WO2004086194A2

WO2004086194A2 - Method and system for promoting usage of financial accounts

Info

Publication number: WO2004086194A2
Application number: PCT/US2004/008844
Authority: WO
Inventors: Steven Freiberg; Peter Knitzer
Original assignee: Citicorp Credit Services Incorporated
Priority date: 2003-03-24
Filing date: 2004-03-24
Publication date: 2004-10-07
Also published as: WO2004086194A3

Abstract

A method and system for increasing frequency of use of a financial account by the account owner in which an entity that issues financial accounts to individual and business customers incentivizes the customers to use such financial accounts for transactions by promising to pay for or reimburse one or more eligible transactions made through the financial accounts. For example, the issuing entity promises each of its account holders that for every N number of transactions using a designated financial account, the issuing entity will credit a partial or full amount of one or more of the transactions. The number of required transactions N or the credited amount can be set as desired by the issuing entity and communicated to the account holders, and each of these parameters can have a fixed number or a random number within a range that the issuing entity can communicate to the account holders.

Description

METHOD AND SYSTEM FOR PROMOTING USAGE OF FINANCIAL ACCOUNTS

Priority Application

[0001] This application claims the benefit of U.S. Provisional Application

No. 60/456,554 , entitled "Method and System for Promoting Usage of Financial

Accounts," filed March 24, 2003 and U.S. Provisional Application No.

60/492,725, entitled "Method and System for Promoting Usage of Financial

Accounts," filed August 6, 2003, each of which is incorporated herein by this reference.

Field of the Invention

[0002] The present invention relates to the field of financial accounts.

More particularly, the present invention relates to a method and system for increasing frequency of use of a financial account by the account owners, incentivizing the use of the financial account for performing transactions, and developing user loyalty.

Background

[0003] Consumers and businesses use financial accounts as convenient vehicles for performing transactions in their daily lives. Financial accounts such as, but not limited to, credit, charge or debit card accounts, bank checking and savings accounts and brokerage accounts are used by consumers and businesses for making purchases, bill payments, investments, fund transfers, savings, etc.

[0004] Consumers and businesses have benefited from competition among account issuers striving to serve their customers' needs and develop their loyalty to particular account products and issuers. For instance, with regard to credit card accounts, customers have benefited from incentives to become cardholders and incentives to use credit card accounts offered by some credit card issuers. These include balance-consolidation offers at low temporary interest rates and reward programs offering frequent-flyer miles or discounts/coupons at participating merchants for purchases made on the credit card. Other credit card issuers offer cash or credit back to their cardholders based on the amount of purchases made on the card. However, the aforementioned incentives suffer from a number of drawbacks that limit their benefits to customers and may prevent their use as effective tools for account issuers to develop customer loyalty to a particular financial account or issuer.

[0005] For instance, a customer often takes advantage of a balance- consolidation credit card offer to consolidate and transfer his or her balances from an existing card with a higher interest rate into the new card. He or she then continues using the existing card for purchase transactions while setting the new card aside to pay off the consolidated balance at the lower interest rate and subsequently canceling the new card. In an alternative scenario a customer applies for and obtains the balance-consolidation loan with his or her credit card account, uses it for purchases while the lower temporary interest rate is in effect, and then sets it aside or cancels it once such initial time period is over.

[0006] Reward programs such as frequent-flyer miles and discounts/coupons at participating merchants also have drawbacks. With frequent- flyer miles programs, a customer must charge a certain amount on a designated credit, charge or debit card before he or she can accumulate enough frequent-flyer miles for a desired flight. While some customers have sufficient financial means to take advantage of this incentive, others with less financial means may not be able to accumulate sufficient frequent-flyer miles. Programs offering discounts/coupons at participating merchants restrict customers to a limited universe of merchants—which may not be convenient or desirable to the customers.

[0007] Cash- or credit-back programs where the credit card issuer may provide only a small percentage of cash or credit back or cap the amount of cash or credit back to the cardholders similarly have drawbacks. These restrictions may not be enough of an incentive to attract and retain cardholders. In one cash/credit- back program, the full amount of a charge is cashed/credited back to a randomly chosen cardholder for a randomly chosen charge. However, in this type of program only a small fraction of cardholders actually receive a reward.

Summary of the Invention

[0008] It is a feature and advantage of the present invention to provide a method and system for providing a user with an incentive to perform a plurality of transactions against a selected account that enables the issuer of financial accounts to attract new account holders.

[0009] It is another feature and advantage of the present invention to provide a method and system for providing a user with an incentive to perform a plurality of transactions against a selected account that enables the issuer of financial accounts to encourage an increase in the frequency of the use of such accounts.

[0010] It is another feature and advantage of the present invention to provide a method and system for providing a user with an incentive to perform a plurality of transactions against a selected account that enables the issuer of financial accounts to provide benefits to anyone who is an account holder regardless of their financial means or the size of their transactions and thereby develop and maintain customer loyalty.

[0011] To achieve the stated and other features, advantages and objects, an embodiment of the invention utilizes computer hardware and software to provide a method and system for promoting usage of a financial account issued for a user in which the user is promised that for a certain number of transactions N made against the account within a predefined period of time M, a rebate amount based, for example, on the charge amount of one or more transactions against the account within the predefined time period will be credited back to the account.

[0012] Thereafter, the user is allowed to make transactions with the account in order to qualify for the rebate, and a count is recorded for the number of transactions made by the user against the account within the predefined time period. If the number of transactions against the account within the predefined time period M is equal to or greater than the predetermined number of transactions N, the rebate amount is computed based on at least a portion on the charge amount of one or more of the transactions against the account within the predefined period of time M, and the amount computed for the rebate is credit back to the account.

[0013] The predetermined number of transactions N against the account within the predefined period of time can be a fixed number of transactions or a randomly selected number of transactions within a range, and the charge amount on which the rebate amount is based can be a fixed amount or a randomly selected amount within a range. The predetermined number of transactions N can be any natural number, and the predefined period of time ean be, for example, one or more monthly billing cycles for the account.

[0014] The rebate amount can be computed, for example, equal to the charge amount of any one of the transactions against the account within the predefined period of timeM, or the rebate amount can be computed based on the charge amount of one or more of the predetermined number of transactions N against the account during the predefined period of timeM. Further, if the recorded number of transactions against the account within the predefined period of timeM exceeds the predetermined number of transactions N, the number of recorded transactions by which the predetermined number of transactions N is exceeded can be carried forward for recording with the transactions made by the user against the account within one or more succeeding predefined time periods N + 1, N+ 2, N+ 3, etc., in which case, for example, a limit on the number of rebates can be established for the user over a desired period of time Y. On the other hand, carry-forward of the excess number of transactions can be prohibited and the number of recorded transactions by which the predetermined number of transactions N is exceeded can be excluded from the number count of transactions made by the user in the succeeding predefined time periods N+ 1 , N+ 2, N+ 3, etc.

[0015] In another aspect of the invention, a qualification period of time Z can be established within which the predetermined number of transactions N must be made against the account to qualify for the rebate. The beginning date for the qualification period of time Z can be, for example, the date on which the account is issued for the user or the date on which the user enrolls in the rebate program subsequent to the date on which the account is issued for the user. Further, if the recorded number of transactions made against the account within the qualification period Z is less than the predetermined number of transactions N, a new beginning date can be established for a succeeding qualification period of time. On the other hand, a new beginning date can be established for a succeeding qualification period of time whether or not the recorded number of transactions made against the account within the qualification period is less than the predetermined number of transactions N.

[0016] An alternate embodiment of the invention proposes that the issuing entity issues, for example, an account for the user, as well as an account for a third party and notifies the user that for submission of a predetermined number of communications N by the user to the issuing entity as alternate means of entry (AMOEs) by the user within a predefined period of timeM, a rebate amount based on at least a portion of an amount of at least one transaction against the third party's account within the predefined period of timeM will be credited to the user's account. The communications by the user to the issuing entity can be in the form, for example, of a letter, a postcard, a fax, and/or an email.

[0017] Thereafter, the third party is allowed to make transactions with the third party's account, and the user is allowed to submit the communications as alternate means of entry to qualify for the rebate. The number of communications as the alternate means of entry submitted by the user within the predefined period of timeM is recorded, and if the recorded number of communications submitted by the user within the predefined period of time Mis equal to or greater than the predetermined number of communications N, the rebate amount is computed based on at least a portion of the charge amount of one or more of the transactions against the third party's account within the predefined period of timeM, and the computed rebate is credited to the user's account. Brief Description of the Drawings

[0018] Fig. 1 is a flow chart that illustrates an example of the process of providing a user with an incentive to perform a plurality of transactions against a selected account for an embodiment of the invention; and

[0019] Fig. 2 is a flow chart that illustrates an example of the process of providing a user with an incentive to perform a plurality of transactions against a selected account for an alternate embodiment of the invention.

Description of the Present Invention

[0020] Referring now in detail to an embodiment of the present invention, an example of which is illustrated in the accompanying drawings, the invention makes use, for example, of computer hardware and software in a method and system for increasing frequency of use of a financial account by the account owner, incentivizing the use of the financial account for performing transactions, and developing user loyalty. According to the preferred embodiments of the present invention, an entity (e.g., a financial institution) that issues financial accounts to individual and business customers incentivizes the customers to use such financial accounts for transactions by promising to pay for or reimburse one or more eligible transactions done through the financial accounts. For instance, the issuing entity promises each of its account holders that for every N transactions (e.g., 50 or some other number of transactions) using a designated financial account, the issuing entity will credit a partial or full amount of one or more of the transactions. The number of required transactions or the credited amount can be set as desired by the issuing entity and communicated to the account holders. Each of these parameters can have a fixed number or a random number within a range that the issuing entity can communicate to the account holders, as further described next.

[0021] Table 1 shows an example of the credit/rebate program in accordance with the preferred embodiments of the present invention. As mentioned above, an account holder can use a designated account to make eligible transactions in order to qualify for a credit/rebate on one of those transactions. The credit/rebate will occur (automatically or otherwise) upon the completion of N or more transactions at the end of the appropriate time cycle M. The variable N can be any desired natural number, and the variable can be any desired time frame. For instance, Table 1 is shown with N=50 andM=l month. Hence, when the account holder cumulatively completes 50 or more transactions at the end of month 2, the account holder can obtain a credit rebate (marked by "C") on one of the completed transactions, i.e., 1 of the 70 transactions cumulatively completed by the end of month 2. Alternatively, the account holder can obtain a credit/rebate on one of the N (i.e., first 50) completed transactions instead of the 70 cumulatively completed transactions.

[0022] Table 1 shows N is reset to zero once the account holder completes the requisite 50 transactions at the end of month 2. Hence, although the account holder has 70 cumulatively completed transactions at the end of month 2 and 30 additional ones in month 3, the 20 excess transactions over 50 at the end of month 2 do not carry over to month 3 (i.e., Table 1 shows only 30 cumulative transactions by the end of month 3). In an alternative embodiment, the 20 excess transactions can be carried over to make 50 in month 3, whereby the account holder can obtain another credit/rebate for that month (not shown in Table 1).

Table l

[0023] According to the preferred embodiments of the present invention, the issuing entity can provide X number of credits/rebates (i.e., X number of completed transactions to be credited/rebated) to each account holder over a desired period of time Y. The variable X can be any desired natural number, and the variable Y can be any desired time frame. Table 2 shows an example wherein N=50, M=l month, X=3, and 7=5M (i.e., 5 months), with no carry over once the number of completed transactions is greater than N. Hence, once the account holder receives the maximum of 3 credits/rebates in months 1, 2, and 3, the account holder does not receive any additional credits/rebates even though he/she completes Nor more transactions in months 4 and 5.

Table 2

[0024] According to the preferred embodiments, each account holder will have a qualification time period Z to complete the N transactions in order to qualify for the credit(s)/rebate(s). The variable Z can be any desired time frame. The variables Zand Y should not be mistaken with one another although the values of Z and Fcan be the same. The qualification period Z can begin on any desired date. For instance, it can begin on the date that the account holder obtains the designated account or on the date that the account holder enrolls in the credit/rebate program subsequent to obtaining the designated account. Table 3 shows an example wherein N=50, M=l month and Z=12M (i.e., 12 months). As shown in the table, because N is not reached in months 1 -12, N is reset to zero and a credit/rebate is provided at month 15 (i.e., second month 3) onceNis reached.

Table 3

[0025] If the account holder completes N transactions before the qualification period Z is over, N can be reset to zero in the following time cycle and a new qualification period Z can begin in which N must be completed. In other words, the qualification period Z is not rolling. Alternatively, the qualification period Z can be rolling, i.e., Nis not reset to zero until the full qualification period Z is over, regardless whether N transactions have been completed.

[0026] Fig. 1 is a flow chart that illustrates an example of the process of providing a user with an incentive to perform a plurality of transactions against a selected account for an embodiment of the invention. Referring to.Fig. 1, at SI, the account is issued for the user, and at S2, the user is notified that for a predetermined number of transactions against the account within a predefined period of time, a rebate amount based on all or part of a charge amount of one or more transactions against the account within the predefined period of time will be credited back to the account. At S3, the user is allowed to make transactions with the account in order to qualify for the rebate, and at S4 a number count of transactions made by the user against the account within the predefined period of time is recorded. At S5, the rebate amount based on the charge amount of one or more of the transactions against the account within the predefined period of time is computed if the recorded number of transactions against the account within the predefined period of time is at least as great as the predetermined number of transactions, and at 86, the computed rebate amount is credited back to the account.

[0027] According to the preferred embodiments of the present invention, account holders can use alternate means of entry (AMOEs) to earn a transaction credit/rebate. In other words, an account holder does not have to use the designated account for N transactions in order to receive credit(s)/rebate(s) on one or more of the completed transactions. For instance, the account holder can send in a designated communication (e.g., letter, postcard, fax, e-mail, etc.) to the issuing entity to obtain 1 AMOE. The issuing entity can require each AMOE to be sent and/or post marked separately and to satisfy other predetermined requirements (e.g., handwritten, including account number, #10 envelope, etc.). The issuing entity may or may not choose to bear the costs of postage for the submission of AMOEs. For instance, if an account holder submits an AMOE to qualify for a credit/rebate, the account holder can be reimbursed for the postage of such AMOE. The postage rebate can show up as a credit on the account per each AMOE, when N AMOEs are received, or when the qualification period Z is over.

[0028] In the AMOE scheme, the credit/rebate will equal the value of a transaction made by a second, "buddy" account holder that is assigned to the account holder seeking the AMOEs. Instead of having to complete N transactions with the designated account, the account holder must complete N AMOEs for the credit/rebate to be rendered. The rules and processes described above (with variables N, M, X, Y, and Z) with regard to credits/rebates for account holders performing transactions using designated accounts also apply to account holders using AMOEs to obtain credits/rebates. To provide equal opportunity for participation in the credit/rebate program of the present invention, the variables N, M, X, Y, and Z in the AMOE scheme have the same values as their counterparts in the transactional scheme.

[0029] According to the preferred embodiments of the present invention, the transaction to be credited/rebated by the issuing entity can be randomly chosen. Thus, each account holder can be guaranteed that at least all or part of one of his or her transactions (or a transaction of a "buddy") to a designated financial account will be free. This provides the account holder with an incentive to obtain and/or use the financial account for more transactions and to encourage use for higher value transactions. Consequently, the account holder benefits from credits generated from his or her own transaction activity (or transaction activity of a "buddy"), and the issuing entity benefits from the account holder's increased use of the financial account and the enhanced loyalty of its account holders to the issuer's products.

[0030] Fig. 2 is a flow chart that illustrates an example of the process of providing a user with an incentive to perform a plurality of transactions against a selected account for an alternate embodiment of the invention. Referring to Fig. 2, at S10, the issuing entity issues an account for the user, as well as an account for a third party, and at SI 1, the user is notified that for submission of a predetermined number of communications by the user to the issuing entity as alternate means of entry by the user within a predefined period of time, a rebate amount based on all or part of an amount of one or more transactions against the third party's account within the predefined period of time will be credited to the user's account. At SI 2, the third party is allowed to make transactions with the third party's account, the user is allowed to submit the communications as alternate means of entry to qualify for the rebate, and the number of communications as alternate means of entry submitted by the user within the predefined period of time is recorded. At SI 4, the rebate amount is computed based on the charge amount of one or more of the transactions against the third party's account within the predefined period of time if the recorded number of communications as alternate means of entry submitted by the user within the predefined period of time is equal to or greater than the predetermined number of communications as alternate means of entry, and at S15, the computed rebate amount is credited back to the user's account.

[0031] Although the invention has been described with reference to these preferred embodiments, other embodiments could be made by those in the art to achieve the same or similar results. Variations and modifications of the present invention will be apparent to one skilled in the art based on this disclosure, and the present invention encompasses all such modifications and equivalents.

Claims

[0032] What is claimed is:

1. A method for providing a user with an incentive to perform a plurality of transactions against a selected account, comprising:

issuing an account for the user;

notifying the user that for a predetermined number of transactions against the account within a predefined period of time, a rebate amount based on at least a portion of a charge amount of at least one transaction against the account within the predefined period of time will be credited back to the account;

allowing the user to make transactions with the account in order to qualify for the rebate;

recording a number count of transactions made by the user against the account within the predefined period of time;

if the recorded number of transactions against the account within the predefined period of time is at least as great as the predetermined number of transactions, computing the rebate amount based on at least a portion of the charge amount of said at least one of the transactions against the account within the predefined period of time; and

providing the credit for the computed rebate amount back to the account.

2. The method of claim 1 , wherein the predetermined number of transactions against the account further comprises a fixed number of transactions.

3. The method of claim 1, wherein the predetermined number of transactions against the account further comprises a randomly selected number of transactions within a predetermined range of numbers of transactions.

4. The method of claim 1 , wherein the charge amount on which the rebate amount is based further comprises a fixed charge amount.

5. The method of claim 1 , wherein the charge amount on which the rebate amount is based further comprises a randomly selected charge amount within a predetermined range of charge amounts.

6. The method of claim 1, wherein the predetermined number of transactions further comprises a natural number.

7. The method of claim 1, wherein the predefined period of time further comprises a predetermined number of monthly billing cycles for the account.

8. The method of claim 1, wherein computing the rebate amount based on at least the portion of the charge amount of said at least one of the transactions against the account within the predefined period of time further comprises computing the rebate amount based on the charge amount of one of the transactions against the account within the predefined period of time.

9. The method of claim 1, wherein computing the rebate amount based on at least the portion of the charge amount of said at least one of the transactions against the account within the predefined period of time further comprises computing the rebate amount based on the charge amount of at least one of the predetermined number of transactions against the account within the predefined period of time.

10. The method of claim 9, wherein computing the rebate amount based on at least the portion of the charge amount of said at least one of the transactions against the account within the predefined period of time further comprises computing the rebate amount based on the charge amount of one of the predetermined number of transactions against the account within the predefined period of time.

11. The method of claim 1 , further comprising carrying forward a number of recorded transactions by which the predetermined number of transactions within the predefined period of time is exceeded for recording with a number count of transactions made by the user against the account within at least one succeeding predefined period of time, if the recorded number of transactions against the account within the predefined period of time exceeds the predetermined number of transactions,

12. The method of claim 11, further comprising establishing a limit on a total rebate amount for the user within a succession of the predefined periods of time.

13. The method of claim 1, further comprising, excluding a number of recorded transactions by which the predetermined number of transactions within the predefined period of time is exceeded from recording with a number count of transactions made by the user against the account within succeeding predefined periods of time, if the recorded number of transactions against the account within the predefined period of time exceeds the predetermined number of transactions,

14. The method of claim 1 , further comprising establishing a qualification period of time within which the predetermined number of transactions must be made against the account to qualify for the rebate.

15. The method of claim 14, further comprising establishing a beginning date for the qualification period of time within which the predetermined number of transactions must be made against the account to qualify for the rebate.

16. The method of claim 15, wherein the beginning date for the qualification period of time within which the predetermined number of transactions must be made against the account to qualify for the rebate further comprises a date on which the account is issued for the user.

17. The method of claim 15, wherein the beginning date for the qualification period of time within which the predetermined number of transactions must be made against the account to qualify for the rebate further comprises a date on which the user enrolls in a rebate program subsequent to a date on which the account is issued for the user .

18. The method of claim 15, further comprising establishing a beginning date for a succeeding qualification period of time, if the recorded number of transactions made against the account within the qualification period is less than the predetermined number of transactions.

19. The method of claim 15, further comprising establishing a beginning date for a succeeding qualification period of time, whether or not the recorded number of transactions made against the account within the qualification period is less than the predetermined number of transactions.

20. A method for providing a user with an incentive to perform a plurality of transactions against a selected account, comprising:

issuing an account for the user and an account for a third party by an issuing entity;

notifying the user that for submission of a predetermined number of communications by the user to the issuing entity as alternate means of entry by the user within a predefined period of time, a rebate amount based on at least a portion of an amount of at least one transaction against the third party's account within the predefined period of time will be credited to the user's account;

allowing the third party to make transactions with the third party's account and allowing the user to submit the communications as alternate means of entry to qualify for the rebate;

recording a number count of the communications as alternate means of entry submitted by the user within the predefined period of time;

if the recorded number of communications as alternate means of entry submitted by the user within the predefined period of time is at least as great as the predetermined number of communications as alternate means of entry, computing the rebate amount based on at least a portion of the charge amount of said at least one of the transactions against the third party's account within the predefined period of time; and providing the credit for the computed rebate amount back to the user's account.

21. A system for providing a user with an incentive to perform a plurality of transactions against a selected account, comprising:

means for issuing an account for the user;

means for notifying the user that for a predetermined number of transactions against the account within a predefined period of time, a rebate amount based on at least a portion of a charge amount of at least one transaction against the account within the predefined period of time will be credited back to the account;

means for allowing the user to make transactions with the account in order to qualify for the rebate;

means for recording a number count of transactions made by the user against the account within the predefined period of time;

means for computing the rebate amount based on at least a portion of the charge amount of said at least one of the transactions against the account within the predefined period of time, if the recorded number of transactions against the account within the predefined period of time is at least as great as the predetermined number transactions; and

means for providing the credit for the computed rebate amount back to the account.

22. A system for providing a user with an incentive to perform a plurality of transactions against a selected account, comprising:

means for issuing an account for the user and an account for a third party by an issuing entity; means for notifying the user that for submission of a predeterrnined number of communications by the user to the issuing entity as alternate means of entry by the user within a predefined period of time, a rebate amount based on at least a portion of an amount of at least one transaction against the third party's account within the predefined period of time will be credited to the user's account;

means for allowing the third party to make transactions with the third party's account and allowing the user to submit the communications as alternate means of entry to qualify for the rebate;

means for recording a number count of the communications as alternate means of entry submitted by the user within the predefined period of time;

means for computing the rebate amount based on at least a portion of the charge amount of said at least one of the transactions against the third party's account within the predefined period of time, if the recorded number of communications as alternate means of entry submitted by the user within the predefined period of time is at least as great as the predefined number of communications as alternate means of entry; and

means for providing the credit for the computed rebate amount back to the user's account.

23. The system of claim 22, wherein the communications by the user to the issuing entity as alternate means of entry further comprises at least one of a letter, a post card, a fax, and an email.