System and method for providing a discount credit transaction network

Claims

We claim:

1. A method for providing a discount for a credit transaction, for use in a discount credit network comprising a plurality of transaction card issuers each having a plurality of participants holding a transaction card account issued by the card issuer, the method comprising the steps of:

(a) assigning each participant a membership number wherein the membership number is associated with the particular participant's transaction card account;

(b) providing a computerized discount authorization processor operatively connected to the discount credit network comprising: (i) a database containing the membership numbers and their associated transaction card accounts; and (ii) processing means for correlating the membership numbers to their associated transaction card accounts and transaction card issuers;

(c) presenting, by the participant, the membership number to an authorized merchant for a transaction;

(d) issuing a first discount authorization request from said authorized merchant through the discount credit network to the discount authorization processor, wherein the first discount authorization request includes transaction data comprising the particular participant's membership number and an amount for the transaction;

(e) correlating the membership number to its associated transaction card account and transaction card issuer;

(f) issuing a second discount authorization request to the transaction card issuer associated with the transaction card account through the credit network, the second discount authorization request comprising the particular participant's transaction card account and the amount of the transaction;

(g) receiving, by the discount authorization processor, an authorization response signal from the transaction card issuer, said signal indicating a response to the proposed transaction; and

(h) forwarding the authorization response signal to the authorized merchant.

2. The method of claim 1 further comprising the step of applying the discount to the transaction whereby the participant receives a discount for initiating the transaction through the discount credit network.

3. The method of claim 1 wherein step (d) further comprises issuing a first discount authorization request from said authorized merchant to a merchant bank wherein the first discount authorization request includes transaction data comprising the particular participant's membership number and an amount for the transaction and routing said first discount authorization request through the discount credit network from the merchant bank to the discount authorization processor.

4. The method of claim 1 wherein the membership number comprises a bank identification number assigned by a VISA.RTM. credit card system, thereby allowing the method to utilize a VISA.RTM. credit transaction network.

5. The method of claim 1 further comprising the step of verifying that the discount authorization request originated with an authorized merchant.

6. The method of claim 1 further comprising the step of verifying that the membership number associated with the particular participant is in good standing.

7. The method of claim 1 further comprising the step of periodically generating a consolidated statement of the transactions utilizing a particular membership number during the period, wherein the statement shows the discount applied to each such transaction.

8. The method of claim 1, wherein the discount authorization processor includes database means for storing authorization parameters, the authorization parameters comprising a transaction limit amount whereby only transactions falling below the limit will be authorized and a database of historical transaction information related to each membership number, and wherein the authorization response signal received from the transaction card issuer indicates that the transaction card issuer has not approved the transaction, the method further comprising the step of:

generating an authorization response signal within the discount authorization processor, wherein the response signal is based on the authorization parameters.

9. The method of claim 1, wherein step (a) comprises the step of actively receiving a request for a membership number from a participant, wherein the membership number is associated with the particular participant's transaction card account.

10. The method of claim 1 further comprising the steps of:

(a) recording information related to each transaction, the information comprising the membership number, the transaction card account, and the amount of the transaction;

(b) issuing a credit transaction through the discount credit network to post the discount to the participant's transaction card account; and

(c) issuing a payment request to the card issuer for the amount of the transaction through the discount credit network.

11. The method of claim 10 further comprising the step of invoicing the authorized merchant for a commission for participating in the discount credit transaction.

12. A system for providing a discount to a credit transaction comprising:

(a) a database comprising a plurality of membership numbers assigned to a plurality of participants, wherein each membership number is associated with a transaction card account and wherein each membership number comprises a bank identification number assigned by a VISA.RTM. credit card system, thereby allowing the membership number to be processed by a VISA.RTM. credit transaction network;

(b) an authorized merchant having means for generating a discount authorization request, the discount authorization request comprising a particular membership number and an amount for the credit transaction; and

(c) a computerized discount authorization processor operatively connected to receive the discount authorization requests, the discount authorization processor comprising: (i) logic means for correlating the membership number to its associated transaction card account; (ii) means for generating a transaction request to one of a plurality of transaction card issuers associated with the transaction card account, the transaction request comprising the particular participant's transaction card account and the amount of the transaction; (iii) means for receiving an authorization response signal from the transaction card issuer, said response signal indicating a response to the proposed transaction; and (iv) means for applying the discount to the transaction whereby the participant receives a discount for initiating the transaction.

13. The system of claim 12 wherein the discount authorization processor further comprising means for verifying that the discount authorization request originated with an authorized merchant.

14. The system of claim 12 wherein the discount authorization processor further comprises means for verifying that the membership number associated with the particular participant is in good standing.

15. The system of claim 12 wherein the discount authorization processor further comprises means for periodically generating a consolidated statement of the transactions utilizing the membership number during the period, wherein the statement shows a discount applied to each such transaction.

16. The method of claim 1, wherein the discount authorization processor includes database means for storing authorization parameters, the authorization parameters comprising a transaction limit amount whereby only transactions falling below the limit will be authorized and a database of historical transaction information related to each discount account number, and wherein the authorization response signal received from the transaction card issuer indicates that the transaction card issuer has not approved the transaction, the discount authorization processor further comprising means for generating an authorization response signal based on the authorization parameters.

17. The system of claim 12 further comprising means for actively receiving a request for a membership number from a participant, wherein the membership number is associated with the particular participant's transaction card account.

18. The system of claim 12 further comprising:

(a) means for recording information related to each transaction, the information comprising the membership number, the transaction card account, and the amount of the transaction;

(b) means for issuing a credit transaction through the discount credit network to post the discount to the participant's transaction card account; and

(c) means for issuing a payment request to the card issuer for the amount of the transaction through the discount credit network.

FIELD OF THE INVENTION

The present invention relates generally to methods for providing a credit transaction system and, more particularly, to methods for providing a discount to customers using such credit transaction systems.

BACKGROUND OF THE INVENTION

The use of transaction cards (including debit or ATM cards) for payment of merchandise is ever increasing. When purchasing merchandise using a standard transaction (i.e., credit) card, the purchaser will typically provide the merchant with the card bearing the account number (or the card number and expiration date if the purchase is being made over a telephone or computer network), and the merchant will then seek authorization from the issuer of the credit card to verify that payment will be forthcoming. The request for authorization is conventionally made over high-speed telecommunication links using modern computer data processors. Thus, the merchant will normally receive an authorization response in "real-time." Credit cards and, particularly, credit card account numbers are somewhat standardized, thus allowing a merchant to accept credit cards from a number of credit card companies, such as companies providing credit card services under the marks VISA.RTM., MASTERCARD.RTM. and DISCOVER.RTM., and others, while being connected to a single credit authorization system. The account number of such cards contains information that identifies the sponsor and the particular issuer of the card, such as a local or national bank. This information is necessary to route any authorization request to the appropriate card-issuer using the credit authorization system.

One standard computer network for transmitting authorization requests is the VISA.RTM. credit transaction network. In addition to VISA.RTM. credit cards, merchants connected to this network may seek authorization for approval of transactions involving other credit cards, such as MASTERCARD.RTM. and DISCOVER.RTM. credit cards. The VISA.RTM. credit transaction network includes a plurality of data processors and financial institutions, all interconnected through telecommunication links which, based on a six digit bank identification number (BIN), route all authorization requests to the appropriate card-issuer and all authorization responses back to the requesting merchant.

Competing transaction card issuers are increasingly seeking ways to cultivate and increase the loyalty to, and the use of, their particular cards. Recently, card issuers have begun developing business relationships with merchants, vendors, organizations and others to add value and provide benefits for the holders of such cards. For example, many card issuers have developed affinity programs wherein the holder of a transaction card receives a benefit each time the card is used to pay for merchandise. The benefit may be in the form of a discount off the price of the merchandise, a rebate, frequent flyer mileage points, or reward points which may eventually be redeemed for cash or gifts. Additionally, known affinity programs may provide a cardholder with a membership number which is linked to one or more of the cardholder's credit, debit or ATM cards. The cardholder purchases merchandise using the membership number and, eventually, a debit is recorded against the associated credit, debit or ATM card. Typically, the administrator of the affinity program develops and operates a private computer-based network to allow the merchants to authorize the transaction.

If such affinity programs were able to take advantage of the previously-described existing credit authorization systems, such as the conventional VISA.RTM. credit transaction network, the costs associated with developing and maintaining such affinity programs would be greatly reduced. By using an existing credit authorization system, there would be no need to build a private transaction network, and the participating card issuers, merchants, and customers would have immediate access to established security, authorization, and settlement processes.

Therefore, there exists a need for an improved discount credit network which utilizes an existing credit authorization system, such as the conventional VISA.RTM. transaction network.

SUMMARY OF THE INVENTION

In accordance with the principles of the invention, the present invention provides a system and method for providing a discount for a credit-based transaction. The system includes a discount credit network wherein a participant holding a transaction card account issued by a card issuer is assigned a membership number that is associated with one of the participant's transaction card accounts. Preferably, each membership number comprises a bank identification number assigned by a VISA.RTM. credit card system, thereby allowing the membership number to access and be processed by a VISA.RTM. credit transaction network.

The system further includes authorized merchants capable of accepting requests for merchandise or services from a participant and generating discount authorization requests that includes the participant's membership number and an amount for the charge transaction. The preferred discount credit system also preferably includes a discount authorization processor that is operatively connected to the discount credit network. Preferably, the discount authorization processor provides a database containing the membership numbers and their associated transaction card accounts and processing means for correlating the membership numbers to such associated transaction card accounts. The preferred discount authorization processor is operatively connected to receive the discount authorization requests and includes: (i) logic means for correlating the membership number to its associated transaction card account; (ii) means for generating a transaction request to one of a plurality of transaction card issuers, the transaction request comprising the particular participant's transaction card account and the amount of the transaction; (iii) means for receiving an authorization response signal from the transaction card issuer; and (iv) means for applying the discount to the transaction whereby the participant receives a discount for initiating the transaction through the discount credit network.

In order to receive the benefits of the present invention, a participant provides a membership number to an authorized merchant for a transaction. The merchant then issues a discount authorization request to a merchant bank wherein the discount authorization request includes transaction data comprising the particular participant's membership number and an amount for the transaction. The discount authorization request is then routed through the discount credit network from the merchant bank to the discount authorization processor, which then correlates the membership number to its appropriate transaction card account, and transmits a transaction authorization request to the appropriate transaction card issuer associated with the transaction card account through the credit network. The request is processed by the transaction card issuer who then transmits an authorization response signal indicating an approval or denial of the proposed transaction. The response signal is received by the discount authorization processor and forwarded to the initial authorized merchant. By using the preferred discount credit system, the participant receives a discount off the selected merchandise or services.

Preferably, during the settlement process of the present invention, both a debit transaction for 100% of the purchase price and a credit transaction for the discount savings are recorded on the participant's transaction card account statement. The settle