is usually preformed, and
may be
similarly adapted to the above-described loyalty program tracking methods. In
some cases,
the current value may be stored on the card itself (for example, as in a smart
money card).
Here, the present invention can implement tracking methods by, for example,
having
merchant POS equipment that records member transactions, at least member
identity and
transaction amount, and makes this information available to the administrator
systems,
either in real-time or for upload of batches of transactions. Alternately, the
card may keep
a counter of the amount of transactions at the particular merchant. Tracking
data may be
obtained by reading and resetting this counter by administrator (or merchant)
systems.
This counter can be implemented in a smart card memory or on a legacy magnetic
stripe.
Further variations in the capture of transaction tracking information from
payment network messages generated by the processing of payment cards of a
wide variety
of types are within the spirit of the above description that will be apparent
to one of skill in
the art in view of this description are also intended to be within the scope
of this invention.
5.3.4. OTHER TRACKING MEANS
Other methods of obtaining member-tracking information may also be used
in the present invention. For example, member purchases that are made via an
electronic
wallet could be tracked. An electronic wallet is conventionally understood to
be a
software component that resides on a user's computer and includes user
identifying data
and data describing debit or credit cards that the user wishes to use for
payment in on-line
transactions. An electronic wallet automatically and securely provides on-line
this
payment information to a merchant. For use in the present invention,
electronic wallet
software would additionally transmit on-line transaction information to
administrative
systems 22 and 23 via, for example, the Internet. If a member with a local
computer
wishes to use an electronic wallet for providing tracking information, the
member would
first register for an electronic wallet on the administrative web site, and
the electronic
42
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
wallet software would be downloaded onto the member's computer. Alternatively,
instead
of an entire electronic wallet, upgrades or modifications to existing
electronic wallets that
performed the additional functions relied on by this invention could be
downloaded. Then,
the member's use of this electronic wallet in on-line purchases would
automatically
generate and send tracking information to the loyalty system databases.
Generally, the present invention may be used with other electronic payment
means, such as electronic checks, electronic cash, the EZ-pass payment system,
other
similar systems and so forth. These electronic payment forms may be
implemented over
computer networks, such as the Internet or private financial networks, or by
use of devices
such as smart cards, tamper-proof (or secure) memories, or so forth. These
electronic
payment systems can easily be adapted for use in the present invention in a
manner
generally similar to the methods described above for financial and payment
networks. For
example, messages already generated during processing of these other
electronic payment
means and containing transaction-tracking information can be copied to the
administrative
systems of this invention. Alternatively, software modifications can generate
additional
messages with transaction tracking for the administrative systems of this
invention.
Thereby, member transaction tracking may then be collected without
intervention of the
member or the participant during transactions of all types where payment is
implemented
by such electronic payment means.
5.4. ALLOCATION OF LOYALTY AMOUNTS
With reference to Fig. 3, rebates, points, other reward currencies and
rewards 58 due from participants 51 because of member 50 transactions 57 are
transferred
58 and 59, directly or indirectly, to escrow or other administrative account
56, or
alternatively to an account of administrator 52. For each member, rebates and
other
incentive amounts received are allocated 73 to loyalty vehicles, either
periodically (e.g.,
daily, weekly, monthly, or so forth), or when a specific minimum has been
received, or so
forth, under control 64 of the administrator 52.
With reference to Fig. 2, periodically database systems 23 query
rebate/reward/incentive information 29 to determine the amounts due from the
participants. The administrative systems then communicate, for example, via
FTP server
39, a request to the participants for these amounts. The participants, as
agreed, then
request their banks or other agents to transfer these amounts to the financial
or other
institutions holding administrator accounts, or the escrow or other
administrative account,
43
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
or through the member agents. When the transfers are completed, the financial
or other
institutions notify the administrative system, for example, again through FTP
server 39,
and database systems 23 update reward/rebate/incentive information 29, member
accounts
31, and its account information in administrative information 33 (or other
data item), and
other data items.
Also periodically, database system 23 queries the database for funds or
other incentive amounts available for allocation. This computation results in
messages or
FTP files transmitted to its agents, which instruct them, inter alia, to
transfer monies or
other incentive amounts to direct incentive accounts of the members or to
security transfer
agents and/or its security brokers to buy or sell securities. The
administrative system
monitors replies from its agents indicating successful completion of their
instructions.
Items in database 26 are then appropriately updated.
The present invention can employ numerous loyalty vehicles. Illustrated in
Fig. 3 are two preferred types of vehicles: equity investments and current
incentives.
Selection between these two types, and between subtypes of each type, is
typically under
the control of the members. An individual member may, for example, have a
longer-term
savings orientation and choose equity or other investments, or shorter-term
consumption
orientation and choose current incentives. These control choices can be
represented as
allocation rules that are a function of, at least, member and participant
identity, and also
other factors, such as type of transaction or product purchased or the
existence of a
participant's current promotion programs. Such rules would be executed by
administrator
52 in the process of rebate or reward allocation.
The two illustrated loyalty vehicles are next described in more detail.
5.4.1. EQUITY FUND INVESTMENTS
In one embodiment, member rebates are at least partially allocated to
equities, preferably equities of participants, and more preferably to a fund
for investment
by or through which the publicly traded equities of at least one participant
are purchased.
The latter embodiment is discussed in the following primarily with respect to
merchant
participants, but it can be immediately applied to participants of all types,
for example to
manufacturers or to credit card issuers.
In more detail, equity investments can be, for example, investments in
individual securities or investments by or through a fund for investment,
including a
mutual fund, that purchases several securities (and, optionally, also cash).
Individual
44
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
securities are preferably securities of the participant furnishing the
particular rebate, or
participants furnishing rebates, to be allocated, ,or they may be one or more
securities
chosen by or for the member for investment. Funds for investment, including
mutual
funds, by or through which securities are purchased preferably purchase
publicly traded
securities of at least one participant. Purchase and sale of securities or
mutual funds are
only schematically illustrated in Fig. 3 by loyalty vehicle 63. In a typical
scenario, the
administrator would use a broker agent, which would buy and sell on security
exchanges
or in other public markets 65 under administrator 52 direction. Rebates,
rewards and other
incentives allocated to equity investments would then be sent to (or received
from) a the
security broker or transfer or other agent, which would also hold and/or
transfer securities.
In the case of a mutual or similar fund, a security broker or transfer agent
could hold a
position in the fund's securities proportionately for the benefit of each
member and/or
issue shares proportionately to members. Members may also be able to request
their own
transactions in securities and transactions by or through funds for investment
as illustrated
by interaction 68. The next subsection describes the operation of funds for
investment in
more detail.
Loyalty vehicles including funds for investment that purchase publicly
traded equities of at least one participant are the preferred loyalty vehicles
and are
described next in more detail.
Concerning the preferred equity fund loyalty vehicle, now described are the
preferred methods of converting rebates and other incentive amounts to
securities
purchased by or through the fund or to shares in the fund, preferred methods
for
purchasing equities and the preferred methods for fund administration. These
are followed
by a fund example. First, in the preferred method of converting the rebates
and other
incentive amounts that members have earned through their purchases into shares
of an
investment, database server 23 periodically (e.g., preferably monthly) queries
the member
purchase/rebate information 29 to locate member accounts that have total
rebate and other
incentive amounts that exceed a specified minimum amount (e.g., the minimum
amount
may be less than $10, $100 or other appropriate amount). The result of the
query is then
compiled into a FTP file and sent to a FTP server at the transfer agent,
broker dealer or
other agent previously selected by the administrator. The administrator also
causes monies
in the escrow or other administrative account 56 corresponding to these rebate
and other
incentive amounts (less any fees that may be charged by the administrator) to
be forwarded
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
to this transfer agent, broker dealer or other agent so that the movies can be
invested in the
equities 63, preferably in the publicly traded equities of at least one
participant.
Next, in the preferred embodiment of purchasing securities of at least one
participant, database server 23 preferably queries stored purchase/rebate
information 29 to
determine what securities of at least one participant should be purchased and
in what
amount(s). Specifically, in the preferred automated embodiment, the database
server 23
calculates the amount of rebate movies and other incentive amounts received
from each
publicly-traded participant whose publicly traded securities are purchased by
or through
the fund. Server 23 also preferably calculates the rebate movies and other
incentive
amounts received from participants whose securities are not purchased by or
through the
fund so that these movies may be invested across the fund's then existing
portfolio or array
of securities purchased (or otherwise invested). This information is then
compiled into an
FTP file that is sent via the administrator FTP servers 39 to the FTP server
of a previously
selected security broker.
The rebate movies and other incentive amounts are preferably invested as
follows: First, to the extent that a participant is, or is a subsidiary of, a
publicly traded
entity (a public participant) listed on a nationally recognized United States
securities
market or international securities market (e.g., the NYSE, the NASDAQ Stock
Market, the
London Stock Exchange, Tokyo Stock Exchange, etc.), the rebate movies and
incentive
amounts received from the participant are invested in shares of equity
securities of that
participant or that participant's publicly traded parent company, if that
participant's
securities are purchased by or through the fund in the amounts so indicated.
Second, to the
extent that the securities of a participant or its parent are not purchased by
or through the
fund in the amounts so indicated, , then the rebate movies and other incentive
amounts
received from the participant may be preferably invested across the array of
securities that
have been purchased by or through the fund. Alternatively, such participant
rebate movies
and other incentive amounts could be invested in other publicly traded
companies. Third,
the fund, may at the discretion of the administrator, use rebate movies or
other amounts
available for investment (or reallocate rebate movies and other incentive
amounts received
from a specific participant to the purchase of shares of companies other than
such
participant) to maintain diversification as may be required by SEC or
international or other
regulations. Fourth, the fund, at the discretion of the administrator or
otherwise, may
retain certain amounts in cash or purchase other securities as dictated by
prudence and
fiduciary considerations.
46
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
The selected broker purchases the participant or other securities (as
illustrated by interaction 66) as directed by the administrator or otherwise
and transmits a
confirmation FTP file to the administrator FTP server 39. The server database
23 then
accesses the confirmation file and automatically updates the stored investment
and/or fund
information 30 to reflect the security purchases.
Instead of sending an FTP file to the broker, the database server 23 may
simply generate information regarding what participant or other securities
should be
purchased, and the administrator could then simply provide the purchase
information to
the broker verbally, in writing, or by some other electronic means. If a
transfer or other
agent is used, the broker or the administrator preferably provides the
security purchase
information to the transfer or other agent via an FTP file, via other
electronic means, or
through other available means. As mentioned above, the administrator may
perform the
functions of the broker or transfer or other agent.
As illustrated by interaction 67, the administrator periodically provides
information concerning the fund to its members. In the preferred embodiment,
the broker
dealer or transfer or other agent periodically provides fund and investment
information to
the administrator via an FTP file, via other electronic means, or through
other available
means, and such information is compiled by the administrative system and
provided on
member home pages and/or e-mailed to the members. For example, information
concerning the fund and/or securities, such as reports, statements, forms, and
general
correspondence is made available on member account pages and/or is e-mailed to
the
members via the server.
The fund provides returns on investments to the members as also shown by
interaction 67. Of course, the value of a member's investments is subject to
not only
earned rebates/other incentive amounts and direct purchases of securities in,
by or through
the fund, but also the performance of the securities themselves. In the case
of a mutual
fund, the value of the fund rises and falls with the value of its.underlying
securities. When
a member seeks to redeem or sell all or some of the member-owned securities
for cash, the
member is required to send a redemption or sell form to the administrator. The
form is
preferably available on-line at the member account-page.
The redemption or sell requests are preferably accepted and processed on a
periodic basis such as daily, monthly, or quarterly. In the preferred
embodiment, the
redemption or sell form is received on-line by the database server 23,
compiled into an
FTP file, and sent via administrator FTP server 39 to the selected transfer
agent's or broker
47
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
dealer's FTP server. The transfer agent or broker dealer then processes the
form, and
sends a confirmation file to the administrator FTP server 39. The server
database 23 then
accesses the file, and updates the stored fund or investment information 30
and member
account information 31. ~ Other electronic means that can provide the relevant
information
to/from the administrative system 22 and 23 and the transfer agent or broker
dealer may
also be used.
Advantageously, members may also choose to make direct investments in
or through the fund. Such investments may be completed at the administrator
web site via
a credit card or other type of purchase. Additionally, members may elect to
make direct
investments in or through the fund by direct deposit arrangements, checks
submitted to the
administrator, or other payment mechanisms. Once the direct investment
purchase is
made, purchase/rebate stored information 29 is preferably automatically
updated to reflect
this activity. Advantageously, database server 23 may periodically calculate
the total
amount of such direct investments in the escrow or other administrative
account, add it to
the total amount of rebates or other incentives received from participants
whose securities
are not purchased by or through the fund, and invest or direct the broker
agent to invest the
total amount across the fund's then existing portfolio or array of securities
purchased.
5.4.2. DIRECT INCENTIVES
Next, current incentives may be of several types, and are preferably,
implemented as id-payment cards of the debit type with associated
authorization-time
rules, which determine how the stored value may be used by authorizing or
declining
proposed payments. For example, a certain participant may wish to give an
unrestricted
"cash-back" promotion on certain products, in which use of these amounts are
not subject
to any rules. The cash-back amount can be changed from time-to-time upon
information
provided to administrator 52 by participant 51 (preferably by electronic
messages between
their computer systems). Alternatively, another participant may wish to limit
use of
rebates, rewards or other incentives to the same or related products, in which
case the rules
would authorize payment only for these products. If a transaction is not
authorized, a
helpful, incentivizing message may preferably be returned to the member at the
POS
explaining the lack of approval. The tied products may be changed from time to
time upon
information provided by the participant. Also, a merchant may give rebates or
other
incentives usable only at the store of the original transaction. Other current
incentive
48
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
schemes, which are known to those of skill in the marketing arts, can be
implemented by
S appropriate authorization time rules.
These rules, if any, associated with the amounts stored for an id-debit card
are executed at authorization time by the issuing bank or by its third-party
processor in
order to authorize transactions.
5.5. OTHER EMBODIMENTS
While the invention has been described in conjunction with specific
embodiments, it is evident that numerous alternatives, modifications, and
variations will
be apparent to those skilled in the art in light of the foregoing description.
For example,
while in the preferred embodiments, the database server 23 automatically
updates its
stored information to reflect member purchases, rebate monies and incentive
amounts
owed to and received by the administrator, and information relating to the
member's
allocation among loyalty vehicles, the administrator may gather some or all of
this
information via other means and input such information into the database
server 23.
Moreover, many of the administrator functions described above may be out-
sourced by the
administrator to third party information processing organizations. For
example, the
tracking of member purchases, the billing of participants for rebate monies
and incentive
amounts, and the receipt of such rebate monies and incentive amounts may be
performed
by an information processing organization under the general direction of the
administrator.
Moreover, the administration of the escrow account that holds the rebate
monies and other
incentive amounts may be out-sourced. In such cases, the relevant information
is provided
(preferably electronically) to the administrator, inputted into the database
server 23, and
maintained in the database server 23.
Also, the various processing and data storage functions of the invention can
be allocated among the actors participating in a loyalty program other than in
the preferred
allocation described above. For example, participants may themselves store
transaction-
tracking information, whether it is determined by them or determined by a
financial
network or other electronic payment means. Using this stored tracking
information,
participants may then compute rebates and other incentive amounts due members
on the
basis of their own rebate and incentive schedules, and cause amounts due to be
forwarded
to the administrator without administrator intervention.
49
CA 02438197 2003-08-12
WO 02/065246 PCT/US02/04222
The invention described and claimed herein is not to be limited in scope by
the preferred embodiments herein disclosed, since these embodiments are
intended as
illustrations of several aspects of the invention. Any equivalent embodiments
are intended
to be within the scope of this invention. Indeed, various modifications of the
invention in
addition to those shown and described herein will become apparent to those
skilled in the
art from the foregoing description. Such modifications are also intended to
fall within the
scope of the appended claims.
A number of references are cited herein, the entire disclosures of which are
incorporated herein, in their entirety, by reference for all purposes.
Further, none of these
references, regardless of how characterized above, is admitted as prior to the
invention of
the subject matter claimed herein.
20
30
50
