CA2441547A1 - Hybrid credit card transaction system - Google Patents
Hybrid credit card transaction system Download PDFInfo
- Publication number
- CA2441547A1 CA2441547A1 CA002441547A CA2441547A CA2441547A1 CA 2441547 A1 CA2441547 A1 CA 2441547A1 CA 002441547 A CA002441547 A CA 002441547A CA 2441547 A CA2441547 A CA 2441547A CA 2441547 A1 CA2441547 A1 CA 2441547A1
- Authority
- CA
- Canada
- Prior art keywords
- transactions
- credit card
- transaction
- affiliated
- hybrid
- Prior art date
- Legal status (The legal status is an assumption and is not a legal conclusion. Google has not performed a legal analysis and makes no representation as to the accuracy of the status listed.)
- Granted
Links
Classifications
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q20/00—Payment architectures, schemes or protocols
- G06Q20/02—Payment architectures, schemes or protocols involving a neutral party, e.g. certification authority, notary or trusted third party [TTP]
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q10/00—Administration; Management
- G06Q10/08—Logistics, e.g. warehousing, loading or distribution; Inventory or stock management
- G06Q10/087—Inventory or stock management, e.g. order filling, procurement or balancing against orders
- G06Q10/0875—Itemisation or classification of parts, supplies or services, e.g. bill of materials
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q20/00—Payment architectures, schemes or protocols
- G06Q20/02—Payment architectures, schemes or protocols involving a neutral party, e.g. certification authority, notary or trusted third party [TTP]
- G06Q20/023—Payment architectures, schemes or protocols involving a neutral party, e.g. certification authority, notary or trusted third party [TTP] the neutral party being a clearing house
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q20/00—Payment architectures, schemes or protocols
- G06Q20/04—Payment circuits
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q20/00—Payment architectures, schemes or protocols
- G06Q20/08—Payment architectures
- G06Q20/10—Payment architectures specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
- G06Q20/105—Payment architectures specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems involving programming of a portable memory device, e.g. IC cards, "electronic purses"
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q20/00—Payment architectures, schemes or protocols
- G06Q20/08—Payment architectures
- G06Q20/20—Point-of-sale [POS] network systems
- G06Q20/204—Point-of-sale [POS] network systems comprising interface for record bearing medium or carrier for electronic funds transfer or payment credit
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q20/00—Payment architectures, schemes or protocols
- G06Q20/30—Payment architectures, schemes or protocols characterised by the use of specific devices or networks
- G06Q20/34—Payment architectures, schemes or protocols characterised by the use of specific devices or networks using cards, e.g. integrated circuit [IC] cards or magnetic cards
- G06Q20/357—Cards having a plurality of specified features
- G06Q20/3572—Multiple accounts on card
-
- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q30/00—Commerce
- G06Q30/02—Marketing; Price estimation or determination; Fundraising
- G06Q30/0207—Discounts or incentives, e.g. coupons or rebates
- G06Q30/0213—Consumer transaction fees
Abstract
A hybrid credit card transaction system that processes transactions as either virtual standard transactions directed through a clearing house or as virtual closed loop transactions bypassing the clearinghouse, is disclosed. The system includes a logic enabled merchant that directs virtual closed loop transactions and directs them to an affiliated acquiring entity which acquires the virtual closed loop transactions and routes them directly to an affiliated card issuing entity so as to bypass the clearinghouse. The affiliated card issuing entity debits virtual standard transactions to a credit card account and virtual closed loop transactions to a private label account. The logic enabled merchant, associated acquiring entity and the associated card entity may be affiliated by participation in an Internet site that promotes transactions between small businesses and merchants selling wholesale goods. A
reduction in processing fees accrued when bypassing the clearinghouse promotes issuance and use of the hybrid credit cards.
reduction in processing fees accrued when bypassing the clearinghouse promotes issuance and use of the hybrid credit cards.
Description
HYBRID CREDIT CARD TRANSACTION SYSTEM
FIELD OF THE INVENTION
The present invention relates to the use of transaction cards to facilitate commercial transactions, more particularly to the use of a hybrid credit card that can be used to conduct revolving credit transactions and private label credit transactions.
BACKGROUND OF THE INVENTION
A large number of firms are in heavy competition to gain market share in the consumer credit market. Consumers of credit cards tend to show little loyalty to any one credit card. This is in part due to an influx of offers from competing credit cards having low initial "teaser" rates and the ease of switching from one card to the next. Credit card sponsors have attempted to inspire loyalty in the cardholders by tying use of the card to a reward system. Some credit card sponsors award points in proportion to the amount of dollar transactions conducted.
These points can then be exchanged with the sponsoring airline for free airfare.
Another marketing tactic is to tie the total expenditures per year to a cash-back reward that is a small fraction of the total expenditures. Despite the success of some of the incentive programs in obtaining and retaining customers, reward systems are typically costly to implement and can have a detrimental effect on profit margins.
Incentive programs can also be tied to transactions limited to a particular group of transactions where the sponsor is both the acquiring bank and the issuing bank in what is referred to as an "on-us" transaction. In a typical credit card transaction, a cardholder makes a purchase at a merchant and the merchant forwards the transaction to an acquiring bank. The acquiring bank processes the transaction for a fee and sends the transaction through a credit card association network (VISA, MASTERCARD, AMERICAN EXPRESS, etc.). The credit card association network further processes the transaction for a fee and sends the transaction to the card sponsoring bank. The card sponsoring bank then posts the transaction to the cardholder's credit account. In an "on-us" transaction, the acquiring bank and the sponsoring bank are the same entity, which allows the acquiring bank to clear the transaction without forwarding the transaction through the credit card association network and incurring a predetermined fee, or other additional fees. The absence of the credit card association network fee allows the sponsoring bank to more easily support incentives for "on-us" purchases and thereby inspire customer loyalty. Despite the ability to offer incentives for "on-us"
transactions, the situations in which an "on-us" transaction can occur are fairly limited. Typically, the merchant must be in a customized agreement with the card sponsor, or must be the card sponsor itself, limiting the number of merchants participating in "on-us" credit transactions.
Merchant exchanges specialize in transactions between merchants where bulk purchases of goods andlor services are made for later resale in retail transactions. Because of the high overall value and low profit margins associated with each transaction, use of credit cards is limited by their relatively high fees.
On the other hand, credit must typically be extended by one of the parties to the other to complete the transaction. Evaluating the credit-worthiness of the opposing party is difficult and costly, and tends to limit the access of many small businesses to merchant exchanges.
It would be advantageous to have a credit card that provides sufficient incentives to attract new cardholders and inspire loyalty in current cardholders. It would also be advantageous to have a credit card that facilitates varied transactions with several types of merchants. Another desired feature would be a credit card that can be used by small businesses to purchase from merchants on a merchant exchange without the merchant incurnng large fees. Finally, it would be advantageous to have a credit card that increases the number of transactions through incentives while minimizing the detrimental effects on the card sponsor's profits.
-2_ SUMMARY OF THE INVENTION
A hybrid credit card transaction system that processes transactions as either virtual standard transactions directed through a clearinghouse or as virtual closed loop transactions bypassing the clearinghouse, is disclosed. Bypassing the clearinghouse reduces the fees associated with standard credit cards and allows the use of an incentive fee structure promoting the issuance and use of the hybrid credit card.
In a first embodiment, the present invention includes a hybrid credit card transaction system for processing a plurality of transactions as either virtual standard transactions routed through a clearinghouse or as virtual closed loop transactions bypassing the clearinghouse. The transaction system includes a hybrid credit card for initiating purchase transactions. The transaction system also includes a logic-enabled merchant having a point of sale terminal including program logic operable to detect the hybrid credit card. The program logic labels each of the transactions as either one of a group of virtual standard transactions or virtual closed loop transactions. An affiliated acquiring entity is configured to acquire and direct the virtual standard transactions to the clearinghouse and to acquire and direct the virtual closed loop transactions so as to bypass the clearinghouse. An affiliated card issuing entity accepts the virtual standard transactions from the clearinghouse and debits a credit card account and accepts the virtual closed loop transactions and debits a private label account.
In another embodiment, the transaction system includes a processing element having an incentive fee structure that returns an incentive fee to the cardholder, the logic-enabled merchant, or both, for conducting virtual closed loop transactions with the hybrid credit card.
In yet another embodiment, the hybrid credit card includes a card identifier having a first string identifying the virtual closed loop transactions and a second string identifying the virtual standard transactions. The first string may include a merchant category code modified to identify the virtual closed loop transactions.
The card identifier in either case is detectable by the program logic of the logic-enabled merchant.
In still another embodiment, the present invention includes a product rollout method that is usable by an affiliated card issuing entity for promoting transactions between small businesses and affiliated and non-affiliated merchants.
The product rollout method includes providing an Internet site for sales by affiliated 'merchants to the small businesses and registering the small businesses for transactions on the Internet site. The affiliated issuing entity offers a private label account and a credit card account to each of the small businesses registered on the Internet site. A hybrid credit card is issued having an identification number with a string associated with the private label account and a string associated with the credit card account. Transactions with non-affiliated merchants are cleared to the credit card account for a fee. Transactions with affiliated merchants on the Internet site are cleared to the private label line of credit for a second fee that is lower than the first fee such that transactions on the Internet site and adoption of the hybrid credit card are promoted.
The advantage of the present invention for the logic-enabled merchant and hybrid credit cardholder is that the credit card association regulated interchange and card association network fees are avoided, allowing the merchant and cardholder to share the cost savings. The advantage for the affiliated acquiring entity is an increase in the number of transactions and accompanying interchange fees. The advantage for the affiliated card issuing entity is an increase in the number of cardholders and credit balances accruing interest charges.
BRIEF DESCRIPTION OF THE DRAWINGS
Having thus described the invention in general terms, reference will now be made to the accompanying drawings, which are not necessarily drawn to scale, and wherein:
Figure 1 is a schematic diagram of a standard credit card transaction processing system of the prior art;
Figure 2 is a schematic diagram of a hybrid credit card transaction system of the present invention; and Figure 3 is a schematic diagram of a virtual closed loop transaction which is part of the hybrid credit card transaction system shown in Figure 2.
DETAILED DESCRIPTION OF THE INVENTION
The present invention now will be described more fully hereinafter with reference to the accompanying drawings, in which preferred embodiments of the invention are shown. This invention may, however, be embodied in many different forms and should not be construed as limited to the embodiments set forth herein;
rather, these embodiments are provided so that this disclosure will be thorough and complete, and will fully convey the scope of the invention to those skilled in the art. Like numbers refer to like elements throughout.
The invention relates to a standard credit card transaction system. Figure 1 is a schematic of a standard credit card transaction of the prior art depicting a purchase transaction occurring between a merchant 11 and a cardholder 12. To make a purchase from the merchant 11, the cardholder 12 presents a credit card to the merchant in return for the receipt of goods and/or services. The merchant either makes an imprint of the credit card or otherwise gathers information on an identification number of the card. The merchant 11 then seeks authorization for the transaction and settlement for the transaction from an acquiring bank 13.
The merchant 11 gets authorization from the acquiring bank 13 by communicating the information about the transaction to the acquiring bank including the credit card number and the amount of the transaction. The acquiring entity 13 communicates the credit card number and transaction amount through a clearinghouse 14 for approval and settlement. The acquiring entity 13 receives a merchant discount fee for the services from the standard merchant 11.
The clearinghouse 14 is also known as a credit card association network and can be, for example, MASTERCARD, VISA, or AMERICAN EXPRESS.
The clearinghouse 14 communicates the card number and transaction amount to a card issuing bank 15, seeking approval and settlement. The clearinghouse 14 receives financial benefits from the acquiring bank 13 and pays fees to the card issuing bank 15 as compensation for facilitating the transaction. These fee structures are predetermined by the clearinghouse.
The card issuing bank has issued the credit card to the cardholder and a credit card account 12 in conjunction with, or accessed by, the card. The card issuing bank 15 compares the amount of the purchase with a current balance and a credit limit of the credit card account 12 associated with the credit card number communicated from the clearinghouse 14. The card issuing bank 15 approves the transaction if there is sufficient credit remaining or may deny the transaction if the credit limit has been exceeded. If approved, the card issuing bank 15 deducts the transaction amount from the credit card account 12 of the cardholder and via the acquiring bank forwards the amount to an account of the standard merchant 11.
The card issuing bank 15 tallies the amount of all transactions for a particular period and submits a statement to the cardholder for payment on the credit card account.
A hybrid credit card transaction system 10 of the present invention includes a hybrid credit card that can be used in either a virtual standard credit card transaction accessing a credit card account or in a virtual closed loop transaction accessing a private label line of credit. Figure 2 is a schematic of the hybrid credit card transaction system 10 using the hybrid credit card of the current invention.
The diagram depicts two alternative types of transactions available when using the system 10, one a virtual standard credit card transaction and the other a virtual closed loop credit card transaction. The term "virtual" herein pertains to the aspect of the invention that mimics the prior art standard and closed loop transactions so as to be transparent to the buyer and the merchant. Transactions using the hybrid credit card can be conducted in situations where the cardholder and hybrid credit card are present during the transactions (face-to-face transactions), in situations where the cardholder and payment card are not present (e.g., telephone order, mail order and Internet transactions), and in situations where the cardholder has authorized periodically recurring charges to be posted against their credit card account 12 or private label line of credit 16. Also, the term "hybrid credit card" is used broadly to denote a form of identification of an account or accounts that can even be independent of a physical card.
The virtual standard transaction includes the standard merchant 11, the acquiring bank 13, the clearinghouse 14, an affiliated card issuing entity 19 and the revolving line of credit 12. The virtual closed loop system includes a logic-enabled merchant 17, an affiliated acquiring entity 18, the affiliated card issuing entity 19 and a private label line of credit 16. The affiliated acquiring entity 18, affiliated card issuing entity 19 and the logic-enabled merchant 17 are all affiliated through a prior agreement to reduce fees, offer incentives or somehow cooperate to the advantage of the affiliates or the cardholders to increase the number of cards issued. A discussion of one embodiment of the incentive system follows hereafter in this specification.
Purchases made with the hybrid credit card at a standard merchant 11 invoke the virtual standard transaction process with the acquiring bank 13 acquiring the transaction and the clearinghouse 14 clearing the transaction.
However, the affiliated card issuing entity 19 handles the standard transaction as would the card issuing bank 15, modifying the status of the credit card account account 12 to debit or credit the transaction. Tn this manner, the use of the hybrid credit card is extended beyond virtual closed loop transactions. The affiliated card issuing entity 19 benefits from an increase in the number of standard transactions using the hybrid credit cards which might not have been issued if not for the advantages to be had in the virtual closed-loop transactions.
When the hybrid credit card is used at a logic-enabled merchant 17, the logic-enabled merchant transmits the hybrid credit card identification number to the affiliated acquiring entity 18. The affiliated acquiring entity seeks an authorization directly from the affiliated issuing entity 19 and the issuing entity deducts the transaction amount from the private label line of credit. Because of the affiliation agreement and the output of the logic-enabled merchant 17, the clearinghouse 14 is bypassed, along with the interchange and clearinghouse fees, as shown more clearly in Figure 3. Bypassing these fees allows incentives to be more easily extended to cardholders when using the hybrid credit card for virtual closed loop transactions.
The logic-enabled merchant 17 detects the difference between the standard transaction and the virtual closed loop transaction using the credit card identification number. The hybrid credit card includes a credit card identification number having a first string associated with the private label line of credit 16 and a second string associated with the credit card account 12. The logic-enabled merchant 17 detects the first string using program logic resident within a logic-enabled point of sale terminal. The pairing of the hybrid credit card and the logic-enabled point of sale terminal facilitates the discrete processing of a set of virtual closed loop transactions without interfering with the functionality of the point of sale terminal in its role as a data capture device for standard credit card transactions. The merchant point of sale terminal, as designated herein, is used in an expansive sense and refers to any data capture and transmission device used to process payment card transactions. Point of sale terminals include, but are not limited to, stand-alone terminals, unattended terminals, web sites and personal computers. The term "string" is used herein to indicate any number of letters, objects, symbols, bar codes or numbers or a combination thereof that can be read or submitted to the logic enabled merchant 17.
In another embodiment, the first string is placed in a field that on standard transaction cards is known as a Merchant Category Code (MCC). In standard practice, the MCC is a constant value for all transactions processed through a single merchant terminal. The MCC is typically assigned during the configuration of the merchant terminal and is used to designate a specific merchant in the case of the airlines, auto rental agencies and hotels, or is used to designate a general product category of the product or service being sold, e.g., shoe stores, women's accessory and specialty stores and chiropractors. Computer program logic resident in the logic enabled merchant terminal changes the merchant category code to identify the transaction as a virtual closed loop transaction. The MCC is only changed if the transaction is executed using a hybrid credit card or hybrid credit card account number which is a member of a class of cards or numbers designated for closed loop transaction processing. The use of the MCC to designate a virtual closed loop transaction promotes the unique processing of that transaction by the logic enabled merchant 17, the affiliated acquiring entity 18 and the affiliated card issuing entity 19.
The affiliated acquiring entity 18 acquires the card identification number using it to identify the virtual closed loop transaction and directs the transaction straight to the affiliated card issuing entity 19, bypassing the clearinghouse 14.
The affiliated card issuing entity 19 then compares the transaction amount with the available private label line of credit 16 and deducts the amount of the transaction if _g_ sufficient credit is available. If sufficient credit is not available, the transaction is denied or treated differently, as determined by previous agreement. The affiliated card issuing entity 19 compiles a billing statement periodically on both the private label line of credit 16 and the revolving line of credit 12 which is sent to the hybrid credit card cardholder.
The advantage of the present invention for the logic-enabled merchant 17 and hybrid credit cardholder is that the interchange and predetermined clearinghouse established fees are avoided, allowing the merchant and cardholder to share the cost savings. In addition, the cardholder benefits from the increased versatility of the hybrid credit card which can be used for multiple transaction types. The advantage for the affiliated acquiring entity 18 is an increase in the number of transactions and accompanying interchange fees. The advantage for the affiliated card issuing entity 19 is an increase in the number of cardholders and credit balances accruing interest charges.
In another embodiment, the present invention includes a product rollout method usable by the affiliated card issuing entity 19 to introduce and promote distribution and acceptance of the hybrid credit card by potential cardholders, in particular small businesses. An Internet site is established for sales of bulk goods by a group of affiliated logic-enabled merchants 17 to small businesses. Each of the affiliated merchants uses the same affiliated acquiring entity or entities 18 that are equipped to detect the hybrid card identification code and route virtual closed loop transactions straight to the affiliated card issuing entity 19 for a merchant discount fee. In one aspect, the Internet site is a merchant exchange where merchant groups that deal in the same types of goods meet participate in transactions for those goods. The affiliation is not limited to the members of an Internet site but could also include members of different merchant groups that deal in the same type of goods and/or service or have some other common connection.
Also, the cardholders on the Internet site need not be limited to small businesses but could also be common consumers.
A small business accesses the affiliated Internet site through the World Wide Web using an Internet browser. In order for the small business to make a purchase from one of the affiliated merchants, the small business must become a registered user. The small business is prompted on the Internet site by the affiliated card issuing entity 19 to establish both a private label account and a credit card account associated with the hybrid credit card. The affiliated issuing entity approves or disapproves the small business applicant based on the credit history of the small business. If approved, the affiliated issuing entity issues the hybrid credit card having the identification number with the string associated with the private label account 16 and the string associated with the credit card account 12. The use of private label line of credit can also be referred to as a "diversion account" or a "ghost account" that is used to capture virtual closed loop transactions and effectively segregate them from other standard transactions which may also be executed using the same hybrid credit card.
The affiliated acquiring entity 18 is then free to acquire transactions between the newly registered small business and the logic-enabled merchant 17.
Clearing by the affiliated card acquiring entity 19 is performed for transactions on the Internet site at a reduced fee that benefits the merchant and the small business by lowering overall costs. The merchant and small business also benefit from an assured line of credit, freeing them from previous concerns about the creditworthiness of the opposite party. The product roll out method benefits the affiliated acquiring entity 18 by providing an incentive for the merchant and small business to conduct transactions on the Internet site using the hybrid credit card, increasing the fees earned by the affiliated acquiring entity. The issuing entity 19 benefits from the product roll out method in that the incentives promote the issuance of an increased number of hybrid credit cards which can also be used in standard revolving credit transactions.
Many types of incentives can be used, but the incentives are preferably in the form of a discount on processing fees levied on the logic-enabled merchant 17.
The small businesses may also receive a benefit in that the usual fee incurred when using a standard charge card for bulk purchases may be waived or reduced. The incentives can be awarded by any and to any of the parties to the transaction and clearing process. Typically, the party awarding the incentive is the party receiving the benefit of bypassing the clearinghouse 14 and its associated fees.
Many modifications and other embodiments of the invention will come to mind to one skilled in the art to which this invention pertains having the benefit of the teachings presented in the foregoing descriptions and the associated drawings.
Therefore, it is to be understood that the invention is not to be limited to the specific embodiments disclosed and that modifications and other embodiments are intended to be included within the scope of the appended claims. Although specific terms are employed herein, they are used in a generic and descriptive sense only and not for purposes of limitation.
FIELD OF THE INVENTION
The present invention relates to the use of transaction cards to facilitate commercial transactions, more particularly to the use of a hybrid credit card that can be used to conduct revolving credit transactions and private label credit transactions.
BACKGROUND OF THE INVENTION
A large number of firms are in heavy competition to gain market share in the consumer credit market. Consumers of credit cards tend to show little loyalty to any one credit card. This is in part due to an influx of offers from competing credit cards having low initial "teaser" rates and the ease of switching from one card to the next. Credit card sponsors have attempted to inspire loyalty in the cardholders by tying use of the card to a reward system. Some credit card sponsors award points in proportion to the amount of dollar transactions conducted.
These points can then be exchanged with the sponsoring airline for free airfare.
Another marketing tactic is to tie the total expenditures per year to a cash-back reward that is a small fraction of the total expenditures. Despite the success of some of the incentive programs in obtaining and retaining customers, reward systems are typically costly to implement and can have a detrimental effect on profit margins.
Incentive programs can also be tied to transactions limited to a particular group of transactions where the sponsor is both the acquiring bank and the issuing bank in what is referred to as an "on-us" transaction. In a typical credit card transaction, a cardholder makes a purchase at a merchant and the merchant forwards the transaction to an acquiring bank. The acquiring bank processes the transaction for a fee and sends the transaction through a credit card association network (VISA, MASTERCARD, AMERICAN EXPRESS, etc.). The credit card association network further processes the transaction for a fee and sends the transaction to the card sponsoring bank. The card sponsoring bank then posts the transaction to the cardholder's credit account. In an "on-us" transaction, the acquiring bank and the sponsoring bank are the same entity, which allows the acquiring bank to clear the transaction without forwarding the transaction through the credit card association network and incurring a predetermined fee, or other additional fees. The absence of the credit card association network fee allows the sponsoring bank to more easily support incentives for "on-us" purchases and thereby inspire customer loyalty. Despite the ability to offer incentives for "on-us"
transactions, the situations in which an "on-us" transaction can occur are fairly limited. Typically, the merchant must be in a customized agreement with the card sponsor, or must be the card sponsor itself, limiting the number of merchants participating in "on-us" credit transactions.
Merchant exchanges specialize in transactions between merchants where bulk purchases of goods andlor services are made for later resale in retail transactions. Because of the high overall value and low profit margins associated with each transaction, use of credit cards is limited by their relatively high fees.
On the other hand, credit must typically be extended by one of the parties to the other to complete the transaction. Evaluating the credit-worthiness of the opposing party is difficult and costly, and tends to limit the access of many small businesses to merchant exchanges.
It would be advantageous to have a credit card that provides sufficient incentives to attract new cardholders and inspire loyalty in current cardholders. It would also be advantageous to have a credit card that facilitates varied transactions with several types of merchants. Another desired feature would be a credit card that can be used by small businesses to purchase from merchants on a merchant exchange without the merchant incurnng large fees. Finally, it would be advantageous to have a credit card that increases the number of transactions through incentives while minimizing the detrimental effects on the card sponsor's profits.
-2_ SUMMARY OF THE INVENTION
A hybrid credit card transaction system that processes transactions as either virtual standard transactions directed through a clearinghouse or as virtual closed loop transactions bypassing the clearinghouse, is disclosed. Bypassing the clearinghouse reduces the fees associated with standard credit cards and allows the use of an incentive fee structure promoting the issuance and use of the hybrid credit card.
In a first embodiment, the present invention includes a hybrid credit card transaction system for processing a plurality of transactions as either virtual standard transactions routed through a clearinghouse or as virtual closed loop transactions bypassing the clearinghouse. The transaction system includes a hybrid credit card for initiating purchase transactions. The transaction system also includes a logic-enabled merchant having a point of sale terminal including program logic operable to detect the hybrid credit card. The program logic labels each of the transactions as either one of a group of virtual standard transactions or virtual closed loop transactions. An affiliated acquiring entity is configured to acquire and direct the virtual standard transactions to the clearinghouse and to acquire and direct the virtual closed loop transactions so as to bypass the clearinghouse. An affiliated card issuing entity accepts the virtual standard transactions from the clearinghouse and debits a credit card account and accepts the virtual closed loop transactions and debits a private label account.
In another embodiment, the transaction system includes a processing element having an incentive fee structure that returns an incentive fee to the cardholder, the logic-enabled merchant, or both, for conducting virtual closed loop transactions with the hybrid credit card.
In yet another embodiment, the hybrid credit card includes a card identifier having a first string identifying the virtual closed loop transactions and a second string identifying the virtual standard transactions. The first string may include a merchant category code modified to identify the virtual closed loop transactions.
The card identifier in either case is detectable by the program logic of the logic-enabled merchant.
In still another embodiment, the present invention includes a product rollout method that is usable by an affiliated card issuing entity for promoting transactions between small businesses and affiliated and non-affiliated merchants.
The product rollout method includes providing an Internet site for sales by affiliated 'merchants to the small businesses and registering the small businesses for transactions on the Internet site. The affiliated issuing entity offers a private label account and a credit card account to each of the small businesses registered on the Internet site. A hybrid credit card is issued having an identification number with a string associated with the private label account and a string associated with the credit card account. Transactions with non-affiliated merchants are cleared to the credit card account for a fee. Transactions with affiliated merchants on the Internet site are cleared to the private label line of credit for a second fee that is lower than the first fee such that transactions on the Internet site and adoption of the hybrid credit card are promoted.
The advantage of the present invention for the logic-enabled merchant and hybrid credit cardholder is that the credit card association regulated interchange and card association network fees are avoided, allowing the merchant and cardholder to share the cost savings. The advantage for the affiliated acquiring entity is an increase in the number of transactions and accompanying interchange fees. The advantage for the affiliated card issuing entity is an increase in the number of cardholders and credit balances accruing interest charges.
BRIEF DESCRIPTION OF THE DRAWINGS
Having thus described the invention in general terms, reference will now be made to the accompanying drawings, which are not necessarily drawn to scale, and wherein:
Figure 1 is a schematic diagram of a standard credit card transaction processing system of the prior art;
Figure 2 is a schematic diagram of a hybrid credit card transaction system of the present invention; and Figure 3 is a schematic diagram of a virtual closed loop transaction which is part of the hybrid credit card transaction system shown in Figure 2.
DETAILED DESCRIPTION OF THE INVENTION
The present invention now will be described more fully hereinafter with reference to the accompanying drawings, in which preferred embodiments of the invention are shown. This invention may, however, be embodied in many different forms and should not be construed as limited to the embodiments set forth herein;
rather, these embodiments are provided so that this disclosure will be thorough and complete, and will fully convey the scope of the invention to those skilled in the art. Like numbers refer to like elements throughout.
The invention relates to a standard credit card transaction system. Figure 1 is a schematic of a standard credit card transaction of the prior art depicting a purchase transaction occurring between a merchant 11 and a cardholder 12. To make a purchase from the merchant 11, the cardholder 12 presents a credit card to the merchant in return for the receipt of goods and/or services. The merchant either makes an imprint of the credit card or otherwise gathers information on an identification number of the card. The merchant 11 then seeks authorization for the transaction and settlement for the transaction from an acquiring bank 13.
The merchant 11 gets authorization from the acquiring bank 13 by communicating the information about the transaction to the acquiring bank including the credit card number and the amount of the transaction. The acquiring entity 13 communicates the credit card number and transaction amount through a clearinghouse 14 for approval and settlement. The acquiring entity 13 receives a merchant discount fee for the services from the standard merchant 11.
The clearinghouse 14 is also known as a credit card association network and can be, for example, MASTERCARD, VISA, or AMERICAN EXPRESS.
The clearinghouse 14 communicates the card number and transaction amount to a card issuing bank 15, seeking approval and settlement. The clearinghouse 14 receives financial benefits from the acquiring bank 13 and pays fees to the card issuing bank 15 as compensation for facilitating the transaction. These fee structures are predetermined by the clearinghouse.
The card issuing bank has issued the credit card to the cardholder and a credit card account 12 in conjunction with, or accessed by, the card. The card issuing bank 15 compares the amount of the purchase with a current balance and a credit limit of the credit card account 12 associated with the credit card number communicated from the clearinghouse 14. The card issuing bank 15 approves the transaction if there is sufficient credit remaining or may deny the transaction if the credit limit has been exceeded. If approved, the card issuing bank 15 deducts the transaction amount from the credit card account 12 of the cardholder and via the acquiring bank forwards the amount to an account of the standard merchant 11.
The card issuing bank 15 tallies the amount of all transactions for a particular period and submits a statement to the cardholder for payment on the credit card account.
A hybrid credit card transaction system 10 of the present invention includes a hybrid credit card that can be used in either a virtual standard credit card transaction accessing a credit card account or in a virtual closed loop transaction accessing a private label line of credit. Figure 2 is a schematic of the hybrid credit card transaction system 10 using the hybrid credit card of the current invention.
The diagram depicts two alternative types of transactions available when using the system 10, one a virtual standard credit card transaction and the other a virtual closed loop credit card transaction. The term "virtual" herein pertains to the aspect of the invention that mimics the prior art standard and closed loop transactions so as to be transparent to the buyer and the merchant. Transactions using the hybrid credit card can be conducted in situations where the cardholder and hybrid credit card are present during the transactions (face-to-face transactions), in situations where the cardholder and payment card are not present (e.g., telephone order, mail order and Internet transactions), and in situations where the cardholder has authorized periodically recurring charges to be posted against their credit card account 12 or private label line of credit 16. Also, the term "hybrid credit card" is used broadly to denote a form of identification of an account or accounts that can even be independent of a physical card.
The virtual standard transaction includes the standard merchant 11, the acquiring bank 13, the clearinghouse 14, an affiliated card issuing entity 19 and the revolving line of credit 12. The virtual closed loop system includes a logic-enabled merchant 17, an affiliated acquiring entity 18, the affiliated card issuing entity 19 and a private label line of credit 16. The affiliated acquiring entity 18, affiliated card issuing entity 19 and the logic-enabled merchant 17 are all affiliated through a prior agreement to reduce fees, offer incentives or somehow cooperate to the advantage of the affiliates or the cardholders to increase the number of cards issued. A discussion of one embodiment of the incentive system follows hereafter in this specification.
Purchases made with the hybrid credit card at a standard merchant 11 invoke the virtual standard transaction process with the acquiring bank 13 acquiring the transaction and the clearinghouse 14 clearing the transaction.
However, the affiliated card issuing entity 19 handles the standard transaction as would the card issuing bank 15, modifying the status of the credit card account account 12 to debit or credit the transaction. Tn this manner, the use of the hybrid credit card is extended beyond virtual closed loop transactions. The affiliated card issuing entity 19 benefits from an increase in the number of standard transactions using the hybrid credit cards which might not have been issued if not for the advantages to be had in the virtual closed-loop transactions.
When the hybrid credit card is used at a logic-enabled merchant 17, the logic-enabled merchant transmits the hybrid credit card identification number to the affiliated acquiring entity 18. The affiliated acquiring entity seeks an authorization directly from the affiliated issuing entity 19 and the issuing entity deducts the transaction amount from the private label line of credit. Because of the affiliation agreement and the output of the logic-enabled merchant 17, the clearinghouse 14 is bypassed, along with the interchange and clearinghouse fees, as shown more clearly in Figure 3. Bypassing these fees allows incentives to be more easily extended to cardholders when using the hybrid credit card for virtual closed loop transactions.
The logic-enabled merchant 17 detects the difference between the standard transaction and the virtual closed loop transaction using the credit card identification number. The hybrid credit card includes a credit card identification number having a first string associated with the private label line of credit 16 and a second string associated with the credit card account 12. The logic-enabled merchant 17 detects the first string using program logic resident within a logic-enabled point of sale terminal. The pairing of the hybrid credit card and the logic-enabled point of sale terminal facilitates the discrete processing of a set of virtual closed loop transactions without interfering with the functionality of the point of sale terminal in its role as a data capture device for standard credit card transactions. The merchant point of sale terminal, as designated herein, is used in an expansive sense and refers to any data capture and transmission device used to process payment card transactions. Point of sale terminals include, but are not limited to, stand-alone terminals, unattended terminals, web sites and personal computers. The term "string" is used herein to indicate any number of letters, objects, symbols, bar codes or numbers or a combination thereof that can be read or submitted to the logic enabled merchant 17.
In another embodiment, the first string is placed in a field that on standard transaction cards is known as a Merchant Category Code (MCC). In standard practice, the MCC is a constant value for all transactions processed through a single merchant terminal. The MCC is typically assigned during the configuration of the merchant terminal and is used to designate a specific merchant in the case of the airlines, auto rental agencies and hotels, or is used to designate a general product category of the product or service being sold, e.g., shoe stores, women's accessory and specialty stores and chiropractors. Computer program logic resident in the logic enabled merchant terminal changes the merchant category code to identify the transaction as a virtual closed loop transaction. The MCC is only changed if the transaction is executed using a hybrid credit card or hybrid credit card account number which is a member of a class of cards or numbers designated for closed loop transaction processing. The use of the MCC to designate a virtual closed loop transaction promotes the unique processing of that transaction by the logic enabled merchant 17, the affiliated acquiring entity 18 and the affiliated card issuing entity 19.
The affiliated acquiring entity 18 acquires the card identification number using it to identify the virtual closed loop transaction and directs the transaction straight to the affiliated card issuing entity 19, bypassing the clearinghouse 14.
The affiliated card issuing entity 19 then compares the transaction amount with the available private label line of credit 16 and deducts the amount of the transaction if _g_ sufficient credit is available. If sufficient credit is not available, the transaction is denied or treated differently, as determined by previous agreement. The affiliated card issuing entity 19 compiles a billing statement periodically on both the private label line of credit 16 and the revolving line of credit 12 which is sent to the hybrid credit card cardholder.
The advantage of the present invention for the logic-enabled merchant 17 and hybrid credit cardholder is that the interchange and predetermined clearinghouse established fees are avoided, allowing the merchant and cardholder to share the cost savings. In addition, the cardholder benefits from the increased versatility of the hybrid credit card which can be used for multiple transaction types. The advantage for the affiliated acquiring entity 18 is an increase in the number of transactions and accompanying interchange fees. The advantage for the affiliated card issuing entity 19 is an increase in the number of cardholders and credit balances accruing interest charges.
In another embodiment, the present invention includes a product rollout method usable by the affiliated card issuing entity 19 to introduce and promote distribution and acceptance of the hybrid credit card by potential cardholders, in particular small businesses. An Internet site is established for sales of bulk goods by a group of affiliated logic-enabled merchants 17 to small businesses. Each of the affiliated merchants uses the same affiliated acquiring entity or entities 18 that are equipped to detect the hybrid card identification code and route virtual closed loop transactions straight to the affiliated card issuing entity 19 for a merchant discount fee. In one aspect, the Internet site is a merchant exchange where merchant groups that deal in the same types of goods meet participate in transactions for those goods. The affiliation is not limited to the members of an Internet site but could also include members of different merchant groups that deal in the same type of goods and/or service or have some other common connection.
Also, the cardholders on the Internet site need not be limited to small businesses but could also be common consumers.
A small business accesses the affiliated Internet site through the World Wide Web using an Internet browser. In order for the small business to make a purchase from one of the affiliated merchants, the small business must become a registered user. The small business is prompted on the Internet site by the affiliated card issuing entity 19 to establish both a private label account and a credit card account associated with the hybrid credit card. The affiliated issuing entity approves or disapproves the small business applicant based on the credit history of the small business. If approved, the affiliated issuing entity issues the hybrid credit card having the identification number with the string associated with the private label account 16 and the string associated with the credit card account 12. The use of private label line of credit can also be referred to as a "diversion account" or a "ghost account" that is used to capture virtual closed loop transactions and effectively segregate them from other standard transactions which may also be executed using the same hybrid credit card.
The affiliated acquiring entity 18 is then free to acquire transactions between the newly registered small business and the logic-enabled merchant 17.
Clearing by the affiliated card acquiring entity 19 is performed for transactions on the Internet site at a reduced fee that benefits the merchant and the small business by lowering overall costs. The merchant and small business also benefit from an assured line of credit, freeing them from previous concerns about the creditworthiness of the opposite party. The product roll out method benefits the affiliated acquiring entity 18 by providing an incentive for the merchant and small business to conduct transactions on the Internet site using the hybrid credit card, increasing the fees earned by the affiliated acquiring entity. The issuing entity 19 benefits from the product roll out method in that the incentives promote the issuance of an increased number of hybrid credit cards which can also be used in standard revolving credit transactions.
Many types of incentives can be used, but the incentives are preferably in the form of a discount on processing fees levied on the logic-enabled merchant 17.
The small businesses may also receive a benefit in that the usual fee incurred when using a standard charge card for bulk purchases may be waived or reduced. The incentives can be awarded by any and to any of the parties to the transaction and clearing process. Typically, the party awarding the incentive is the party receiving the benefit of bypassing the clearinghouse 14 and its associated fees.
Many modifications and other embodiments of the invention will come to mind to one skilled in the art to which this invention pertains having the benefit of the teachings presented in the foregoing descriptions and the associated drawings.
Therefore, it is to be understood that the invention is not to be limited to the specific embodiments disclosed and that modifications and other embodiments are intended to be included within the scope of the appended claims. Although specific terms are employed herein, they are used in a generic and descriptive sense only and not for purposes of limitation.
Claims (29)
1. A hybrid credit card transaction system for processing a transaction, initiated by a cardholder using a hybrid credit card, as either one of a group of virtual standard transactions routed through a clearinghouse or as one of a group of virtual closed loop transactions bypassing the clearinghouse, said transaction system comprising:
a hybrid credit card;
a logic-enabled merchant having a point of sale terminal including program logic operable to identify the hybrid credit card and to label the transaction using the hybrid credit card as being one of the virtual closed loop transactions;
an affiliated acquiring entity configured to acquire and direct the virtual standard transactions to the clearinghouse and configured to acquire and direct the virtual closed loop transactions so as to bypass the clearinghouse;
and an affiliated card issuing entity accepting the virtual standard transactions from the clearinghouse and debiting a credit card account and accepting the virtual closed loop transactions and debiting a private label account.
a hybrid credit card;
a logic-enabled merchant having a point of sale terminal including program logic operable to identify the hybrid credit card and to label the transaction using the hybrid credit card as being one of the virtual closed loop transactions;
an affiliated acquiring entity configured to acquire and direct the virtual standard transactions to the clearinghouse and configured to acquire and direct the virtual closed loop transactions so as to bypass the clearinghouse;
and an affiliated card issuing entity accepting the virtual standard transactions from the clearinghouse and debiting a credit card account and accepting the virtual closed loop transactions and debiting a private label account.
2. The hybrid credit card transaction system of claim 1, further comprising a processing element having an incentive fee structure that returns an incentive to the cardholder for conducting virtual closed loop transactions with the hybrid credit card.
3. The hybrid credit card transaction system of claim 2, wherein said incentive is in proportion to a fee avoided when bypassing the clearinghouse.
4. The hybrid credit card transaction system of claim 1, further comprising a processing element having an incentive fee structure that returns an incentive to the merchant for conducting virtual closed loop transactions with the hybrid credit card.
5. The hybrid credit card transaction system of claim 2, wherein said incentive is in proportion to a fee avoided when bypassing the clearinghouse.
6. The hybrid credit card transaction system of claim 1, wherein said hybrid credit card includes a card identifier having a first string identifying the virtual closed loop transactions and a second string identifying the virtual standard transactions, said card identifier detectable by the program logic of the logic-enabled merchant.
7. The hybrid credit card transactions system of claim 6, wherein said first string includes a merchant category code modified to identify the virtual closed loop transactions.
8. The hybrid credit card transaction system of claim 1, wherein the logic-enabled merchant is one of a group of affiliated merchants participating in sales on an internet site.
9. The hybrid credit card transaction system of claim 8, wherein the cardholders are small businesses and the internet site is a marketplace for business-to-business transactions.
10. The hybrid credit card transaction system of claim 1, wherein the credit card account includes a revolving credit line.
11. The hybrid credit card transaction system of claim 1, wherein the private label line of credit is an unsecured credit line that must be periodically paid in full.
12. The hybrid credit card transaction system of claim 1, wherein the affiliated card issuing entity issues separate periodic statements of transaction activity on the private label line of credit and the credit account to the cardholder.
13. The hybrid credit card transaction system of claim 1, further comprising an affiliate agreement agreed upon by the logic enabled merchant, the affiliated acquiring entity and the affiliated card issuing entity, said affiliate agreement defining a fee structure for crediting and debiting fees resulting from the virtual closed loop transaction amongst the logic enabled merchant, the affiliated acquiring entity and the affiliated card issuing entity.
14. A method of processing a transaction, initiated by a cardholder using a hybrid credit card, as either one of a group of virtual standard transactions routed through a clearinghouse or as one of a group of virtual closed loop transactions bypassing the clearinghouse, said method of processing a transaction comprising:
identifying the hybrid credit card using program logic at a point of sale of a logic enabled merchant and labeling the transaction using the hybrid credit card as being one of the virtual closed loop transactions;
acquiring and directing the virtual standard transactions to the clearinghouse and acquiring and directing the virtual closed loop transactions so as to bypass the clearinghouse using an affiliated acquiring entity; and accepting the virtual standard transactions from the clearinghouse and debiting a credit card account and accepting the virtual closed loop transactions and debiting a private label account using an affiliated card issuing entity.
identifying the hybrid credit card using program logic at a point of sale of a logic enabled merchant and labeling the transaction using the hybrid credit card as being one of the virtual closed loop transactions;
acquiring and directing the virtual standard transactions to the clearinghouse and acquiring and directing the virtual closed loop transactions so as to bypass the clearinghouse using an affiliated acquiring entity; and accepting the virtual standard transactions from the clearinghouse and debiting a credit card account and accepting the virtual closed loop transactions and debiting a private label account using an affiliated card issuing entity.
15. The method of processing a transaction of claim 14, further comprising the step of issuing the hybrid credit card to the cardholder before use in the transaction.
16. The method of processing a transaction of claim 14, further comprising the step of returning an incentive to the cardholder for conducting virtual closed loop transactions with the hybrid credit card.
17. The method of processing a transaction of claim 14, further comprising the step of returning an incentive to the merchant for conducting virtual closed loop transactions with the hybrid credit card.
18. The method of processing a transaction of claim 14, wherein said identifying the hybrid credit card step includes identifying, using the program logic, a card identifier having a first string indicating the virtual closed loop transactions and a second string indicating the virtual standard transactions using the program logic.
19. The method of processing a transaction of claim 18, wherein said identifying the hybrid credit card step includes identifying the first string having a merchant category code modified to indicate the virtual closed loop transactions.
20. The method of processing a transaction of claim 14, further comprising the step of enrolling the logic-enabled merchants into a group of affiliated merchants participating in sales on an Internet site.
21. The method of processing a transaction of claim 20, wherein the step of enrolling includes enrolling cardholders that are small businesses to participate in business-to-business transactions with the affiliated merchants.
22. The method of processing a transaction of claim 14, wherein in the step of accepting the virtual standard transactions includes debiting a revolving credit line.
23. The method of processing a transaction of claim 14, wherein the step of accepting the virtual closed loop transactions includes debiting an unsecured credit line that must be periodically paid in full.
24. The method of processing a transaction of claim 14, further comprising the step of issuing separate periodic statements of transaction activity on the private label line of credit to the cardholder.
25. The method of processing a transaction of claim 14, further comprising the step of defining a fee structure for crediting and debiting fees resulting from the virtual closed loop transaction and agreed upon by the logic enabled merchant, the affiliated acquiring entity and the affiliated card issuing entity.
26. A product rollout method usable by an affiliated card issuing entity for promoting transactions between small businesses and affiliated and non-affiliated merchants, said product rollout method comprising:
providing an internet site for sales by the affiliated merchants to the small businesses;
registering the small businesses for transactions on the internet site;
offering a private label account and a credit card account to each of the small business registered on the internet site;
issuing a hybrid credit card usable to initiate transactions debiting both the private label account and the credit card account to the registered small businesses;
clearing transactions with non-affiliated merchants to the credit card account for a fee; and clearing transactions with affiliated merchants on the Internet site to the private label line of credit for a second fee that is lower than the first fee such that transactions on the Internet site and adoption of the hybrid credit card are promoted.
providing an internet site for sales by the affiliated merchants to the small businesses;
registering the small businesses for transactions on the internet site;
offering a private label account and a credit card account to each of the small business registered on the internet site;
issuing a hybrid credit card usable to initiate transactions debiting both the private label account and the credit card account to the registered small businesses;
clearing transactions with non-affiliated merchants to the credit card account for a fee; and clearing transactions with affiliated merchants on the Internet site to the private label line of credit for a second fee that is lower than the first fee such that transactions on the Internet site and adoption of the hybrid credit card are promoted.
27. The product rollout method of claim 26, wherein said clearing transactions with affiliated merchants step includes identifying the hybrid credit card using an identification number associated with the hybrid credit card.
28. The product rollout method of claim 26, wherein said clearing transactions with non-affiliated merchants includes clearing transactions through a clearinghouse.
29. The product rollout method of claim 28, wherein said clearing transactions with affiliated merchants includes bypassing the clearinghouse and avoiding clearinghouse fees.
Applications Claiming Priority (3)
| Application Number | Priority Date | Filing Date | Title |
|---|---|---|---|
| US09/812,452 US7752134B2 (en) | 2001-03-20 | 2001-03-20 | Hybrid credit card transaction system |
| US09/812,452 | 2001-03-20 | ||
| PCT/US2002/008521 WO2002075501A2 (en) | 2001-03-20 | 2002-03-20 | Hybrid credit card transaction system |
Publications (2)
| Publication Number | Publication Date |
|---|---|
| CA2441547A1 true CA2441547A1 (en) | 2002-09-26 |
| CA2441547C CA2441547C (en) | 2013-07-30 |
Family
ID=25209605
Family Applications (1)
| Application Number | Title | Priority Date | Filing Date |
|---|---|---|---|
| CA2441547A Expired - Lifetime CA2441547C (en) | 2001-03-20 | 2002-03-20 | Hybrid credit card transaction system |
Country Status (8)
| Country | Link |
|---|---|
| US (2) | US7752134B2 (en) |
| EP (1) | EP1412893A4 (en) |
| JP (1) | JP2005507099A (en) |
| CN (1) | CN100346323C (en) |
| AU (1) | AU2002254303A1 (en) |
| CA (1) | CA2441547C (en) |
| MX (1) | MXPA03008503A (en) |
| WO (1) | WO2002075501A2 (en) |
Families Citing this family (74)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| US6915277B1 (en) * | 2000-05-10 | 2005-07-05 | General Electric Capital Corporation | Method for dual credit card system |
| US7406442B1 (en) * | 2000-09-11 | 2008-07-29 | Capital One Financial Corporation | System and method for providing a credit card with multiple credit lines |
| US20030097270A1 (en) * | 2001-11-16 | 2003-05-22 | Musselwhite Eric Lee | Methods, systems and articles of manufacture for providing financial accounts with incentives |
| US7257246B1 (en) * | 2002-05-07 | 2007-08-14 | Certegy Check Transaction Service, Inc. | Check cashing systems and methods |
| US20030216996A1 (en) * | 2002-05-14 | 2003-11-20 | Capital One Financial Corporation | Methods and systems for providing financial payment services |
| CA2488730A1 (en) * | 2002-06-11 | 2003-12-18 | First Data Corporation | Value processing network and methods |
| US8156042B2 (en) * | 2003-08-29 | 2012-04-10 | Starbucks Corporation | Method and apparatus for automatically reloading a stored value card |
| WO2005048145A1 (en) * | 2003-10-13 | 2005-05-26 | Starbucks Corporation D/B/A Starbucks Coffee Company | Dual card |
| US20050080672A1 (en) * | 2003-10-13 | 2005-04-14 | Starbucks Corporation | Creating customer loyalty |
| IL158694A (en) * | 2003-10-30 | 2014-11-30 | Verifone Israel Ltd | Prepaid debit card processing |
| US8660950B2 (en) * | 2004-04-16 | 2014-02-25 | Wells Fargo, N.A. | System and method for bill pay with credit card funding |
| US8626536B2 (en) | 2004-08-31 | 2014-01-07 | Electronic Commerce for Healthcare Organizations, Inc. | Intelligent router for medical payments |
| US7848977B2 (en) * | 2005-05-09 | 2010-12-07 | First Data Corporation | Private label purchase card acceptance systems and methods |
| US7506804B2 (en) * | 2005-05-27 | 2009-03-24 | U.S. Bancorp Licensing, Inc. | System and method for an integrated payment and reward card |
| US7765131B2 (en) | 2006-06-20 | 2010-07-27 | United Parcel Service Of America, Inc. | Systems and methods for providing personalized delivery services |
| EP2605195A1 (en) | 2005-06-21 | 2013-06-19 | United Parcel Service Of America, Inc. | Systems and Methods for Providing Personalized Delivery Services |
| US8770473B2 (en) * | 2005-10-25 | 2014-07-08 | Capital One Financial Corporation | Systems and methods for providing flexible incentive rewards |
| US7725351B1 (en) * | 2006-04-26 | 2010-05-25 | Rbs Lynk Incorporated | Point of sale system interface for processing of transactions at a secondary transaction payment network |
| US7792686B2 (en) | 2006-12-05 | 2010-09-07 | Stoneeagle Services, Inc. | Medical benefits payment system |
| WO2008101271A2 (en) * | 2007-02-23 | 2008-08-28 | Yasas Jayasuriya | Making payments through transfer of reusable credit |
| AU2007327711B2 (en) * | 2007-02-23 | 2009-01-08 | Yasas Jayasuriya | System of transferring and utilising reusable credit |
| US8078531B2 (en) * | 2007-04-25 | 2011-12-13 | Pe Systems, Llc | Auditing or determining reductions to card-issuer interchange fees |
| US7603312B2 (en) * | 2007-04-25 | 2009-10-13 | Pe Systems, Inc. | Altering card-issuer interchange categories |
| US8271392B2 (en) * | 2008-04-04 | 2012-09-18 | Mastercard International Incorporated | Methods and systems for managing merchant screening |
| US8606662B2 (en) | 2008-04-04 | 2013-12-10 | Mastercard International Incorporated | Methods and systems for managing co-brand proprietary financial transaction processing |
| US10282391B2 (en) | 2008-07-03 | 2019-05-07 | Ebay Inc. | Position editing tool of collage multi-media |
| US8365092B2 (en) * | 2008-07-03 | 2013-01-29 | Ebay Inc. | On-demand loading of media in a multi-media presentation |
| US8893015B2 (en) | 2008-07-03 | 2014-11-18 | Ebay Inc. | Multi-directional and variable speed navigation of collage multi-media |
| US9043726B2 (en) * | 2008-07-03 | 2015-05-26 | Ebay Inc. | Position editing tool of collage multi-media |
| US8086526B2 (en) * | 2008-07-23 | 2011-12-27 | Ebay Inc. | Hybrid account |
| US20100042535A1 (en) * | 2008-08-15 | 2010-02-18 | Ebay Inc. | Currency display |
| US8027891B2 (en) * | 2008-12-17 | 2011-09-27 | Mastercard International, Inc. | Interactive online spending analysis tool |
| US9841282B2 (en) | 2009-07-27 | 2017-12-12 | Visa U.S.A. Inc. | Successive offer communications with an offer recipient |
| US9342835B2 (en) | 2009-10-09 | 2016-05-17 | Visa U.S.A | Systems and methods to deliver targeted advertisements to audience |
| US20110125565A1 (en) | 2009-11-24 | 2011-05-26 | Visa U.S.A. Inc. | Systems and Methods for Multi-Channel Offer Redemption |
| US20110166922A1 (en) * | 2010-01-06 | 2011-07-07 | Zack Fuerstenberg | Portal including merchant funded affiliate cash back service |
| US10007915B2 (en) * | 2011-01-24 | 2018-06-26 | Visa International Service Association | Systems and methods to facilitate loyalty reward transactions |
| US10223707B2 (en) | 2011-08-19 | 2019-03-05 | Visa International Service Association | Systems and methods to communicate offer options via messaging in real time with processing of payment transaction |
| US8886563B2 (en) | 2011-08-30 | 2014-11-11 | Visa International Service Association | Least cost routing and matching |
| US10489815B1 (en) | 2012-01-18 | 2019-11-26 | Google Llc | Individual use code for multiple users in a loyalty program |
| US10360578B2 (en) | 2012-01-30 | 2019-07-23 | Visa International Service Association | Systems and methods to process payments based on payment deals |
| WO2013116515A1 (en) * | 2012-01-31 | 2013-08-08 | Visa International Service Association | Mobile managed service |
| US10546287B2 (en) * | 2012-05-07 | 2020-01-28 | Visa International Service Association | Closed system processing connection |
| US10360556B2 (en) * | 2012-07-19 | 2019-07-23 | Veritec Inc. | Financial card transaction security and processing methods |
| US10096020B2 (en) * | 2012-08-30 | 2018-10-09 | Worldpay, Llc | Combination payment card and methods thereof |
| US8712854B1 (en) | 2012-08-30 | 2014-04-29 | Vantiv, Llc | Systems, methods and apparatus for payment processing |
| US11004063B1 (en) | 2012-09-24 | 2021-05-11 | Vpay, Inc. | Intermediary payment method using interchange differential |
| US9576282B2 (en) * | 2012-10-15 | 2017-02-21 | Bank Of America Corporation | Merchant category code (“MCC”) based acceptance cost recovery |
| WO2014078241A2 (en) | 2012-11-14 | 2014-05-22 | Jaffe Jonathan E | A system for merchant and non-merchant based transactions utilizing secure non-radiating communications while allowing for secure additional functionality |
| US10963857B2 (en) | 2012-11-27 | 2021-03-30 | Verizon Media Inc. | Systems and methods for processing electronic transactions based on consumer characteristics |
| US9916557B1 (en) | 2012-12-07 | 2018-03-13 | United Parcel Service Of America, Inc. | Systems and methods for item delivery and pick-up using social networks |
| US10387824B2 (en) | 2012-12-21 | 2019-08-20 | United Parcel Service Of America, Inc. | Systems and methods for delivery of an item |
| US11144872B2 (en) | 2012-12-21 | 2021-10-12 | United Parcel Service Of America, Inc. | Delivery to an unattended location |
| CA2900041C (en) | 2013-02-01 | 2020-04-21 | United Parcel Service Of America, Inc. | Systems and methods for parcel delivery to alternate delivery locations |
| US20140279658A1 (en) | 2013-03-12 | 2014-09-18 | United Parcel Service Of America, Inc. | Systems and methods of suggesting attended delivery/pickup locations |
| US10354216B2 (en) | 2013-08-30 | 2019-07-16 | United Parcel Service Of America, Inc. | Systems, methods, and computer program products for providing customized communication content in conjunction with transport of a plurality of packages |
| US20150100514A1 (en) | 2013-10-09 | 2015-04-09 | United Parcel Service Of America, Inc. | Customer Controlled Management of Shipments |
| CN106030631B (en) | 2013-10-14 | 2020-04-07 | 统一包裹服务美国有限公司 | System and method for facilitating delivery of parcels to appropriately sized lockers |
| US10062075B2 (en) * | 2013-11-04 | 2018-08-28 | E2Interactive, Inc. | Systems and methods for using a dual function medical benefits card |
| US10489754B2 (en) | 2013-11-11 | 2019-11-26 | Visa International Service Association | Systems and methods to facilitate the redemption of offer benefits in a form of third party statement credits |
| US10002340B2 (en) | 2013-11-20 | 2018-06-19 | United Parcel Service Of America, Inc. | Concepts for electronic door hangers |
| CA2935200C (en) | 2014-02-16 | 2019-11-26 | United Parcel Service Of America, Inc. | Determining a delivery location and time based on the schedule or location of a consignee |
| CA2940981C (en) | 2014-03-07 | 2022-05-03 | Jeffrey Brian Newcombe | Dual-function card with key card functionality and stored value card functionality |
| US10733563B2 (en) | 2014-03-13 | 2020-08-04 | United Parcel Service Of America, Inc. | Determining alternative delivery destinations |
| US10650398B2 (en) | 2014-06-16 | 2020-05-12 | Visa International Service Association | Communication systems and methods to transmit data among a plurality of computing systems in processing benefit redemption |
| US10438226B2 (en) | 2014-07-23 | 2019-10-08 | Visa International Service Association | Systems and methods of using a communication network to coordinate processing among a plurality of separate computing systems |
| US10445735B1 (en) | 2014-08-30 | 2019-10-15 | Vpay, Inc. | Virtual payment card fraud detection |
| US11599885B1 (en) | 2014-08-30 | 2023-03-07 | Vpay, Inc. | System and method for virtual payment card fraud detection |
| US20160063201A1 (en) | 2014-09-02 | 2016-03-03 | Stoneeagle Services, Inc. | Payment Card Reconciliation by Authorization Code |
| US10410164B2 (en) | 2014-11-14 | 2019-09-10 | United Parcel Service Of America, Inc | Systems and methods for facilitating shipping of parcels |
| WO2016077807A2 (en) | 2014-11-14 | 2016-05-19 | United Parcel Service Of America, Inc. | Systems and methods for facilitating shipping of parcels for returning items |
| US9799026B1 (en) | 2014-12-17 | 2017-10-24 | Supersede Solutions, LLC | Direct payment method using gateway exception handling |
| US10600022B2 (en) | 2016-08-31 | 2020-03-24 | United Parcel Service Of America, Inc. | Systems and methods for synchronizing delivery of related parcels via a computerized locker bank |
| TWI770406B (en) * | 2019-07-31 | 2022-07-11 | 中國信託商業銀行股份有限公司 | Credit card linked account payment method and credit card linked account payment system |
Family Cites Families (35)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| US4727243A (en) * | 1984-10-24 | 1988-02-23 | Telenet Communications Corporation | Financial transaction system |
| US6088682A (en) * | 1993-02-18 | 2000-07-11 | Every Penny Counts, Inc. | Funds distribution system connected with point of sale transactions |
| US5940811A (en) * | 1993-08-27 | 1999-08-17 | Affinity Technology Group, Inc. | Closed loop financial transaction method and apparatus |
| US5824622A (en) * | 1994-01-12 | 1998-10-20 | E. I. Du Pont De Nemours And Company | Porous microcomposite of perfluorinated ion-exchange polymer and metal oxide, a network of silica, or a network of metal oxide and silica derived via a sol-gel process |
| US5715298A (en) * | 1996-05-16 | 1998-02-03 | Telepay | Automated interactive bill payment system using debit cards |
| US5590038A (en) * | 1994-06-20 | 1996-12-31 | Pitroda; Satyan G. | Universal electronic transaction card including receipt storage and system and methods of conducting electronic transactions |
| US5826241A (en) * | 1994-09-16 | 1998-10-20 | First Virtual Holdings Incorporated | Computerized system for making payments and authenticating transactions over the internet |
| US5732136A (en) * | 1995-01-31 | 1998-03-24 | Realsource Communications, Inc. | Merchant specific debit card verification system |
| US5866889A (en) * | 1995-06-07 | 1999-02-02 | Citibank, N.A. | Integrated full service consumer banking system and system and method for opening an account |
| DE19604691A1 (en) * | 1996-02-09 | 1997-08-14 | Sel Alcatel Ag | Chip card, method and system for using paid services |
| US5745554A (en) * | 1996-07-18 | 1998-04-28 | Impact With Quality, Inc. | Systems for requesting services using card reading terminals |
| US5903877A (en) * | 1996-09-30 | 1999-05-11 | Lucent Technologies Inc. | Transaction center for processing customer transaction requests from alternative media sources |
| US5923016A (en) * | 1996-12-03 | 1999-07-13 | Carlson Companies, Inc. | In-store points redemption system & method |
| IL121192A0 (en) * | 1997-06-30 | 1997-11-20 | Ultimus Ltd | Processing system and method for a heterogeneous electronic cash environment |
| WO1999007121A2 (en) * | 1997-07-29 | 1999-02-11 | Netadvantage Corporation | Method and system for conducting electronic commerce transactions |
| US6105863A (en) * | 1997-09-18 | 2000-08-22 | At&T Corp. | Method and system for continuing billing arrangements |
| US6000832A (en) * | 1997-09-24 | 1999-12-14 | Microsoft Corporation | Electronic online commerce card with customer generated transaction proxy number for online transactions |
| US5883810A (en) * | 1997-09-24 | 1999-03-16 | Microsoft Corporation | Electronic online commerce card with transactionproxy number for online transactions |
| US6092057A (en) * | 1997-12-12 | 2000-07-18 | Commstar, Inc. | Unattended POS system for automatic control of bank system rejections |
| US6636833B1 (en) * | 1998-03-25 | 2003-10-21 | Obis Patents Ltd. | Credit card system and method |
| US6422462B1 (en) * | 1998-03-30 | 2002-07-23 | Morris E. Cohen | Apparatus and methods for improved credit cards and credit card transactions |
| PL345032A1 (en) * | 1998-06-19 | 2001-11-19 | Protx Ltd | Verified payment system |
| US6615189B1 (en) * | 1998-06-22 | 2003-09-02 | Bank One, Delaware, National Association | Debit purchasing of stored value card for use by and/or delivery to others |
| US6606602B1 (en) * | 1998-07-20 | 2003-08-12 | Usa Technologies, Inc. | Vending machine control system having access to the internet for the purposes of transacting e-mail, e-commerce, and e-business, and for conducting vending transactions |
| US6169974B1 (en) * | 1998-10-08 | 2001-01-02 | Paymentech, Inc. | Method for closed loop processing of transactions utilizing bank card association |
| US6032136A (en) * | 1998-11-17 | 2000-02-29 | First Usa Bank, N.A. | Customer activated multi-value (CAM) card |
| EP1028401A3 (en) | 1999-02-12 | 2003-06-25 | Citibank, N.A. | Method and system for performing a bankcard transaction |
| US7319986B2 (en) * | 1999-09-28 | 2008-01-15 | Bank Of America Corporation | Dynamic payment cards and related management systems and associated methods |
| US6615190B1 (en) | 2000-02-09 | 2003-09-02 | Bank One, Delaware, National Association | Sponsor funded stored value card |
| US6915277B1 (en) * | 2000-05-10 | 2005-07-05 | General Electric Capital Corporation | Method for dual credit card system |
| US7406442B1 (en) | 2000-09-11 | 2008-07-29 | Capital One Financial Corporation | System and method for providing a credit card with multiple credit lines |
| US6631849B2 (en) * | 2000-12-06 | 2003-10-14 | Bank One, Delaware, National Association | Selectable multi-purpose card |
| US20020107731A1 (en) * | 2001-02-07 | 2002-08-08 | Teng Patrick Chee-Wai | Purchase-based reward system and method |
| US20030009393A1 (en) * | 2001-07-05 | 2003-01-09 | Jeffrey Norris | Systems and methods for providing purchase transaction incentives |
| US7069244B2 (en) * | 2002-09-17 | 2006-06-27 | First Data Corporation | Method and system for merchant processing of purchase card transactions with expanded card type acceptance |
-
2001
- 2001-03-20 US US09/812,452 patent/US7752134B2/en active Active
-
2002
- 2002-03-20 WO PCT/US2002/008521 patent/WO2002075501A2/en active Application Filing
- 2002-03-20 JP JP2002574044A patent/JP2005507099A/en active Pending
- 2002-03-20 EP EP02723528A patent/EP1412893A4/en not_active Ceased
- 2002-03-20 CA CA2441547A patent/CA2441547C/en not_active Expired - Lifetime
- 2002-03-20 CN CNB02806853XA patent/CN100346323C/en not_active Expired - Lifetime
- 2002-03-20 MX MXPA03008503A patent/MXPA03008503A/en unknown
- 2002-03-20 AU AU2002254303A patent/AU2002254303A1/en not_active Abandoned
-
2010
- 2010-04-30 US US12/771,321 patent/US8650121B2/en not_active Expired - Lifetime
Also Published As
| Publication number | Publication date |
|---|---|
| US7752134B2 (en) | 2010-07-06 |
| WO2002075501A3 (en) | 2004-03-04 |
| EP1412893A2 (en) | 2004-04-28 |
| JP2005507099A (en) | 2005-03-10 |
| EP1412893A4 (en) | 2010-08-25 |
| CA2441547C (en) | 2013-07-30 |
| AU2002254303A1 (en) | 2002-10-03 |
| US8650121B2 (en) | 2014-02-11 |
| US20100211444A1 (en) | 2010-08-19 |
| US20020138428A1 (en) | 2002-09-26 |
| CN100346323C (en) | 2007-10-31 |
| WO2002075501A2 (en) | 2002-09-26 |
| CN1520567A (en) | 2004-08-11 |
| MXPA03008503A (en) | 2003-12-08 |
Similar Documents
| Publication | Publication Date | Title |
|---|---|---|
| CA2441547C (en) | Hybrid credit card transaction system | |
| US11836744B2 (en) | Loyalty rewards management and processing system and method | |
| US20220148003A1 (en) | System and method for processing and for funding a transaction | |
| US10990998B2 (en) | POS terminal(s) with free form rewards architecture | |
| US5970480A (en) | Centralized credit interchange system of converting purchase credit awards through credit exchange system for purchase of investment vehicle | |
| US8489449B2 (en) | System and method for receiving and redeeming loyalty incentives | |
| US8412629B2 (en) | Non-cash transaction incentive and commission distribution system | |
| US8831976B2 (en) | System and method for transacting purchases with a cash vendor using points and a virtual credit card | |
| US20100057551A1 (en) | Point-of-sale purchase system and method with option of payment using loyalty points | |
| US20040249752A1 (en) | Charity funding method using an open-ended stored-value card | |
| US20020107738A1 (en) | Paperless coupon redemption method and apparatus | |
| US20030229540A1 (en) | Rebate issuance and reconciliation systems and methods | |
| US20060161478A1 (en) | System, method and computer program product for currency redemption in loyalty reward programs | |
| US20090125386A1 (en) | System and method of operating a customer loyalty program | |
| US20030097298A1 (en) | On-line bonus program | |
| JP2001509629A (en) | Automatic payment system and method | |
| US20130231986A1 (en) | Non-cash transaction incentive and commission distribution system | |
| JP2001306952A (en) | Purchasing and settling system | |
| AU770512B2 (en) | Transaction based award program | |
| US20030014313A1 (en) | Data processing system for facilitating merchandise transactions | |
| AU2001100038A4 (en) | A reward system | |
| US20110276520A1 (en) | Promotional and transactional hotel keycard | |
| US20080319838A1 (en) | Reward system and method for online credit and debit card transactions | |
| AU2005312342B2 (en) | System and method of operating a customer loyalty program | |
| AU744565B3 (en) | A rewards system |
Legal Events
| Date | Code | Title | Description |
|---|---|---|---|
| EEER | Examination request | ||
| MKEX | Expiry |
Effective date: 20220321 |