Gift card reimbursement system and method

A method for purchasing goods and services in transactions utilizing a valued card includes issuing to a card owner from an issuing institution a valued card pursuant to an agreement between the card owner and the issuing institution. The valued card has a purchase value. The valued card is transferred to a recipient having authority to purchase goods and services utilizing at least a portion of the purchase value. The card owner is reimbursed a percentage of a remaining balance of the purchase value at an expiration date pursuant to the agreement.

BACKGROUND OF THE INVENTION

This invention relates generally to debit cards and, more particularly, to a valued card system and method that reimburses the purchaser a percentage of a balance remaining unused by a recipient at the expiration date of the valued card.

Commercial transactions involving payment for goods and/or services typically involve some form of transfer of funds between the purchaser and the seller. Such transfers may include a payment by cash, check or any suitable negotiable instrument. Such payments may also be made using a credit card or a debit card. Credit cards and debit cards have enjoyed increasing popularity for payment on accounts and for purchasing goods and/or services due to the distinct advantages associated with credit cards and debit cards, including privacy and security advantages. More specifically, if a card is lost or stolen, its owner is normally exposed to only limited liability, if any, for its misuse. Further, various security measures tend to minimize unauthorized card usage. By verifying cardholder identities and by invoking other security measures, commercial institutions have achieved some measure of success in curbing credit/debit card fraud.

A banking institution issues a credit card to a card owner under an agreement including terms and conditions in which the card owner is responsible for payment on an account. For example, when the card owner purchases goods and/or services on the credit card a balance is created on the account to essentially provide a line of credit. Pursuant to the agreement, the card owner is responsible for payments on the balance.

In contrast to credit cards, a debit card facilitates transferring funds from a card owner's account, such as from a corresponding checking account established with a banking institution. The funds transferred during a transaction for goods and/or services are deposited in the card owner account prior to the transaction. Thus, unlike a credit card that establishes a line of credit, a debit card transaction is limited by the amount of funds deposited in the corresponding checking account at the transaction time.

A gift card is one type of debit card. A purchaser purchases a gift card from a shopping mall, a department store, a grocery store or another point-of-sale retail establishment in a desired amount or denomination, such as $50.00, $100.00 or $250.00. The purchaser gifts the gift card to a recipient, who is then free to purchase goods and/or services of his or her choice with the gift card utilizing all or only a portion of the value on the gift card. Many conventional gift cards include expiration dates on which the gift card expires and any balance of the value is no longer available for use. At least some gift cards expire over a time period. For example, on the purchase date a purchaser may purchase a gift card having a purchased value of $100.00. At one year from the purchase date, the gift card may have a maximum value of $50.00 and at two years from the purchase date the gift card may have a maximum value of $0.00. Any portion of the purchase value unused at the expiration date results in an earlier transfer of funds to the issuing institution without an obligation to transfer any goods or services to the recipient and/or to reimburse the purchaser for any remaining balance of the purchased value.

BRIEF DESCRIPTION OF THE INVENTION

In one aspect, a method for purchasing goods and services in transactions utilizing a valued card is provided. The method includes issuing to a card owner from an issuing institution a valued card pursuant to an agreement between the card owner and the issuing institution. The valued card has a purchase value. The valued card is transferred to a recipient having authority to purchase goods and services utilizing at least a portion of the purchase value. The card owner is reimbursed a percentage of a remaining balance of the purchase value at an expiration date pursuant to the agreement.

In another aspect, a valued card system is provided. The valued card system includes a card owner account established with an issuing institution pursuant to an agreement between the card owner and the issuing institution. A valued card is issued from the issuing institution to the card owner. The valued card has a purchase value funded by the card owner account authorizing a recipient to purchase goods and services utilizing at least a portion of the purchase value upon transfer of the valued card from the card owner to the recipient. A first computer located at the issuing institution is in communication with a second computer located at a point-of-sale retail establishment. The first computer is configured to authorize a transaction between the recipient and the point-of-sale retail establishment to purchase the at least one of goods and services utilizing the valued card. A price of the purchased goods and services is debited from the purchase value in response to the transaction to adjust a remaining balance on the card owner account. The card owner is reimbursed a percentage of the remaining balance at an expiration date pursuant to the agreement.

DETAILED DESCRIPTION OF THE INVENTION

Referring toFIGS. 1 and 2, in one embodiment a system10is provided for purchasing goods and/or services using a valued card12. In this embodiment, valued card12is a debit card that may be presented to a recipient as a gift card, as described in greater detail below. In alternative embodiments, valued card12is any suitable card including, without limitation, a credit card or a gift card. System10includes a card issuing institution14such as any suitable financial institution including, without limitation, a bank, a credit card or debit card company or a credit union. It should be apparent to those skilled in the art and guided by the teachings herein provided that card issuing institution14may include any suitable institution capable of performing the responsibilities associated with issuing a credit card and/or a debit card. As shown inFIG. 1, card issuing institution14includes at least one computer16or a network of computers to facilitate operating system10.

System10also includes a point-of-sale (POS) retail establishment network17that includes merchants and/or other entities providing goods and/or services generally described herein as POS retail establishments18. Point-of sale retail establishment network17may include multiple, different POS retail establishments18, such as stores within a shopping mall, and/or may include multiple, similar POS retail establishments, such as franchise or chain stores. Although two POS retail establishments18are shown inFIG. 1, it should be apparent to those skilled in the art and guided by the teachings herein provided that POS retail establishment network17may include any suitable number of POS retail establishments18. In one embodiment, computer16is in communication with POS retail establishment network17that includes multiple POS retail establishments18that accept valued card12for the purchase of goods and/or services. In a particular embodiment, each POS retail establishment18includes at least one computer20in communication with computer16of card issuing institution14using any suitable communication line. Computers20may be hardwired with computer16or may be electrically coupled to computer16through the Internet or wirelessly, for example. A magnetic card reader22is integrated with or operatively coupled to computer20and configured to detect an identifier24, as described in greater detail below, which is encoded onto a magnetic strip of valued card12.

In one embodiment, each merchant subscribes to a program with card issuing institution14to accept valued cards12issued by card issuing institution14. In a particular embodiment, card issuing institution14includes a bank or debit card company and POS retail establishment network17accepts the valued debit card issued by card issuing institution14as one form of payment for goods and/or services provided by POS retail establishment18in POS retail establishment network17. Referring further toFIG. 1, in one embodiment each POS retail establishment18in POS retail establishment network17issues one or more valued cards12to the card owner, under a suitable agreement with card issuing institution14, and conducts transactions for the goods and/or services sold at the respective POS retail establishment18. In this embodiment, valued card12can be preprinted by card issuing institution14for distribution to card owners at POS retail establishment18. In an alternative embodiment, card owners purchase valued card12directly from card issuing institution14for later use at one or more POS retail establishments18in POS retail establishment network17. In a further alternative embodiment, POS retail establishment network17operates as the card issuing institution.

In one embodiment, system10includes suitable security measurements to ensure that valued card12is utilized pursuant to the agreement between the card owner and card issuing institution14. In a particular embodiment, the use of valued card12is limited to payment for goods and/or services while preventing use of valued card12to directly acquire cash, thus making valued card12less inviting for theft and/or misuse. Additionally, POS retail establishment18may require the use of magnetic card reader22for insuring that valued card12is physically present for conducting a transaction. Further, an identifier, such as a personal identification number (PIN), may be assigned to each recipient, which is known to the recipient only for verification of his or her authorization to conduct the transaction. Additionally or alternatively, valued card12may also include a unique tracking number. If valued card12is lost or stolen, valued card12is canceled and a replacement valued card is issued.

Referring further toFIG. 1, a card owner establishes a card owner account30with issuing institution14pursuant to a suitable contract or agreement, such as a purchase agreement between the card owner and issuing institution14. One or more valued cards12are issued from issuing institution14to the card owner upon payment of cash or another suitable form of payment from the card owner to card issuing institution14. In one embodiment, card issuing institution14then credits card owner account30with a credit value equal to a purchase value. Each valued card12has a purchase value, such as $25, $100 or $250 for example, that is funded by card owner account30authorizing a recipient, such as at least one respective identified recipient, to purchase goods and/or services utilizing at least a portion of the purchase value upon transfer of valued card12from the card owner to the recipient. For example, the card owner may purchase, valued card12to gift to the recipient as a birthday, graduation or wedding gift. In an alternative embodiment, the card owner does not pay for valued card12until valued card12is utilized by the recipient to purchase goods and/or services. In a particular embodiment, the card owner determines the purchase value of valued card12. However, the card owner is responsible for payment to card issuing institution14for the purchase price of the goods and/or services, up to the purchase value of valued card12, only upon purchase of the goods and/or services by the recipient utilizing valued card12. In a particular embodiment, the card owner is billed the purchase price through his or her credit card account, bank account, savings account or any suitable account established with card issuing institution, for example.

In a particular embodiment, card issuing institution14distributes unvalued cards to each POS retail establishment18in POS retail establishment network17. Card issuing institution14creates a respective card owner account30through POS retail establishment18to generate valued card12having a purchase value selected by the card owner pursuant to an agreement between the card owner and card issuing institution14. For example, at POS retail establishment18a card owner may complete an application to establish a card owner account30with card issuing institution14. Information related to card owner account30is transmitted from computer20to computer16to establish card owner account30. Upon establishment of card owner account30and payment for the purchase value of valued card12, POS retail establishment18issues valued card12to the card owner having a purchase value selected by the card owner. Card issuing institution14may charge to POS retail establishment network17fees associated with establishing, issuing and/or purchasing goods and/or services utilizing valued card12.

The identified recipient is authorized by the card owner to purchase goods and/or services from associated POS retail establishments18using valued card12. During transactions between the identified recipient and POS retail establishment18, computer16communicates with computer20at POS retail establishment18. Computer16is configured to authorize the transaction between the identified recipient and POS retail establishment18to purchase goods and/or services utilizing valued card12. A purchase price of the purchased goods and/or service is debited or deducted from the purchase value in response to the transaction to adjust a remaining balance on card owner account30. In alternative embodiments, computer20is configured to authorize the transaction without necessarily communicating with computer16.

In one embodiment, computer16communicates with computer20to authorize a withdrawal of funds equal to the purchase price from card owner account30payable to a merchant from whom the goods and/or services are purchased. Computer16and/or computer20then calculates the remaining balance on card owner account30, which is equal to a difference between the purchased value of valued card12and the purchase price debited from card owner account30. During the transaction, computer16receives from computer20a request for authorization of a transaction to support the purchase. The request includes information representative of the purchase price and a potential recipient. Computer16and/or computer20verifies that the potential recipient is an identified recipient. Computer16and/or computer20then authorizes the transaction in an amount not exceeding the remaining balance on card owner account30.

In a further embodiment, system10includes at least one recipient account32established with card issuing institution14pursuant to the agreement between the card owner and card issuing institution14. Each recipient account32designates one or more corresponding identified recipients34. Computer16receives a request for authorization of a transaction to support the purchase. The request includes information representative of the purchase price and a potential recipient. Computer16and/or computer20verifies that the potential recipient is an identified recipient34before the transaction is authorized. Upon verification of identified recipient34, computer16and/or computer20authorizes the transaction in an amount not exceeding the remaining balance of a corresponding recipient account32.

Upon an expiration date as set forth in the agreement between the card owner and card issuing institution14, the card owner is reimbursed a percentage of the remaining value or balance on card owner account30at the expiration date pursuant to the agreement. In a further embodiment, the card owner earns interest at a rate set forth in the agreement. For example, the card owner may earn interest on the purchase value until the recipient uses valued card12, and/or the card owner may earn interest on the remaining balance of valued card12over the life of valued card12. Computer16is further configured to determine the remaining balance at the expiration date to facilitate reimbursing the card owner the percentage of the remaining balance at the expiration date and/or pay the card owner interest at a rate set forth in the agreement, if applicable. In a particular embodiment, computer16is also configured to generate a negotiable instrument, such as a printed check, payable to the card owner to facilitate reimbursing the card owner the agreed percentage of the remaining balance at the expiration date. Upon expiration of the agreement, card owner account30is terminated by card issuing institution14. In one embodiment, computer16is configured to terminate card owner account30.

FIG. 2is a flow chart describing a method for purchasing goods and/or services in transactions utilizing valued card system10. The method starts100with card issuing institution14establishing102a card owner account30. In one embodiment, the card owner provides information on an application. Based on this information, card issuing institution14establishes card owner account30under terms and conditions of an agreement. The agreement may include, without limitation, an expiration date and a selected percentage of return upon expiration of the agreement. In a particular embodiment, one or more recipient accounts are established104to identify respective recipients34authorized to conduct transactions utilizing valued card12. The card owner decides a suitable denomination for valued card12for presentation, such as by gift, to identified recipient34and the valued card is funded108. Card issuing institute14issues110to the card owner a valued card12having a purchase value pursuant to the agreement between the card owner and card issuing institution14. In a particular embodiment, card owner account30is credited with a credit value equal to the purchase value when valued card12is issued by card issuing institution14to the card owner pursuant to the agreement. In an alternative embodiment, card issuing institution14issues unvalued cards (not shown) to one or more POS retail establishments18within POS retail establishment network17. A card owner account30is created with or at POS retail establishment18to generate valued card12.

The card owner transfers112valued card12to identified recipient34. Valued cards12are suitable for presenting to identified recipients34as holiday, birthday and/or graduation gifts. Upon transferring valued card12to identified recipient34, the card owner authorizes identified recipient34to utilize valued card12to purchase goods and/or services provided by one or more POS retail establishments18in POS retail establishment network17. Such authorization is limited to the purchase value or a remaining balance of the purchase value. Thus, identified recipient34may purchase goods and/or services utilizing all or only a portion of the purchase value of valued card12.

Utilizing valued card12, identified recipient34conducts transactions114with one or more POS retail establishments18in POS retail establishment network17to purchase goods and/or services from respective POS retail establishment18. During the transaction, in one embodiment computer20at POS retail establishment18communicates with computer16at card issuing institution14to verify116the identity of identified recipient34and an amount of the purchase value remaining on valued card12. Information regarding a potential recipient is inputted116into computer20, such as by sliding valued card12through card reader22. In a particular embodiment, the information is transmitted from computer20to computer16. Upon verifying that the potential recipient is in fact an identified recipient34who is authorized to purchase goods and/or services utilizing valued card12, computer20confirms whether valued card12has expired118. In this embodiment, a recipient account for one or more identified recipients is established. When computer16receives a request for authorization of a transaction to support the purchase, information representative of the purchase price and/or a potential recipient is transmitted from computer20to computer16. Upon verification that the potential recipient is an identified recipient34, computer16authorizes the transaction in an amount not exceeding the remaining balance of the recipient account. The request is generated from computer20located at POS retail establishment18and received by remote computer16of card issuing institution14operatively coupled to computer20.

If valued card12has not expired and valued card12has a present value greater than $0.00, computer20authorizes120completion of the transaction. In a particular embodiment, computer20transmits122a signal to computer16requesting authorization from card issuing institution14to complete the transaction. Computer20transmits signals representing information regarding potential recipients and/or sales information including, without limitation, a retail price for each item and/or service selected for purchase.

When identified recipient34purchases goods and/or services utilizing valued card12during a transaction, a purchase price of the purchased goods and/or services is debited or deducted from the purchase value of valued card12and the remaining balance on valued card12is adjusted. In a particular embodiment, funds are withdrawn from card owner account30equal to the purchase price and payable to the merchant from whom the goods and/or services are purchased. The remaining balance equal to a difference between the purchased value and the purchase price debited from card owner account30is calculated. In one embodiment, computer16receives a request for authorization of a transaction to support the purchase that includes information representative of the purchase price and a potential recipient. The potential recipient is verified as identified recipient34and the transaction is authorized in an amount not exceeding the remaining balance of card owner account30. The request is generated at computer20located at POS retail establishment18. The generated request is received by issuing institution14at remote computer16in communication with computer20.

Upon completion124of the transaction, a determination126is made by computer16and/or computer20whether valued card12has a balance of $0.00. If the balance of valued card12is greater than $0.00, identified recipient34is authorized128to continue purchasing goods and/or services utilizing valued card12. If, however, the balance of valued card12is $0.00, card owner account30is terminated130.

In one embodiment, if computer16and/or computer20determines that valued card12has expired at step118, the card owner is reimbursed132a percentage of a remaining balance of the purchase value at an expiration date pursuant to the agreement and card owner account30is terminated130. Additionally or alternatively, the card owner is automatically reimbursed132a percentage of a remaining balance of the purchase value at the expiration date pursuant to the agreement and card owner account30is terminated130without identified recipient34attempting to utilize valued card12for completing a transaction for goods and/or services.

In an alternative embodiment, the agreement between the card owner and card issuing institution14provides a schedule that deducts a portion of the purchase value or the remaining value after designated time periods. In a particular embodiment, a percentage value, such as 2% or 5%, or a money value, such as $2.00 or $5.00, is deducted from the remaining value of valued card12at least one designated time period. In this embodiment, the designated time period may be one month, one year or any suitable designated time period. Thus, for example, at one year from issuance of valued card12, each month a percentage value or a money value is deducted from the remaining value. A portion of the value deductions may be reimbursed to the card owner. In a particular embodiment, these deductions are prevented by the recipient's usage of valued card12to purchase goods and/or services.