Method and system for dynamically adjusting discount rates for a card transaction

• US 7,624,068 B1
• Filed: 08/18/2004
• Issued: 11/24/2009
• Est. Priority Date: 08/18/2003
• Status: Active Grant

• Current Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Original Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Inventors: Partel, Frank J. Jr., Heasley, Philip G.
• Primary Examiner(s): Felten; Daniel S
• Assistant Examiner(s): Rankins; William E
• Application Number:
  US10/920,398
• Time in Patent Office: 1,924 Days
• Field of Search: 705 39- 41
• US Class Current: 705/38
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 20/105 involving programming of a portable memory device, e.g. IC cards, "electronic purses"
• CPC Class Codes: G06Q 30/0215 Including financial accounts
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof

Abstract

According to one embodiment, the present invention relates to a method and a system for dynamically adjusting discount rates for a closed loop transaction. A computer implemented method for dynamically adjusting discount rates for a card transaction comprises the steps of identifying credit worthiness of at least one consumer; assigning a credit level to a line of credit associated with a credit product for the at least one consumer wherein the credit product is accepted at an identified one or more merchants; assigning a financing charge to the line of credit; determining a discount rate based at least in part on the credit worthiness of the at least one consumer; and applying the discount rate when at least one transaction is made with the credit product; wherein the applied discount rate is adjusted based on the credit worthiness of the at least one consumer.

Claims

1. An automated computer implemented method for dynamically adjusting discount rates for a card transaction, wherein the method is executed by a programmed computer processor, the computer implemented method comprising the steps of:

identifying credit worthiness of at least one consumer, at an issuing module using the programmed computer processor;

assigning a first credit level to a line of credit associated with a credit product for the at least one consumer, at the issuing module using the programmed computer processor, wherein the credit product is accepted at an identified one or more merchants, wherein at least one of the identified one or more merchants is within a closed loop network;

assigning a second credit level to a second line of credit associated with the credit product, at the issuing module using the programmed computer processor, wherein the second line of credit is for general use within a card association network;

assigning a first financing charge to the first line of credit;

assigning a second financing charge to the second line of credit, at the issuing module using the programmed computer processor, wherein the first financing charge is different from the second financing charge;

determining a discount rate for at least one transaction based at least in part on the credit worthiness of the at least one consumer and based at least in part on merchant-related data, using the programmed computer processor; and

applying the discount rate when at least one transaction is made with the credit product at the identified one or more merchants within the closed loop network, at the rate determining module using the programmed computer processor wherein the discount rate is paid by the identified one or more merchants;

wherein the discount rate is dynamically adjusted as the credit worthiness of the at least one consumer changes.

2. The method of claim 1, wherein the credit worthiness is determined by a FICO risk score.

3. The method of claim 1, wherein the second line of credit is dynamically adjusted.

4. The method of claim 1, wherein the step of determining the discount rate is based at least in part on the credit worthiness of the at least one consumer further comprises the step of:

determining the discount rate based at least in part on merchant-related data comprising at least one of sales data, inventory data, economy data, type of channel and type of merchandise.

5. The method of claim 4, further comprising the step of:

dynamically adjusting the discount rate as the merchant-related data is adjusted.

6. The method of claim 1, wherein a transaction type is identified at a point of sale for routing the transaction to an appropriate network.

7. The method of claim 1, wherein an interchange fee associated with the general purpose line is based at least in part on the credit worthiness of the at least one consumer.

8. The method of claim 7, wherein the interchange fee is dynamically adjusted as the credit worthiness of the at least one consumer fluctuates.

9. The method of claim 1, wherein the step of determining a discount rate involves assigning a table of discount rates and selecting the appropriate discount rate for each transaction.

10. The method of claim 1, wherein the at least one consumer represents a class of consumers.

11. The method of claim 1, wherein the identified one or more merchants are within a closed loop network.

23. A computer program of instructions configured to be readable by at least one programmed computer processor to execute a computer process for performing the method as recited in claim 1.

12. A computer implemented system for dynamically adjusting discount rates for a card transaction, the computer implemented system comprising:

a processor;

an issuing module for identifying credit worthiness of at least one consumer;

assigning a first credit level to a line of credit associated with a credit product for the at least one consumer wherein the credit product is accepted at an identified one or more merchants within a closed loop network;

assigning a second credit level to a second line of credit associated with the credit product wherein the second line of credit is for general use within a card association network; and

assigning a first financing charge to the line of credit; and

assigning a second financing charge to the second line of credit, wherein the first financing charge is different from the second financing charge;

a rate determining module for determining a discount rate for at least one transaction based at least in part on the credit worthiness of the at least one consumer and based at least in part on merchant-related data; and

applying the discount rate when the at least one transaction is made with the credit product at the identified one or more merchants within the closed loop network, wherein the discount rate is paid by the identified one or more merchants;

wherein the discount rate is dynamically adjusted as the credit worthiness of the at least one consumer; and

wherein the processor, the issuing module, the rate determining module are interoperatively connected.

13. The system of claim 12, wherein the credit worthiness is determined by a FICO risk score.

14. The system of claim 12, wherein the second line of credit is dynamically adjusted.

15. The system of claim 12, wherein the discount rate is further based at least in part on merchant-related data comprising at least one of sales data, inventory data, economy data, type of channel and type of merchandise.

16. The system of claim 15, wherein the discount rate is dynamically adjusted as the merchant-related data is adjusted.

17. The system of claim 12, wherein a transaction type is identified at a point of sale for routing the transaction to an appropriate network.

18. The system of claim 12, wherein an interchange fee associated with the general purpose line is based at least in part on the credit worthiness of the at least one consumer.

19. The system of claim 18, wherein the interchange fee is dynamically adjusted as the credit worthiness of the at least one consumer fluctuates.

20. The system of claim 12, wherein the rate determining module assigns a table of discount rates and identifies the appropriate discount rate for each transaction.

21. The system of claim 12, wherein the at least one consumer represents a class of consumers.

22. The system of claim 12, wherein the identified one or more merchants are within a closed loop network.

24. An automated method for implementing a credit card product with multiple lines of credit, wherein the method is executed by a programmed computer processor, the method comprising the steps of:

implementing a general purpose line with a first credit level, at the issuing module using the programmed computer processor; and

implementing a private label line with a second credit level different from the first credit level, at the issuing module using the programmed computer processor;

wherein a first discount rate is applied to the general purpose line and a second discount rate based at least in part on the credit worthiness of the at least one consumer and based at least in part on merchant-related data is applied the private label line and wherein the first discount rate is different from the second discount rate; and

wherein the second discount rate is paid by one or more merchants associated with the private label line.

25. The method of claim 24, wherein the private label line has an adjustable discount rate.

26. A credit card product with multiple lines of credit, the credit card product comprising:

a general purpose line with a first credit level; and

a private label line with a second credit level different from the first credit level;

wherein a first discount rate is applied to the general purpose line and a second discount rate based at least in part on the credit worthiness of the at least one consumer and based at least in part on merchant-related data is applied the private label line and wherein the first discount rate is different from the second discount rate; and

wherein the second discount rate is paid by one or more merchants associated with the private label line.

27. The product of claim 26, wherein the private label line has an adjustable discount rate.

28. A computer program of instructions configured to be readable by at least one processor for dynamically adjusting discount rates for a card transaction, the computer program comprising:

identifying means for identifying credit worthiness of at least one consumer;

assigning means for assigning a credit level to a line of credit associated with a credit product for the at least one consumer wherein the credit product is accepted at an identified one or more merchants;

assigning means for assigning a financing charge to the line of credit;

determining means for determining a discount rate for at least one transaction based at least in part on the credit worthiness of the at least one consumer and based at least in part on merchant-related data; and

applying means for applying the discount rate when at least one transaction is made with the credit product wherein the discount rate is paid by the identified one or more merchants;

wherein the applied discount rate is adjusted based on the credit worthiness of the at least one consumer;

wherein at least one of the identified one or more merchants is within a closed loop network.

29. An automated computer implemented method for dynamically adjusting discount rates for a card transaction, wherein the method is executed by a programmed computer processor, the computer implemented method comprising the steps of:

identifying credit worthiness of at least one consumer, using the programmed computer processor;

assigning a credit level to a line of credit associated with a credit product for the at least one consumer, using the programmed computer processor, wherein the credit product is accepted at an identified one or more merchants within a closed loop network;

assigning a financing charge to the line of credit, using the programmed computer processor;

determining a discount rate for at least one transaction based at least in part on the credit worthiness of the at least one consumer and merchant-related data comprising at least one of sales data, inventory data, and economy data, wherein the credit worthiness is determined by a FICO risk score, using the programmed computer processor;

assigning a second credit level to a second line of credit associated with the credit product, using the programmed computer processor, wherein the second line of credit is for general use within a card association network;

applying the discount rate when the at least one transaction is made with the credit product, using the programmed computer processor;

wherein a transaction type is identified at a point of sale for routing the transaction to an appropriate network;

wherein the discount rate is paid by the identified one or more merchants; and

dynamically adjusting the discount rate as the credit worthiness of the at least one consumer fluctuates and dynamically adjusting the discount rate as the merchant-related data is adjusted, using the programmed computer processor;

wherein the applied discount rate is adjusted based on the credit worthiness of the at least one consumer;

wherein an interchange fee associated with the general purpose line is based at least in part on the credit worthiness of the at least one consumer; and

the interchange fee is dynamically adjusted as the credit worthiness of the at least one consumer fluctuates.

30. An automated computer implemented method for dynamically adjusting discount rates for a card transaction, wherein the method is executed by a programmed computer processor, the computer implemented method comprising the steps of:

identifying credit worthiness of at least one consumer, using the programmed computer processor;

assigning a credit level to a line of credit associated with a credit product for the at least one consumer, using the programmed computer processor;

assigning a financing charge to the line of credit, using the programmed computer processor;

determining a discount rate for at least one transaction based at least in part on the credit worthiness of the at least one consumer and merchant-related data comprising at least one of sales data, inventory data, and economy data, wherein the credit worthiness is determined by a risk score, using the programmed computer processor;

assigning a second credit level to a second line of credit associated with the credit product, using the programmed computer processor, wherein the second line of credit is for general use within a card association network;

applying the discount rate when at least one transaction is made with the credit product, using the programmed computer processor;

wherein a transaction type is identified at a point of sale for routing the transaction to an appropriate network;

wherein the discount rate is paid by the identified one or more merchants; and

dynamically adjusting the discount rate as the credit worthiness of the at least one consumer fluctuates and as the merchant-related data is adjusted, using the programmed computer processor;

wherein the applied discount rate is adjusted based on the credit worthiness of the at least one consumer;

wherein an interchange fee associated with the general purpose line is based at least in part on the credit worthiness of the at least one consumer; and

the interchange fee is dynamically adjusted as the credit worthiness of the at least one consumer fluctuates.