U.S. patent application number 12/825844 was filed with the patent office on 2011-01-06 for method and system for using reward points to liquidate products.
This patent application is currently assigned to SIGNATURE SYSTEMS LLC. Invention is credited to Richard Postrel.
Application Number | 20110004512 12/825844 |
Document ID | / |
Family ID | 46302579 |
Filed Date | 2011-01-06 |
United States Patent
Application |
20110004512 |
Kind Code |
A1 |
Postrel; Richard |
January 6, 2011 |
METHOD AND SYSTEM FOR USING REWARD POINTS TO LIQUIDATE PRODUCTS
Abstract
A user selects a product to be liquidated from a product
provider and then designates to the transacting entity that reward
points are to be used towards the purchase of the liquidated
product. The transacting entity acts to decrease the number of
reward points in the user's reward account by the required number
of points. The reward account holder conveys consideration to the
transacting entity equivalent to the par value of the reward points
consumer obtains the product in exchange for reward points having a
retail value equivalent to what he would have otherwise paid for
the product, while the reward account holder is required to convey
only the par value of the points. The product provider is able to
liquidate the product and obtain payment equivalent to what it
would otherwise have obtained in a prior art liquidation process,
auction or trading environment.
Inventors: |
Postrel; Richard; (Miami
Beach, FL) |
Correspondence
Address: |
BARKUME & ASSOCIATES, P.C.
20 GATEWAY LANE
MANORVILLE
NY
11949
US
|
Assignee: |
SIGNATURE SYSTEMS LLC
Miami Beach
FL
|
Family ID: |
46302579 |
Appl. No.: |
12/825844 |
Filed: |
June 29, 2010 |
Current U.S.
Class: |
705/14.1 |
Current CPC
Class: |
G06Q 30/0234 20130101;
G06Q 20/102 20130101; G06Q 20/06 20130101; G06Q 20/10 20130101;
G06Q 30/0241 20130101; G06Q 30/0239 20130101; G06Q 30/0207
20130101; G06Q 30/02 20130101; G06Q 30/0238 20130101; G06Q 30/0226
20130101 |
Class at
Publication: |
705/14.1 |
International
Class: |
G06Q 30/00 20060101
G06Q030/00 |
Claims
1-15. (canceled)
16. A computer-implemented method of executing a product
liquidation transaction in conjunction with a reward account stored
on a reward server computer, comprising the steps of: a. a user
having a reward account stored on a reward server computer
associated with a reward account issuer comprising reward points
previously awarded by a reward issuing entity to the user as part
of a previous transaction, the reward points having i) a par value
established by the reward account issuer equivalent to an amount
that the reward account issuer will convey upon surrender of said
reward points, and ii) a retail value equivalent to an amount that
the user will accept for surrender of said reward points, said
retail value being substantially higher than said par value; the
reward account issuer varying the par value as a function of a rate
of redemption of reward points from one or more of a plurality of
reward accounts; b. a product provider offering to sell a product
at a liquidation price that is substantially less than a reference
price otherwise charged for the product; c. the user requesting a
transacting entity to facilitate the user in obtaining the product
by surrendering at least some of the reward points from the reward
account stored on the reward server computer to the reward account
issuer, the number of reward points surrendered having a par value
that is varied by the reward account issuer as a function of a rate
of redemption of reward points from one or more of a plurality of
reward accounts and a retail value substantially equal to the
reference price; d. requesting the reward account issuer to convey
to the transacting entity the par value of the surrendered reward
points; e. the transacting entity conveying consideration to the
product provider equivalent to the liquidation price of the
product; and f. the product provider causing the product to be
conveyed to the user; whereby the user receives the product from
the product provider as a result of at least surrendering the
reward points from the reward account stored on the reward server
computer.
17. The method of claim 16 wherein the liquidation price of the
product is equivalent to the par value of the reward points and
other consideration.
18. The method of claim 16 wherein the reward account issuer is a
single reward issuing entity.
19. The method of claim 16 wherein the reward account issuer is an
aggregator and the reward account is an exchange account comprising
reward point value obtained as a result of exchanging reward points
from separate reward point accounts stored in separate reward point
server computers in association with different reward issuing
entities.
20. A system for executing a product liquidation transaction
comprising: a. a reward points server computer selectively
interconnected over a computer network and associated with a reward
account issuer, comprising data storage means for storing a reward
account associated with a user, the reward account configured to
track reward points previously earned by the user for previous
transactions between the user and a reward issuing entity, wherein
the reward points have i) a par value established by the reward
account issuer equivalent to the amount that the reward account
issuer will convey upon surrender of said reward points, and ii) a
retail value equivalent to an amount that the user will accept for
surrender of said reward points, said retail value being
substantially higher than said par value, the reward account issuer
varying the par value as a function of a rate of redemption of
reward points from one or more of a plurality of reward accounts;
b. a product provider server computer selectively interconnected
over the computer network and associated with a product provider,
comprising means for offering to sell a product at a liquidation
price that is substantially less than a reference price otherwise
charged for the product; c. a user computer selectively
interconnected over the computer network and associated with a
user, comprising means for requesting a transacting entity to
facilitate the user in obtaining the product by surrendering at
least some of the reward points to the reward account issuer, the
number of reward points surrendered having a par value that is
varied by the reward account issuer as a function of a rate of
redemption of reward points from one or more of a plurality of
reward accounts and a retail value substantially equal to the
reference price; d. a transaction server computer selectively
interconnected over the computer network and associated with a
transacting entity, comprising: i. means for requesting the reward
account issuer to convey to the transacting entity the par value of
the surrendered reward points; ii. means for conveying
consideration to the product provider equivalent to the liquidation
price of the product; whereby the user receives the product from
the product provider as a result of at least surrendering the
reward points.
21. The system of claim 20 wherein the liquidation price of the
product is equivalent to the par value of the reward points and
other consideration.
22. The system of claim 20 wherein the reward account issuer is a
single reward issuing entity.
23. The system of claim 20 wherein the reward account issuer is an
aggregator and the reward account is an exchange account comprising
reward point value obtained as a result of exchanging reward points
from separate reward point accounts stored in separate reward point
server computers in association with different reward issuing
entities.
24. A computer-implemented method of a transacting entity
facilitating a product liquidation transaction comprising the steps
of: a. a transacting entity offering a product for sale from a
product provider to a user in exchange for a quantity of reward
values, the reward values being stored in a reward account held by
a reward account holder on a reward server computer comprising
reward values previously provided by a reward issuing entity to the
user, the reward values having a par value attributed by the reward
account holder equivalent to a first amount that the reward account
holder is willing to convey upon surrender of said reward values,
the reward account holder varying the par value as a function of a
rate of redemption of reward values from one or more of a plurality
of reward accounts, the reward values also having a retail value
attributed by the user equivalent to a second amount that the user
is willing to accept upon surrender of said reward values, wherein
the retail value of the quantity of reward values is equivalent to
a reference price; b. accepting a request from a user to convey the
product in exchange for the quantity of reward values from the
reward server computer specified by the transacting entity; c.
causing the reward account on the reward server computer to be
reduced by the quantity of reward values specified by the
transacting entity; d. effecting a transfer of consideration from
the reward account holder on the reward server computer to the
product provider, the consideration equivalent to a liquidation
price that is substantially less than the reference price; and e.
causing the product provider to transfer the product to the
user.
25. The method of claim 24 wherein the liquidation price of the
product is equivalent to the par value of the reward values and
other consideration.
26. A product transaction server computer comprising: a. means for
offering a product for sale from a product provider to a user in
exchange for a quantity of reward values, the reward values being
stored in a reward account held by a reward account holder
comprising reward values previously provided by a reward issuing
entity to the user, the reward values having a par value attributed
by the reward account holder equivalent to a first amount that the
reward account holder is willing to convey upon surrender of said
reward values, the reward account holder varying the par value as a
function of a rate of redemption of reward values from one or more
of a plurality of reward accounts, the reward values also having a
retail value attributed by the user equivalent to a second amount
that the user is willing to accept upon surrender of said reward
values, wherein the retail value of the quantity of reward values
is equivalent to a reference price; b. means for accepting a
request from a user to convey the product in exchange for the
quantity of reward values specified by the transacting entity; c.
means for causing the reward account to be reduced by the quantity
of reward values specified by the transacting entity; d. means for
effecting a transfer of consideration from the reward account
holder to the product provider, the consideration equivalent to a
liquidation price that is substantially less than the reference
price; and e. means for causing the product provider to transfer
the product to the user.
27. A product transaction server computer comprising processing
circuitry programmed to operate the computer to: a. enable offering
a product for sale from a product provider to a user in exchange
for a quantity of reward values, the reward values being stored in
a reward account held by a reward account holder comprising reward
values previously provided by a reward issuing entity to the user,
the reward values having a par value attributed by the reward
account holder equivalent to a first amount that the reward account
holder is willing to convey upon surrender of said reward values,
the reward account holder varying the par value as a function of a
rate of redemption of reward values from one or more of a plurality
of reward accounts, the reward values also having a retail value
attributed by the user equivalent to a second amount that the user
is willing to accept upon surrender of said reward values, wherein
the retail value of the quantity of reward values is equivalent to
a reference price; b. accept a request from a user to convey the
product in exchange for the quantity of reward values specified by
the transacting entity; c. cause the reward account to be reduced
by the quantity of reward values specified by the transacting
entity; d. effect a transfer of consideration from the reward
account holder to the product provider, the consideration
equivalent to a liquidation price that is substantially less than
the reference price; and e. cause the product provider to transfer
the product to the user.
28. A computer-implemented method of a product provider
facilitating a product liquidation transaction comprising the steps
of: a. causing a transacting entity to offer a product for sale to
a user in exchange for a quantity of reward values, the reward
values being stored in a reward account held by a reward account
holder on a reward server computer comprising reward values
previously provided by a reward issuing entity to the user, the
reward values having a par value attributed by the reward account
holder equivalent to a first amount that the reward account holder
is willing to convey upon surrender of said reward values, the
reward account holder varying the par value as a function of a rate
of redemption of reward values from one or more of a plurality of
reward accounts, the reward values also having a retail value
attributed by the user equivalent to a second amount that the user
is willing to accept upon surrender of said reward values, wherein
the retail value of the quantity of reward values is equivalent to
a reference price; b. authorizing the transacting entity to i)
accept a request from a user to convey the product in exchange for
at least the quantity of reward values specified by the transacting
entity; ii) cause the reward account on the reward server computer
to be reduced by the quantity of reward values specified by the
transacting entity; and iii) effect a transfer of consideration
from the reward account holder on the reward server computer to the
product provider, the consideration equivalent to the par value of
the reward values surrendered; and c. providing the product to the
user.
Description
CROSS-REFERENCE TO OTHER APPLICATIONS
[0001] This application is a continuation application of
application Ser. No. 12/105,751, filed on Apr. 18, 2008, now U.S.
Pat. No. ______; which is a continuation application of application
Ser. No. 10/921,085, filed on Aug. 18, 2004, which claims the
benefit of provisional patent application Ser. No. 60/503,299 filed
on Sep. 15, 2003 and which is a continuation-in-part application of
application Ser. No. 10/608,736, filed on Jun. 27, 2003, now U.S.
Pat. No. 6,820,061; which is a continuation application of Ser. No.
09/602,222, filed on Jun. 23, 2000, now U.S. Pat. No. 6,594,640;
which claims the benefit of provisional patent application Ser. No.
60/140,603, filed on Jun. 23, 1999.
BACKGROUND OF THE INVENTION
[0002] The present invention relates to electronic trading,
exchange, liquidation and bartering systems that allow users to
trade or redeem reward points, such as those already accumulated in
airline frequent flyer programs, into an account for redeeming
products and services offered over a broad based communications
system such as the Internet or interactive television. This would
allow users to use their frequent flyer (or frequent car rental,
frequent dining, etc.) points for products or services other than
those which may be typically offered by the point sponsor. The
points would be sold back or traded to the issuing entity or other
third party. The system would also allow for purchase by users of
points traded in by other users, such that points may be
redistributed without incurring a transaction directly with the
airline or other issuing entity.
[0003] The present invention also allows for manufacturers and
distributors or traders of goods to put overstocked, discontinued,
returned, or end of run products into a liquidation process that
can be redeemed, purchased, traded or exchanged for reward points
or similar value.
[0004] In order to attract and retain business customers, airlines,
hotels, car rental companies, chain retailers, telecom providers,
etc. have historically introduced frequency use programs that offer
awards of "frequent flyer miles" or other such incentives schemes
based on the distance traveled, amount of money spent, or use by
that customer. Success has enabled airlines to modify the manner in
which mileage was acquired to include travel related purchases by
consumers. For example, a percentage of the dollar-based cost of a
hotel stay may be awarded as mileage to a client account. Within
the past several years, credit card companies or other retailers
and etailers have co-branded credit cards in the name of airlines,
oil companies, retailers, service companies, and the credit card
company where each dollar spent using the card is recorded as a
mile or unit of travel, reward point or similar value in the award
program or some monetary value assigned by the issuer. These cards
may additionally award bonus miles, points or other value in
coordination with user purchases of preferred products or flights
during preferred times.
[0005] U.S. Pat. No. 5,774,870, FULLY INTEGRATED, ON-LINE
INTERACTIVE FREQUENCY AND AWARD REDEMPTION PROGRAM, issued to
Netcentives, Inc. on Jun. 30, 1998. The '870 patent provides a
system whereby the user can make purchase of products over the
Internet and receive award points, which are stored in an
associated database. The user can subsequently view an award
catalog to determine which awards he may be able to redeem based on
the number of points in his account. This patent does not teach,
however, the ability of a user to trade-in his points accumulated
in a pre-existing frequent flyer account in order to make purchases
of products from the award catalog or allow the points to be pooled
with other programs in order to gain further purchasing power.
[0006] The ClickRewards program site appears to operate in the same
fashion as that described in the '870 patent; i.e. it allows users
to gain points (called "ClickMiles") for making an online purchase
of a product through an associated web site. For example,
ClickMiles may be awarded for a purchase of Gap products at the Gap
web site. The ClickMiles can ultimately be redeemed for frequent
flyer miles, for example at one of several major airlines. Another
web site, www.webflyer.com, is associated with ClickRewards and
provides ClickMiles for purchasing frequent flyer-related goods,
such as guidebooks.
[0007] The ClickMiles Reward Catalog allows the user to redeem the
ClickMiles for merchandise in the alternative to frequent flyer
miles. For example, a CD can be obtained from CDNow by redeeming
900 ClickMiles.
[0008] Although the ClickRewards program allows a user to redeem
accumulated points for obtaining merchandise over the Internet, it
does not allow for the redemption of frequent flyer miles from a
pre-existing account to be traded for reward points.
[0009] U.S. Pat. No. 5,794,210, ATTENTION BROKERAGE, issued on Aug.
11, 1998 to CyberGold, Inc. The '210 patent describes a system that
makes immediate payment to a user for paying attention to an
advertisement or other "negatively priced" information distributed
over the Internet. A special icon or other symbol displayed on a
computer screen may represent compensation and allow users to
choose whether they will view an ad or other negatively priced
information and receive associated compensation. The points
accumulated can then be used to purchase "positively priced
information" or products.
[0010] The CyberGold web site, www.cybergold.com, describes an
"earn and spend" community in which users earn "cash" online, for
example by visiting a portal site. The earnings can then be used to
make online purchases, such as software.
[0011] Again, although the '210 patent and the CyberGold web site
describe an incentive system that allows users to purchase products
or services over the Internet, neither teaches the ability of the
redeeming frequent flyer miles from a pre-existing account for
reward points.
[0012] U.S. Pat. No. 5,025,372, SYSTEM AND METHOD FOR
ADMINISTRATION OF INCENTIVE AWARD PROGRAM THROUGH USE OF CREDIT,
issued on Jun. 18, 1991 to Meridian Enterprises, Inc. The '372
patent describes an incentive award program in which credit is
awarded to participants based on the participant meeting a
designated level of performance under the system. This patent does
not teach the ability to increase the reward points in a user's
account by redeeming points from a pre-existing account such as a
frequent flyer mileage program.
[0013] With regard to FIG. 1, a model of the frequent flyer systems
of the prior art is presented. Two different airlines servers are
shown surrounded by their related marketing partners, the first
grouping labeled Airline 1 100 and the second independently
operated but functionally similar grouping labeled Airline 2 200.
In order to lure more business travelers, the airlines 100, 200
have established marketing agreements with travel related companies
to provide the business traveler with a more robust way to generate
rewards in the form of frequent flyer miles. These marketing
arrangements or associations have typically involved credit card
companies, phone companies, hotel chains and car rental companies.
Any purchases made through these "co-branded" partners were then
awarded to the user periodically. Bonus miles or points may
additionally be accumulated based on the user's actions in response
to offers made by the airline or in coordination with the partner
company. For example, phone companies offer bonus miles to users
based on the user's agreement to change phone service. These points
are obtained by the partner companies by purchasing them from the
issuing entity for redistribution as an incentive to utilize their
particular goods and/or services. FIG. 2 shows some sample
co-branded cards that are representative of marketing agreements
between TWA, Sprint, and Mastercard. In order to receive these
benefits, the user must sign up with each of the partner companies
separately and provide the frequent flyer account number that is to
receive the credited miles. A user either making phone calls or
purchases in accordance with the agreements made with each of these
partners will first accumulate a value on the partner's system
which in turn is periodically updated on the issuer's reward server
to reflect the value earned during that period. FIG. 3 is
representative of a typical user account that shows various
earnings in the system transferred in from any of the co-branded
partners. The records of the table in FIG. 3 identify the source of
the rewards, the dates they were recorded and the number of miles
associated with that transaction. The user can view the accumulated
miles by accessing the issuer's reward server or by tracking the
individual value reported to the user through the various bills the
user receives from each of the co-branded partners.
[0014] The prior art does not provide for a consumer to utilize
relatively small amounts of reward points in any manner. In
addition, a consumer often can only redeem points in an
airline-related manner (i.e. to obtain a free ticket or upgrade
from coach to first class). This prior art does not recognize the
need for a consumer to exchange reward points for non-travel
related goods, and in particular renders relatively small numbers
of points useless. For example, a consumer that does not travel
often may have 500 points in United Airlines, 700 points in USAir,
and 1000 points in TWA, each of which is relatively useless in the
prior art.
[0015] What is desired therefore is a system where users may submit
frequent flyer awards, reward points or other credits accumulated
for other types of transactions for redemption or translation into
a form readily acceptable by a participating merchant. An exchange
rate will be established for the relative consideration received by
the companies involved in the transaction. A user should be able to
pool, trade or aggregate the various earned rewards that may exist
in currently separate reward server systems where the resulting
combined value may be used by a user of the system to acquire items
of equivalent or relative value. In another embodiment, the award
program looking to reduce frequent flyer liabilities or exchange
redemption opportunities to increase customer satisfaction may
contact users (or be contacted by other members of the system) and
arrange for a transfer of the reward points into a value (which may
be predetermined) to be credited to the trading system reward
account. Alternatively, the points may be used in an auction
environment where points may be used to bid for certain awards,
products, services, or points from other programs. A user can
utilize points to bid for products or use value to bid for points.
Groups of bidders may pool points together for purchases or
donations. A user who has earned frequent flyer miles or rewards
from several points issuers that, individually, may be insufficient
to receive any direct value for their mileage may be able to pool
the miles acquired from several different points issuers to
transfer the awards accumulated to the trading system of this
invention. The user may have the selected items delivered by
performing a purchase request by various means such as over the
Internet, dialing a toll free number for placing an order, or any
other means of placing an order that will accept payment from this
system.
[0016] It is further desired to provide a system and method that
enables product providers such as manufacturers, wholesalers,
distributors, retailers and/or liquidators to liquidate their
products through a liquidation service run by a transacting entity
such as a liquidation broker, which will accept reward points
directly or indirectly from a user as consideration (in whole or in
part) for obtaining the product.
[0017] It is also desired to provide a system and method for users
to purchase, sell, or trade in points or blocks of points or value,
wherein the value and/or cost of the points is a function of the
open marketplace or the performance or desire of the issuing,
trading, selling purchasing or redeeming entity, either presently
or at some time in the future. This would allow users to obtain
points in the present time based on either the present or the
future performance of the issuer.
SUMMARY OF THE INVENTION
[0018] This invention allows a user to purchase goods or services
using reward points held by a variety of award programs or
co-branded partners (where individual accounts may or may not be
maintained) that are aggregated into an exchange account. A
frequent flyer program is typical of the systems to be encompassed
by this invention. Tie-in promotions have been introduced over the
past several years that have allowed purchases for goods and
services such as hotel or car rentals to accumulate award miles
that are then recorded on the airline award system. More recently
credit card companies offer cards where a mile or point award (or
similar value) is made for every dollar spent using that credit
card. These cards may additionally award bonus miles, points or
other value in coordination with user purchases of preferred
products.
[0019] A system and method are disclosed where the system allows
the user to redeem the reward points aggregated from a plurality of
reward entities for exchange with a merchant or other trader or
member of the system (referred to generically herein as a
"merchant"). As used herein, a reward or reward point refers
generally to a frequent flyer mile or credit, reward point, rebate,
cash-back value, or any other value awarded by a party to a
consumer (also known as a user) based on a transaction between the
party (or an affiliated party) and the consumer, where that reward
is typically tracked by the entity issuing the reward until
redeemed or otherwise surrendered or retired by the consumer or
other user. The process for redemption or exchange of the
pre-accumulated reward points under this invention comprises the
steps of the user requesting, via a user computer or other
electronic device, an exchange server computer (also referred to as
a trading server computer) to obtain reward points from a reward
server associated with a rewarding entity with which the user has
reward points or other value. The reward server computer decreases
the number of points or amount of value in the user's reward point
account by the requested number of reward points. The reward server
computer conveys consideration to the exchange server computer,
where the consideration corresponds to the number of reward points
decreased in the account of the reward server. The exchange server
computer increases the reward exchange account on the exchange
server associated with the user by the requested number of points
or value. The exchange server receives the consideration from the
reward server computer. Following or anticipating this conversion
into the exchange server, the user requests a purchase, exchange or
trade of an item from an associated merchant computer by selecting
the item to be purchased from a plurality of available items. The
exchange server computer confirms that the user's reward exchange
account contains sufficient points or value to obtain the selected
item or that the offered amount has been accepted. The user may
purchase or borrow additional points or value in the event that his
account does not contain the requisite number of points or value
for making the purchase transaction or the user's offer has not
been accepted. The user may also provide cash or other
consideration as partial payment for the item selected. The
exchange server computer requests the merchant computer to deliver
the item to the user. The exchange server decreases the user
exchange account by the number of points corresponding to the
purchased or exchanged item and the exchange server computer
conveys consideration to the merchant computer equivalent to the
required points. In another embodiment, the user may redeem rewards
at the reward server following the selection of an item to be
acquired. Policies may be established to automatically contact each
of the servers according to a user procurement profile to transact
the required payment. This profile may indicate the order of
redemption and method of providing funds sufficient to cover the
purchase after redeemable points are exhausted. After redemption
the appropriate consideration is transferred to the respective
merchant.
[0020] In a further embodiment of the invention, product providers
such as manufacturers, wholesalers, distributors, retailers and/or
traders are able to liquidate goods via a transacting entity such
as a liquidation broker or exchange service, which acts to exchange
a user's earned or otherwise acquired reward points for the
liquidated goods in a manner that is transparent to both the
redeeming user and the product provider. In this embodiment, a user
selects a product to be liquidated from a product provider (such as
the product manufacturer, wholesaler, distributor, retailer or
trader). The user may be a consumer, or it may be a third party
such as a trader or the like. The user designates to the
transacting entity that reward points are to be used towards the
purchase of the liquidated product in whole or in part. The reward
points may be obtained directly from a reward account held by a
reward server on the user's behalf, or they may be obtained from an
aggregated reward point exchange account that holds reward value
aggregated from multiple reward points issuers. In any event, the
transacting entity acts to decrease the number of reward points in
the user's reward account, as either designated by the user or by a
third party (or directed by a prearranged set of rules), by the
required number of points. The reward account holder (which is
either a reward issuer or an aggregator) conveys consideration to
the transacting entity equivalent to the par value (or a portion
thereof) of the reward points. In this case, the consumer obtains
the product in exchange for reward points having a retail value
equivalent to what he would have otherwise paid for the product at
a retail store (a "reference price"), while the reward account
holder is able to convey only the par value of the points (which is
generally substantially less than the retail value of the points).
The product provider is able to liquidate the product and obtain
payment (the lower par value of the reward points) equivalent to
what it would otherwise have obtained in a prior art liquidation
process, auction or trading environment, but without having to go
through a typical "liquidation process" with its accompanying brand
devaluation and associated costs. The reward account holder is able
to eliminate the liability of the reward points previously owed to
the user, but pays far less (only at the lower par value) than the
retail value of the points assigned by the user. As described, the
user may utilize reward points from a single reward issuing entity,
or he may aggregate points from multiple reward issuing entities as
described herein (cash and/or other consideration may also be
combined with points as described herein).
BRIEF DESCRIPTION OF THE DRAWING
[0021] FIG. 1 is representative of the prior art marketing
arrangements used in reward programs;
[0022] FIG. 2 is a representation of the co-branded partners in a
prior art award program;
[0023] FIG. 3 is a sample of the prior art reward summary from an
airline frequent flyer system;
[0024] FIG. 4 is a block diagram of the components of the present
invention;
[0025] FIG. 5 is a block diagram of the system components of the
present invention;
[0026] FIG. 6 is a data flow diagram of the process for a user to
redeem rewards;
[0027] FIG. 7 is a data flow diagram of the user request for
purchase of an item at a merchant site;
[0028] FIG. 8 is a data flow diagram of the user account creation
process on the exchange server;
[0029] FIG. 9 is a data flow diagram of the offer process by a
reward program or by a merchant;
[0030] FIG. 10 is a data flow diagram of the process where a user
may be redirected from a reward program to the exchange server of
the present invention; and
[0031] FIG. 11 is a block diagram of the liquidation process of the
present invention.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT
[0032] With reference to FIG. 4, a plurality of reward server
computers 10, 12, 14, a trading server (also referred to as an
exchange server) 20, a merchant computer 30 and a user computer 40
are shown in communication with a network 2. The network may
comprise any type of communication process where computers or
computing devices may contact each other. The present invention
will be described with respect to an Internet-based network where
the reward server computer 10 is associated with an airline
frequent flyer program. Any type of reward server may also be used
in this system. The reward server computer may be a credit card
reward program such as that offered by AMERICAN EXPRESS where the
user earns rewards based on purchases, or an advertising based
award program where the user earns rewards by selecting advertising
content for viewing on the Internet.
[0033] A user of this system may acquire and accumulate rewards
through any prior art means such as that shown on FIG. 1, which are
then posted in a user's reward point account 52 that is accessible
through the reward server computer 10. The exchange server computer
20 is in communication through the network 2 with a user on a user
computer 40 and is additionally able to connect to the reward
server computers 10, 12, and 14 through the network 2 in accordance
with techniques well known in the art for Internet communications.
Alternative electronic communications methodologies may be used,
such as an ATM, POS device or credit card network interface device
adapted to allow a user to access his accounts, or a smart card
reader, etc. The merchant computer 30 is representative of any site
that can communicate with the network that has goods or services
for sale or trade. The merchant may have a direct relationship with
the exchange server where the direct relationship allows for a
streamlined process for allowing a user to acquire products offered
via the merchant computer. Alternatively, the merchant computer may
be an independent merchant that does not currently have a profile
defined in the exchange server that will accept payment from
another computer system in any one of well known e-commerce
embodiments.
[0034] The rewarding entities may be any type of entity that has a
service for allocating points or consideration for user actions.
The reward server computers 10, 12, 14 may be of any type of
accessible server capable of holding data about a user along with a
corresponding earned value that is negotiable for other goods,
services, or points of another system or for use internal to the
trading system. In the preferred embodiment, the airline reward
server computer 10 may refer to one or several different airlines
that have frequent flyer programs or the like. The credit card
reward server computer 12 may refer to any type and number of
credit card server systems capable of holding, increasing or
decreasing a user's earned rewards acquired according to the terms
of the credit card program to which the user has enrolled. The
marketing reward server computer 14 may refer to one or a multitude
of network accessible marketing systems that allow a user to have
an account where points or other redeemable value may be stored,
updated and redeemed by a user. The exchange server computer may be
any type of computer system that allows users to access the system
in order to perform the processes involved in this invention. In
the preferred embodiment all of the systems described are
accessible through the Internet and the user may automatically or
freely navigate to any site by means well known in the art.
[0035] The present invention allows points issuers, who originally
sold reward points in their program to third parties for use as an
incentive by those third parties, to repurchase or trade points at
a substantial discount, thereby reducing their liability and
allowing for a trading strategy that enables points to continually
be sold, traded or repurchased. This process may be executed under
a separate accounting procedure than what is otherwise used for
points that are granted directly from the issuer.
[0036] The method of allowing the user to redeem the accumulated
reward points from one or more of a plurality of reward entities
will now be described with respect to FIG. 4 and the data flow
diagram of FIG. 6. The exchange server system would allow users to
log in to access the functionality provided, where the user may
interact with applications, forms or controls. For example, the
user may view his account information by using a web browser which
may automatically select or allow the user to enter the appropriate
identification information and then select buttons, links or other
selectable objects to navigate to the part of the system desired.
In the alternative, navigation may be done automatically by the web
site, and thus be transparent to the user (i.e. not directly
controlled by the user). If the user does not yet have an account
(step 602), then the user may be enrolled per the flow diagram of
FIG. 8 (step 604) as discussed below. The user, from the user
computer, makes a request to the exchange server computer 20 via
communications flow 102 (step 600), requesting redemption through
the network 2 for either all or a portion of the pre-accumulated
reward points stored for the user in one of the rewarding entities.
A user's reward point account 52 is associated with each of the
reward servers but is only shown in FIG. 4 connected to the airline
server for sake of clarity. Communications are made by the exchange
server 20 to the user computer 40 via communications data flows
104. The user may interactively select rewards to be redeemed, or
the system may determine which rewards are to be redeemed based on
a previously defined user profile rule or other third party profile
rule (such as an issuer) (step 606). The exchange server computer
20 obtains the reward points balance information from a reward
server 10, 12, 14 stored in the user's account 52 by contacting the
appropriate reward server via communication flow 110 (step 608)
according to the user's requirements, by using the connection
parameters as defined in a database 54 on the exchange server as
shown in FIG. 5. In one embodiment, the exchange server retrieves
reward point account balance information via communications flow
114 (step 610) from the reward server for the user. In another
embodiment, the exchange server transfers as part of the
communication 110, the requested reward points to be redeemed (step
612). The reward server computer 10 decreases the user's reward
point account 52 by the requested number of reward points (step
614). The term point is used to reference any earned value that has
a cash equivalent or negotiable worth as in "frequent flyer" point
or mile. The reward server computer 10 conveys consideration to the
exchange server computer 20 where the consideration corresponds to
the number of reward points decreased in the user's account 52 on
the reward server 10 (step 616), taking into account a conversion
rate that may be stored in the database 54. For example, the
consideration may be in the form of a monetary credit to an account
that exists between the exchange server and the reward server, that
gets paid at the end of a predefined billing cycle (i.e. every
month) or in real time or upon execution of a trade or redemption
procedure. The exchange server computer 20 increases the reward
exchange account 54 associated with the user by the received number
of points (step 620). The exchange server computer 20 in turn,
receives the consideration from the reward server computer 10 (step
618).
[0037] Similar communications are made between the exchange server
20 and the credit card reward server 12, as indicated by the data
communications 120 made by the exchange server 20 to the credit
card reward server 12 and the data communications 124 made by the
credit card reward server 12 to the exchange server 20. Likewise,
communications are made between the exchange server 20 and the
marketing reward server 14, as indicated by the data communications
130 made by the exchange server 20 to the marketing reward server
14 and the data communications 134 made by the marketing reward
server 14 to the exchange server 20. In each case, the exchange
server 20 increases the user's reward exchange account 54 by the
received number of points from the credit card reward server 12 and
the marketing reward server 14, respectively, based on the
appropriate conversion rate. Exchange rates may float or be
variable according to value of the acceptance of bid and ask
terms.
[0038] In the second part of the transaction (see FIG. 7), the user
from a user computer 40 may make a request 150 to purchase an item
from an associated merchant computer 30 (step 700) or from a
catalog or network of offerings or special event offerings as a
one-time or unique event. In the preferred embodiment, the merchant
computer system will be a networked computer system accessible via
the Internet. The user would visit the site by selecting on a link
from the exchange server's web site or by entering the name or
address of the destination web site or product brand or category
desired. The web site may also be pushed to the user rather than
pulled by the user as described above. The user may identify one or
many items to be acquired from one or several merchants 30. The
user elects to pay for the desired item with points (step 702), and
the user is redirected from the merchant server to the exchange
server at step 704. If the user does not have an account (step 706)
then the user is enrolled per the flow diagram of FIG. 8 (step
708). The merchant server computer 30 would confirm that the user
has sufficient points or value to purchase the selected item by
communicating with the exchange server 20 via communication flows
140, 144 in order to check the user's reward exchange account 54
(step 710). If the user does not have enough points in his reward
exchange account at the exchange server 20, then the process of
trading more points from the user's reward point account 52 into
his reward exchange account 54 is executed by branching to the flow
diagram at exit point A (step 712) which brings the process to the
flow diagram in FIG. 6 discussed above. After enough points are
traded or accumulated, the user continues with the process from
step 712 as shown in FIG. 7. The user may also purchase or borrow
additional points to make purchases or trades. The exchange server
computer 20 would request the merchant computer to deliver the item
to the user. The user delivery information may be retrieved from
the exchange server computer 20 or may be supplied in some other
manner. The exchange server computer 20 would decrease the user
exchange account 54 by the number of points or value corresponding
to the purchased item (step 714). The exchange server computer 20
conveys consideration to the merchant computer 30 equivalent to the
cost of the item by means well known in the art of electronic
commerce (e.g. by a preexisting account, credit card, etc.) (steps
716, 718). In the alternative, the consideration may be a direct
transfer of points to an account associated with the merchant. The
merchant, transaction broker, liquidator or member then completes
the transaction at step 720, for example by delivering the
purchased item. A transaction fee may be charged by any of the
parties in the form of points, cash or cash equivalent, etc. Also,
a delivery fee may be charged for delivery of the product.
[0039] Policies and profiles may be established to automatically
contact each of the reward servers according to a user profile,
merchant profile, broker dealer profile, issuer profile, or product
provider redemption profile (see FIG. 5) to transact the required
payment for an item selected by a user. This profile may indicate
the order of redemption and method of providing funds sufficient to
cover the purchase after redeemable points are exhausted. For
example, if a user has a preferred air carrier where the user would
like to retain mileage in that reward system, the user may specify
a priority of use indicating the reward resources that should be
exhausted prior to accessing the most desirable rewards. Following
the selection of an item to be acquired, the server may contact all
of the reward resources according to this profile to selectively
redeem each as required to meet the purchase price. The process may
be performed in real time or as a background process transparent to
the user, or where the user may select how the transaction should
proceed. If the user exhausts lower personal worth resources from
the reward servers, the system may be required to contact the user
before the transaction is allowed to proceed to redeem points. A
classification system may also be used to indicate rewards of
similar worth or category. If for instance, a frequent flyer
program supports multiple classifications of miles that may be
redeemed differently, the user may optionally define how those
resources should be managed during redemption. The redemption
process would then honor those rules elected by the user to select
from several different reward programs instead of redeeming rewards
strictly on a value required from the first reward program
contacted or based upon a preferred hierarchy defined by the system
or its members.
[0040] FIG. 8 describes the process steps involved in enrolling a
user to utilize the exchange server. The user accesses the exchange
server 20 at step 800 and selects an option to create a user
account at step 802. The data entered by the user may be used in
determining whether a user allows unsolicited offers to be
presented from the exchange server. In addition, offers may be
provided in an automatic fashion without user interaction. The
user's preferences for manufactured goods services, products,
travel destinations, hobbies, interests or any other user entered
criteria may be stored in the database for subsequent use by the
system (steps 804 and 808). The exchange server has the ability to
receive offers from reward servers or merchants (steps 806 and 808)
which may then be directed in real time to users based on the
database profile information provided by the user or other third
party (e.g an issuer, merchant, etc.) (see FIG. 9). At step 900,
the reward server contacts the exchange server with an offer to
redeem points. Similarly, a merchant may contact the exchange
server with an offer to be distributed or offered in the exchange
to members (step 902). The exchange server records the offer in a
database (step 906), and the exchange server may record a
conversion rate or rules in its database for that trade (step 906).
The reward server may then contact the user with an offer to redeem
at step 908. Optionally, the process may branch to the flow diagram
in FIG. 6 discussed above (step 910).
[0041] The exchange server may also be contacted in response to a
button or hyperlink located on a web page accessible by the user
from the airline reward server (FIG. 10, steps 1000 and 1002). The
process may continue to that described with respect to FIG. 6 for
trading points into a reward exchange account (step 1004). In a
similar manner, hyperlinks or calling routines may allow a user to
access a reservations system or merchant from the exchange server.
The link would direct the user to partner or associated air
carriers where the points in a user exchange account on the
exchange server 20 may be used to acquire hotel accommodations,
special offers, reduced fare or charter or free flights.
[0042] The system used to implement the aforementioned method will
now be disclosed with respect to FIG. 5. The system is comprised of
an exchange server computer connected to a network of computers
where a user interface is established whereby a user from a user
computer may access the server to request the transaction to
contact a reward server computer system. In the preferred
embodiment, the server has memory means for storing the user
account information, user profiles and rules which may be specified
by the user, system, issuer, member or merchant. The exchange
server also has communications means to allow users to access the
server and to allow the exchange server to contact reward servers
and processing means to interpret the rules and coordinate the
contact to the respective servers. The processing means is adapted
to allow the user to request and exchange consideration for rewards
from reward servers. The processing means additionally is adapted
to coordinate the exchange of consideration and increase or
decrease the user exchange accounts stored in memory in response to
actions performed by the user computer, reward server and merchants
and issuers.
[0043] In one aspect of the invention, new products may be made
available in the exchange before they are generally available to
the public ("advance sales"), so that the manufacturers can
determine the demand for the products prior to committing to the
full costs of marketing and distribution of the products.
[0044] In another aspect of the invention, reward points are
considered to have a par value, which is the cost of redeeming a
point by the issuing entity. For example, assume that a points
issuer assigns a par value of 0.25 cents per point. When the points
issuer awards 10,000 points to a customer (e.g. for flying 10,000
miles), then the actual cost to the issuer is $25.00. This par
value is the value that the issuer will assign to the outstanding
points on its records for redemption, surrender or retirement.
Thus, an issuer with 10,000,000 points awarded has a liability
(sometimes referred to as a contingent liability) of $25,000.
[0045] Points also may be considered to have a retail value which
is the value that a consumer or user obtains (or perceives that he
or she should fairly obtain) based on redeeming or surrendering the
points, for example in a redemption transaction. For example, most
consumers ascribe a retail value of 1 cent per point. This means
that an account that has 10,000 points in it has a total retail
value of $100.00 to that consumer. In the event that a consumer is
only able to redeem those 10,000 points for something worth less
than $100, he has obtained less than the full retail or perceived
value and this transaction is unattractive to him. Likewise, in the
event that the consumer is able to redeem those 10,000 points for
something with a perceived value worth more than $100, he has
obtained more than the full or perceived retail value and this
transaction is attractive to him. Issues arise when the par value
(the value that the issuer is willing to convey in order to
surrender or retire the points) is less than the retail value (the
value that the consumer is willing to accept to redeem the points),
which issues are addressed and resolved by an embodiment of the
present invention described herein.
[0046] In one embodiment, the par value of the points may be varied
by the points issuer, after issuance (e.g. while in an account of a
user), based upon factors such as the rate of redemption of points
by other users. For example, if the rate of redemption becomes
excessively large, this may negatively impact the cash position of
the issuer since points redemption generally results in cash flow
out of the issuer to product and service providers. Thus, when an
issuer determines that the cash flow is excessive, it may reduce
the par value such that subsequent redemptions will result in a
lower cash flow rate. For example, an issuer may be normally
redeeming points at the rate of 0.25 cents per point; that is, it
pays 0.25 cents to a merchant or aggregator when directed by a user
in exchange for reducing the user's points account by one point. In
the event that an excessive number of points are redeemed or
tendered, then the issuer (or aggregator or trader) may change the
value to 0.125 cents per point such that the user would only
receive a $12.50 credit for redeeming 10,000 points. The
issuer/aggregator may continue this reduced rate of exchange until
such time that cash flow levels out to an acceptable rate. Of
course, the issuer may also further reduce the exchange rate in
order to ameliorate the cash flow even further, if desired. In
addition, certain types of trades or redemptions may be limited
from time to time in order to control redemption rates, etc.
[0047] Likewise, in an embodiment wherein a product liquidator
charges a certain liquidation price in exchange for points
redemption, then the liquidator may also vary the liquidation price
based upon the current or projected sales volume. Thus, when the
rate of sales increases due to a relatively low product price
offering, then the liquidator may increase the price to either (1)
slow down the redemption rate, and/or (2) increase its cash
flow.
[0048] In a further embodiment, a bulletin board may be used on a
computer network wherein the value of points, last trade price,
bid/ask parameters, etc. are posted to provide a points exchange
environment.
[0049] In the preferred embodiment, the memory means comprises a
database structure that is used to record the transactions
associated with the previously described method. Records indicating
the changes and current value of user exchange accounts are updated
according to the request processed by the processor. This invention
also implements the recording and subsequent reporting of factors
such as the average retail value redeemed to date, the rate of
redemption, and other liquidation liability factors.
[0050] In response to a request for redemption, the exchange server
looks up the contact properties of the reward server to be
contacted. Properties may be fixed for a certain time or variable
on a bid/ask basis per trade. Market offers can be fixed for a
certain time, or value, or product. The user information is
submitted to the reward server to display the available points that
may be redeemed. In another embodiment, the request additionally
contains a value to be redeemed. The processor establishes a
communication link with the reward server and a transaction request
is sent to the processor of the reward server. The processor of the
reward server may perform actions that may allow or refuse the
requested action, or suggest an alternative action. In another
embodiment, the exchange server processor may be granted direct
authorization to modify the user's records in the reward server
database without analysis by the processor of the reward server. A
conversion rate may be applied to the transaction such that the
reward server reduces the available rewards or value in the user's
account. The reward server then transfers consideration to the
exchange server that corresponds to the value reduced or available
in the reward system. In response to the receipt of the transfer or
approval of the transfer, the exchange server increments the user
account balance to reflect the received (or issued or acquired)
consideration and the connection to the reward server is
terminated. A transaction log may be used to record each of the
transactions in case a reconciliation process is required at a
later time. The new value, whether increased or decreased in the
user's exchange account may then be stored until a user finds an
item to be purchased or trade to be engaged.
[0051] The user selects the desired object from the merchants (or
offering menu in the exchange) by indicating the type of product or
service to be procured. In one embodiment, the exchange server
contacts the merchant server to return to the user a list of
products that match the user's search criteria or if the user had
specified in detail what was desired, the product may be directly
acquired from a merchant, trader, member or broker/dealer. A
communication link is established between the exchange server and
the merchant computer or designee for e-commerce. Direct
acquisition may be enacted by contacting the merchant or
broker/dealer computer and supplying the user indicia, the product
indicia, and the retail value sufficient to secure the transaction.
In response to the transaction request, the merchant computer or
broker/dealer will receive the consideration supplied and contract
for the delivery of the product. Unfulfilled requests are stored
and when available can be pushed to the user. In another
embodiment, the consideration required for the item selected is
sent to the exchange server where based on the available points in
the user's exchange account the exchange server will determine
whether the consideration is available. An authorization process
may be incorporated at this point to request authorization from the
user or in a more simplified process, the consideration will be
transferred to the merchant computer and the user's exchange
account will be reduced. The merchant computer will receive the
consideration and will effectuate a delivery transaction to be
issued.
[0052] The goods may also be placed under direct control of a
distribution arm of the trading service so that the user places the
order with the trading service directly and the merchants are not
directly involved with the sale of the goods.
[0053] In a situation wherein the user finds it necessary or
desirable to return a product, such as when the product may be
damaged, then provision is made for the restocking of points back
into the user account (rather than a cash refund), with an optional
restocking fee being charged to the user in the form of points.
[0054] Thus, the present invention provides a liability management
system for issuers of reward points, which allows them to retire
points (take points off the books) and eliminate them, if desired,
at a discounted (or premium) rate. This system enables the sale or
repurchase of points with a trading strategy in which points need
not expire, or may be retired at a controlled rate or value. The
value ascribed to the points (the par value) may be changed by the
points issuer/aggregator based on the rate of redemption of the
points with respect to the issuers' ability to maintain cash flow,
or as may be determined by the market. That is, the par value of
the points may be varied by the points issuer, after issuance,
based upon factors such as the rate of redemption of points by
other users. For example, if the rate of redemption becomes
excessively large, this may negatively impact the cash position of
the issuer since points redemption generally results in cash flow
out of the issuer to product and service providers. Thus, when an
issuer determines that the cash flow is excessive, it may reduce
the par value such that subsequent redemptions will result in a
lower cash flow rate. Likewise, when an issuer determines that the
cash flow is low, it may if so desired increase the par value such
that subsequent redemptions will result in a higher cash flow
rate
[0055] The present system may be implemented by means of a smart
card (or credit/stored value card, or loyalty or frequency of use
card) wherein frequent use points may be accumulated on the user's
card every time the card is used for associated application. For
example, if a user uses his smart card to pay for a hotel that
normally gives reward points, those reward points may be stored on
the smart card. Likewise, when the card is used for the purchase of
an airline ticket, the points would be added to the smart card. The
user may then redeem the accumulated reward points by inserting the
card into a reader associated with a computer connected to the
Internet or other authorized communication system (e.g. an ATM/POS
device or other reader). The trading process proceeds as described
above, except that the points are obtained directly from the smart
card or system rather than a reward server. Information provided to
the user regarding the user's reward points is updated after every
transaction.
[0056] The user may have a credit card, debit card, or stored value
card that is linked to their points account in such a way as to
permit them to pay for purchases with a merchant by using the card,
wherein the merchant uses the existing credit card payment
infrastructure as if payment were being made/authorized by a bank
linked to the credit card or debit card account, but in fact the
card may be linked to the user's points account. In this manner,
the user and merchant can use the points account to pay for
purchases in a seamless manner whereby points are used for
consideration rather than or as a supplement to cash and
traditional credit.
[0057] Other aspects of this invention will now be disclosed that
will enhance the reader's understanding of the application of this
invention.
[0058] The user can purchase points from the system, borrow points
from the system, option points from the system, etc., and basically
treat the points as cash consideration or as a commodity for
purposes of such transactions. Points may be borrowed by a consumer
or other member of the network in order to use them to obtain
liquidated or other products, the consumer will be required to pay
interest to the points issuer/aggregator or provider based on the
points borrowed. Since the value of the points borrowed may be
measured by the price of the liquidated products purchased with
those points, and the liquidation price may be varied by the
liquidation broker, then the relative interest rate charged by the
issuer may vary as well. For example, a consumer wants to purchase
a TV with an MSRP of $1,000 from a liquidation broker. The consumer
contracts with a bank (or other lender) to borrow 100,000 points
from a bank, which in this case acts as the points issuing entity.
The bank agrees to convey consideration to the liquidation broker
to cover the cost of the TV, and the consumer agrees to repay the
value of 100,000 points to the bank with interest at a rate of 10%.
The bank, however, is only required to pay a liquidation sum of
$500 to the liquidation broker in exchange for the TV being
delivered to the consumer. Thus, the bank has provided 100,000
points to the consumer to obtain the TV, but has only had to expend
$500 in cash, thus doubling the effective rate of return on the
lending of points to the consumer. The consumer may also borrow
points for purchase of non-liquidated items as well.
[0059] The system can prioritize the order of points being traded
based on a predetermined set of rules such as in higher value
points being issued before those with a lower value.
[0060] Merchandisers also benefit from the use of this system where
another marketing channel is afforded for products that are often
purchased by frequent travelers with high disposable income.
Products and services encompassing jewelry, flowers, limousine
transport, timeshare rental may be exchangeable for points stored
in this system. Items purchased through the system may also be paid
for by a combination of points and currency which might be the case
when a user does not have enough accrued points to meet the
purchase consideration of an item selected. There may be
designations where a percentage of the product may be paid with
points, with the rest in cash or cash equivalent.
[0061] It is anticipated that high quality limited access products
may benefit from the distribution methods afforded by this system.
For example, companies like SONY and Chanel may take advantage of
this distribution means without impacting the level of quality or
excellence associated with their products.
[0062] Manufacturers can discount or liquidate goods for points in
a manner that doesn't negatively affect the perceived value of the
goods (i.e. not in direct competition with the mainstream sales).
That is, the manufacturer can place overstocked, end of run type
goods and the like, place them in the chain of distribution for
exchange with points, and not be in direct competition with cash
sales of its mainstream products.
[0063] Resort destinations that are managed by property management
companies such as RCI may be integrated into this system where
instead of trading accommodations with only those having similar
property, it is now possible that the rental of the property may be
achieved by conversion for points or points plus a property
timeshare or a percentage of cash. Rooms or inventory or any
vacation product (e.g. boat timeshares) may be booked with
discounts that vary in accordance with the number of rooms
available, which can change in real time as per the changing
availability of rooms or inventory.
[0064] Offers may be distributed to users of this system where
substantial rebates or reduced rates are described in the offer.
Time sensitive product offerings can also be accommodated in the
system where the value of the product is decreased according to a
life span of the product. Time sensitive product offerings such as
food products or concert tickets, airline departures, hotel room
rentals and the like can have an associated diminishing or
escalating value based on the length or availability of the offer.
This invention may be used to provide hotel rooms such that when
rooms are available and the date of use approaches, the rental
price may decrease or increase (the same methodologies may be used
to sell advertising space that is time-sensitive).
[0065] Using this system it is now possible to coordinate the
products of several different providers into one package. A user of
this system may therefore select an airline, hotel, car rental and
Broadway show tickets in New York, individually or in a prepared
package from one location by trading points where the package may
not have existed before where the trading system coordinates all
aspect of the transaction and reduces the user's exchange rewards
in a corresponding manner.
[0066] A purchasing club, organization, corporation or group may
utilize the present invention in order to purchase items in bulk.
For example, a transaction may be configured wherein a purchasing
club can obtain 100 TVs at a substantial discount, if and only if
they agree to purchase all or a substantial portion of them.
[0067] Other purchasing leverage not specifically addressed
previously may also be acquired by combining the power of a pool of
users of this system where these users may be allocated access to
products or services not generally distributed to the remainder of
the system users. Points collected in the system by these users may
afford them access to limited distribution channels where higher
discount levels or premium products may be acquired. Direct access
to cartel or special club products such as diamonds, bulk or
price-advantaged products, duty free items and other restricted
access product or service offerings are also accommodated through
the coordination of the exchange server with these specialized
service and product providers. For example, a preferred client
distribution channel such as found in a European market for luxury
goods would be made available to users of this system where the
prices for the objects in this preferred channel may be
significantly lower than retail for objects that are typically
reserved for limited distribution at premium prices. The exchange
server may additionally have exclusive rights to allocate access to
certain premium products, services, events, travel destinations or
accommodations in accordance with any right or grant permitting
such allocation to any user of the system. A distribution channel
may make available exclusive products for all or a limited amount
of the members of the system where the exchange server system
controls access to the offer. Parameters associated with the
available quantity, duration, exchange rates, etc may be input into
the system to be used in the allocation algorithm to restrict the
offer. Upon user access, the exchange server would, in these cases,
modify the premiums offered to reflect the immediately attainable
items for the current user and may additionally display or provide
access to premiums that may be acquired through payment by other
means (i.e. cash, charge, debit) to make up the difference between
the user's available points and the points required to accept the
offer.
[0068] Junkets and cruises may be obtained in exchange for points
and/or other consideration using the methods of the present
invention as described herein. Video and/or music files may be
downloaded or otherwise obtained in exchange for points and/or
other consideration using the methods of the present invention as
described herein.
[0069] In one embodiment, the present invention utilizes a graphic
on a web page that shows the availability of an item, such as the
number of items left (or about to expire) for a given
offer--similar to a running meter. This meter would be updated in
real time so that a user would know when the offer will soon be
expired due to unavailability of an item.
[0070] In another embodiment of this invention, airlines seeking to
provide higher levels of personalized service for their business
travelers will provide access to the Internet or access to
in-flight services such as video games, for a fee or in place of
granting mileage rewards on transcontinental or transatlantic
flights. Access to video games or other services (e.g. meals and
drinks) may be afforded to the traveler where the availability of
different games depends on the number of reward points traded in by
the traveler. The rewards may be converted using the exchange
server of this invention, where the user may opt to forego
collecting mileage in return for accessing on-board entertainment
provided in a standalone mode or in a linked mode. For example,
users may select to play video games, access the Internet or
utilize Email via a seatback or tray table mounted interface and
controller. The user may optionally connect a laptop computer to an
interface port of the aircraft using an Ethernet, parallel, USB
connection or proprietary connector provided by the air carrier. In
the preferred embodiment, the user would select the connection
speed and type for communications based on whether in-flight or
external services were to be accessed. Other types of business
services may additionally be used and accounted for, such as using
network printers or fax equipment. RF, satellite or microwave based
communications may be used for real time communications where
sufficient geographical coverage is provided.
[0071] The interface would allow a user to login using the frequent
flyer account information or preferably, the exchange server
account login id and password, where the user may use points
awarded from another air carrier or point server to "pay" for the
services accessed. The account balance from the exchange server may
be transferred to the local controller prior to takeoff for each
user that logs in to the exchange server. Once the plane has
departed, depending on the linking or access capability afforded by
the air carrier or service provider, the user's account may be
modified in real time or upon reconnection following landing, based
on services selected by the traveler. If a real time link is
supported, the user's exchange account may be periodically debited
according to the services selected and duration of use, certified
against the passenger log.
[0072] In another aspect of the invention, an electronic
liquidation or bartering system is implemented, wherein product
providers such as manufacturers, wholesalers, retailers, producers,
distributors, etc. can provide surplus, returns, discontinued or
overstocked goods for liquidation into the chain of supply of the
system and exchange then for points as described herein. This
provides an inventory management and liquidation system for these
manufacturers and sellers. This embodiment is further described
with respect to FIG. 11.
[0073] In this embodiment, three basic functions are
performed--typically by three distinct parties, but one party could
perform more than one function in some embodiments. The three
functions are (1) a product provider 1100, which provides a product
(or service), (2) a transacting entity 1102, which provides
transaction facilitation or supervision, and (3) a reward account
holder 1104, which provides issuance and/or aggregation of reward
points that will be used towards the purchase of the product or
service in a transaction carried out by the transacting entity 1102
The reward account holder may be a reward point issuer 1106 or it
may be a reward exchange trading entity 1108 that aggregates reward
points from multiple reward point issuing entities 1110 as
previously described. In either case, the reward account holder
maintains an account on behalf of a user that holds value,
typically in the form of reward points that have a par value (the
value the reward account holder is willing to pay on surrender of
the points) as well as a retail value (the value a user desires to
obtain from redeeming or surrendering the points) as previously
described. In some cases, reward points may be exchanged or
aggregated in real time (at the time of redemption for a product as
described herein.
[0074] In some cases, a product provider 1100 might perform
functions of the transacting entity 1102 as well, or the reward
account holder 1104 (i.e. the reward points issuer and/or
aggregator) might perform the functions of the transacting entity
1102 (in these cases, there are only two entities performing the
three functions). In another case, the reward account holder 1104
may provide the products as well, or the transacting entity 1102
may provide the product, etc. In certain cases, one party may
perform all three functions.
[0075] In a typical embodiment, FIG. 11 shows a system for
executing a product liquidation transaction in association with a
product liquidation service run by a transacting entity 1102. The
transacting entity (referred to herein also as the liquidation
broker) may be an independent third party, the exchange system
itself, or the functions performed by the liquidation broker 1102
may be performed by a product or service provider 1100 or reward
points issuer 1106 or aggregator 1108. In the case where the
liquidation broker 1102 is an independent third party (FIG. 11),
one or more product providers 1100 (such as a manufacturer 1112,
wholesaler 1114, distributor 1116, retailer 1118 or liquidator
1120) subscribe to the liquidation service provided by the
transacting entity 1102, thus forming a product supplier network
1122 in association with the transacting entity 1102. Products to
be liquidated may be made available to the user or consumer 1124
directly from the manufacturer 1112, or via any other product
provider 1100. For example, a television manufactured by SONY may
be liquidated under this invention directly from SONY (such as from
the SONY web site www.sony.com), or from a distributor 1116 or
other product provider 1100, etc. In addition, the product to be
liquidated may be made available from a web site catalog of a
points issuer/aggregator or some other third party or listed
directly on a points exchange server through a pre-arranged
agreement with the provider of the product or directly listed or
advertised by the exchange server or network. The actual source of
the product to be liquidated under this invention makes no
difference to the consumer 1124, who will obtain the product
substantially in exchange for reward points as now described.
[0076] One or more reward account holders also subscribe to the
liquidation service provided by the liquidation broker or
transacting entity 1102, thus forming a reward points network 1126
in association with the liquidation broker. As shown in FIG. 11,
the liquidation broker 1102 acts as an intermediary between the
product provider network 1122 and the reward points network 1126 to
provide a product selected by a consumer 1124 from the product
provider network 1122 substantially in exchange for reward points
in a user's reward points account held by a reward account holder
that is part of the reward points network 1126.
[0077] In accordance with this invention, a consumer 1124 obtains a
liquidated product in exchange for reward points from his or her
reward point account, wherein the transaction is brokered and
supervised by the liquidation broker as the transacting entity. The
consumer will provide consideration in the form of a combination of
reward points and a cash (or credit based) portion, wherein the
total value of the cash portion and the retail value of the points
as previously defined is substantially equivalent to a reference
price such as the MSRP (manufacturer's suggested retail price). In
this manner, it does not appear to the consumer that it is a
liquidation purchase (i.e. the liquidation aspects of the
transaction are transparent to the consumer or purchaser or
acquirer), and the usual brand devaluation that would normally
occur with liquidation sales does not occur. For example, assume
that the retail value is considered by a consumer in a given
transaction to be 0.01 (one cent) per point, and the consumer wants
to purchase a SONY television at an MSRP of $1,000. The consumer
views a web page from a web site maintained by one of the parties,
such as the liquidation broker, and is given an offer to acquire
the SONY television in exchange for $250 cash and 25,000 reward
points. Since the retail value of each reward point in this case
0.01, the consumer perceives that he has paid a value equivalent in
reward points to $250 (25,000.times.0.01=$250) plus the $250 cash,
for a total perceived value of $500, which is still much less than
the MSRP of $1,000.00 for the television. As a result, the consumer
perceives that he has received value of $750 for his 25,000 reward
points, which is 0.03 per point or three times the retail value,
and his or her incentive to use this system is the ease of
purchasing the product using only reward points at a much higher
retail value(or reward points and other consideration such as cash
or credit card in an alternative embodiment). The consumer
perceives that he has paid cash and reward points equal to the MSRP
of the television with his reward points having a retail value of
three cents each, which is highly attractive to the consumer.
[0078] In this situation, the liquidation broker receives the $250
cash payment from the consumer and pays $250 to the product
provider (SONY or a distributor) in full payment for the
television, which is delivered to the consumer. The liquidation
broker also causes the consumer's reward points account, held by a
designated reward account holder, to decrease by the 25,000 points.
The liquidation broker can then take one of several actions. First,
it may simply transact with the reward account holder to redeem
those 25,000 points, at a par value of 0.25 cents per point paid by
the reward account holder to the liquidation broker, which provides
a cash flow of $62.50 which is fully retained by the liquidation
broker. This provides a 25% profit margin to the liquidation broker
based on the initial $250 transaction. In the alternative to
redeeming or surrendering the points directly with the reward
account holder, the liquidation broker may seek to sell the points
to a 3.sup.rd party marketer at a resale value of 0.01 per point
(One cent per point). This would provide a profit of $250 rather
than $62.50. The 3.sup.rd party marketer has incentive to purchase
points at 0.01 per point since it usually must do so at 0.02 per
point directly with the issuer.
[0079] In the alternative, if the product is provided directly from
the manufacturer to the consumer or exchange system, then the
liquidation broker or exchange system pays the manufacturer
directly and retains the balance as its profit.
[0080] In an alternative embodiment, the liquidation brokerage
functions are performed by the product provider 1100 rather than an
independent third party 1102. In this case, then the product
provider 1100 interacts with the consumer 1124 to receive a request
for a product being liquidated (e.g. a selection on a web page),
interacts with the reward account holder 1104 to remove the reward
points from the consumer's account, receives consideration in
exchange for removing the reward points from the reward account
holder, arranges for conveyance or delivery of the liquidated item
to the consumer, and retains a substantial profit (the difference
between full consideration received from the reward account holder
and the liquidation price paid to the product provider).
[0081] In another alternative embodiment, the reward account holder
may act as the liquidation broker. In this case, a consumer, would
select the desired product from a catalog or web site provided by
the reward account holder, and the reward account holder would
convey consideration (the liquidation price) directly to the
product provider. So, for example, when the liquidation price is
$250.00 and the MSRP is $1,000.00, the manufacturer receives
$250.00 and the consumer's reward points account is debited by
100,000 points. Here, the reward account holder reaps the benefit
of the higher profit margin for the liquidation transaction.
[0082] Accordingly, several benefits are realized by this aspect of
the invention. The reward account holder (whether it is a reward
point issuer or an aggregator) realizes a decrease in a liability
associated with the reward account that is substantially more than
the total consideration paid for the transaction. The consumer
receives the desired product substantially in exchange for reward
points, and said manufacturer liquidates the product at
substantially the same price that it would otherwise realize in a
standard wholesale transaction.
[0083] As described herein, the product to be liquidated and
obtained by the user may be provided by any of the product
providers in the product distribution chain (i.e. the manufacturer
1112, wholesaler 1114, distributor 1116, retailer 1118 or
liquidator 1120). In addition, the product may exist at several or
all of these product providers, and it may be delivered (e.g. drop
shipped) to the user after payment is tendered to any party having
a contractual arrangement to do so. For example, a manufacturer may
transact with the liquidation broker and obtain payment as
described above, but instead of delivering the product directly
from the manufacturer to the user, the product may be located at a
distributor and the manufacturer may request the distributor to
ship the product to the user. In this event, the manufacturer may
provide a credit to the account of the product provider that ships
the product to the user, for example in the form of new products
that would replace the liquidated product. An example of this would
be if a manufacturer decides to liquidate a certain older
television model, and instructs all product providers in the
distribution line that they will receive a newer television model
for the older models that they ship under this liquidation process.
In this manner, a product that exists at some or all of the
entities in the distribution chain (distributor, retailers, etc.)
may be liquidated without the manufacturer (or any single entity
transacting with the liquidation broker) being required to have
actual physical possession of the product for shipment to the user.
This enables the manufacturer to liquidate a product from the
marketplace quickly (e.g. without having top recall them) and
reduce the time to market for new products.
[0084] In another embodiment, the liquidation broker sets up a
points escrow account on behalf of the consumer, and acts to
transfer reward points from one or more issuers into the escrow
account when requested by the consumer. The liquidation broker may
then carry out liquidation purchase transactions as further
requested by the consumer.
[0085] In another embodiment, the value of the reward points may
fluctuate as a function of the company's performance, which may be
measured by reference to the price of its stock, revenue, earnings,
or some other parameter that is agreed to that reflects the
relative performance of the company The number or value of points
outstanding being redeemed also may also be a factor). In this
manner, companies that perform well would provide an additional
incentive to a user for using their frequent use program rather
than a competitor's program. For example, all other parameters
being the same, a user would likely choose the Acme credit card
company over the Beta credit card company when the user determines
that the Acme company performance results in a 10% increase in the
value of points otherwise earned by using its credit card. The
value may also fluctuate as a function of the number of points
outstanding or the desirability of the issuer to reduce its
liability or make it more robust.
[0086] In a further embodiment, the present invention may be
utilized to allow users to pay for items won in an auction with
points aggregated as described above. In this embodiment, a user
may participate in an auction, such as one of many known auction
services executed over the Internet, whereby a user selects an item
that he or she would like to bid on from a web page provided by a
merchant computer web site, or even by a web site hosted by the
exchange server computer or a third party auction service provider.
The auction may be carried out in any number of well known ways,
such as for example when all bidders may bid up until a date and
time when the auction ends, and the highest bidder or group of
bidders wins the auction. The winning bidder may then designate
reward points from his or her reward points exchange account to be
used to pay for the item bid for and won in the auction. The
accumulated reward points are selected by the user, and
consideration is conveyed to the merchant/seller in exchange for
the auctioned item as described above.
* * * * *
References