Abstract:
A system and method for encouraging a customer utilizing a financial card to perform a debit-type financial transaction rather than a credit-type transaction at a merchant. The customer is offered a price-per-unit (PPU) discount for fuel as a reward for performing the debit-type financial transaction. A point-of-sale (POS) system at the merchant determines that the customer performed the debit-type transaction, and stores the PPU discount and a customer identifier in a Discounts-Earned database. When the customer initiates a subsequent purchase of fuel, at the merchant or a different retail fueling merchant, a fuel dispenser retrieves the PPU discount from the database, discounts the posted price of the fuel by the PPU discount, and dispenses fuel to the customer at the reduced price. A redeemed discounts calculator multiplies the PPU discount by the number of units purchased in the fueling transaction, and a clearing mechanism allocates the redeemed discount between the merchant and the retail fueling merchant.

Description:
RELATED APPLICATIONS  
       [0001]     This application is a continuation-in-part of co-pending U.S. patent application Ser. No. 11/158,674 filed Jun. 22, 2005. 
     
    
     BACKGROUND OF THE INVENTION  
       [0002]     This invention relates to automated retail systems and methods. More particularly, and not by way of limitation, the invention is directed to a system and method for providing a customer with an incentive to select a debit-type financial transaction rather than a credit-type transaction when making a purchase at a point-of-sale (POS) system.  
         [0003]     Financial card authorization networks charge retailers a fee for processing credit and debit card transactions. The network fee for processing credit card transactions is higher than the fee for processing debit card transactions. Therefore, from the retailer&#39;s perspective, it is desirable to encourage customers to use debit cards rather than credit cards. Additionally, many cards are “dual-mode” cards, which can be used as either a debit or a credit card. Retailers also find it desirable to encourage customers to use their dual-mode cards as debit cards rather than credit cards.  
         [0004]     To achieve this objective, the POS system must be able to identify a card as being a credit-only card, a debit-only card, or a dual-mode card when it is swiped at the payment terminal. Currently, many POS systems make this identification by requesting the customer to select either Credit or Debit when beginning the transaction. This approach, however, may result in the customer selecting a mode of payment that is not valid for the particular card. If the customer makes an invalid selection, an additional transaction fee may be incurred. In any event, there is no incentive for the customer to select Debit instead of Credit.  
         [0005]     Some financial card authorization networks maintain a Bank Identification Number (BIN) File that contains card information that provides additional insight into whether the cards in a particular range of cards are credit-only, debit-only, or dual-mode cards. However, there are several problems with using the BIN File. First, the BIN File is extremely large and cannot be sent directly to the POS terminal. Instead, the network host computer generally sends the BIN File to the merchant&#39;s host computer periodically (for example, once a week). When a transaction is initiated and the customer selects Debit or Credit, the merchant&#39;s POS system dials out to the merchant&#39;s host and retrieves the information from the BIN File for the card swiped by the customer. A second problem is that the BIN File is not always accurate. One reason for this is that the BIN File is generally a best guess approximation by the network host based on actual transactions processed over time. Another reason is that card issuers do not cooperate (for competitive reasons) to provide BIN range information to each other, so the information is often incomplete. Card issuers may also be reluctant to share this information because they do not necessarily want the customer to choose debit because this reduces their transaction fee revenue. In any event, once again, there is no incentive for the customer to select Debit instead of Credit.  
         [0006]     What is needed in the art is a system and method that overcomes the disadvantages of existing systems and methods by providing a customer with an incentive to select a debit-type financial transaction rather than a credit-type transaction when making a purchase at a POS system. The present invention provides such a system and method.  
       SUMMARY OF THE INVENTION  
       [0007]     In one aspect, the present invention is a computer-implemented method of encouraging a customer utilizing a financial card to perform a debit-type financial transaction rather than a credit-type transaction at a merchant. The method includes offering the customer a price-per-unit (PPU) discount for fuel as a reward for performing a debit-type financial transaction at the merchant; determining that the customer performed the debit-type financial transaction at the merchant; and dispensing fuel to the customer in a subsequent fueling transaction at a PPU reduced from a posted price by an amount equal to the PPU discount. In one embodiment, the dispensing step is performed by a retail fueling merchant different from the merchant where the customer performs the debit-type transaction. In this case, a redeemed discount is calculated by multiplying the PPU discount by the number of units of fuel purchased in the fueling transaction, the redeemed discount is provided to a clearing mechanism, and the redeemed discount is allocated between the merchant and the retail fueling merchant.  
         [0008]     In another aspect, the present invention is a system for encouraging a customer utilizing a financial card to perform a debit-type financial transaction rather than a credit-type transaction at a merchant. The customer is offered a PPU discount for fuel as a reward for performing the debit-type financial transaction. The system includes a point-of-sale (POS) system at the merchant comprising means for determining that the customer performed the debit-type financial transaction at the merchant; and means, responsive to a determination that the customer performed the debit-type financial transaction, for awarding the PPU discount to the customer. The system also includes a fuel dispenser for dispensing fuel to the customer in a subsequent fueling transaction, wherein the dispenser has access to the customer&#39;s PPU discount and reduces a posted price for the fuel by an amount equal to the PPU discount.  
         [0009]     The system may also include a database for storing the amount of the customer&#39;s PPU discount, and a fuel dispenser controller having access to the database. The controller includes means for determining that the customer has initiated a subsequent purchase of fuel; means for retrieving the amount of the PPU discount from the database; and means for discounting the price of the fuel posted on the fuel dispenser by the amount of the PPU discount. In one embodiment, the fuel dispenser is located at a retail fueling merchant different from the merchant where the customer performs the debit-type transaction. In this case, the system includes a redeemed discounts calculator for calculating a redeemed discount by multiplying the PPU discount by the number of units of fuel purchased in the fueling transaction; and a clearing mechanism for receiving the redeemed discount and allocating the redeemed discount between the merchant and the retail fueling merchant.  
     
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0010]     The invention will be better understood and its numerous objects and advantages will become more apparent to those skilled in the art by reference to the following drawings, in conjunction with the accompanying specification, in which:  
         [0011]      FIG. 1  is a flow chart illustrating the steps of an embodiment of a method of awarding a PPU discount for fuel in exchange for a customer&#39;s selection of a debit financial transaction;  
         [0012]      FIG. 2  is a flow chart illustrating the steps of an embodiment of a method of redeeming and clearing the PPU discount for fuel in accordance with the teachings of the present invention;  
         [0013]      FIG. 3  is a simplified block diagram of an embodiment of the system of the present invention; and  
         [0014]      FIG. 4  is a flow chart illustrating the steps of another embodiment of a method of awarding a PPU discount for fuel in exchange for a customer&#39;s selection of a debit financial transaction. 
     
    
     DETAILED DESCRIPTION OF EMBODIMENTS  
       [0015]     The present invention provides an incentive to a consumer to select Debit as the mode of payment for a financial transaction by awarding the customer a price-per-unit (PPU) discount on fuel if the customer performs a debit transaction rather than a credit transaction. The invention also makes it easier for the customer to select Debit by eliminating one of the steps that the customer is currently required to perform. When the customer swipes a card, the POS system accesses the BIN File in the merchant&#39;s host computer and determines whether the card is a credit only, debit only, or dual-mode card. If the card is identified as being credit only, the transaction is automatically initiated as a credit transaction. If the card is identified as being debit only, the terminal displays the message Enter PIN”. Thereafter, the transaction is completed as a debit transaction. If the card is identified as a dual-mode card, or if the mode of the card cannot be determined from the BIN File, the terminal displays the message “Enter PIN or Press Credit”. This message eliminates the need for the preliminary message “Press Debit or Credit”, followed by the additional message “Enter your PIN” if Debit was selected.  
         [0016]      FIG. 1  is a flow chart illustrating the steps of an embodiment of a method of awarding a PPU discount for fuel in exchange for a customer&#39;s selection of a debit financial transaction. At step  1   1 , a customer swipes a financial card at a POS terminal. At step  12 , the POS terminal access the BIN File either in a local database or at the merchant&#39;s host computer. At step  13 , it is determined from the information in the BIN File whether the card is a credit-only card. If so, the method moves to step  14  and conducts a credit transaction. However, if the card is not a credit-only card, the method moves to step  15  where it is determined from the information in the BIN File whether the card is a debit-only card. If so, the method moves to step  16  where the POS terminal displays “Enter PIN”. At step  17 , the customer enters his/her PIN, and at step  18  a debit transaction is conducted.  
         [0017]     As a reward for using a debit card, the customer is awarded a PPU discount on fuel at step  19 . In one embodiment, the PPU discount is awarded each time the customer performs a debit transaction. In another embodiment, the PPU discount is awarded after one or more award criteria are met. For example, the customer may have to perform a predefined number of debit transactions, or may have to purchase a predefined threshold amount of goods or purchase a cross-marketed product in addition to performing the debit transaction(s). At step  20 , the PPU discount is saved in a Discounts-Earned database.  
         [0018]     If it is determined at step  15  that the card is not a debit-only card, and thus is not a credit-only card or a debit-only card, the method moves to step  21  where it is concluded that the card is either a dual-mode card or the payment mode of the card cannot be determined from the BIN File. The method then moves to step  22  where the POS terminal displays “Enter PIN or Press Credit”. At step  23 , it is determined whether the customer entered a PIN. If so, the method moves to step  18  and conducts a debit transaction. At steps  19  and  20 , the customer is awarded the PPU discount and the discount is stored in the Discounts-Earned database. If the customer did not enter a PIN at step  23 , the method moves to step  24  where the customer presses Credit. The method then moves to step  25  and conducts a credit transaction.  
         [0019]     The present invention thus provides an incentive to the customer by offering a PPU discount on the purchase of fuel in exchange for the customer&#39;s selection of a debit transaction. The fuel may be sold by the merchant or by a retail fueling merchant who has a cross-marketing agreement in place with the merchant. The amount of the PPU discount may be a fixed amount such as ten cents per gallon, or may vary depending on other factors such as the number of times the customer selects Debit in a predefined time period, the amount of the financial transaction, whether a cross-marketed product was purchased, or the amount of fuel the customer purchases with the card at the retail fueling merchant. For example, the first five times the customer selects Debit each month at the merchant, the PPU discount may be ten cents per gallon. For the sixth through the tenth time the customer selects Debit at the merchant in the month, the PPU discount may be twenty cents per gallon, and so on. The value of redeemed discounts (i.e., the PPU discount provided to the customer multiplied by the number of gallons purchased) is then allocated between the merchant and the retail fueling merchant in accordance with the agreement between them.  
         [0020]     In one embodiment of the present invention, the issuer of the financial card also enters an agreement with the merchant and the retail fueling merchant to provide an incentive for customers to use the issuer&#39;s card. This may be an affinity-type relationship in which a bank issues the card with an oil company logo on the face of the card. For example, Wells Fargo may issue a relationship card with an Exxon logo on its face. The incentive for customers to use the Wells Fargo relationship card is that the customer may earn an immediate discount on fuel at Exxon stations by using the relationship card at the merchant. The incentive to select a debit transaction at the merchant is that the customer only earns the discount if a debit transaction is selected. Note that the inventive affinity-type relationship provides an immediate discount at the point of purchase, while existing affinity-type relationships provide delayed credits on the customer&#39;s credit card statement at a later date, or points that the customer must redeem when an award level is reached.  
         [0021]      FIG. 2  is a flow chart illustrating the steps of an embodiment of a method of redeeming and clearing the PPU discount for fuel in accordance with the teachings of the present invention. In this embodiment, the card issuer, merchant, and retail fueling merchant have entered an affinity-type agreement at step  31 , and the card issuer has issued a relationship card having the merchant&#39;s logo on the card at step  32 . For purposes of the present invention, the card may be a debit-only card or a dual-mode card.  
         [0022]     At step  33 , when the customer uses the relationship card to conduct a debit-type transaction at the merchant, a PPU discount for fuel is earned and stored in the Discounts-Earned database. The customer subsequently uses the relationship card to purchase fuel at the participating retail fueling merchant, and the island card reader (ICR) in the fuel dispenser reads the relationship card at step  34 . At step  35 , the dispenser controller retrieves the PPU discount information from the Discounts-Earned database. At step  36 , the dispenser controller immediately lowers the posted street price displayed on the dispenser by the amount of the PPU discount retrieved from the Discounts-Earned database. The PPU discount may be a fixed amount such as 10 cents per gallon, or may be a percentage discount, which fluctuates with the posted price of the fuel. For example, if the affinity-type agreement between the bank, the merchant, and the retail fueling merchant recites a five percent discount, and the posted street price of the fuel is $2.00 per gallon, the customer sees the price on the dispenser drop by 10 cents per gallon when the dispenser reads the card. If the posted price is $3.00 per gallon, the customer sees the price drop by 15 cents per gallon when the dispenser reads the card. At step  37 , the fuel dispenser dispenses fuel to the customer at the reduced PPU. From the customer&#39;s perspective, the transaction is complete when the fuel purchase transaction is completed. No future events or actions on the part of the customer are required to utilize an earned reward.  
         [0023]     At step  38 , a redeemed discount is calculated. In the preferred embodiment, a dollar amount of the redeemed discount is calculated by multiplying the PPU discount by the number of units of fuel purchased in the transaction. At step  39 , a clearing mechanism tracks the redeemed discounts, and performs settlement procedures by exchanging funds between the parties to the affinity-type agreement. For example, the clearing mechanism may receive or retrieve funds from the card issuer, and credit those funds to the retail fueling merchant. In this scenario, the retail fueling merchant always receives the posted street price for the fueling transaction. The card issuer funds the discounts from its credit card transaction fees. In another scenario, the merchant may also provide part of the funds to the retail fueling merchant. In this scenario, the merchant may fund its part of the discount from transaction fees that were saved as a result of the customer selecting a debit transaction instead of a credit transaction. In yet another scenario, a vendor of a cross-marketed product, which was one of the necessary criteria for awarding the discount, provides funds to cover all or part of the discount.  
         [0024]      FIG. 3  is a simplified block diagram of an embodiment of the system of the present invention. When a customer performs a debit transaction at the merchant&#39;s POS system  41 , a PPU discount is earned, and the earned PPU discount is stored in the Earned-Discounts database  42 . As previously noted, the PPU discount may be earned solely for performing a debit transaction, or may also or alternatively require that other criteria be met, such as using a relationship card subject to an affinity-type agreement, purchasing more than a threshold amount of goods, or purchasing a cross-marketed product.  
         [0025]     Subsequently, when the customer uses the card to purchase fuel at the retail fueling merchant, the Island Card Reader (ICR)  43  in the fuel dispenser (or other input device) reads the magnetic strip on the relationship card. The card information may also be input by other technologies such as a radio frequency identification (RFID) controller with read/write capability, a contactless smart card reader, an audio recognition device, a biometric recognition device, an optical reader, and the like. The BIN range is utilized to identify the card issuer, and a card issuer ID and the customer ID are passed to a dispenser controller  44 . Alternatively, the ICR may send the card number to the dispenser controller, and the controller may determine the identification of the card issuer and the customer. The dispenser controller uses the card issuer ID and/or customer ID to access the Earned-Discounts database  42  and retrieve an associated redeemed PPU discount. The controller then reduces the posted street price on the dispenser display by the amount of the associated PPU discount, and causes the fuel dispenser  45  to dispense the fuel at a discounted price.  
         [0026]     When the customer indicates the transaction is complete (for example by replacing the fuel nozzle in its holder), the number of units of fuel purchased is determined by the dispenser controller  44 , which then sends the number of units of fuel purchased and the PPU discount to a redeemed discounts calculator  46 . The calculator may be incorporated into the dispenser controller, or may be implemented separately. The calculator preferably calculates the amount of the redeemed discount by multiplying the PPU discount by the number of units of fuel purchased in the transaction. The redeemed discount may then be stored in a redeemed discount database  47  where it is associated with the card issuer, the merchant, the retail fueling merchant, and optionally, a third party vendor if a cross-marketed product was involved.  
         [0027]     A clearing mechanism  48  interfaces with the redeemed discount database, and retrieves the amount of the redeemed discount. The clearing mechanism then transfers funds for the amount of the redeemed discount between the parties of the agreement in accordance with the terms of the agreement. For example, funds may be drawn from the merchant&#39;s account  49  and provided to the retail fueling merchant&#39;s account  50  if the discount was awarded purely because the customer performed a debit transaction and/or purchased a threshold amount of goods from the merchant. If an affinity-type agreement was involved with the card issuer, the clearing mechanism may also or alternatively obtain funds from the card issuer&#39;s account  51  and provide the funds to the retail fueling merchant to cover the cost of the discount. Likewise, if a cross-marketing agreement was involved with a third party vendor, the clearing mechanism may also or alternatively obtain funds from the third party vendor&#39;s account  52  and provide the funds to the retail fueling merchant to cover the cost of the discount.  
         [0028]     Thus, the customer receives an immediate reward, the retail fueling merchant receives the posted street price for the fueling transaction, and the merchant, the card issuer, and the third party vendor fund the discount.  
         [0029]      FIG. 4  is a flow chart illustrating the steps of another embodiment of a method of awarding a PPU discount for fuel in exchange for a customer&#39;s selection of a debit financial transaction. In this embodiment, an instant PPU discount is provided when the customer chooses to perform a debit transaction when purchasing fuel at the retail fueling merchant. Since the discount is instant, an Earned-Discounts database is not required.  
         [0030]     At step  61 , a customer swipes a financial card at the ICR of a fuel dispenser at the retail fueling merchant. At step  62 , the dispenser controller access the BIN File either in a local database or at the retail fueling merchant&#39;s host computer. At step  63 , it is determined from the information in the BIN File whether the card is a credit-only card. If so, the method moves to step  64  and conducts a credit transaction, dispensing fuel to the customer at the posted price. However, if the card is not a credit-only card, the method moves to step  65  where it is determined from the information in the BIN File whether the card is a debit-only card. If so, the method moves to step  66  where the dispenser displays “Enter PIN”. At step  67 , the customer enters his/her PIN, and at step  68  a debit transaction is conducted.  
         [0031]     As a reward for using a debit card, the customer is awarded an instant PPU discount at step  69 . At step  70 , the dispenser dispenses fuel to the customer at a price that is discounted from the posted price by the amount of the instant PPU discount.  
         [0032]     If it is determined at step  65  that the card is not a debit-only card, and thus is not a credit-only card or a debit-only card, the method moves to step  71  where it is concluded that the card is either a dual-mode card or the payment mode of the card cannot be determined from the BIN File. The method then moves to step  72  where the dispenser displays “Enter PIN or Press Credit”. At step  73 , it is determined whether the customer entered a PIN. If so, the method moves to step  68  and conducts a debit transaction. At steps  69  and  70 , the customer is awarded the instant PPU discount, and the dispenser dispenses fuel to the customer at the discounted price. If the customer did not enter a PIN at step  73 , the method moves to step  74  where the customer presses Credit. The method then moves to step  75  and conducts a credit transaction, dispensing fuel to the customer at the posted price.  
         [0033]     It is thus believed that the operation and construction of the present invention will be apparent from the foregoing description. While the method, apparatus and system shown and described has been characterized as being preferred, it will be readily apparent that various changes and modifications could be made therein without departing from the scope of the invention as defined in the following claims.