System and method for administration of an incentive award system having a delayed award payment using a credit instrument

A system and method for administration of an incentive award program wherein award points are earned in response to certain actions by the Participants and then credited to the Participant's credit card, but only after a predetermined time delay. Furthermore, the Participant must still be a customer in good standing with the credit card Sponsor at the end of this predetermined delay period in order to receive the awarded points. As used herein, the term "credit card" is intended to encompass traditional credit cards, debit cards, smart cards, etc. which are commonly accepted as payment for purchases in place of cash or bank checks. The system of the present invention therefore creates an incentive for the Participant to purchase the Sponsor's goods and/or services in order to earn award points, and further creates an incentive for the Participant to remain a loyal customer of the Sponsor in order to receive and redeem these award points at some point in the future. Each award point therefore serves a double function as a reward for using the Sponsor's products and/or services and also as an incentive for customer loyalty to the Sponsor.

TECHNICAL FIELD OF THE INVENTION
 The present invention generally relates to the field of computer
 programming and data processing systems for incentive award programs and,
 more particularly, to a system and method for administration of an
 incentive award system having a delayed award payment using a credit
 instrument.
 BACKGROUND OF THE INVENTION
 Many recent prior art incentive award programs utilize either a credit card
 or debit card which is issued to the Participant. For example, one such
 prior art process requires the issuance of a traditional credit card to
 each incentive program Participant. The Participant's cardholder account
 is assigned a credit limit which is based upon the Participant's past
 credit history. Earnings which are accumulated in the incentive award
 program are then used to "float" this credit limit up to the level of the
 Participant's assigned credit limit plus any available non-redeemed
 earnings. The Participant may then use the credit card to make purchases
 at any merchant honoring the credit card. These purchases will then
 downgrade the amount of available credit on the cardholder account. After
 settlement and posting of these purchase transactions into the
 cardholder's account, the incentive program's administrator may make a
 payment to the cardholder's account based upon charge amounts and any
 available program earnings. The Participant/cardholder is then responsible
 for any outstanding balances above the amount paid by the incentive
 program administrator. He may choose to pay this amount or allow the
 balance to revolve, thereby accruing interest charges until paid.
 In such prior art systems, incentive award program points may be earned in
 any way, but it is most common to award points for use of the credit card,
 either to purchase the Sponsor's products or to purchase any items that
 may be paid for with the credit card. The incentive award program points
 therefore are in the nature of a rebate on the prior qualifying purchases.
 In the system as just described, points earned by the Participant in the
 incentive program are converted to dollars whenever purchases are posted
 to the cardholder's account. At that time, any available points are
 converted to dollars and the incentive program administrator makes a
 payment to the credit card issuer (i.e. the Bank that issues the credit
 card). Under such a scenario, the incentive program administrator retains
 the money earned through the incentive program until such time as the
 program Participant makes a purchase with his credit card. This system
 therefore has the feature that the incentive program administrator keeps
 track of points earned through the incentive program and then converts
 these points to dollars immediately after the Participant makes a purchase
 with the credit card. The Sponsor of such a plan therefore provides an
 incentive to the Participant to perform the desired action in order to
 earn the award points, but once the award points are earned, they provide
 no further incentive to the Participant to perform the desired action. In
 other words, once the points are awarded, incentive to perform the desired
 action is only achieved by awarding further points; the previously awarded
 points don't create any incentive for customer loyalty.
 There is therefore a need for a system and method for administration of an
 incentive award program in which incentive to perform the desired action
 is achieved not only by a Participant's desire for more award points, but
 is also achieved by the method by which the points may be redeemed. In
 particular, there is a need for a system and method for administration of
 an incentive award program which provides incentive both for performing
 the desired action and for Participant loyalty to the program. The present
 invention is directed toward meeting these needs
 SUMMARY OF THE INVENTION
 The present invention relates to a system and method for administration of
 an incentive award program wherein award points are earned in response to
 certain actions by the Participants and then credited to the Participant's
 credit card, but only after a predetermined time delay. Furthermore, the
 Participant must still be a customer in good standing with the credit card
 Sponsor at the end of this predetermined delay period in order to receive
 the awarded points. As used herein, the term "credit card" is intended to
 encompass traditional credit cards, debit cards, smart cards, etc. which
 are commonly accepted as payment for purchases in place of cash or bank
 checks. The system of the present invention therefore creates an incentive
 for the Participant to purchase the Sponsor's goods and/or services in
 order to earn award points, and further creates an incentive for the
 Participant to remain a loyal customer of the Sponsor in order to receive
 and redeem these award points at some point in the future. Each award
 point therefore serves a double function as a reward for using the
 Sponsor's products and/or services and also as an incentive for customer
 loyalty to the Sponsor.
 In one form of the invention, a method for administration of an incentive
 award system is disclosed, comprising the steps of: a) issuing a credit
 card account to a Participant; b) selling goods and/or services of a
 Sponsor to said Participant; c) charging said sales to said credit card
 account; d) determining an award amount bases at least in part upon said
 charges; e) waiting a predetermined length of time; f) determining if said
 Participant is still a customer in good standing of said Sponsor after
 said predetermined length of time; and g) if said Participant is
 determined at step (f) to be a customer in good standing, crediting said
 award amount to said credit card amount.
 In another form of the invention, a method for administration of an
 incentive award system is disclosed, comprising the steps of: a) causing a
 credit provider to issue a credit card account to a Participant; b)
 creating a database containing information about said credit card account;
 c) selling goods and/or services of a Sponsor to said Participant; d)
 charging said sales to said credit card account; e) using computer data
 processing means to calculate an award amount based at least in part upon
 said charges; f) waiting a predetermined length of time; and g)
 determining if said participant is still a customer in good standing of
 said Sponsor after said predetermined length of time; and h) causing said
 award amount to be credited to said credit card account information if
 said Participant is determined at step (g) to be a customer in good
 standing.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT
 For the purpose of promoting an understanding of the principles of the
 invention, reference will now be made to the embodiment illustrated in the
 drawings and specific language will be used to describe the same. It will
 nevertheless be understood that no limitation of the scope of the
 invention is thereby intended, such alterations and further modifications
 in the illustrated device, and such further applications of the principles
 of the invention as illustrated therein being contemplated as would
 normally occur to one skilled in the art to which the invention relates.
 Referring to FIG. 1, there is illustrated a preferred embodiment process
 flow of the system and method of the present invention. The preferred
 embodiment is illustrated herein using a long-distance telephone company
 as the exemplary Sponsor of the credit card; however, as discussed in
 greater detail hereinbelow, those having ordinary skill in the art will
 recognize that the system and method of the present invention lend
 themselves for use in many different businesses. References to a
 long-distance telephone company herein are therefore made only for
 illustrative purposes, and are not intended to limit application of the
 present invention to only Sponsors in that field.
 Additionally, the system and method described hereinbelow refers to several
 different entities and the relationships that exist between them. For the
 purposes of this discussion, the following definitions will be used:
 Bank--the bank responsible for the traditional bank operations involved
 with credit cards (i.e.: card issuance, extension of credit (if required),
 customer service, etc.).
 Incentive Card Administration--the incentive agency automated systems and
 resources responsible for incentive program enrollment, performance
 tracking, and awarding of award points.
 Participant--the individual that participates in the incentive program by
 enrolling, earning award points, and utilizing the credit card for
 redemption of these earnings.
 Sponsor--the sponsoring company who has acquired the services of the
 incentive agency to administer their incentive program through use of the
 credit card issued by the Bank.
 As shown in FIG. 1, a preferred embodiment process of the present invention
 begins at step 10, in which Participants are enrolled into the incentive
 program. In the preferred embodiment, enrollment consists of issuing a
 credit card to the Participant, wherein the credit card is co-sponsored by
 the Bank issuing the credit card and a long-distance telephone company
 (the Sponsor). It is therefore necessary for the Participant to be
 approved by the Bank for issuance of a credit card, and also to have
 contracted with the Sponsor for the provision of long-distance telephone
 services. Under a contractual agreement supplied at the time of credit
 card issuance, the Participant agrees to the normal terms associated with
 the issuance of a credit card, but in addition, the Participant agrees to
 allow the Sponsor to bill the Participant's long-distance telephone
 charges directly to the credit card, instead of sending a bill for these
 charges to the Participant. This arrangement provides a benefit to the
 Sponsor in the form of quicker payment on its accounts receivable, as well
 as a likely reduction iii unpaid bills. The Bank also receives the benefit
 of potential interest income if these charges are not paid in full by the
 Participant every month. The Participant also receives a benefit by not
 receiving multiple bills and by only needing to write a single check to
 the Bank to pay for both general credit card charges and long-distance
 telephone charges. An additional benefit to the Participant is that the
 Participant will earn award points proportional (according to a
 predetermined formula) to at least the amount of charges made to the
 credit card for each billing cycle. The amount of charges which qualify
 for the earning of award points may be the total number of dollars charged
 to the credit card, only the dollars charged to the credit card by the
 Sponsor for long-distance services, or some other predetermined formula.
 As described in greater detail hereinbelow, these award points may
 eventually be converted into dollars which are credited to the credit card
 account.
 After enrollment, the Participant will use the Sponsor's long-distance
 services and the Sponsor, at step 20, will bill any long-distance charges
 accrued by the Participant to the Participant's credit card. These charges
 may be billed to the credit card account as they accrue, or they may be
 billed on a monthly basis. The Sponsor therefore enjoys the convenience of
 simply notifying the Bank of the amount of charges for each Participant,
 and receiving payment from the Bank for these charges. It is not necessary
 for the Sponsor to print and mail a bill to each Participant, nor is it
 necessary for the Sponsor to incur the cost of collection on these bills
 (including delays in receiving payment, the cost of sending reminder
 notices, the cost of bad accounts which are written off, etc.).
 On a periodic basis, typically at the end of each monthly billing cycle,
 the Incentive Card Administration will calculate at step 30 the number of
 award points earned by the Participant in the preceding period. This award
 calculation will be made according to a predetermined formula, such as,
 for example, two percent (2%) of the total amount of long-distance
 telephone charges billed to the credit card account during the preceding
 period. The present invention comprehends the use of other predetermined
 formulas for calculating the award amount.
 The award calculated at step 30 may later be used to reduce the amount of a
 future credit card bill for the Participant. However, the process of FIG.
 1 includes a delay period 40 which must occur before this award is
 available to the Participant. The delay will be for a predetermined time
 period, for example, two months (i.e., two billing cycles for the credit
 card). During this delay period, the award earned at step 30 is not
 available for use by the Participant, although the Participant may
 continue to use the credit card and to have his long-distance telephone
 charges billed directly to the credit card. The Participant will also
 continue to earn award points based on new charges to the credit card
 account during this delay period.
 At step 50, the process of FIG. 1 determines if the Participant is still a
 customer in good standing, according to predetermined criteria. These
 criteria might include such things as: Is the customer still contracting
 with the Sponsor for the provision of long-distance telephone services,
 does the Participant still maintain a credit card account with the Bank,
 is the Participant's credit card account in good standing (i.e., not
 delinquent), etc. As an optional feature, the Participant may be required
 to be a customer in good standing both at the time the award is to be
 posted to his account and at the time the award is to be redeemed. In the
 typical case, the Sponsor will notify the Bank of each Participant's
 standing on a monthly basis. If the Participant does not meet any of the
 predetermined criteria established at step 507 the process of FIG. 1
 proceeds to step 60 which determines that the award earned at step 30 will
 not be received by the Participant because the Participant has not met the
 predetermined criteria after the delay period 40.
 If, however, it is determined at step 50 that the Participant is still a
 customer in good standing, then the award earned at step 30 prior to the
 delay period 40 is credited to the credit card account at step 70. The
 award may be credited to the credit card account in a variety of ways. For
 example, the award may be used to reduce the total credit card balance,
 the award may be used to reduce only the portion of the credit card
 balance attributable to the Participant's long-distance telephone charges
 (i.e. an award amount greater than the current charges for long-distance
 telephone services will not be applied to the credit card account), the
 award may be deposited into the credit card account for use id payment of
 any future long-distance telephone charges billed to the credit card, etc.
 In other words, the award may be applied to the credit card account in any
 manner, including ways which will provide further incentive for the
 Participant to purchase the Sponsor's goods and/or services. Furthermore,
 a time limit on redeeming the award may be imposed. For example, once the
 award is posted to the Participant's account, the Participant may be
 required to redeem the award by making new charges to his account
 exceeding the amount of the award, within a predetermined period of time
 after the reward is posted. Failure to do so would forfeit the award. The
 process then returns to step 20 in order to bill further long-distance
 telephone charges to the Participant's credit card account.
 There are several important advantages obtained by the Bank, the Sponsor,
 and the Participant in the system and method of the present invention. For
 example, Participants can be encouraged to enroll in the preferred
 embodiment process described hereinabove with the promise of earning
 "free" telephone calls while a member of the program. Incentive is
 provided to the Participant not to switch telephone carriers because the
 earned award is not credited to the Participant's account except for
 amounts that were earned two or three months previously (for example).
 Therefore, there is always a built-up award amount that has been earned
 but not credited to the Participant, and this award amount will be
 forfeited if the Participant changes long-distance telephone providers.
 Additionally, the system and method of the present invention can provide
 incentive to the Participant to continuously use the Sponsor's
 long-distance telephone service. For example, step 50 of FIG. 1 may
 determine that the Participant is not a customer in good standing if the
 Participant has not used the Sponsol's long-distance telephone services
 during the past month. Also, awards may be credited to the credit card
 account at step 70 such that they may only be used to pay for
 long-distance telephone charges which are billed to the credit card
 account during the next ninety (90) days (for example).
 Methods such as these provide a strong incentive for the customer to
 continuously use the Sponsor's services. The system and method of the
 present invention therefore has the distinct advantages of requiring the
 Participant to remain with the Sponsor for some period of time before
 earned awards can be redeemed, and it also provides an incentive not to
 discontinue use of the Sponsor's goods and/or services due to the
 possibility of forfeiting earned but unredeemed awards. Whereas credit
 cards were used in the past in order to simply make payments to merchants,
 the credit card of the present invention can be used as a device to incent
 loyalty to a particular Sponsor or program.
 Although the preferred embodiment system and method described hereinabove
 utilizes a long-distance telephone carrier as the Sponsor for illustrative
 purposes, the system and method of the present invention will benefit any
 Sponsor which makes recurring charges to their customers. For example,
 utility companies, such as natural gas, electric, water, local telephone
 service providers, etc., cable television providers, cellular telephone
 carriers, insurance companies, mortgage companies providing automobile
 loans or other consumer credit, consumer buying clubs, department stores,
 etc. may be made a Sponsor in the system and method of the present
 invention and derive the same benefits described hereinabove in relation
 to the long-distance telephone carrier Sponsor. In any of these
 situations, awards may be earned for items billed by the Sponsor to the
 credit card, and the delayed payout of the award may be used to encourage
 customer loyalty to the Sponsor. In turn, the Bank sponsoring the credit
 card also gets the benefit of this loyalty. Furthermore, it is possible to
 have more than one Sponsor for each credit card account, such that the
 Participant may earn separate award points for charges to his credit card
 account by each of the Sponsors. An optional requirement in this situation
 is that the Participant would have to be a customer in good standing of
 all of the Sponsors at the time of payout in order to receive the award.
 In another alternative embodiment of the present invention, the Sponsor's
 goods and/or services are not billed to the credit card account, but the
 Participant still receives an award based up on the amount of charges made
 to his credit card account. This award is paid after a predetermined delay
 and only if the Participant is still a customer in good standing of the
 Sponsor. This alternative embodiment may, for example, be attractive in
 situations where the Sponsor is a utility company and the locality in
 which the Participant lives has laws prohibiting utility bills from being
 charged to credit cards.
 In a further embodiment of the present invention, the system and method of
 the present invention can allow the Sponsor to select a specific time
 period when awards can be earned and/or redeemed. For example, a
 department store chain may be a Sponsor of the credit card account and may
 want to provide incentive to the Participants to shop during the Christmas
 season. Therefore, the Sponsor may give are awkward (or an extra award)
 during the period preceding Christmas, for example, from November 15th
 through December 24th. Any purchases made at the Sponsor's store during
 this period will earn the awards. The awards earned may then be applied to
 the customer account at some time after the end of the award period, but
 only if the customer is still a Participant. For example, the awards may
 not be redeemable until the Christmas shopping period of the following
 year. The system and method of the present invention therefore will allow
 the Sponsor to fine-tune, to a certain extent, the shopping habits of the
 Participants so that there is an incentive for the Participants to make
 purchases at a particular time of year. This method may be used by any
 Sponsor who wants to focus sales during a particular time of year, such as
 to help with cash flow, inventory control, etc.
 Those having ordinary skill in the art will recognize that the system and
 method of the present invention may be implemented using standard computer
 data processing equipment tied into standard systems already in place for
 the issuance, use, and billing of consumer credit card accounts. Such
 commonly available computer data processing equipment may be programmed to
 implement the data input, timing, calculating and output functions
 described herein, including the interface for data interchange to existing
 computers operated by the Bank for tracking of the credit card accounts.
 The system and method of the present invention provides advantages over
 prior art systems, by incenting credit card usage, incenting the
 Participant to remain a member of the Sponsor's group in order to redeem
 previous awards, incenting the Participant to buy the Sponsor's products
 and/or services in order to earn and redeem awards, by making it
 convenient for the Participant by having several recurring charges
 combined on one statement which can be paid with a single check.
 While the invention has been illustrated and described in detail in the
 drawings and foregoing description, the same is to be considered as
 illustrative and not restrictive in character, it being understood that
 only the preferred embodiment has been shown and described and that all
 changes and modifications that come within the spirit of the invention are
 desired to be protected.