AU2008202060B2 - A Rewards System - Google Patents

Description

P/00/0011 Regulation 3.2 AUSTRALIA Patents Act 1990 COMPLETE SPECIFICATION FOR A STANDARD DIVISIONAL PATENT ORIGINAL Name of Applicant: Edward John Knight Actual Inventors: Edward John Knight Address for service in Australia: WALLINGTON-DUMMER CPO BOX 3888 Sydney NSW 2000 Invention Title: A Rewards System Details of Divisional Parent Application: Australian Standard Patent Application No.2002308399 Filed 20 May 2002 The following statement is a full description of this invention, including the best method of performing it known to us 2 A REWARDS SYSTEM Field of the Invention 5 The present invention relates to a rewards system for rewarding a Member's loyalty to a group of Merchants and thereby encouraging the Member to return and repurchase from any Member of the Merchant group. 10 Background of the Invention Rewards systems for encouraging repeat purchases have a long commercial history and vary in complexity from the offer of a discount to sophisticated points-based systems. The purpose of all such rewards systems is to provide the Member 15 with an incentive to purchase goods and/or services from a particular Merchant by providing the Members with a reward each time the Members purchase goods and/or services from the Merchant. Generally, such points-based rewards systems operate by 20 providing Members registered with the system with a card which serves to identify the Member and thereby identify the account to which points are to be allocated as a result of a purchase. The Members receive, in general by mail, information which identifies the items and/or services available to the Members 25 together with an indication as to the number of points required to claim the item and/or service. Instead of offering items and/or services to the Members, some rewards systems offer vouchers for use with specific stores and/or shopping centres. 30 However, a disadvantage of points-based rewards systems known hitherto is that it is necessary for Members to redeem rewards by applying for the desired item or service in advance, generally in writing. This is cumbersome and time consuming for the Members. 35 The systems are also of limited appeal to Members because only a preset range of items and/or services which have been 3 selected by operators of the systems are available to the Members. The systems also suffer from relatively large 5 administration costs because they carry out periodic mailing to Members of printed points statements and catalogues of the available items and/or services. 10 Definitions Words and expressions in this specification have the meanings respectively set out after them in this "definition" section and shall be read and construed in accordance with those meanings. 15 "Product" Product is used in a broad sense to mean any form of goods or services, including superannuation payment and purchase of insurance cover (health), provided by a Merchant for sale or hire or 20 engagement at a published or established price. "Member" A Member is a person or company that has received accreditation as a member of the rewards system and is entitled to receive reward points on all 25 purchases or services made at any accredited Merchant of the rewards system. "Merchant" Is a seller, retailer, wholesaler, service provider or professional practitioner, including 30 superannuation funds and insurance (health) companies, appointed to the rewards system and contractually obligated to provide Members with rewards points as a result of purchase of a product, and to redeem rewards points selected for 35 use by a Member during purchase of a product. "Point of sale or desktop/terminal" Means any electronic device capable of receiving, collecting, deciphering, storing and transmitting 40 electronic data. The type of device may include but is not limited to eftpos or thin client devices and any future upgrade of same. "Territory" Means a defined geographic area allocated to a 45 particular Merchant as the exclusive rewards 4 schemes representative for their particular trade, profession or merchandise. 5 "Operator" Means, the firm, Company person or persons who are the principle operators of the rewards system. "Rewards" The terms "reward" and "rewards" are used to mean points, or any other commodity which notionally 10 corresponds to a predetermined financial amount and which is received as a reward by a Member as a consequence of an act of purchasing a product. "Point" A point is a Members unit of value notionally 15 equal to a predetermined monetary amount. It is equivalent to currency and can be used by Members of the system to purchase products corresponding in monetary value to the points to be redeemed in exchange or part exchange for the product. 20 "UOV" A unit of value equal to the monetary value of a point issued by the Merchant to a Member. "EFT" The term EFT refers to "electronic funds 25 transfer", "POS" The term POS refers to "point of sale". "EFTPOS" The term EFTPOS refers to "electronic funds 30 transfer at point of sale". "PCPOS" The term PCPOS refers to "personal computer point of sale".

-5 "Rewards Financial Account" Means the Operators rewards funds pool account controlled by the Operator. Summary of the Invention 5 The system in accordance with the present invention makes it possible to open up to a Member a substantially unlimited, freely available choice of reward products on which to expend rewards points, whilst at the same time offering the possibility of eliminating the need for catalogues, rewards statements, 10 inventories of merchandise, storage, administration and related facilities. This allows the system to offer lower costs to participating Merchants and increase the value of rewards to Members. In particular forms, information of account balances and items of. transaction statements can made available in a user 15 friendly format with accurate accountability. Accordingly, in one broad form of the invention, there is provided a rewards system which rewards Members of the system for utilizing Merchant Members of the system as their Merchants of preference for the purchase of product including goods and/or 20 services (as defined in the specification); the system comprising one or more Members and one or more Merchant Members, and an Operator who operates and administers the system; and wherein a Merchant Member provides to a Member's system account reward points on purchases made by the Member from that Merchant and provides to 25 the Operator the funding of the monetary value of the points issued to the Member's account by that Merchant; and wherein a Member can purchase any product or service from any Merchant Member in exchange for redemption of a specified number of reward points; each of the points representing a predetermined monetary amount; 30 and wherein reward point transactions between a Merchant Member, a Member and the Operator are effected through a user interface (as defined in the specification); the user interface interacting over -6 a communication network with a processor unit and database maintained by the Operator. Preferably, said operator administering the system is not participating in the system as a Merchant Member. 5 The system of any one of Claim 1 or Claim 2 wherein the product or service provided by the Merchant Member is at a published or established price. Preferably, the member has the freedom to purchase any product or service displayed or advertised for sale by any Merchant Member by 10 redeeming rewards points against that purchase. Preferably, every redemption transaction is treated as a normal buy transaction in which rewards points are earned according to the usual points award rules. Preferably, the Member comprises a person who has chosen to 15 become registered with the system and is entitled to receive points for purchases made by the Member from any Merchant Member associated with the system. Preferably, each Merchant Member appointed to the system is entitled to provide and redeem Members points as a result of 20 purchase of a product. Preferably, the predetermined financial amount is expressed in cents. Preferably, the predetermined financial amount is applied to both a redemption transaction and a buy transaction between the Member 25 and the Merchant Member. Preferably, the predetermined financial amount is an agreed monetary value against the purchase of a product. Preferably, the operator allocates each Merchant Member an exclusive territory, 30 Preferably, the territory is demarked by the nature of goods sold by the Merchant Member, Preferably, the territory is demarked by a marketing channel. Preferably, the territory is demarked geographically. Preferably, the Merchant Members are selected for participation and territories are arranged to be substantially 5 contiguous whereby a Member can obtain a broad array of products from Merchant Members within any given territory. Preferably, the predetermined financial amount is set by the operator of the system. 10 Description of the Drawings The present invention will now be described, by way of example only, with reference to the accompanying drawings, in which: Figure 1 is block diagram of a rewards system in 15 accordance with an embodiment of the present invention; Figure 2 is a flow diagram indicating a rewards receiving operation of the embodiment shown in Figure 1; Figure 3 is a flow diagram indicating a rewards redeeming operation of the embodiment shown in Figure 1; 20 Figure 4 is a block diagram of a buy transaction in accordance with an example of an implementation of the present invention; Figure 5 is a block diagram of a redemption transaction (entirely points) also in accordance with a first example of a 25 preferred embodiment of the present invention. Description of an Embodiment of the Present Invention In a broad sense, the present invention relates to a rewards system which operates such that during a rewards 30 receiving operation, a financial amount in points corresponding to a proportion of the purchase price of a product is transferred to a Members points rewards account when a product is purchased. During a rewards redeeming operation, at least a proportion of the amount in an operators 8 pool account is transferred to a Merchant account when a product is purchased. In this way, not only may rewards be received at a point of sale as part of an act of purchasing a product, but rewards 5 may also be redeemed at a point of sale as part of an act of purchasing a product. This is possible since the rewards points received correspond to a financial amount, the correspondence known to the Member at time and place of purchase or redemption. 10 Referring to the drawings, in Figure 1 there is shown a rewards system 10 which includes user interface devices in the form of point of sale terminals 12, 14 and a processing unit 15. The point of sale terminals 12, 14 are of any suitable type capable of acting as an interface between a Member and 15 the rewards system 10 and, in particular, of the type capable of receiving reward information and user identification information at a point of sale, and capable of forwarding the reward information and user identification information to the processing unit 15. 20 The rewards system 10 is arranged such that Members who have registered with the rewards system 10 become Members of the rewards system 10, with each Member being allocated a Member rewards account. The Member rewards accounts are arranged to store information indicative of the points value 25 attributable to each Member as a result of purchases made by the Members and rewards received by the Members. In this embodiment, the Member rewards accounts do not store financial amounts per se but instead store points which represent financial amounts stored in a financial account associated 30 with Members of the rewards system 10. In order to facilitate registration of new Members, Merchants registered with the system may be provided with a plurality of identification cards which may be issued to new Members at the point of sale. When a card is first used, the 9 card is activated and a Member rewards account is activated and allocated to the Member. The allocated Member rewards account is then associated with the Member details provided by the Member when the Member formally registers with the rewards 5 system 10. The rewards system 10 may also be arranged such that Merchants who have registered with the system become registered Merchants authorised by operators of the system to offer rewards as a result of an act of purchasing a product 10 and to accept rewards as at least part payment for purchase of a product. The rewards system 10 communicates with at least one financial institution, in this example a first bank 16 and a second bank 18. The first and second banks 16, 18 hold an 15 account for Member accumulated rewards points and accounts 30, 32 for a plurality of Merchants. The rewards system 10 includes a first communications network 20 which may be any communications network suitable for carrying communications signals between the point of sale 20 terminals 12, 14 and the processing unit 15. In this example, the first communications network 20 is arranged to carry communications signals from a variety of user interface devices, such as EFTPOS terminals, PCPOS terminals, telephones and Internet enabled personal computer devices, However, it 25 will be understood that in practice several communications networks may be utilised for carrying communications signals between the user interface devices and the processing unit 15, each communications network being specific to particular communications signals from a particular user interface 30 device. The EFTPOS terminal 12 is arranged to receive identification information indicative of the identity of a Member, to receive rewards information indicative of the rewards amount applicable for a purchase, to forward the 10 identification information and the rewards information to the processing unit 15, and to receive and forward payment information to a financial institution associated with a Member for the purpose of carrying out electronic payment of a 5 product. The EFTPOS terminal 12 may be a standard EFTPOS terminal which has been provided with interface software to enable the EFTPOS terminal 12 to communicate with the processing unit 15 through the communications network 20 in accordance with the 10 present invention. Alternatively, the EFTPOS terminal 12 may be specifically designed to operate in accordance with the present invention. Similarly, the PCPOS terminal 14 is arranged to receive identification information indicative of the identity of a 15 Member, to receive information indicative of the rewards amount applicable for a purchase, to forward the identification information and the rewards information to the processing unit 15, and to receive and forward payment information to a financial institution associated with a 20 Member for the purpose of carrying out electronic payment of a product. However, it will be understood that although the EFTPOS and PCPOS terminals 12, 14 are arranged to facilitate electronic payment of a product, this is not an essential 25 requirement of the invention, and other methods of payment are also applicable, such as payment by cash or credit card. In this embodiment, a Member is identified at the point of sale by virtue of an identification card issued to the Member by operators of the rewards system 10, the card 30 containing identification information unique to the Member. For example, the card may be of the type including a magnetic strip for recording information or the card may be of the type known as "smart cards" and which include an integrated circuit for recording information. Of course, in order for the point 11 of sale terminals 12, 14 to be able to receive the identification information from the identification cards, the point of sale terminals would be provided with card reading devices. 5 However, although not ideal, it will be understood that the use of identification cards is not an essential requirement of the invention and Members could be identified merely by manually communicating the appropriate identification information to a representative of a Merchant 10 at the point of sale. Likewise, registered Merchants may be identified by virtue of an identification card issued to the Merchants by operators of the system. The processing unit 15 includes a controller 22 which 15 generally serves to coordinate functions in the processing unit 15. The controller 22 is arranged to receive communications from the user interface devices, in particular from the EFTPOS terminal 12 and the PCPOS terminal 14, to interrogate and instruct applications of the processing unit 20 15, to carry out actions in response to such interrogations or in response to instructions from the terminals, and to direct information from the processing unit 15 through the communications network 20 to the user interface devices. The controller 22 communicates with a financial control 25 application 24 which serves as an interface between the controller 22 and the financial institutions 16, 18. The main function of the financial control application 24 is to instruct the transfer of financial amounts between accounts in the financial institutions 16, 18. The financial control 30 application 24 also calculates the number of points corresponding to each financial amount transferred between financial accounts in the financial institutions 16, 18, and forwards information indicative of the calculated number of points to the controller 22 for crediting to or debiting from 12 the appropriate Member account. Of course, since this application interfaces with financial institutions, it will be subject to the security rules set by the banking system. The financial control application 24 communicates with 5 the financial institutions 16, -18 through a second communications network 26 which may be any communications network suitable for carrying communications signals between the processing unit 15 and the financial institutions 16, 18. The first bank 16 includes a rewards financial account 28 10 associated with the rewards system 10, and a plurality of Merchant accounts 30, each of which is associated with a Merchant of goods and/or services. The second bank 18 includes a plurality of Merchant accounts 32, each of which is associated with a Merchant of goods and/or services. 15 The rewards financial account 28 includes a Members points reward account including, information indicative of a points value attributable to Members of the rewards system 10, and a system financial account including information indicative of a financial amount attributable to the operators 20 of the rewards system 10. The controller 22 communicates with a database application 34, a customer application 36, a help application 38 and a funds management application 40. Each of the applications 34, 36, 38, 40 may be in the 25 form of a separate Computing device arranged to communicate with the controller 22, or may be in the form of a software application with each software application stored on the same computing device. The database application 34 serves to store Member 30 account information in the form of a plurality of Member rewards accounts, with each Member rewards account including information indicative of transactions attributable to the Member to and from the Members points reward account. The transaction information stored in each Member rewards account 13 is in the form of a cumulative total of points, with each point corresponding to a predetermined financial amount, for example 10 cents. The database application 34 operates such that a transaction to the Members points reward account and 5 attributable to a particular Member results in the addition of a number of points corresponding to the transaction to the cumulative total of points in the respective Member rewards account. The database application also operates such that a transaction from the Members points reward account to a 10 Merchant financial account and attributable to a particular Member results in the subtraction of a number of points corresponding to the transaction from the cumulative total of points in the respective Member rewards account. The database application 34 also includes details of PIN 15 numbers associated with the Members, and PIN numbers of Merchants registered with the rewards system 10. The customer application 36 is arranged to store Member and Merchant information such as the names and addresses of the Members and Merchants and other demographic information 20 relating to the Members and Merchants. The customer application 36 is also arranged to interrogate the other applications 34, 38, 40 in the processing unit 15 in response to requests to generate reports. Such reports may be forwarded to the requesting user interface device through the first 25 communications network 20 or to requestors by any other suitable communications method, for example by e-mail, standard mail or facsimile. For example, the customer application 36 may be arranged to cooperate with the database application 34 so as to provide points balance information 30 and/or transaction history information on request. The customer application 36 may also serve to generate purchasing activity data of Members which can be combined with Member demographic information to carry out targeted sales promotion. The help application 38 is arranged to receive and 14 respond to requests for assistance from Members and/or Merchants. For this purpose the help application 38 may be supported by human operators and/or may include voice recognition software. 5 The customer application 36 and the help application 38 are accessible through the first communications network 20 using any suitable user interface device, in this example by using the EFTPOS terminal 12, the PCPOS terminal 14 and a personal computing device 41 which may be located at the home 10 or workplace of a Member. The help application 38 may also be accessible using a telephone 42, the user interacting with the help application using the voice recognition software of the help application 38. 15 The funds management application 40 communicates with the controller 22 and the first bank 16 and serves to manage the financial amount in the rewards financial account 28 with a view to generating revenue for the operators of the rewards system 10. 20 Operation of the rewards system 10 will now be described in relation to a rewards receiving operation wherein a Member of the rewards system 10 receives rewards as a result of purchasing a product. Steps of a rewards receiving operation are indicated by 25 reference numerals 46 to 62 in Figure 2. The Member first negotiates a product price and the number of points to be offered for the product with a representative of a Merchant. Once the Member and the representative have agreed on the product price and the number 30 of points offered, the Member pays for the product by cash, credit card, EFTPOS transfer or any other suitable payment method acceptable by the Member and the Merchant. The Member then provides the Merchant with information identifying the Member by supplying the Merchant with an identification card 15 and the Merchant introducing the identification card into the card reading device of the point of sale terminal 12, 14. Of course, as mentioned above, it will be understood that although the Member identification card is a particularly 5 desirable way to identify the Members, other identification methods may be used, the important aspect being that the point of sale terminal is provided with information indicative of the identity of the Member so that the rewards system 10 is able to allocate the appropriate number of points to the 10 Members account in the database application 34. Once the Member identification information has been received by the point of sale terminal 12, 14, the information is forwarded from the point of sale terminal 12, 14 to the controller 22 through the first communications network 20, 15 whereupon the controller 22 communicates with the database application 34 to verify that the information used to identify the Member correlates with information indicative of the Member in the database application 34. Following positive correlation, the Member provides the 20 point of sale terminal 12, 14 with a PIN number. Information indicative of the PIN number is then forwarded through the first communications network 20 to the controller 22 which then compares the entered PIN number with the PIN number stored in the database application 34 and associated with the 25 Member. The rewards system 10 is also arranged to require verification of the identity of the Merchant, for example by receiving information identifying the Merchant and a PIN number associated with the Merchant. Preferably, verification 30 of a Merchant occurs when the Merchant first connects with the rewards system. However, it will be understood that verification of the Merchant may occur as part of each act of purchasing a product. Following a positive identification of the PIN number and 16 therefore a positive identification of the Member, the number of points offered for the product is entered into the point of sale terminal, for example by the representative of the Merchant. A financial amount corresponding to the number of 5 points offered is then calculated by the financial control application 24 and the financial control application 24 transfers the calculated financial amount from the Merchant account 30, 32 associated with the Merchant to the rewards financial account 28. A proportion of the calculated financial 10 amount is allocated to the system financial account as an administration fee, and the remainder of the calculated financial amount is allocated to the Members points reward account. The financial control application 24 also calculates the 15 number of points corresponding to the financial amount transferred to the Members points reward account and instructs the controller 22 to add the appropriate number of points to the Member rewards account in the database application 34. A rewards redeeming operation will now be described 20 wherein a Member of the rewards system 10 redeems rewards as part of an act of purchasing a product. Steps of the rewards redeeming operation are indicated by reference numerals 64 to 82 in Figure 3. The Member first negotiates the product price with a 25 representative of the Merchant. Likewise with the rewards receiving operation, the Member is then identified by providing an identification card and by entering a PIN number. Following positive identification of the Member, the Member selects the number of points to be used for the 30 purchase and the controller 22 communicates with the database application 34 so as to determine whether the number of points selected by the Member are available to the Member. If the selected number of points are available to the Member, the financial control application 24 calculates a 17 financial amount corresponding to the selected number of points and transfers the calculated financial amount from the Members points reward account to a Merchant financial account 30, 32 associated with the Merchant. The controller 22 then 5 communicates with the database application 34 so as to deduct the selected number of points from the Member rewards account. The difference, if any, between the price of the product and the calculated financial amount is then determined and the difference is paid by the Member by any suitable method, for 10 example by cash, credit card, EFTPOS or a combination of any of these methods. It will be understood that the rewards system 10 may be arranged so that the Member also receives rewards points as a result of purchase of a product even when the product is 15 purchased at least partly using rewards points. It will be appreciated that the present rewards system encourages Members to return and repurchase by providing Members registered with the system with rewards which are directly backed by a financial amount and which may be 20 utilised to purchase goods and/or services from a plurality of Merchants registered with the system. In this way and by only allowing a predetermined proportion of Merchants to be registered with the system the registered Merchants are provided with an advantage in the marketplace over non 25 registered Merchants. It will also be appreciated that the present rewards system provides Members with a powerful incentive to repurchase from a Merchant in a more cost effective way than rewards systems known hitherto since it is not necessary to 30 provide Members with expensive printed material such as catalogues of goods and/or services on offer. With the present system, all products and/or services which are on offer for sale from registered Merchants are available for purchase using the rewards. Similarly, all products and/or services 18 which are on offer for sale from registered Merchants can serve to generate rewards for the Members. It will also be appreciated that in order to reduce fraud, the rewards system may be arranged so as to distinguish 5 between total points held and points available for redemption, wherein points only become available for redemption after a predetermined period of time. Furthermore, it will be appreciated that since the rewards received by Members registered with the rewards system 10 are backed by financial amounts, the Members are able to negotiate the sale price of products with Merchants. Example: By way of non-limiting and non-binding example, Figs. 4 15 and 5 illustrate steps in a rewards system 100 for both buy and redemption transactions in accordance with the above described embodiment. In the detailed description of the example which follows one rewards point costs a merchant 101 twelve cents of which 20 ten cents is allocated to Operators rewards funds pool account 102 and two cents is allocated to the rewards system operator account 103. It will be appreciated that other amounts can and will be used depending on local conditions under which the rewards system is operating. In many circumstances the 25 predetermined monetary value to be attributed to a point would be determined by contractual arrangement between each merchant 101 and the rewards system operator. With further reference to Fig. 4 an example of a buy transaction 104 is provided wherein product X is purchased 30 entirely for currency (i.e. there is no redeeming of points involved) from merchant 101 by Member 105. In this example the triggering of the purchase and allocation of points is achieved by the Member 105 causing his rewards card 109 to be swiped through EFTPOS terminal 107 19 resulting ultimately in electronic communication between the merchant's bank account 109 and the operator's bank account 110 whereby, in this example, funds to a value of twelve cents per point purchased by merchant 101 for allocation to the 5 benefit of Member 105 at the rate of twelve cents per point are deposited to the operator's bank account 110. More specifically, two cents of this amount is placed in the operator's account 103 whilst ten cents is deposited into the rewards funds pool account controlled by the operator. At the 10 same time the points are allocated to the rewards point database 111 to the benefit of Member 105, such points being available for Member 105 to utilise in subsequent redemption operations to be described below. It will be understood that the points and the purchasing 15 power of the points are backed by the funds in pool account 102. At all times a one to one correspondence will exist between the value of funds in Member's pool account 102 and the points allocated to the Members in the rewards point 20 database 111 based on the predetermined monetary value to be accorded each point, In this non-limiting example the value in the hands of each Member is ten cents per point. In the same way that a single EFTPOS terminal 107 can be utilised for communication of both credit card information and 25 rewards card information as described above it is envisaged that the credit card 106 and the rewards card 109 could be combined as a single combined card 112, for example by including magnetic stripe recorded information for credit card 106 in first stripe 113 and recording rewards card information 30 on second magnetic stripe 114. With reference to Fig. 5 a corresponding redemption transaction 115 is illustrated and wherein like components are numbered as for Fig. 4. In this example Member 105 purchases product X entirely 20 on the basis of redemption of points via merchant 101. In this instance because the transaction is entirely based on points redemption only the rewards card 109 need be swiped through the EFTPOS terminal 107 with the end result that funds 5 to the value of product X are passed from the Member's pool account 102 to the merchant's bank account 108 and points corresponding to the value of product X are deducted from the rewards point database 111 from the account corresponding to Member 105. 10 It is to be understood that every redemption transaction is treated as a normal buy transaction where rewards points are earned according to the usual points award rules. It will be observed that characteristics of the above referenced example include; 15 (a) The Merchant need only purchase reward points for issue to a Member at the time a commercial buy transaction is entered into by a Member. (b) A Member can redeem reward points credits at any participating merchant as part of an otherwise 20 conventional buy transaction, and treating the rewards points at predetermined value as legal tender. (c) A buy transaction may be paid for in whole or in part by points redemption. (d) Data entry for attributing rewards points in relation to 25 member can utilise existing commercial data entry components such as EFTPOS terminals and also utilise the existing communications infrastructure between merchants and financial intermediaries. 30 Software which can be invoked to implement the system of the example includes JAVA and MULTOS implementations. A suitable specification for the database portion of the software of the example is: 21 DATABASE FUNCTIONS 1. Member database 2, Merchant database 3. Management database 5 4. Members or merchants identified by particular number code with pin number backup. 5. Systems to accommodate hundreds of thousands of merchants. 6. Systems to accommodate millions of Members. 10 7. Member database to facilitate Members' account points (money) account. 8. The merchant (through R.R. EFTPOS software) has connection to a batch database installed "fund pool" for managing the flow of units of value, "points" (money) to 15 and from the central control bank. 9. The management transaction or batch database extracts funds from the merchant's own bank account and accumulates and divides the funds O.0.V. funded by merchant and directs 16.666% to Operators account and 20 83.333% to Members' pool account. 10. By swiping the Member's card through the merchant's EFTPOS machine, the merchant can: a) Send funds amounting to a specific number of points to be processed through the Operators batch 25 database, which will automatically deduct the transaction fee from the monetary value of each point (U.O.V.) and transfer 16.66% of the value of each point to the Operators business account and 83.33% of the monetary value of each point to the 30 credit of the Operators Pool Account account. 11. The Operators Pool Account account will hold all the monetary value of the rewards points to the Operators orders, which orders are confirmed and governed by the operating rules of membership, one of which disallows a 22 Member from drawing points in cash either directly or through the services of an appointed merchant. INCOMING & OUTGOING TRANSACTION FLOWS: 1. Merchant conducts transaction with Member by selling 5 goods to the Member. 2. The Member pays for the goods received either by; a) Cash, credit card or hire purchase agreement. b) Payment in points value 10 cents per point. 3. Once the details of the transaction are agreed, the 10 merchant will: a) Where goods are purchased by cash, etc. enter the transaction details in the merchant's EFTPOS machine, swipe the Member's card - security procedure will take place, i.e. Pin No., 15 identification, etc. and the agreed number of points rewarded on the amount of the Member's purchase will be automatically transferred from the merchant's bank account to the Member's account. b) When goods are purchased for points or part points 20 and part cash, the merchant will enter the transaction details in the merchant's EFTPOS machine, swipe the Member's card - a security procedure will take place, i.e. PIN No., identification, etc., and the agreed number of 25 points (amount of money) will be deducted from the Member's R.R. account and transferred to the merchant's own business bank account. OTHER CONSIDERATIONS FOR THE EXAMPLE SYSTEM 30 1. Members and merchants will be provided access to information on the Member's account by using security procedures, i.e. Pin No., etc. 2. A full audit trail of detail on all transactions will be in place on a continuing updated and downloaded basis.

23 3. There will be automatic monthly deduction of points from the merchant's account for management, membership and transaction costs. These points will be considered a membership fee. 5 4. Fraud management parameters will be built into the software and show by highlight in audit trail. 5. The software system will have spare capacity providing options for future expansion and development of the program. 10 6. The software system will have both a local and a wide area network base to answer adequate reporting and management function requirements with the ability for user reporting and query development. 7. There will be high fault tolerance, line system 15 maintenance, which makes way for minimal staffing and management requirements, which are pivotal to the commercial integrity and returns of the program. In a further particular form each reward point can be 20 attributed a value in the hands of the Member of 10 cents with an additional 2 cents attributable to the control entity. Such a system in accordance with the example has the following characteristics: 1. Each Real Reward point is set at a specific amount to the 25 Member of 10 cents per point. 2. The Real Reward Member knows the exact value of points given by a merchant against each purchase by virtue of their set specific amount of 10 cents per point and by statements issued with each transaction. 30 3. The Real Reward Member can check their points balance at any time using a series of tools including a call centre, Internet, SMS and faxback. 4. The Real Reward Member pays for a range of services such as checking points balance via charges against their 24 points balance. Monthly membership fees are also charged against Members points balance. 5. Security uses three separate forms of identification including a PIN, a card and a Member's or merchants 5 contact details. 6. Rewards points capture and processing can rely on current 3DES (Encryption Standard) on JAVA and MULTOS compatible hardware and such equivalent standards that may apply from time to time for existing point of sale transaction 10 capturing devices such as EFTPOS machines 7. The system is a non-proprietary, independently operated scheme that rewards loyalty to a group of geographically located merchants across the full spectrum of industry types. 15 8. The system is designed as both business-to-consumer and business-to-business. 9. Each Real Reward point is underwritten by cash reserves held under strict governance regulations as detailed in the organisation's articles of association. 20 10. Merchants are given an organised territory, which they hold exclusively within their industry group whilst they adhere to the terms and conditions of being appointed a license. 11. The Merchant has control over how many points are given 25 in exchange for the purchase of goods and services normally sold by that particular Merchant. For example, points given can range from a high percentage for non discounted goods and services to no points for "loss leaders". 30 12. Each Real Reward redemption transaction constitutes a full margin sale upon which further reward points may accrue. 13. Real Reward offers the Member effectively unlimited choice of which goods or services they may elect to 25 redeem their points at appointed merchants rather than a limited range from a catalogue, retail outlet, web site or the like. 14. Real Reward points can be amalgamated with other Member's 5 points (with their agreement) for example by say a family to make one purchase. 15. Real Reward Members can purchase goods and services for part cash/part reward points. 16. Real Reward points are not tied to a merchant's brand or 10 point-of-sale system. 17. Real Reward Members retain their points purchasing capacity regardless of the financial and business viability of merchants. 18. Redemption of points are significantly faster and easier 15 than existing competitive products. 19. Redemption of points are managed by instructions issued by the Operators control centre to the merchant, merchant bank and The Rewards bank. 20. Redemption of points can only occur if the Member has 20 sufficient active points in their account. It is to be understood that the above example is to be taken as a non-limiting and non-binding example of operation of the rewards system of the present invention. It is also to be understood that the Member reward points 25 account is not an account maintained in actual currency. Rather, the points held in the rewards points account equate to a specified purchasing value, which value is backed by the Members pool of funds maintained and controlled by the operator. Stated another way points are not currency per se, 30 but equate to a predetermined monetary value. It is also to be understood that a Member will not be able to redeem points for currency but only for product as defined earlier in the specification. Modifications and variations as would be apparent to a 26 skilled addressee are deemed to be within the scope of the present invention. INDUSTRIAL APPLICABILITY 5 The rewards system can be applied to electronic transaction systems as currently available at point of sale terminals in many shopping outlets.

Claims (16)

1. A rewards system which rewards Members of the system for utilising Merchant Members of the system as their Merchants of preference for the purchase of product including goods and/or 5 services (as defined in the specification); the system comprising one or more Members and one or more Merchant Members, and an Operator who operates and administers the system; and wherein a Merchant Member provides to a Member's system account reward points on purchases made by the Member 10 from that Merchant and provides to the Operator the funding of the monetary value of the points issued to the Member's account by that Merchant; and wherein a Member can purchase any product or service from any Merchant Member in exchange for redemption of a specified number of reward points; each of the points 15 representing a predetermined monetary amount; and wherein reward point transactions between a Merchant Member, a Member and the Operator are effected through a user interface (as defined in the specification); the user interface interacting over a communication network with a processor unit and database 20 maintained by the Operator.

2. The reward system of Claim 1 wherein said operator administering the system is not participating in the system as a Merchant Member.

3. The system of any one of Claim 1 or Claim 2 wherein the product 25 or service provided by the Merchant Member is at a published or established price.

4. The system of any one of Claims 1 to 3 wherein the member has the freedom to purchase any product or service displayed or advertised for sale by any Merchant Member by redeeming rewards 30 points against that purchase.

S. The system of any one of Claims 1 to 4 wherein every redemption transaction is treated as a normal buy transaction - 28 in which rewards points are earned according to the usual points award rules for that merchant.

6. The system of any one of Claims 1 to 5 wherein the Member comprises a person who has chosen to become registered with 5 the system and is entitled to receive points for purchases made by the Member from any Merchant Member associated with the system.

7. The system of any one of Claims 1 to 6 wherein each Merchant Member appointed to the system is entitled to provide and 10 redeem Members points as a result of purchase of a product.

8. The system of any one of Claims 1 to 7 wherein the predetermined financial amount is expressed in cents.

9. The system of any of claims I to 8 wherein the predetermined financial amount is applied to both a redemption transaction 15 and a buy transaction between the Member and the Merchant Member.

10. The system of any one of Claims 1 to 9 wherein the predetermined financial amount is an agreed monetary value against the purchase or acquisition of a product. 20

11. The system of any one of Claims 1 to 10 wherein the operator allocates each Merchant Member an exclusive territory.

12. The system of Claim 11 wherein the territory is demarked by the nature of goods sold or provided by the Merchant 25 Member.

13. The system of claim 11 or Claim 12 wherein the territory is demarked by a marketing channel.

14. The system of Claims 11, 12 or 13 wherein the territory is demarked geographically, 30

15. The system of any one of Claims 11 to 14 wherein the Merchant Members are selected for participation and territories are arranged to be substantially contiguous - 29 whereby a Member can obtain a broad array of products from Merchant Members within any given territory.

16, The system of any one of Claims 1 to 15 wherein the predetermined financial amount is set by the operator of the 5 system,