US008595055B2
`
`(12) United States Patent
`MacLean et a].
`
`(10) Patent N0.:
`(45) Date of Patent:
`
`US 8,595,055 B2
`Nov. 26, 2013
`
`(54) APPARATUS AND METHOD OF
`FACILITATING THE EXCHANGE OF POINTS
`BETWEEN SELECTED ENTITIES
`
`(75) Inventors: Trevor Robert MacLean, Toronto (CA);
`Jerry Philip, Oakville (CA); Stephen
`Paul Ogden, Toronto (CA); Darlene
`Higbee Clarkin, Toronto (CA)
`
`(73) Assignee: Points.com, Toronto (CA)
`
`( * ) Notice:
`
`Subject to any disclaimer, the term of this
`patent is extended or adjusted under 35
`U.S.C. 154(b) by 1835 days.
`
`(21) Appl.No.: 09/818,400
`
`(22) Filed:
`
`Mar. 27, 2001
`
`(65)
`
`Prior Publication Data
`
`US 2002/0143614 A1
`
`Oct. 3, 2002
`
`(2012.01)
`
`(51) Int. Cl.
`G06Q 30/00
`(52) US. Cl.
`USPC ....................................................... .. 705/141
`(58) Field of Classi?cation Search
`USPC ..................................... .. 705/14, 26, 27, 14.1
`See application ?le for complete search history.
`
`(56)
`
`References Cited
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`Birch, Dave E-cash lays the foundations for private corporate cur
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`(Continued)
`
`Primary Examiner * Daniel Lastra
`(74) Attorney, Agent, or Firm * CoWan, LieboWitZ &
`Latman, P.C.; Mark Montague, Esq.
`
`ABSTRACT
`(57)
`This invention relates to a system and method of exchanging
`?rst points held by a customer for second points, Wherein the
`?rst points that are issued by a ?rst point issuer differ from the
`second points that are issued by a second point issuer. This
`method comprises the steps of permitting the customer to set
`a ?rst number of ?rst points to be exchanged and permitting
`the ?rst and second point issuers to set the point Withdrawal
`and deposit rates of their ?rst and second points respectively.
`Next, an equivalent number of the second points is deter
`mined based upon the point Withdrawal and deposit rates of
`the ?rst and second point issuers respectively, and the ?rst
`number of the ?rst points. Then, the ?rst number of points is
`exchanged for a second equivalent number of second points.
`
`2 Claims, 30 Drawing Sheets
`
`Transaction Center(s)
`
`Points Issuer
`30o
`
`Points Issuer
`
`Points Issuer
`130C
`
`

`

`US 8,595,055 B2
`Page 2
`
`(56)
`
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`99
`EP
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`EP
`EP
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`EP
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`EP
`ER
`gg
`
`GB
`GB
`GB
`GB
`W0
`W0
`W0
`W0
`W0
`$8
`W0
`W0
`W0
`W0
`W0
`W0
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`0 1923 103 4
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`009594292
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`019643196
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`100000
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`W0
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`W0
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`W0
`W0
`W0
`W0
`W0
`W0
`W0
`W0
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`$8
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`W0
`W0
`W0
`W0
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`W0
`W0
`W0
`W0
`W0
`W0
`W0
`W0
`W0
`W0
`$8
`W0
`W0
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`
`WO 01/08113
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`WO 01/41015
`6/2001
`W0 (ll/41612
`6/2001
`WO 01/43006
`6/2001
`$8 85338; ,1‘
`2588}
`W0 0162156
`70001
`W0 0167816
`80001
`WO 01/67365
`9/2001
`WO 01/77856
`10/2001
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`l0/200l
`W0 ()1/g2239
`11/2001
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`11/2001
`WO 01/82241
`11/2001
`WO 01/83062
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`WO 01/83063
`11/2001
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`11/2001
`WO 01/86535
`11/2001
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`WO 02/01433
`1/2002
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`1/2002
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`H2002
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`5588?
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`
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`Arena”, iMarketing News, vol. 2, No. 17, May 1, 2000, p. 35.
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`Offline”, iMarketing News, vol. 2, No. 9, Mar. 6, 2000.
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`Judge, Debra, “Loyal to a Point”, Internet World, Dec. 1, 1999.
`
`

`

`US 8,595,055 B2
`Page 3
`
`(56)
`
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`
`* cited by examiner
`
`

`

`US. Patent
`
`Nov. 26, 2013
`
`Sheet 1 0f30
`
`US 8,595,055 B2
`
`FIG. 1
`
`Customer
`1 10
`
`Transaction Center(s)
`1 2O
`
`Points Issuer
`1300
`
`Points Issuer
`13Gb
`
`Points Issuer
`130C
`
`

`

`US. Patent
`
`NOV. 26, 2013
`
`Sheet 2 0f 30
`
`US 8,595,055 B2
`
`Customer Terminal
`1 100
`Customer
`Computer 220i
`Web Browser
`202a
`
`Customer Terminal
`I IOb
`
`Customer 2m b
`Computer —
`Web Browser
`202b
`
`Customer Terminal
`I 10c
`(Customer 201C
`Web Browser
`M
`
`omputer —
`
`Internet
`205
`
`FIG. 2
`
`T Ion; FirewaII—22TJ_ T
`Web Server
`230
`
`Master Database
`240
`
`Transaction
`Center
`I20
`
`206a
`
`Issuer Terminal
`130a
`
`Transaction Server
`250
`L Transaction Firewall 260i
`Issuer Terminal
`13Gb
`
`206c
`
`Issuer Terminal
`ISOc
`
`I
`I
`I
`I
`I_
`
`

`

`US. Patent
`
`NOV. 26, 2013
`
`Sheet 3 0f 30
`
`US 8,595,055 B2
`
`300
`
`302
`
`Customer "Sudan 7 Home Page displayed
`to Web site
`(“6- 4A)
`
`303
`Customer clicks on
`”Open an Account“
`
`ll
`
`304
`Customer lnlormation
`torm displayed
`(FIG. 4B)
`
`505
`Customer fills out
`information torm
`
`306
`"Custamer?terms and
`Conditions displayed
`(no. 40)
`
`ll
`
`307
`Customer clicks on
`"l accept"
`
`308
`Customer account
`inlormatian displayed
`(H6. 40)
`
`l
`
`310
`Customer LP account
`509
`Customer clicks on >
`displayed
`“pointstolio”
`(FlC. 4E)
`
`I512
`
`List of LP
`31 1
`Customer clicks on > issuers displayed
`“add loyalty program“
`(HG. 4F)
`
`313
`
`Customer selects a
`loyalty program
`
`315
`Customer tilt out
`inlormation torm
`
`514
`Customer LP lntormation
`torm displayed
`(H0. 46)
`
`516
`ll pointstolionlerms and
`onditions displayed
`(FIG. 4H)
`l___
`
`3,11%
`
`> Customer accepts
`
`318
`Customer LP account
`intormation displayed
`(no. 41)
`319
`y
`Generate an account
`validation request tor
`added LP
`
`320
`
`y
`transmit
`validation
`request
`
`322
`
`Activate LP
`account in Master
`Database
`
`525
`Flag LP account as
`erroneous and <
`notrty customer
`
`FIG. 3
`
`

`

`US
`
`Patent
`
`N v. 26, 2013
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`US. Patent
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`Nov. 26, 2013
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`US 8,595,055 B2
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`

`US. Patent
`
`Nov. 26, 2013
`
`Sheet 9 0f 30
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`US 8,595,055 B2
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`Patent
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`

`

`US. Patent
`
`NOV. 26, 2013
`
`Sheet 13 0f 30
`
`US 8,595,055 B2
`
`500
`
`Customer clicks on
`xchange now
`
`503
`Customer clicks on
`"advanced ponints
`exchange
`
`505
`Customer selects
`withdrawal LPs
`
`502
`Display pointsxchange
`(F It}. 6A)
`
`504
`Prompt customer tor list
`at LPs trom which points
`will be drawn
`(FIG. 6B)
`
`506
`Prompt customer for
`points amounts to be
`withdrawn
`(FIG. 6C)
`
`FIG.
`
`5A
`
`508
`terminate exchange
`and notity customer
`at insutticient points
`balances
`
`507
`Sufficient points
`balances for
`withdrawals?
`
`YES
`
`509
`Prompt customer to designate
`the target LP into which points
`will be deposited
`(no. so)
`
`51 0
`Customer selects
`depositing tPs
`
`51 2
`Customer selects
`"continue xchange“
`
`51 4
`Customer selects
`“go to next step“
`
`51 6
`Customer provides
`bitlinq into
`
`51 8
`Customer selects
`“submit”
`
`511
`Calculate number at points to
`be withdrawn and deposited.
`> Display summary at pending
`transaction.
`(FIG. 6E)
`
`513
`Display exchange terms and
`conditions and tees.
`(FIG. 6F)
`
`515
`Request billing and credit
`card intormation
`(no. so)
`
`517
`Contirm billing and credit
`card intormation
`(no. on)
`
`tl
`
`tl
`
`519
`Display transaction summary
`7 and confirmation number
`(no. a)
`
`

`

`US. Patent
`
`NOV. 26, 2013
`
`Sheet 14 0f 30
`
`US 8,595,055 B2
`
`528
`Roll back points exchange
`and notify customer the
`exchange request failed
`
`500 (cont'd)
`
`520
`Post points exchange request
`to transaction queue. Mark
`exchange as z'PENDING“
`
`522
`p
`Construct a points withdrawal
`transaction message for
`each designated issuer
`
`524
`w
`transmit each points
`withdrawal transaction
`message to its target issuer
`
`L____J
`
`526
`
`Receive transaction
`confirmation messages from
`all target withdrawing issuers
`
`Construct a points deposit
`transaction message for each
`designated issuer
`
`552
`w
`transmit points deposit
`transaction messages to all
`target depositing issuers
`
`l
`WIAIT
`t
`Receive transaction
`confirmation messages from
`all target depositing issuers
`
`554
`
`FIG. 5B
`
`535
`Deposit points
`transactions were
`successful
`
`536
`Roll back points exchange
`and notify customer the
`exchange request failed
`
`537
`
`538
`
`Mark exchange as
`“COMPLETE”
`
`Notify customer of
`successful exchange
`
`

`

`US. Patent
`
`Nov. 26, 2013
`
`Sheet 15 0f30
`
`US 8,595,055 B2
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`US. Patent
`
`Nov. 26, 2013
`
`Sheet 16 0f30
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`US 8,595,055 B2
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`U.S.
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`Nov. 26, 2013
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`US 8
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`U.S
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`. Patent
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`NOV.
`
`26,2013
`
`Sheet230f30
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`US 8,
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`595
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`

`

`US. Patent
`
`Nov. 26, 2013
`
`Sheet 24 of 30
`
`US 8,595,055 B2
`
`700
`
`
`
`
`
`
`
`701
`Define data format,
`validation rules for
`account confirmation
`
`
`FIG.
`
`"7A
`
`710
`
`
`714
`
`Customer
`
`
`transmit account
`
`account
`Format of customer
`
`
`confirmation record
`validation
`account validation
`
`
`
`
`containing an error
`request
`request correct?
`
`
`
`
`response code
`received
`
`
`712
`
`
`
`715
`
`
`Transmit account
`
`
`
`Customer is a valid
`confirmation record
`
`
`member of
`this LP?
`containing an error
`
`response code
`
`
`
`
`
`717
`
`
`
`
`transmit account confirmation
`record containing confirmation
`code and current point account
`balance for this member
`
`
`
`
`
`center
`
`Flag member account as a
`customer of
`transaction
`
`
`
`

`

`US. Patent
`
`Nov. 26, 2013
`
`Sheet 25 of 30
`
`US 8,595,055 B2
`
`720
`
`
`START
`
`
`
`
`
`721
`
`Define data format &
`communications protocol
`
`for providing account
`balance updates
`
`FIG.
`
`'70
`
`_
`
`FIG. 7D
`
`732
`
`
`733
`
`
`Account
`
`
`balance
`Transmit update account
`
`
`balance record
`change
`
`
`
`detected
`
`
`FIG.
`
`"7E
`
`740
`
`744
`
`
`746
`
`
`745
`
`
`Account
`Transmit
`
`
`
`Format ot balance
`
`balance
`
`confirmation record
`
`
`
`request message
`request
`
`containing an error
`
`correct?
`received
`
`response code
`
`
`748
`747
`
`
`Transmit
`
`Customer is a
`
`confirmation record
`
`registered member
`
`containing an error
`
`this LP?
`at
`response code
`
`
`
`
`Transmit update account
`balance record
`
`
`
`

`

`US. Patent
`
`Nov. 26, 2013
`
`Sheet 26 of 30
`
`US 8,595,055 B2
`
`m
`
`75‘
`
`
`Define data format,
`
`validation rules and
`communications protocol
`
`
`for points transactions
`
`
`
`FIG. 7F
`
`760
`
`764
`
`
`763
`point
`
`withdrawal
`Transmit
`
`
`
`Format of
`transaction
`confirmation record
`
`
`
`
`transaction message
`
`
`message
`containing an error
`correct?
`
`received
`
`
`
`response code
`
`
`
`
`transmit
`
`Does transaction '
`
`confirmation record
`FIG. 7G
`
`message SOIISTX validation
`
`rules.
`containing an error
`
`
`response code
`
`Y SE
`
`768
`
`
`Transmit confirmation record
`containing transaction
`
`Post a credit
`to customer's
`confirmation code and
`LP account
`
`
`
`updated point account
`balance for this member
`
`
`774
`
`
`
`775
`point
`
`
`
`
`deposit
`
`
`
`transaction
`
`
`transaction message
`message
`
`containing an error
`correct?
`
`
`
`
`received
`response code
`
`
`Format of
`
`Transmit
`confirmation record
`
`762
`
`772
`
`FIG. 7H
`
`776
`775
`
`
`
`Transmit
`Does transaction .
`
`confirmation record
`message satisfz validation
`
`
`
`rules.
`containing an error
`
`response code
`
`YES
`778
`
`
`Transmit confirmation record
`containing transaction
`
`
`Post a debit
`to customers
`confirmation code and
`LP account
`
`updated point account
`
`
`balance for this member
`
`
`777
`
`

`

`U.S. Patent
`
`NOV. 26, 2013
`
`Sheet 27 of 30
`
`US 8,595,055 B2
`
`FIG. 8
`
`800
`
`801
`
`
`
`the point withdrawal
`Set
`rate and the point
`deposit rate
`tor this LP.
`
`
`
`
`Transmit
`the point
`
`withdrawal and point
`deposit rates to the
`
`transaction center
`
`
`
`
`
`

`

`US
`
`P
`
`US 8,595,055 B2
`
`
`
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`OOCAH#HMHOMHfiOSOMmQNHwEDNVOGOHEOHQ
`
`
`
`
`
`
`
`

`

`US. Patent
`
`Nov. 26, 2013
`
`Sheet 29 of 30
`
`US 8,595,055 B2
`
`1 OO
`
`_________
`Points withdrawal value:
`
`—I
`
`[—
`
`(number of points withdrawn from
`withdrawing LP account)
`
`X
`
`(point withdrawal rate for
`L__JWW¥?__J
`
`F‘ _________ _‘
`Points deposit value:
`
`I |
`
`I l
`
`(points withdrawal value)
`
`minus
`
`(point exchange transaction fee)
`t_ _________ _l
`
`I l I
`
`l— _________ ‘l
`Number of points to deposit:
`
`(points deposit value)
`
`X
`
`I | I I
`
`.
`(point deposd rate for
`L___E_LL__J
`
`de ositin
`
`LP
`
`I | I |
`
`Determine the value
`at
`the points
`withdrawal
`transaction
`
`
`
`
`
`
`mm
`the points withdrawal
`Post
`value to the points
`reconciliation account for
`the withdrawal
`issuer
`
`1 003
`
`
`Determine the value at
`the points deposit
`
`transaction
`
`lOO4
`
`
`
`
`Determine number at
`points to be deposited
`
`
`
`
`
`Ims
`the points deposit
`Post
`value to the points
`reconciliation account for
`the deposrtrng Issuer
`
`
`
`

`

`US. Patent
`
`Nov. 26, 2013
`
`Sheet 30 of 30
`
`US 8,595,055 B2
`
`
`
`1101
`
`1102
`
`
`
`
`Generate and transmit
`tally all points withdrawal
`an invoice to each
`values in each
`
`
`issuer based on
`reconciliationlaccount
`
`
`these tallies
`for each issuer
`
`
`FIG. 12
`
`1200
`
`1202
`
` 1201
`
`
`
`Tally all points deposit
`Generate and transmit
`transactions originated
`an invoice transaction
`from transaction
`center based on
`
`center
`these tallies
`
`
`
`
`
`
`

`

`US 8,595,055 B2
`
`1
`APPARATUS AND METHOD OF
`FACILITATING THE EXCHANGE OF POINTS
`BETWEEN SELECTED ENTITIES
`
`FIELD OF THE INVENTION
`
`This invention relates to apparatus and methods for keep-
`ing track of points and,
`in particular, for managing and
`exchanging those points that are issued and redeemed in the
`context of a loyalty program (LP).
`
`BACKGROUND OF THE INVENTION
`
`5
`
`10
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`2
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`LPs. Presently, such large issuers have income from the sale
`ofpoints to their existing customers, but also to other business
`entities.
`
`LP points typically have a limited life from their date of
`issuance. Thus, many points will expire as a result of a lack of
`interest in participating in a LP plan. In 1998, 68 billion points
`expired. The lack of interest and participation results in part
`from the number of available plans, the complexity of a
`particular plan, the inability to readily ascertain the balances
`in the LPs to which a customer may belong and the relatively
`small value of the points. There are billions of points that sit
`in accounts with very limited redemption options and low
`utility to a customer, i.e., the points are kept in accounts with
`balance that are below redemption levels, or a levels with
`limited redemption options. The growing number of LPs have
`led customer to join a number of LPs, thus spreading the
`points issued to this customer among the many programs and
`preventing any one of these plans from accumulating a sig-
`nificant number of points. For the above reason, few custom-
`ers are achieving significant value from the LPs thereby pre-
`venting a LP from meeting its goal of achieving customer
`loyalty to a particular source of products and/or services.
`There are presently available a number web sites that offer
`services related to LP programs. MaxMiles MileageMiner is
`a website offering management services to frequent flyers.
`MaxMiles automatically gathers frequent flyer balances and
`account information from airlines, hotels, and credit cards,
`analyzes the most current mileage offers, searches for miss-
`ing mileage credits, and sends a personalized report of all
`miles via email to the frequent flyer. The personalized reports
`are updated daily.
`Miles Direct.com is a website that automatically gathers
`and reports all of your frequency and rewards balances from
`airlines, hotels, credit cards into one consolidated statement.
`Miles direct also tracks expiring miles or points, activity, and
`elite levels.
`
`Points Universe is a website that keeps track of points,
`miles and other currencies in one statement. A customer can
`
`also earn points, award points, and join a points universe
`loyalty program. By shopping/visiting sites, these points can
`be used to redeem products on the Awards Store Catalogue.
`The AwardMaximizer tool tells you what products can be
`purchased with your Award Points.
`Milesandpoints.com is a web service that keeps track of
`your miles and points in one location. The site alerts you
`about new promotions and offers based on your preferences.
`The site also reminds its customers when promotions/miles/
`points are about to expire.
`MilePoint.com is a website service that converts any or all
`of its customers’ miles and points from participating frequent
`traveler programs into money to spend at an assortment of
`online merchants. Every mile point is valued at a set rate. For
`example, if you have 500 miles and the set rate is 0.02/mile, a
`customer’s points may be converted in a currency, e.g. $10.
`MilePoint Money is used for partial payment of purchases
`with merchants within the MilePoint network. In addition,
`Mile Point permits its customers to set up accounts and to add
`selected LPs to its portfolio. The MilePoint website is issu-
`ered with its LPs.
`
`The Netcentives website provides relationship marketing
`technologies and services creating loyalty programs for
`brick-and-mortar, click-and-mortar, and pure-play online
`companies to maximize the value of their relationships with
`its customers, employees and business issuers. Netcentives
`creates private label rewards for its clients or can have it’s
`clients participate in ClickRewards.
`
`15
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`20
`
`25
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`30
`
`35
`
`This invention has in at least one embodiment an applica-
`tion to loyalty programs (LPs). LPs are designed as the name
`suggests is to create and maintain the loyalty of a customer to
`a particular product or service. The source of such services
`and/or products is also the issuer or distributor ofthe points to
`its customers and the redeemer of those points for rewards.
`LPs are based on the concept of influencing the customer to
`continue to purchase products and/or services from one
`source, whereby the customer is repetitively issued points
`and, over a period of time, will accumulate sufiicient points
`that may be redeemed for a valuable reward.
`There are now over 5 trillion LP points outstanding around
`the world. Annually 500 billion new points are issued. Each of
`these points represents real economic value to both the cus-
`tomer and the issuer. LP’s which issue points must carry them
`on their balance sheets as a contingent liability (for example,
`Business Week has reported that in American Airlines’ case
`this number is greater than $800 million). In some cases, LPs
`are also using points as a revenue-generating product that LP
`proprieters sell to marketing partners. There are four main
`types of loyalty programs: travel (airlines and hotels), finan-
`cial (credit cards), retail and network (AirMiles, ClickRe-
`wards and WebMiles).
`The number of LPs has exploded in recent years, thus
`making it difficult for customers to be knowledgeable about
`the plans, much less interested in participating in a LP. Pres-
`ently there are over 90 LPs sponsored by the airlines, i.e.,
`frequent flyer programs. There are hundreds of credit card
`programs sponsored by financial institutions. There are over
`8500 LPs sponsored by retail companies. The number of
`customers who have participated in LPs is greater than 350 45
`million. Globally, there are more than 200 million customers
`participating in frequent flyer LPs, of which 160 million
`customers participate in LPs sponsored by US airlines. 75%
`of the UK population carry a loyalty card, while 66% of
`Canadian households belong to LPs of AirMiles or Sears 50
`Club.
`
`40
`
`The issued points that have not been redeemed has now
`grown to staggering numbers. There are presently 3 .5 trillion
`points in the market today in the North American LPs alone.
`500 Billion new points are generated annually in frequent 55
`flyer LPs alone. Each point has an economic value, which can
`be expressed in monetary units per point. Accumulated in the
`numbers mentioned above, unredeemed points represent
`huge assets. In addition, unredeemed points represent a liabil-
`ity to the issuing entity in terms of the future cost to redeem 60
`these points. While presenting a liability to the point issuers,
`they also represent a huge asset base, which is growing annu-
`ally, as most LPs are accruing more points each year than their
`customers are redeeming. This positive issue/redeem ratio is
`expected to continue in the future. Thus while the liability of 65
`many LP point issuers has increased, also has been the oppor-
`tunity of generating revenue streams for many of the larger
`
`

`

`US 8,595,055 B2
`
`3
`None of the above described services or web sites recog-
`nize much less address the primary problem with LPs, namely
`that most customers do not accumulate sufficient numbers of
`
`points at which the customers can effect redemption’s for the
`rewards. In particular, these services do not teach how points
`may be accumulated into one account. In additio