U.S. patent application number 11/184502 was filed with the patent office on 2005-11-10 for mutual fund card method and system.
This patent application is currently assigned to Bank One Corporation. Invention is credited to Sullivan, Kevin.
Application Number | 20050251470 11/184502 |
Document ID | / |
Family ID | 24034562 |
Filed Date | 2005-11-10 |
United States Patent
Application |
20050251470 |
Kind Code |
A1 |
Sullivan, Kevin |
November 10, 2005 |
Mutual fund card method and system
Abstract
A computerized method and system for implementing such method,
the method comprising establishing a card payment instrument
account for an approved customer and an investment account for the
benefit of the approved customer. A rebate is calculated
periodically based on credit card usage and the rebate is applied
to fund the investment account periodically. The rebate is the only
flnding of the investment account accomplished through the card
payment instrument account.
Inventors: |
Sullivan, Kevin;
(Wilmington, DE) |
Correspondence
Address: |
HUNTON & WILLIAMS LLP
INTELLECTUAL PROPERTY DEPARTMENT
1900 K STREET, N.W.
SUITE 1200
WASHINGTON
DC
20006-1109
US
|
Assignee: |
Bank One Corporation
|
Family ID: |
24034562 |
Appl. No.: |
11/184502 |
Filed: |
July 15, 2005 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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11184502 |
Jul 15, 2005 |
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09511362 |
Feb 23, 2000 |
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6941279 |
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Current U.S.
Class: |
705/35 |
Current CPC
Class: |
G06Q 20/10 20130101;
G06Q 30/02 20130101; G06Q 40/04 20130101; G06Q 40/00 20130101; G06Q
20/105 20130101; G06Q 30/00 20130101 |
Class at
Publication: |
705/035 |
International
Class: |
G06F 017/60 |
Claims
1-28. (canceled)
29. A computer-implemented method comprising: a credit card account
provider establishing a credit card account using a computer for an
approved cardholder; monitoring an indicia of activity of said
credit card account and determining a reward based on said indicia
of card usage using a computer; transmitting a first communication
to said cardholder including the determined reward and an offer to
link an investment fund account with the credit card account and to
fund the investment fund account with said reward from the credit
card account; upon acceptance of the offer, linking the investment
fund account to the credit card account and transferring the reward
to the investment fund account using a computer; and transmitting a
second communication including information of the value of the
investment fund account to said cardholder, the second statement
further including information designating a reward value based on
the credit card account that was applied to the investment
account.
30. The computer-implemented method of claim 29, wherein the first
communication and second communication comprise account statements
from a standard statement process provided for the cardholder.
31. The computer-implemented method of claim 29, wherein the reward
based on the indicia of card usage accrues according to a first
period, and wherein the reward can vest to be applied to the
investment account according to a second period, wherein the second
period is longer than the first period.
32. The computer-implemented method of claim 29, wherein the
investment fund account is a new investment fund account
established as a result of the credit card account provider
requesting the investment account provider to set-up the new
investment fund account for the benefit of an individual.
33. The computer-implemented method of claim 32, wherein the
individual is the approved cardholder.
34. The computer-implemented method of claim 29, wherein monitoring
an indicia of activity and computing a reward comprises
ascertaining card account activity based on the card balance.
35. The computer-implemented method of claim 29, wherein the
investment fund account is an existing investment fund account, and
wherein the cardholder accepting the offer designates the existing
investment fund account to be linked to the credit card
account.
36. The computer-implemented method of claim 29, wherein the second
statement further designates an accrued reward value which has not
yet vested to be applied to the investment account.
37. The computer-implemented method of claim 36, wherein the second
statement provides a determined reward for the most recent period,
an accrued reward value, and a vesting date.
38. The computer-implemented method of claim 29, wherein the
funding for the reward is shared between the credit card account
provider providing the credit card account and the investment
account provider providing the investment fund account.
39. A computer-implemented method comprising: establishing a card
instrument account for an approved cardholder by a card instrument
issuer using a computer; computing a reward periodically using a
computer based on an indicia of activity of the card instrument
card account; issuing a first communication using a computer
including said computed reward and an offer to apply the reward to
an investment account not presently linked to the card instrument
account; and linking an investment account to the card instrument
account and applying said reward to the investment account using a
computer upon acceptance of the offer; and transmitting a second
communication including information of the value of the investment
fund account. the second communication further including
information designating a reward value based on the credit card
account that was applied to the investment account.
40. The computer-implemented method of claim 39, wherein computing
a reward periodically using a computer comprises ascertaining card
account activity based on the card balance.
41. The computer-implemented method of claim 39, wherein the reward
accrues according to a first period, and wherein the reward can
vest to be applied to the investment account according to a second
period, wherein the second period is longer than the first
period.
42. The computer-implemented method of claim 39, wherein the
investment account is a new investment account established upon
acceptance of the offer, the new investment account being linked to
the card instrument account.
43. The computer-implemented method of claim 39, wherein the
investment account is an existing investment account, the
cardholder designating the existing investment account to be linked
with the card instrument account.
44. The computer-implemented method of claim 39, wherein the second
statement further designates an accrued reward value which has not
yet vested to be applied to the investment account.
45. The computer-implemented method of claim 39, wherein the second
statement provides a computed reward for the most recent period, an
accrued reward value, and a vesting date.
46. The computer-implemented method of claim 39, wherein the
funding for the reward is shared between the card issuer providing
the card account and the investment account provider providing the
investment account.
47. A computer-implemented method, comprising: establishing a card
instrument account for a consumer having a reward feature for
funding an investment account using a computer; establishing an
investment account for a consumer using a computer; providing an
offer to the consumer to link the card instrument account and the
investment account; linking the card instrument account and the
investment account upon an indicia of acceptance from the consumer;
periodically calculating a reward using a computer based on card
instrument account activity according to a first period, the
calculated reward aggregating into an accrued reward value;
applying the accrued reward value from the card instrument account
to the investment account according to a second period using a
computer; wherein the second period is longer than the first
period; thereby providing a reward feature which accrues according
to a shorter first period and vests according to a longer second
period.
48. The computer-implemented method of claim 47, further comprising
issuing a communication identifying the reward value applied to the
investment account.
49. The computer-implemented method of claim 47, wherein the
communication further identifies an accrued reward value which has
not yet vested to be applied to the investment account.
50. The computer-implemented method of claim 47, wherein the
communication provides a calculated reward for the most recent
period, an accrued reward value, and a vesting date.
Description
FIELD OF THE INVENTION
[0001] The present invention relates generally to a method and
system for a card payment instrument that is associated with an
investment account. A holder of the card payment instrument can
receive rebates based on the usage of the card. The rebates are
transferred periodically to an investment account that is
established for the benefit of the cardholder.
BACKGROUND OF THE INVENTION
[0002] It is increasingly common that consumers pay for many of
their products and services using credit cards, charge cards, debit
cards, bankcards, stored value cards and like card payment
instruments rather than using cash or checks. Consumers do this
because they find it more convenient than sending or using cash or
checks. Also, consumers are not constrained by cash at hand. For
instance, credit cards present unique advantages insofar as they
provide a revolving line of credit that can be accessed when
personal finds are low. Consumers are inclined to use credit cards
versus other means for purchases because itemized reports of
transactions (citing amounts and merchant names) are generated each
month. This is useful for monitoring spending habits, detecting
fraud or errors, disputing charges, proving purchase when returning
items without a conventional receipt, and providing expense records
for end-of-year tax purposes.
[0003] In fact, in today's so-called "plastic economy" it is
increasingly common that consumers use the credit card as a first,
rather than last, resort. Many consumers use credit cards for most
non-trivial transactions, taking advantage of the typical 20-25 day
interest-free grace period and paying their balances off each
month, sometimes thousands of dollars. At the other end of the
spectrum, many consumers who have expenses that exceed their
monthly income on a regular basis use the available revolving
credit-line to manage their spending flow. In sum, there is a large
body of credit or other cardholders in modem society who engage in
a significant volume of transactions on a regular, continuous
basis.
[0004] The modem plastic economy greatly benefits merchants and
service providers because the convenience and instant credit access
lead to increased sales. They also benefit the issuer of the credit
cards and other card payment instruments such as an issuing bank
because for each transaction an "interchange" fee (typically 1-4%)
administered by the credit card associations such as Visa.RTM. and
MasterCard.RTM. is distributed to the issuer. The interchange fee
is typically deducted from the overall transaction amount.
Moreover, the issuer of the credit card benefits from the elevated
interest payments made by consumers carrying a balance. Therefore,
in the card issuer/merchant/customer model of a card payment
instrument system such as a credit card system, the card issuers
and merchants receive substantial benefits.
[0005] Thus, consumers tend to use their conventional credit cards
for certain types of purchases, such as retail transactions in
shopping malls, groceries at foodstores, dinner at restaurants,
airline tickets and so forth. The credit card's attributes make it
well-suited for use in such transactions and the average consumer
is likely to reach for his/her credit card rather than for cash in
such circumstances due to convenience. However, despite the wide
use of credit cards in the modem economy, there is still a need to
increase their use especially in non-traditional credit card
transactions and financial services.
[0006] Some card issuers have sought to employ rebates in order to
increase use of credit cards. Credit card rebate systems, such as
the Discover.RTM. card or the like, provide a rebate tied to
general card usage. The entire benefit is enjoyed by consumers who
receive a check or credit on their account. However, such credit
card rebate systems provide no particular long-term benefits to the
cardholder or the card issuer--especially benefits that relate to
the card issuers business. There is limited loyalty-building to
encourage cardholders to maintain their existing accounts or open
new ones. Moreover, because the rebate is sent directly to the
consumer, who can spend it as he/she pleases, there is no mechanism
to encourage the consumer to consider other financial products
offered by the card issuer or associated financial companies. Nor
is there a way to channel funds back to the card issuer to expand
business and cross-sell. This is a lost opportunity and significant
disadvantage.
[0007] Others have suggested credit card systems that transfer a
predetermined amount of money to an investment account periodically
and bill the cardholder through the credit card account. For
example, U.S. Pat. No. 5,787,404 to Fernandez-Holmann describes
such a credit card system in combination with a rebate that is also
transferred to the investment account. Such credit card systems,
however, are not favored by cardholders because they require forced
investments on a periodic basis. In addition, many brokerages and
securities firms do not offer card acceptance for investment
purchases.
SUMMARY OF THE INVENTION
[0008] The present invention overcomes one or more of the
aforementioned limitations of existing card payment systems and
methods. Accordingly, the present invention is directed to a system
and method for a card payment instrument with a rebate based on the
usage of the card payment instrument. The rebate can only be
applied for funding an investment account established for the
benefit of the cardholder. Thus, the present invention encourages
increased usage of the card payment instrument and the
establishment of new investment accounts.
[0009] It is an object of the invention to provide a card payment
instrument whereby a predetermined percentage of consumer card
payment instrument spending is rebated so as to encourage customer
use of the card payment instrument and increase loyalty to the card
payment instrument issuer.
[0010] It is another object of the invention to provide an
automatic method for establishing an investment account which
relieves the consumer of the burden of having to proactively
establish an investment account, and promotes new account openings
for the investment account provider.
[0011] It is yet another object of the invention to provide a card
payment instrument where the card payment instrument issuer and the
investment account provider can share the cost of the rebate
program so that a significant rebate can be provided without
imposing excessive costs on the card payment instrument issuer.
[0012] To achieve these and other objects, which will become
readily apparent to a person skilled in this art from the following
discussion, the present invention, in its broadest aspects, is
directed to a computerized method and system for implementing such
method, the method comprising establishing a card payment
instrument account for an approved customer and an investment
account for the benefit of the approved customer. A rebate is
calculated periodically based on credit card usage and the rebate
is applied to fund the investment account periodically. The rebate
is the only funding of the investment account accomplished through
the card payment instrument account. Preferably, the card payment
instrument is issued by the card payment instrument issuer in
partnership with the investment account provider. The investment
account provider is preferably a financial institution such as a
bank, savings and loan association, mutual fund, insurance company,
brokerage, credit union or any other entity authorized by law to
accept deposits from, or sell investments, mutual funds or
annuities to, the general public.
[0013] In one embodiment of the present invention the card payment
instrument is a credit card and the investment account is a mutual
fund account provided by an investment account provider.
Preferably, the consumer signs up for the card knowing about the
ability to earn dollars that fund a mutual fund. The rebate is
preferably calculated as a percentage of the value of the
net-purchases by the customer using the credit card. The rebate is
calculated periodically, such as on a monthly or quarterly basis
and a statement is issued to the cardholder which includes an entry
for an estimated rebate for the current period as well as the total
accumulated rebate. The statement may further include an offer to
the cardholder to activate and fund an investment account which is
established automatically for his/her benefit by the investment
account provider if this option wasn't taken by the consumer at the
outset. Upon acceptance of the offer by the cardholder, the mutual
fund account is automatically activated and funded with the
accumulated purchase rebates. The mutual fund account is funded
with the purchase rebates on a monthly basis, preferably once or
twice a year, more preferably on a semi-annual basis and even more
preferably on a yearly basis. The rebate amount is preferably
transferred to the investment account electronically, however,
other ways of transferring could be used including, for instance,
submitting the rebate as a two-party check which can be submitted
by the consumer to the investment account provider. An investment
account statement is issued to the customer preferably by the
investment account provider on a periodic basis. The investment
account provider is preferably an independent entity from the card
payment instrument issuer and the cost or funding of the rebate
program is shared by both entities. The customer may independently
fund the investment account at any time.
[0014] This method and system which is also referred to hereinafter
as the mutual fund card ("MFC") is advantageous in a number of
respects. First it encourages the creation of new investment
accounts and maintenance of existing credit card accounts. Second,
it provides investment account companies such as brokerage
companies an entry into the credit card economy. It is beneficial
to associated investment account providers such as mutual fund
issuers who seek expanded opportunities to create a loyalty and
retention platform for new or existing customers. Moreover, the
funding of the investment account with the purchase rebates serves
as a powerful incentive to customers to stay loyal to the credit
card issuer, increase the usage of their credit cards and open new
investment accounts or maintain existing ones with associated
financial institutions. Thus, the MFC system and method opens the
door for unique partnership relationships between independent
business entities, not otherwise readily established between
financial institutions such as for example banks and brokerage
companies.
[0015] The accompanying drawings further illustrate the present
invention. They illustrate several specific embodiments of the
invention and, together with the description, serve to explain the
principles of the invention. However, it will become apparent from
the drawings and description that other embodiments, objects,
advantages and benefits of the invention also exist. Thus, it
should be understood that the drawings and the specific embodiments
are given for purposes of illustrating the invention and are not
intended to limit the scope of the invention which is delineated in
the appended claims.
[0016] Additional features and advantages of the invention will be
set forth in the description that follows, and in part will be
apparent from the description, or may be learned by practice of the
invention. The objectives and other advantages of the invention
will be realized and attained by the system and methods,
particularly pointed out in the written description and claims
hereof as well as the appended drawings.
BRIEF DESCRIPTION OF THE DRAWINGS
[0017] The purpose and advantages of the present invention will be
apparent to those of skill in the art from the following detailed
description in conjunction with the appended drawings in which like
reference characters are used to indicate like elements, and in
which:
[0018] FIG. 1 is a block diagram illustrating the relationship
between cardholders, service providers, merchants, the card issuer
system and investment account provider, according to an embodiment
of the present invention.
[0019] FIG. 2 is a block diagram according to an embodiment of the
invention illustrating the components of a card issuer system.
[0020] FIG. 3 is a block diagram according to an embodiment of the
invention illustrating an exemplary credit card bill issued to a
cardholder, including summaries of the rebate balance.
[0021] FIG. 4 is a block diagram according to an embodiment of the
invention illustrating an exemplary mutual fund account statement,
including a summary of credits rebated by a card issuer system.
[0022] FIG. 5 is a flowchart illustrating a method according to an
embodiment of the invention for providing rebates to a cardholder's
mutual fund account based on card usage.
DETAILED DESCRIPTION OF THE INVENTION
[0023] The present invention is directed to a method and apparatus
for a card payment instrument with a rebate that is associated with
an investment account, whereby rebates based on card usage are
transferred to the investment account periodically for funding the
investment account. The term "card payment instrument" is used
herein to mean credit cards, multi-featured credit cards, debit
cards, bank cards, stored value cards, transaction cards and like
instruments. According to one embodiment of the invention a credit
card is issued by a credit card issuer such as a bank in
partnership with an investment account provider such as a brokerage
company. Preferably, the brokerage company offers shares in a
mutual fund investment program. A credit issuer such as a bank
issues approved customers a credit card having a line of credit and
a predetermined annual percentage rate (APR). The card is
preferably marked with information of the identity of the issuing
bank as well as the investment account provider. When the card is
issued, the bank notifies the partner investment account provider
to open a mutual fund account for the benefit of the cardholder.
Net purchases made with the credit card are tracked and at the end
of predetermined periods, a fixed, predetermined percentage,
preferably from about 0.5 to about 2.0 and more preferably from
about 0.75 to about 1.25 percent of the total value of the net
purchases is rebated by the bank into the mutual find account.
During special marketing promotional periods, the rebate amount can
be increased. The cost of the rebate program is preferably absorbed
by both the credit card issuer and the investment account provider
which allows for greater rebates to the consumer. In the normal
course of business, the partner investment account provider may
issue the customer a mutual fund or investment account statement.
Alternatively, a combined credit card account and mutual fund
account statement may be issued, preferably by the credit card
issuer. In addition, the customer may purchase additional mutual
fund shares at any time.
[0024] Overview of the Invention According to One Embodiment
[0025] FIG. 1 provides an overview of the relationships between the
various components according to one embodiment of the present
invention, and may comprise cardholder A 125, cardholder B 130,
cardholder X 135; card issuer system 100; service providers 120 and
merchants 122; and investment account provider 105. Card issuer
system 100 may comprise a server-based system carrying out the
operations of the card issuer, such as for receiving applications,
maintaining account data, processing transactions, and interfacing
with cardholders, merchants, service providers and investment
account providers.
[0026] Service providers 120 and merchants 122 illustrate the
various vendors that interact with cardholders A-X (blocks 125-135)
and card issuer 100 during transactions involving the purchase of
goods and services.
[0027] Investment account provider 105 represents an investment
account provider participating as the partner in the mutual fund
card program associated with the present invention. Investment
account provider 105 may comprise personnel and/or computer means
for receiving and processing usage rebate funds or "points"
submitted by card issuer system 100 or from individual cardholders,
such as cardholders A-X (blocks 125-135). In one embodiment, the
invention provides for investment account provider 105 to receive
and process checks or wire transfers from card issuer system 100 so
that the card usage rebate for a given time period is sent from the
card issuer to the investment account provider to be credited
against the benefiting investment account. Preferably the
investment account is a mutual fund account. In a related
embodiment, the invention provides for investment account provider
105 to process electronic transfers (such as automated clearing
house drafts) from card issuer system 100 for each approved
cardholder that are processed in an automated or semi-automated
fashion to credit the proper investment account with the proper
card usage rebates. In another embodiment, the invention provides
for investment account provider 105 to receive and process
two-party checks, initially issued to cardholders from card issuer
system 100, that are forwarded by the cardholders to the investment
account provider for depositing into the respective cardholder
investment accounts. These checks would be made so that cardholders
could only deposit them to their investment accounts, thus
providing an incentive to the cardholders to activate and/or
maintain the investment accounts.
[0028] In the preferred embodiment, investment account provider 105
represents an investment account provider that is partnered with
the card issuer issuing a so-called "co-branded" credit instrument.
For such co-branded credit or debit cards, the physical card may be
issued in the investment account provider's name (and also in the
card issuer's name) to take advantage of the benefits of
cross-selling and to facilitate loyalty-building. In another
embodiment, the credit card with the rebate feature is not marketed
as a co-branded offering per se, but cardholders are offered the
option to add the investment account feature at any time.
[0029] Cardholder A 125, cardholder B 130 and cardholder X 135
represent cardholders maintaining card accounts according to the
present invention. In other words, these cardholders maintain a
credit or debit card account with the card issuer whereby a
predetermined percentage of card usage is accumulated and returned
as a rebate to be applied for funding an investment account set-up
by the brokerage provider for the benefit of each cardholder. In a
preferred embodiment the investment accounts are provided by an
investment account provider that is associated with the
card-issuer.
[0030] In an alternate embodiment, cardholders can maintain
investment accounts with investment account providers that are not
formally partnered with the card issuer, as described previously.
In this case, the card issuer has not entered into a formal
arrangement with the investment account provider, but rather is
marketing the card to consumers on the basis that purchase rebates
will be transferred to an investment account designated by the
cardholder. This rebate may also take the form of a two-party check
sent to the cardholder for depositing it into the investment
account. Or the rebate could be sent directly to the investment
account provider (by check, wire transfer, electronic payment, and
the like). One of the benefits of this alternate embodiment is that
it encourages non-partnered investment account providers to
consider a formal partnering relationship (e.g., a co-branded
card). This is because an initially non-partnered investment
account provider gradually becomes aware of the profit and
marketing potential that exist from co-branding and participating
in the program. This benefits both the card issuer and investment
account provider because processing can be streamlined (e.g.,
rebates can be transferred electronically and automatically, even
in batch fashion, rather than through wire transfers or checks) and
cross-marketing and joint loyalty benefits accrue. For example, the
card issuer and investment account provider can cross-market
whereby customers of the one are solicited to purchase the products
or engage the services of the other. A co-branded debit card could
serve as a consumer access vehicle to an investment account
provider deposit account such as a money market fund. This is a
substantial advantage.
[0031] Cardholders A-X (blocks 125-135) interface with card issuer
system 100 for purposes of payment and receipt of bills and the
like using the mail system, Internet or like shared network.
Cardholders A-X (blocks 125-135) interface with merchants 122 and
service providers 120 to consummate purchases and the like
in-person or using the mail system or Internet or like shared
network. Cardholders A-X (blocks 125-135) interface with investment
account providers 105 for purposes of opening accounts, submission
of payments, receipt of bills and the like using the mail system,
Internet or like shared network.
[0032] As noted above, the present invention may provide a
percentage rebate based on card usage that can be paid by the card
issuer. In one embodiment, that amount may be fixed at 1% of the
value of net-purchases calculated periodically and vested after a
standard period, such as a quarter or year. In this embodiment, the
balance of the usage rebate will be updated and reported to the
cardholder on a periodic basis, such as at the time each monthly
card statement is issued. The usage rebate rate can vary, for
example, based on the investment account provider's concern (higher
or lower rebate rates depending on the investment account provider
and the agreement with the card issuer) and based on the cardmember
(higher or lower rebate rates based on the cardmember's past or
ongoing purchasing behavior, credit rating, levels of spending
[e.g., a higher rebate rate at higher levels of spending], loyalty
in terms of how long the cardmember has been associated with the
card issuer and/or the investment account provider, payment
performance, etc.). In one embodiment, the finding for the usage
rebate may be shared between the card issuer and an investment
account provider as both benefit from the arrangement. In yet
another embodiment, the rebate percentage is fixed at a
predetermined level provided by the credit card issuer.
[0033] Regarding the accrual or computation period, the usage
rebate may be computed on a periodic basis, such as on a monthly
basis. Since credit card issuers generally deliver paper or on-line
statements to cardholders on a monthly basis, it may be convenient
and cost-effective to accrue and report the usage rebate in similar
fashion. Timing for payout, i.e., when the rebate funds are
transferred to the investment account provider for depositing into
the investment account, can vary as well. In one embodiment, the
payout period may be annually or semi-annually so as to reduce
processing costs for the cardholder and investment account
provider. It can also enhance cardmember loyalty to both the card
issuer and investment account provider if the payout is predicated
on the cardmember still being an active account holder. For
example, a cardmember contemplating canceling the credit account
and/or the investment account program in July may be less inclined
to do so if he/she knows that the accumulated rebate that will
mature or vest later in September would be lost.
[0034] The present invention is not limited to a specific type of
investment account. A variety of different types of investment
could be used such as "e brokerage" accounts, money market funds,
general stock investment accounts and employee stock purchase
account. As can be readily appreciated, this means that the present
invention provides significant opportunities for financial
institutions such as investment account providers to market
cardmembers on a broad spectrum of investment products that are
available.
[0035] The Card Issuer System
[0036] FIG. 2 illustrates card issuer system 100, which may
comprise transaction processor system 205; account database 210;
report processor system 215; application processor system 220; bill
processing system 225; credit bureau database 230; rebate
processing system 235; and rebate issue and transfer system 240.
Those of skill in the art should appreciate that the allocation of
the aforementioned elements is exemplary and functional, the
purpose here being to explain the present invention most clearly.
The functions performed by said elements could be allocated
differently, such that the elements could be combined or further
divided depending on the requirements of specific implementation
into hardware and/or software. Additionally, the elements of the
system need not be co-located, but could reside at geographically
distinct locations and could interface using communications
technologies well known in the art, such as direct-dial
connections, hard-wire link, the Internet or IPng (Internet
Protocol next generation), satellite, microwave, cellular networks
and so on.
[0037] Transaction processor system 205 is a computerized system,
which may be a server-based system, for processing transactions in
the credit card- based system, such as consummating purchases
(issuing transaction codes, declines, call the bank ["call me"]
referrals, etc.), processing payments from cardholders, and
processing transactions with investment account providers. Account
database 210 may comprise one or more data modules having account
data for the cardholders, including investment account data and
investment account provider data. Report processor system 215
generates reports or statements for the card issuer and/or
investment account provider company summarizing cardholder
activity, profits and revenue and the like. Application processor
system 220 receives and processes applications for credit cards,
and may set up accounts when applications are approved. In one
embodiment, application processor 220 could also receive
applications for investment accounts and process said requests or
investment account provider for processing. Bill processing system
225 prepares the bills to be sent to cardholders, including a
summary of charges, balance due, accrued rebate balance, due date
and the like. The bills may optionally include investment account
information. Credit bureau database 230 may comprise a database
accessed for application processing for making the underwriting
determination associated with credit card approval and/or
investment account approval. Since the present invention is
susceptible to application to debit cards, the aforementioned
elements could perform the corresponding operations for a debit
card instrument.
[0038] Rebate processing system 235 performs the processing
associated with accounts established for cardholders under the
present invention and, accordingly, computes card usage over the
proper period, computes the usage rebate, and maintains the usage
rebate balance for participating cardholders. Rebate issue and
transfer system 240 performs the processing and transactions for
issuing and transferring the usage rebates in the appropriate
amounts and at the proper times. Thus, rebate issue and transfer
system 240 may determine that a six-month rebate for a certain
investment account will vest for a particular cardholder on
December 15 and transfer said rebate via check, wire transfer, or
electronic transfer to the investment account. Data stored in
account database 210 may be accessed to inform rebate issue and
transfer system 240 whether the form of the transfer should be
check, wire or electronic for a particular investment account or
investment account company. Rebate issue and transfer system 240
may determine that the usage rebate should be issued to the
cardholder in the form of a two-party check. As explained above,
the rebate is preferably based on the net purchases in a credit
card account.
[0039] Exemplary Credit Card and Investment Account Statements for
the Invention
[0040] FIG. 3 illustrates an exemplary statement (bill) issued to a
cardholder according to the invention. As those of skill in the art
will appreciate, the bill could be issued through the mail or via
facsimile or Internet or like network interface. As depicted by
FIG. 3, the credit card statement resembles a typical credit card
statement, identifying the date, transaction codes, vendor/merchant
ID's and amounts for the transactions from the last period. The
previous balance, new charges, payments and new balance are also
reported. For purposes of reporting the status of the usage rebate,
the card usage for the period (here for the month it is "$XXXX.XX")
is reported, as well as the usage rebate for the period as computed
based on the rebate rate (e.g., 1% of $XXXX.XX yields a usage
rebate for the month in the amount of $XX.XX). The current rebate
value or balance is reported (here it is "$YYY.YY"), reflecting the
accrued value of the usage rebate that has yet to vest or be paid
out. The rebate payout date reflecting when the usage rebate will
vest or be made available is reported (here it is "X/X/XX"), as is
the identity of the beneficiary account (investment account
provider account) to which the rebate may be applied.
[0041] FIG. 4 illustrates an exemplary investment account provider
statement that might be generated by the investment account
provider according to the present invention. As would typically be
the case, the investment account number, number of shares, and date
are listed. Credits received from a card issuer in the form of
usage rebates (here it is "$YYY.YY") according to the present
invention may be listed as credits, with an explanation identifying
the amount and source of the credits (usage rebates). Rebates that
have not been transferred to the investment account as of the date
of the statement may also be included in the statement as future
credits.
[0042] It should be noted that the investment account provider
statement illustrated by FIG. 4 is more illustrative of the card
usage rebate application where rebate funds are sent or transferred
from the card issuer to the investment account provider. In the
embodiment providing for rebate funds to be sent to the cardholder
in the form of a two-party check or the like, the cardholder will
forward the rebate check to the investment account provider.
[0043] A Method for Providing Card Usage Rebates for Funding a
Mutual Fund Account
[0044] According to an embodiment of the present invention, FIG. 5
depicts a method for a credit card system providing card usage
rebates to a cardholder for application to a mutual fund account
set-up by an investment account provider for the benefit of the
cardholder. Where the instrument is a debit card, the steps are
substantially the same except the usage is based on a debit
instrument.
[0045] A card issuer enters into an arrangement with an investment
account provider (e.g., see account database 210), according to
step 500. As previously noted, this arrangement may be in the form
of a partnering or co-branding undertaking whereby the credit or
debit cards are issued under the credit issuer's name and the two
entities the credit card issuer and the investment account provider
have pre-established procedures for handling the processing
associated with the accrual and application of rebates to a mutual
fund account. Alternatively, the investment account provider and
card issuer may not have a partnering relationship, or have any
pre-existing relationship at all, but step 500 includes the
interface and communication between the two entities for the usage
rebate program to be implemented for a given cardholder.
[0046] According to step 505, the card issuer (or its agent)
solicits a general consumer to apply for mutual fund card. The
application is processed and approved by the card issuer (e.g., see
application processor system 220, credit bureau database 230),
according to step 510. Card issuer notifies investment account
provider to set-up a mutual fund account for the approved
cardholder according to step 515. The mutual fund account card is
linked or associated with the credit card (or debit) account (e.g.,
see account database 210), according to step 520. The cardholder
uses the credit (or debit) card to purchase goods and services from
merchants (or service providers) (e.g., see transaction processor
system 205), according to step 525. A designated percentage of
credit card purchases are calculated and accrue in the usage rebate
account (e.g., see rebate processing system 235 and account
database 210), according to step 530.
[0047] The card issuer provides a periodic accounting of the usage
rebate balance to the cardholder (e.g., see bill processing system
225), according to step 535. The card issuer issues a rebate (see,
e.g., module 240, FIG. 2) when the usage rebate "vests" or is due
to be paid out, according to step 540. If the rebate is to be a
so-called "automatic" payout (sent from the card issuer to the
investment account concern), according to the "Y" (yes) branch of
block 545, then the card issuer sends or transfers the rebate to
the investment account concern to be credited to the proper
investment account provider account (e.g., see module 240, FIG. 2),
according to step 550. If the rebate is not a so-called "automatic"
rebate, according to the "N" (no) branch of block 545, the card
issuer sends a check (two-party check or bank draft, or wire or
electronic transfer, or the equivalent) to the cardholder (e.g.,
see module 240, FIG. 2), according to step 555.
[0048] According to step 570, the cardholder sends the check or
like instrument to the investment account provider. According to
step 575, the investment account provider issues a mutual fund
statement to the cardholder. The cardholder can make independent
deposits to the mutual fund account, according to step 560.
[0049] Other embodiments and uses of this invention will be
apparent to those having ordinary skill in the art upon
consideration of the specification and practice of the invention
disclosed herein. The specification and examples given should be
considered exemplary only, and it is contemplated that the appended
claims will cover any other such embodiments or modifications as
fall within the true scope of the invention.
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