Currency and barter exchange debit card and system

Abstract

The Currency Exchange Network transaction management and accounting system assists businesses, employees, and consumers to engage in productive economic activity that is not supported by traditional cash- and credit-based transaction systems. The system functions as a currency exchange between the non-cash, volunteer and barter economies and the mainstream cash economy. This dual-currency system handles transactions for goods and services using a combination of cash and Community Economic Development Scrip, a new currency based on non-cash service credits.

Claims

What is claimed is:

1. A record management system for use in accounting for sales by a Vendor of a quantum of goods or services in return for a payment in a dual-currency combination of cash and service credits, said system comprising:

a) input means for receiving data indicative of the cash and service credit balances credited those respective accounts of each participant Member and on each Member's Cash Discount Category (CDC);

b) register means connected for receiving data from said input means and for storing that data for each Member and each account; and

c) control means for implementing and accounting for a sale of a particular quantum of goods and services to be sold through the dual-currency system, said control means carrying out the operations for each transaction of:

1. obtaining information indicative of the TRANSACTION PRICE for the selected quantity of the goods or services;

2. calculating the minimum cash percentage of the CASH BASE price required for the selected quantity of the goods or services;

3. accessing cumulative records of cash discounts made available to Members over a specified time interval and cumulative records of all service credits earned by all Members in the same selected time interval to enable the calculation of a current ratio of goods and services to service credits and storing that current ratio in the register means;

4. accessing CDC and current ratio information in the register means and calculating the amounts of cash and service credits required to be paid by a participant to complete the transaction, with the minimum cash portion equaling the CASH BASE; and

5. debiting the Member's dollar and service credit accounts in the register means by an amount equal to the dollars and service credits necessary to complete the transaction and crediting designated accounts with those dollars and service credits in accordance with a distribution plan implemented by the control means.

2. The invention of claim 1 wherein the distribution plan includes payments to the Vendor's account and to other accounts.

3. The invention of claim 2 wherein the other accounts include an account of the agency responsible for operation of the record management system.

4. The invention of claim 3 wherein the other accounts also include an account of a sponsoring organization designated by the Member.

5. The system according to claim 1 wherein the means of activating access to register means on behalf of a specific participant is a dual-currency debit card carrying information enabling secure identification of the participant.

6. A record management system for planning and organizing the production and sale of goods and services to Members in return for payment to Vendors in a combination of dollars and Community Economic Development Scrip or CEDS, said system comprising, in combination:

a) first input means for receiving data indicative of the identity and quantity of goods and services desired by Members and their account balances in cash and service credits and discount category and estimating total cash/CEDS revenues available in the system;

b) second input means for receiving data on the availability of those goods and services in inventory and the incremental labor and/or material needs of Vendors to produce additional desired goods and services;

c) third input means for receiving data on the availability and skill level of labor to fill participating Vendor's requirements to produce additional desired goods and services;

d) fourth input means for receiving data on the availability of materials in the system and valuing those materials on a cash and CEDS basis;

e) means for calculating cash plus CEDS wages in various job classifications based upon available jobs, regular retail prices, labor requirements, Member discount categories and total volume of production and for making information on the wage rates available to Members and Vendors;

f) control means for matching specific employment seeking Members to the participating employee needing Vendors for producing the additional desired goods and services; and

g) control means for determining the dollar value of service credits to be paid in CEDS, by dividing the total discount in dollar value of new goods and services made available to Members by the number of service credits earned or made available to be earned by Members.

7. The invention of claim 6 wherein the control means is constructed for carrying out the operations of:

a) receiving information indicative of a lack of available qualified employees to meet production goals for additional desired goods and services for a participating Vendor;

b) announcing training opportunities for interested Members payable in CEDS;

c) announcing increased cash and CEDS compensation for production jobs in Vendors experiencing a lack of qualified labor, to encourage recruitment of additional Members and improve retention of existing Vendor employees.

8. The invention of claim 1 wherein a further means is provided for Vendors or their employees to express a willingness to earn service credits instead of cash, thereby indicating that the cash base of a product or service can be lowered and that service credits can buy more within the system.

Description

BACKGROUND OF THE INVENTION

There are a number of computerized cash and credit accounting systems that handle transactions in dollars or other currency denominations. However, these existing systems cannot accommodate transactions in which purchasers also have some form of non-cash credit to exchange for goods and services.

There are also computerized systems that handle barter transactions between businesses--as in the exchange of vacant hotel rooms for vacant airline seats--and there are networks through which volunteer work in the non-profit and public sectors is exchanged using hourly service credits, sometimes referred to as "time dollars". However, these non-cash transaction systems cannot interact with existing cash and credit accounting systems.

Although we have currency exchanges that facilitate trade between different nations, we have no comparable tool to facilitate trade between the cash and non-cash sectors of the economy. To effectively integrate the cash and non-cash sectors of the economy, we need a dual-currency transaction management and accounting system that links these sectors.

SUMMARY OF THE INVENTION

The Currency Exchange Network transaction management and accounting system is designed to support a new model of community economic development. Its purpose is to create strategic business alliances of non-profit community organizations and for-profit businesses within which individuals can earn service credits for community-service work that they can redeem for goods and services at participating for-profit businesses.

The invention operates as a currency exchange between the non-cash economy and the mainstream cash economy. The mechanism of the currency exchange is based on the determination of a conversion rate between cash (measured in dollars) and service credits (measured in hours). The invention determines the ratio of the dollar discounts--available through participating businesses--to the number of allocable service credits that can be earned through community service at participating organizations.

When a person carrying the Currency Exchange Card wishes to purchase goods and/or services for a combination of cash and earned service credits, the system determines the present conversion rate, and converts the earned service credits into a second currency called Community Economic Development Scrip or CEDS (pronounced "seeds").

CEDS are used in the transaction management system of the invention to translate time-based service credits into spendable units in the cash economy, which constitute a discount on the purchase price in dollars. The number of service credits earned per hour of service can be multiplied by a factor to recognize the level of difficulty or create an incentive to undertake a given volunteer task within the system. The transaction management system also permits the application of differing discount rates based upon the economic need of individual participants.

BRIEF DESCRIPTION OF DRAWINGS

FIG. 1 describes one Currency Exchange Network involved in dual-currency transactions.

FIGS. 2, 2A and 2B describe the flow of interactions occurring between a Member of the network (4) and a Sponsoring Organization (hereafter Sponsor) of the network (3) as service credits are earned by the Member and credited to the Member's account by the Currency Exchange Center (1).

FIGS. 3, 3A and 3B describe the flow of interactions by which the Member, through the Currency Exchange Debit Card, performs a transaction to purchase goods and/or services from a Vendor (2).

DETAILED DESCRIPTION OF THE INVENTION

What follows is a description of a computer-based system for implementing the Currency Exchange Network economic development model by means of a dual-currency transaction management and accounting system, using a debit card to settle a specific transaction.

FIG. 1 depicts the relationships between the interacting parties within a Currency Exchange Network. The Currency Exchange Center (1) manages and operates a debit-card based accounting system that facilitates interactions between Sponsors (3) and Vendors (2) and individual Members (4). Members earn service credits by performing agreed-upon and authorized tasks for or through the Sponsors, and then purchase goods and services through Vendors who have contracted to accept card-based transactions at an agreed-upon cash discount.

The heart of the invention is a computerized transaction management and accounting system for both dollars and CEDS. The dual-currency system of the present invention is constructed and arranged using conventional hardware and software technology to access various items of data through a central computer system, to make decisions, and ultimately to carry out sales transactions and to document those transactions.

All participants in transactions involving the dual-currency debit card may enter into transactions through the Currency Exchange Network in more than one way. Members who choose to earn service credits by performing certain tasks may elect to spend those service credits by purchasing goods or services from another Member. Sponsors, which might include not-for-profit community organizations such as a church, synagogue or a hospital, could provide goods and/or services to Members with earned service credits at a cash discount below the amount paid by an independent purchaser. A for-profit Vendor might agree by contract to employ Currency Exchange Members for a combination of cash and service credits earned in transactions with other Members. In all cases, the participants in the transactions have agreed upon the basis of such transactions and are known to be participants through the computer-based records of the Currency Exchange Center.

The system of the present invention is constructed and arranged using conventional hardware and software technology for accessing various items of data through a central computer system to make decisions and ultimately to carry out sales transactions and to document those transactions.

The invention aids businesses willing and able to produce goods and services, prospective employees willing and able to work, and interested consumers to be coordinated despite a lack of traditional financial resources. Currently, many corporations barter goods and services back and forth using trade dollars or bartering. The converted service credit measured in CEDS as the basis for the present system is a more versatile and universal monetary unit than prior conventional units because it not only manages business-to-business exchanges, but also facilitates economic transactions between businesses, workers, and consumers. The dual-currency approach is also superior to current models of barter, because it allows for payment of the incremental cash costs of a commercial transaction while bartering only its profit margin. For all of our examples, the cash discount value of one unit of CEDS will be assumed to be one dollar.

All participants, whether individuals or institutions, are assigned accounts with bank-type secret access codes. In a preferred embodiment of the system, participants use debit cards which enable transactions in a combination of dollars, service credits and CEDS. Participants include Vendors, Members and Sponsors.

The model also relies upon the participation of Sponsors, who can be community organizations, non-profits, churches or synagogues, government agencies, labor unions, etc. The role of Sponsors is to bring Members who may be unemployed or under employed workers, volunteers, social welfare recipients and others into the new economic development model. Sponsors earn a referral fee in cash and CEDS from the purchases of their sponsored Members for their efforts, which allows them to be more self-funding and to more effectively carry out their missions of community service.

The network also utilizes a Currency Exchange Project Board (hereafter Board) which accepts applications for participation in the economic development model from Vendors, Sponsors, and Members. The Currency Exchange Network solicits a commitment from participating businesses to offer a volume of goods and services for a combination of dollars and CEDS. The Currency Exchange Network enters an appropriate listing of the available goods and services into a central computer which Members can access to learn what is available for purchase through the system. Members can access this information through public ATM-style machines, telephone calls to computers or operators, home-computer modems, traditional advertising, network newsletters, etc.

A quantity of service credits (convertible to CEDS at the anticipated rate) are introduced into the system by the Currency Exchange Board. The number of service credits will be adjusted to provide a match at the anticipated conversion rate to the available discounts offered under contract by Vendors when redeemed in CEDS. Most will be distributed to Sponsors, who can then hire Members which expands their services to the community. A portion of the CEDS may give raises to existing employees and hire and train Members in businesses which are increasing their production of goods and services for the economic development network.

The operating overhead of the system is funded like a standard credit card operation by a service fee charged by the Currency Exchange Network and deducted from the purchase price whenever Members make purchases with their dual-currency debit cards. A percentage of the dollars and CEDS spent in every transaction is earned as a referral fee by the Sponsor under whose sponsorship the cardholder is participating. Based on Member income and need, a Cash Discount Category (CDC) is established for each Member, which determines the ratio of cash dollars to CEDS each participant spends as they make purchases in the economic development model. Sponsors also take applications from unemployed workers and volunteers which go to the Currency Exchange Board. Vendors may send profiles of employees they need and a match is made through the computer system. A similar match is made between institutions that offer training of prospective new employees in need of training. All financial transactions in the system occur in some combination of cash and CEDS.

The basis for the currency exchange is the conversion of service credits to a currency equivalent, CEDS. As will be described more fully below, service credits are created on the basis of a single service credit for each hour of work which is done by participants in the operation of the model. (A multiplying factor greater than one may be used in crediting work in difficult or distasteful tasks.) As distinguished from prior systems, the system of the present invention provides for a closed loop continuous valuation of the service credits in terms of either dollars or, more directly, in the definition of the quantity of goods or services that can be procured for each service credit earned by a participant.

The system evaluates the value of the service credits on a continuing basis by keeping a running total of the dollar value of cash discounts for new products and services made available to Members, divided by the total hours of service credit labor authorized to be earned in the system.

The infusion of non-cash labor creates new goods and services of substantial value and expands the total volume of production without increasing cash costs. This provides a significant competitive advantage to Vendors by increasing their productivity. It is the purpose of the present invention to provide an accounting and valuation system providing the incentive of noncash, but valuable, benefits to the Members to compensate their labor hours. The system is also designed to bring new customers to participating businesses, thus increasing their profits.

The valuation of the service credit can be seen to vary in the system in direct relationship to the dollar value of the goods or services produced by the non-cash labor input. Let us assume that, in a small model network of the sort shown in FIG. 1, and over a particular period of time, a total of $100,000 in discounts from normal cash prices is made available by contract with Vendors. Let us also assume that the Currency Exchange Board authorizes the expenditure of 10,000 service credits through Sponsors. It can be seen that the value of each service credit is $10 (redeemed in CEDS), whether the particular service credit was earned by Members working for Sponsors or for Vendors.

As has been stated, the determination of the value of the service credits is based upon a running calculation by the accounting system of the present invention of the value of discounts on goods/services made available to Members. The available goods/services will largely result from contractual agreements with participating Vendors to take advantage of off-peak or underutilized capacity. The accounting system is constructed and adapted for allowing sales of goods and services within the system using prices determined by the amount that a willing buyer pays a willing seller.

Since CEDS in the system are tied directly to the incremental added volume of goods and services produced by businesses, then the dual-currency system is also designed to prevent inflation and devaluation of its currencies. The network is completely market driven.

EXAMPLE OF OPERATION

A restaurant's budget as an example will help explain the operation of the system. This example applies to all producers of goods and services. Restaurants use a quantity of labor to convert raw materials into finished products which are in turn sold to customers. In addition to the cost of materials and labor, restaurants (as with any business) have certain expenses generally counted as overhead. In order for a business to operate in the context of the inventive economic model, it is only necessary that there be some excess productive capacity that is not being used in the conventional dollar economy in which the business operates.

For the concrete illustrative example we will assume that the costs of the food and materials for the restaurant represent 20% of sales. Furthermore we assume labor to be 35%, overhead 35% and profit 10%.

Using those percentages we can project that for a particular meal period where 200 normal cash customers spend $5 each, they generate total revenue of $1,000, food costs will be $200, labor $350 and overhead $350, with profit of $100.

Another factor that is relied upon for the operation of the economic model, in addition to and as a consequence of the fact that there is excess capacity in the participating businesses, is a decrease in the incremental costs of providing additional goods or services. Most of the overhead and some of the cost of labor for the incremental increase in production is not applicable.

Turning again to the restaurant example, we can evaluate on an incremental cost basis the effect of serving a second two hundred Members during a meal period. In a sense, these new customers (the Members of the Currency Exchange Network) are like members of a Discount Club who are made aware of the time and place of off-peak discounts for cash and CEDS. We initially assume that the cost of additional food and materials remains the same, ignoring for the purposes of the example that an economy of scale may result in reduction of the cost of materials. We also allocate the same 35% for labor for a second 200 meals; we thus assure that the existing labor force is not overloaded by the increase in the number of customers to be served. The fact that more workers will be hired to serve the second 200 meals points to one of the benefits of the economic development model. More jobs become available and the level of responsibility of the existing employees may be enhanced as they train and mentor new employees. The most dramatic area of savings is the reduction of the overhead from 35% to something more like 5%, representative of additional wear and tear on the capital equipment and extra energy costs for cooking the additional meals, washing the dishes, etc. If the 10% profit margin remains constant from customer's additional business, the restaurant owner is likely to find the use of the model to increase profits to be appealing.

In this example, to fund the operation of the system, a 5% cash service fee is deducted from the transaction price of every transaction handled through the system with the dual-currency debit card.

If we total the incremental cash expenses for the second two hundred meals without adding the cost of labor, we arrive at $400 ($200 materials, $50 overhead, $100 profit, and $50 service fee) which amounts to $2.00 per meal for 200 meals, before addition of the labor cost. The above cost savings are known in the prior art and are the basis for the "two for one" promotions that restaurants have long used to increase their volume. As will be demonstrated below, the cash and CEDS revenues allow us to pay the 35% labor costs in a combination of cash and CEDS, as well as to raise considerable new revenues for the community. The result is an expansion of the economic pie with new purchasing power in the hands of workers and consumers and new markets for participating businesses.

The system of the present invention manages transactions like those in the restaurant example, using both cash and CEDS as units of exchange and establishing a weighted sales price based upon the economic status of the participant. Thus a $5 meal price will be paid partially in cash and partially in CEDS. In the example shown, the $2.00 "cash base" of the meal will pay at least the incremental cash costs. The more affluent Members will be expected to pay the entire price of the meal in cash while the least affluent will be given the option of purchasing the meal for the cash base plus CEDS to bring the transaction price to the normal meal cost of $5. Below are four sample Cash Discount Categories for a $5.00 meal with a cash base of $2.00. If we assume that the 200 additional customers of the restaurant from the CEN fall in equal numbers, 50 into each different Cash Discount Category (CDC) the total new revenues in cash and CEDS is as shown in the table below:

    ______________________________________
    CHART 1
    CDC    # of
    Category
           Members  $/Meal   CEDS/Meal
                                      Total $
                                             CEDS
    ______________________________________
    A      50       2.00     3.00     100.00 150.00
    B      50       3.00     2.00     150.00 100.00
    C      50       4.00     1.00     200.00 50.00
    D      50       5.00     0.00     250.00 0.00
    Totals 200                        700.00 300.00
    ______________________________________

    ______________________________________
    CHART 2
    Disbursement  Dollars     CEDS    Totals
    ______________________________________
    Sponsors      50.00       50.00   100.00
    Labor         175.00      175.00  350.00
    Service Fee   25.00       25.00   50.00
    Econ Development
                  50.00       50.00   100.00
    Totals        300.00      300.00  600.00
    ______________________________________

• Inventors
  Hodroff, Joel;
• Assignee
  Commonweal Incorporated (St. Louis Park, MN)
• Published
  Jan-7-1997
• Current US Classes:
  705/14
  705/32
  705/40
• Application #
  261459
• International Classes
  G06F 157/00
• Field of Search
  235/379 235/380
• Examiner
  Hayes; Gail O.
• Agent
  Faegre & Benson