Method and system for generating fixed and/or dynamic rebates in credit card type transactions

• US 20020152116A1
• Filed: 03/23/2001
• Published: 10/17/2002
• Est. Priority Date: 01/30/2001
• Status: Abandoned Application

• Current Assignee: Haijun Li, Kent J. Yan
• Original Assignee: Haijun Li, Kent J. Yan
• Inventors: Li, Haijun, Yan, Kent J.
• Application Number:
  US09/816,915
• Publication Number:
  US 20020152116A1
• Time in Patent Office: Days
• US Class Current: 705/14
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0212 Chance discounts or incentives

Abstract

The present invention is directed to a method and system for dynamically generating and distributing rebates to a credit cardholder in response to credit card payment transactions initiated by the credit cardholder. The method comprises the steps of processing a credit card transaction initiated by a credit cardholder, storing transaction data corresponding to the credit card transaction in a transaction database, accessing the transaction data stored on the transaction database on a periodic basis to produce a billing statement listing a debt incurred by the credit cardholder, generating a dynamic rebate amount for effecting a discount of the incurred debt for the cardholder, and updating the billing statement to reflect the discount provided by the dynamic rebate amount.

Claims

1. A method for generating rebates to a cardholder-initiated credit card transaction, the method comprising the steps of:

(a) maintaining in a storage device a database identifying a plurality of credit cardholders accounts and one or more outstanding credit card transactions initiated by authorized cardholders;

(b) periodically reading said database to retrieve data corresponding to said outstanding credit card transactions for a billing or rebating period; and

(c) generating a fixed and/or a dynamic rebate amount for effecting a discount applied to selected one or more credit card transactions or cardholders accounts initiated during said billing or rebating period.

2. The method of claim 1, further comprising the steps of:

generating an account statement for each of said plurality of credit cardholders accounts separately listing each of said credit card transactions including the generated fixed and/or dynamic rebate amounts for effecting said discount; and

transmitting said account statement, respectively, to each of the authorized credit cardholders.

3. The method of claim 1, wherein the rebate generation step further comprising the steps of:

receiving from a credit card issuer a set of rebate parameters corresponding to a rebate amount which said credit card issuer desires to award for the billing or rebating period;

classifying each of said plurality of credit card transactions into one or more card issuer defined segments; and

generating a fixed sweepstake rebate for dynamically selected cardholders accounts or credit card transactions in each defined segment.

4. The method of claim 1, wherein the rebate generation step further comprising the steps of:

receiving from a credit card issuer a set of rebate parameters corresponding to a rebate amount which said credit card issuer desires to award;

classifying each of said plurality of credit card transactions into one or more card issuer defined segments; and

generating a dynamic rebate for selected ones of the cardholders accounts or the credit card transactions in each segment.

5. The method of claim 1, wherein the rebate generation step further comprising the steps of:

receiving from a credit card issuer a set of rebate parameters corresponding to a rebate amount which said credit card issuer desires to award for the billing or rebating period;

classifying each of said plurality of credit card transactions into one or more card issuer defined segments;

generating one or more sweepstake rebates for dynamically selected ones of the cardholders accounts or the credit card transactions in each segment;

determining an average dynamic rebate amount remaining based on total sweepstake rebate amount awarded, and the total rebate amount set by the credit card issuer; and

generating one or more dynamic rebates for selected ones of the cardholders accounts or the credit card transactions in each segment.

6. The method of claim 5, wherein the parameter receiving step further comprising the steps of:

defining by said card issuer the segments into which each transaction is classified;

assigning a distribution curve function for each defined segment;

defining a percentage of the total rebate amount to be awarded as deep sweepstake rebate awards in each defined segment;

defining a sweepstake rebate amount or percentage for each defined segment; and

defining the cardholders accounts or the transactions which are eligible to be awarded said sweepstake rebates based on transaction volume and/or transaction time for each defined segment.

7. The method of claim 6, wherein the parameter receiving step further comprising the steps of:

defining a linear relationship between an average rebate percentage of each defined segment; and

defining a target average rebate.

8. The method of claim 5, wherein the sweepstake rebate generation step further comprising the steps of:

determining total number and volume of the credit card transactions in each segment;

determining total transaction volume of all segments;

determining an amount limit for awarding sweepstake rebates in each defined segment;

selecting in a dynamic manner the transaction or cardholder to be awarded a sweepstake rebate in each defined segment; and

repeating the selection step until the amount limit for awarding the sweepstake rebates is reached in each defined segment.

9. The method of claim 8, wherein the dynamic transaction or cardholder selection step further comprising the steps of:

assigning each transaction or cardholder in the segment a sequence number;

generating a uniform distribution dynamic fraction, u(0,1), or u; and

inputting the uniform distribution dynamic fraction, u(0,1), or u, the total number of transactions or cardholders accounts in the segment, TN, into the following equation;

T_m=u·

TN

to obtain the sequence number of the transaction or cardholder to be awarded the sweepstake rebate.

10. The method of claim 5, wherein the average dynamic rebate amount determining step further comprising the steps of:

adding all transaction volumes of the selected transactions or cardholders accounts in each segment;

determining total sweepstake rebate amount awarded for each segment; and

determining the difference between the rebate amount said credit card issuer desires to award, and the total sweepstake rebates awarded in each segment.

11. The method of claim 7, wherein the dynamic rebate generation step further comprising the steps of:

determining a target average rebate percentage, TRB_n, for each defined segment based on the card issuer defined average rebate percentage linear relationship; and

dynamically generating a rebate for each transaction or cardholder within each of the defined segment using an algorithm implementing the card issuer assigned distribution curve function.

12. The method of claim 11, wherein the distribution curve function algorithm comprises the steps of:

generating a uniform distribution dynamic fraction, u(0,1) or u;

inputting the variable TRB_n, or target rebate percentage of segment n, and card issuer selected parameter, X_nMin, into the following equations;

MinR_n=X_nMin·

TRB_nMaxR_n=(2·

TRB_n)−

(X_nMin·

TRB_n)

 

to obtain MinR_n, which is less than the average rebate percentage, and maximum rebate percentage, MaxR_n, respectively;

inputting the generated variables u, MinR_n, and MaxR_n, into the following equation;

DR_mn=MinR_n+(MaxR_n−

MinR_n)·

u

 

to obtain a dynamically generated rebate percentage, DR_mn, of transaction, “

m”

, in segment, “

n”

;

inputting the dynamically generated rebate percentage, DR_mn, and the transaction volume of the corresponding transaction, into the following equation;

DRB_mn=TV_mn·

DR_mn

 

to obtain a dynamically generated rebate amount, DRB_mn.

13. The method of claim 11, wherein the distribution curve function algorithm comprises the steps of:

generating a uniform distribution dynamic fraction, u(0,1) or u;

inputting a toughness parameter, k, and the target average rebate percentage, TRB_n, for the segment, into the following equation;

$\mathrm{\sigma <br><br>}=\frac{T<br><br>\text{\hspace{1em}<br><br>}<br><br>R<br><br>\text{\hspace{1em}<br><br>}<br><br>B_n}{2·<br><br>k}$

 

to obtain σ

;

inputting said uniform distribution dynamic fraction, u(0,1) or u into the following equation;

$D<br><br>\text{\hspace{1em}<br><br>}<br><br>R<br><br>\text{\hspace{1em}<br><br>}<br><br>B_{m<br><br>\text{\hspace{1em}<br><br>}<br><br>n}=\frac{\left[u^{0.135}-{\left(1-u\right)}^{0.135}\right]}{0.1975}$

 

to obtain a dynamic rebate percentage, DRB_mn;

inputting said uniform distribution dynamic fraction, u(0,1) or u, DRB_mn, σ

, a transaction volume of the corresponding transaction, TV_mn, and the average rebate percentage into the following equation;

Dynamic Rebate Amount=TV_mn[TRB_n+σ

·

DRB_mn]

 

to obtain the dynamically generated rebate award amount.

14. The method of claim 1, further comprising the step of:

storing in said storage device distributed rebate data corresponding to rebates applied to respective credit card transactions of said cardholders;

receiving request from a merchant user for refund amount information corresponding to a revoked transaction of a cardholder;

reading said distributed rebate data corresponding to the revoked transaction;

calculating the refund amount by subtracting the rebate applied to said revoked transaction from the transaction volume of the revoke transaction and; and

transmitting said refund amount information to said merchant user in order to administer a refund to said cardholder.

16. The system of claim 15, wherein the processor is further operative for:

generating an account statement for each of said plurality of credit cardholders accounts separately listing each of said credit card transactions including the generated fixed and/or dynamic rebate amounts for effecting said discount; and

transmitting said account statement, respectively, to each of the authorized cardholders.

17. The system of claim 15, wherein the rebate generation step further comprising the steps of:

receiving from a credit card issuer a set of rebate parameters corresponding to a rebate amount which said credit card issuer desires to award for the billing or rebating period;

classifying each of said plurality of credit card transactions into one or more card issuer defined segments; and

generating a fixed sweepstake rebate for dynamically selected cardholders accounts or credit card transactions in each defined segment.

18. The system of claim 15, wherein the rebate generation step further comprising the steps of:

receiving from a credit card issuer a set of rebate parameters corresponding to a rebate amount which said credit card issuer desires to award;

classifying each of said plurality of credit card transactions into one or more card issuer defined segments; and

generating a dynamic rebate for selected ones of the cardholders accounts or the credit card transactions in each segment.

19. The system of claim 15, wherein the rebate generation step further comprising the steps of:

receiving from a credit card issuer a set of rebate parameters corresponding to a rebate amount which said credit card issuer desires to award for the billing or rebating period;

classifying each of said plurality of credit card transactions into one or more card issuer defined segments;

generating one or more sweepstake rebates for dynamically selected ones of the cardholders accounts or the credit card transactions in each segment;

determining an average dynamic rebate amount remaining based on total sweepstake rebate amount awarded, and the total rebate amount set by the credit card issuer; and

generating one or more dynamic rebates for selected ones of the cardholders accounts or the credit card transactions in each segment.

20. The system of claim 19, wherein the parameter receiving step further comprising the steps of:

defining by said card issuer the segments into which each transaction is classified;

assigning a distribution curve function for each defined segment;

defining a percentage of the total rebate amount to be awarded as deep sweepstake rebate awards in each defined segment;

defining a sweepstake rebate amount or percentage for each defined segment; and

defining the cardholders accounts or the transactions which are eligible to be awarded said sweepstake rebates based on transaction volume and/or transaction time for each defined segment.

21. The system of claim 20, wherein the parameter receiving step further comprising the steps of:

defining a linear relationship between an average rebate percentage of each defined segment; and

defining a target average rebate.

22. The system of claim 19, wherein the sweepstake rebate generation step further comprising the steps of:

determining total number and volume of the credit card transactions in each segment;

determining total transaction volume of all segments;

determining an amount limit for awarding sweepstake rebates in each defined segment;

selecting in a dynamic manner the transaction or cardholder to be awarded a sweepstake rebate in each defined segment; and

repeating the selection step until the an amount limit for awarding sweepstake rebates, is reached in each defined segment.

23. The system of claim 22, wherein the dynamic transaction or cardholder selection step further comprising the steps of:

assigning each transaction or cardholder in the segment a sequence number;

generating a uniform distribution dynamic fraction, u(0,1), or u; and

inputting the uniform distribution dynamic fraction, u(0,1), or u, the total number of transactions or cardholders accounts in the segment, TN, into the following equation;

T_m=u·

TN

 

to obtain the sequence number of the transaction or cardholder to be awarded the sweepstake rebate.

24. The system of claim 19, wherein the average dynamic rebate amount determining step further comprising the steps of:

adding all transaction volumes of the selected transactions or cardholders accounts in each segment;

determining total sweepstake rebate amount awarded for each segment; and

determining the difference between the rebate amount said credit card issuer desires to award, and the total sweepstake rebates awarded in each segment.

25. The system of claim 21, wherein the dynamic rebate generation step further comprising the steps of:

determining a target average rebate percentage, TRB_n, for each defined segment based on the card issuer defined average rebate percentage linear relationship; and

dynamically generating a rebate for each transaction or cardholder within each of the defined segment using an algorithm implementing the card issuer assigned distribution curve function.

26. The system of claim 25, wherein the distribution curve function algorithm comprises the steps of:

generating a uniform distribution dynamic fraction, u(0,1) or u;

inputting the variable TRB_n, or target rebate percentage of segment n, and card issuer selected parameter, X_nMin, into the following equations;

MinR_n=X_nMin−

TRB_nMaxR_n=(2·

TRB_n)−

(X_nMin·

TRB_n)

 

to obtain MinR_n, which is less than the average rebate percentage, and maximum rebate percentage, MaxR_n, respectively;

inputting the generated variables u, MinR_N, and MaxR_n, into the following equation;

DR_mn=MinR_n+(MaxR_n−

MinR_n)·

u

 

to obtain a dynamically generated rebate percentage, DR_mn, of transaction, “

m”

, in segment, “

n”

;

inputting the dynamically generated rebate percentage, DR_mn, and the transaction volume of the corresponding transaction, into the following equation;

DRB_mn=TV_mn·

DR_mn

 

to obtain a dynamically generated rebate amount, DRB_mn.

27. The system of claim 25, wherein the distribution curve function algorithm comprises the steps of:

generating a uniform distribution dynamic fraction, u(0,1) or u;

inputting a toughness parameter, k, and the target average rebate percentage, TRB_n, for the segment, into the following equation;

$\mathrm{\sigma <br><br>}=\frac{T<br><br>\text{\hspace{1em}<br><br>}<br><br>R<br><br>\text{\hspace{1em}<br><br>}<br><br>B_n}{2·<br><br>k}$

 

to obtain σ

;

inputting said uniform distribution dynamic fraction, u(0,1) or u into the following equation;

$D<br><br>\text{\hspace{1em}<br><br>}<br><br>R<br><br>\text{\hspace{1em}<br><br>}<br><br>B_{m<br><br>\text{\hspace{1em}<br><br>}<br><br>n}=\frac{\left[u^{0.135}-{\left(1-u\right)}^{0.135}\right]}{0.1975}$

 

to obtain a dynamic rebate percentage, DRB_mn;

inputting said uniform distribution dynamic fraction, u(0,1) or u, DRB_mn, σ

, a transaction volume of the corresponding transaction, TV_mn, and the average rebate percentage into the following equation;

Dynamic Rebate Amount=TV_mn[TRB_n+σ

·

DRB_mn]

 

to obtain the dynamically generated rebate award amount.

28. The system of claim 15, wherein the processor is further operative for:

storing in said storage device distributed rebate data corresponding to rebates applied to respective credit card transactions of said cardholders;

receiving request from a merchant user for refund amount information corresponding to a revoked transaction of a cardholder;

reading said distributed rebate data corresponding to the revoked transaction;

calculating the refund amount by subtracting the rebate applied to said revoked transaction from the transaction volume of the revoke transaction and; and

transmitting said refund amount information to said merchant user in order to administer a refund to said cardholder.

15. A system for generating rebates to a cardholder-initiated credit card transaction, the system comprising:

a storage device;

a processor connected to the storage device;

the storage device storing a program for controlling the processor; and

the processor operative with the program for executing a method comprising the steps of;

(a) maintaining in a storage device a database identifying a plurality of credit cardholders accounts and one or more outstanding credit card transactions initiated by authorized cardholders;

(b) periodically reading said database to retrieve data corresponding to said outstanding credit card transactions for a billing or rebating period; and

(c) generating a fixed and/or a dynamic rebate amount for effecting a discount applied to selected one or more credit card transactions or cardholders accounts initiated during said billing or rebating period.