Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Discount or incentive
Reexamination Certificate
1996-08-01
2001-12-18
Stamber, Eric W. (Department: 2162)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Discount or incentive
Reexamination Certificate
active
06332126
ABSTRACT:
BACKGROUND OF THE INVENTION
As the credit card industry has evolved and grown more competitive over the last twenty years, many credit card issuing financial institutions have attempted to distinguish themselves from their competition by introducing new features and benefits with their credit cards. Among these features have been programs that reward the consumer for using their credit card with reduced interest rates on the purchase amount, accrued rebates redeemable for specified products or services, or coupons redeemable at the time of purchase. Some of the more successful reward programs have been designed to motivate the consumer to make purchases at specific merchants.
It is common practice among the credit card issuers to include inserts with their monthly statements that market merchant products and services. The targeting for these inserts is based, however, on minimal cardholder information such as the cardholder's state, zip code, or credit card type. These sorts of inserts have been found to generate a very low response rate, i.e., have stirred little interest in consumers. It is believed that most cardholders discard the inserts without looking at them.
Focus groups conducted on this subject have found that consumers are interested in receiving discounts for products and services, but only for those items that they consider valuable. It is impossible to evaluate consumer interest in a product or service based only on the geographic location of the consumer's residence.
Merchants are continually looking for ways to effectively market their products and services. Discounts have proven to be an effective method for attracting and retaining customers. Today there are a number of vehicles available to the merchant to provide discounts to potential customers including bulk mailings, newspaper, radio and television advertisements, and targeted marketing.
Targeted marketing is particularly effective and efficient for merchants because it is designed to identify consumers that are more likely than the general public to be interested in the merchant's products or services. One proven method has been to identify consumers that have demonstrated interest by purchasing similar or related products in the past. One way for merchants to obtain such information has been to purchase consumer lists from various providers. These lists are again, however, generally based on rather limited, static targeting criteria.
Merchants thus desire a flexible, cost effective method for finding consumers who will be interested in their products or services. Consumers on the other hand desire discounts on products and services they want or need. Unfortunately, the structure of the bank card world (VISA and MASTERCARD bankcard) makes the accomplishment of these seemingly parallel goals difficult. Cardholder transaction histories, a key to determining cardholder preferences and thus successful target marketing, are owned and controlled by the cardholders' issuing financial institutions and are unavailable to merchants and their acquiring financial institutions who are separated from the cardholders and their issuers by the VISA and MASTERCARD bankcard interchanges, across which money, but not information, passes.
Merchants and their acquirers do not therefore have access to the cardholder information necessary to provide targeted offers, and issuers do not have the access to merchants necessary to design targeted offers deemed valuable by their cardholders. An individual financial institution that serves as both an issuer and acquirer may bridge the gap for its own merchants and cardholders, but targeting to this smaller subset of cardholders is obviously of less value to merchants and the limited range of merchant offers is similarly of less value to cardholders and will be less effective in stimulating card usage. The divide between merchants and their acquirers and cardholders and their issuers can be bridged however by a credit card processor that receives information from both sides of the interchange and has the processing capacity to perform the necessary offer matching, delivery, and fulfillment.
SUMMARY OF THE INVENTION
The purpose of the present invention is to meet the objectives of merchants (which includes service providers) and consumers as well as the financial institutions on both sides of the interchange. Specifically, the goal is to provide merchants with a flexible, cost effective method to provide a large number of interested consumers with value propositions that discount the merchants products and services, and to provide consumers, or cardholders, with a broad range of merchant offers in which they will be most interested. A further goal and effect of the invention will be to increase the use of the bankcards of participating financial institutions, which provides a convenient automated means for implementing targeted discounts without the need for coupons, mailings, or additional transactions on the part of either the cardholder or merchant. Finally, the invention meets the above objectives while at the same time preserving the consumers' privacy by avoiding the dissemination of the cardholders' transaction histories to merchants or outside financial institutions.
To meet these objectives the invention utilizes five basic steps: (1) an automated process which enables the merchant to target consumers based on purchase behavior and geographic location; (2) an automated process which matches targeted merchant offers against a data base of consumers and historical purchase behavior; (3) an automated process which provides the consumer with the best value propositions from multiple merchants/service providers; (4) the ability for the consumer to act on the value proposition and receive an automated credit for the discount amount without the need of a coupon or additional transactions; (5) an automated process which reports on the execution of the discount transaction to the consumer and merchant.
In the first step, the merchant can, through an automated process, define targeting criteria based on consumer historic purchase activity by Merchant Category Code (MCC) or specific merchant ID. This gives the merchant the ability to target consumers that have transacted at their location, competitors en masse, or complimentary MCCs. For example, a boating merchant can target consumers that have made purchases at boating merchants, boating service stations, or sporting goods stores. The merchant can further focus the targeting of historic purchase activity by requiring a specific number of prior purchases and/or a minimum dollar amount spent at the targeted merchants during a specific period. Other targeting criteria available to the merchant include airline travel information, months since last move, credit limit, credit instrument available funds, consumer state, and consumer five digit zip code. Merchants or their acquirers can submit preliminary batch queries to determine the number of cardholders who would qualify for a particular proposed discount offer. Merchants can thereby fine tune their target criteria to reach an audience of the desired size and level of interest.
Merchants can define the discount amount of the value propositions to be a percentage of the total purchase or a flat dollar amount. They can also define whether the value proposition is a one time offer or unlimited for a specified promotion period. If the value proposition can be redeemed more than once, the merchant can vary the discount percentage or amount between the first and subsequent purchases. The merchant can also define a minimum or maximum purchase amount, as well as a maximum discount amount.
Once the target criteria have been defined, an automated process matches the value propositions against the consumer data base supplied by the participating issuers to find eligible consumers. Each consumer will receive multiple value propositions from different merchants. The limit on the number of value propositions provided to each consumer each month is defined by a parameter in
Dobbs Mary K.
Duncan John
Johnson Kurt W.
Loftesness Scott J.
Mayes Dan
First Data Corporation
McCutchen Doyle Brown & Enersen LLP
Myhre James W.
Stamber Eric W.
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