Tier Redemption Cap feature description
Table of Contents
- Purpose
- Relevant Cap Types and Exemptions
- Technical/System Requirements
- Use Cases – Card/Currency (redeemable/daily limit/tier limit)
- Use Case 1 – RDM Giftcards/Currency (1200/1000/500)
- Use Case 2 – RDM Giftcards/Currency (900/1000/500)
- Use Case 3 – RDM Giftcards/Currency (1200/1000/1000)
- Use Case 4 – RDM Giftcards/Currency (1200/1000/1000)
- Use Case 5 – RDM Giftcard/Season's Pass (1800/1000/1000)
- Use Case 6 – RDM Giftcard/Season's Pass (1800/1000/500)
- Use Case 7 – RDM Giftcard/Season's Pass (1800/500/500)
- Use Case 8 – RDM Giftcard/Season's Pass (1800/500/250)
Purpose
The tier redemption cap prevents a member from redeeming more value within a calendar day than is permitted by the limit assigned to their tier in the loyalty program. For example, the tier redemption cap might be configured as:
- Bronze tier – tier redemption cap of $500 per day
- Silver tier – tier redemption cap of $1,000 per day
- Gold tier – tier redemption cap of $1,500 per day
The intent of the progressive cap is to reward higher-tier members with the ability to redeem more of their accumulated rewards, and to encourage redemptions among the highest-tier members who have likely accumulated the most rewards.
In practice, it is important to understand how the tier redemption cap, the daily redemption cap, and the member's redeemable balance all interact to determine how much a member can redeem. It is also important to understand how holds on redemptions may block additional redemptions during the same calendar day.
Relevant Cap Types and Exemptions
Daily Redemption Cap
Overview
The daily redemption cap defines the maximum total redemption amount, in dollar value, that a member is permitted to transact within any given calendar day (for example, $1,000 per day per member). The purpose is to limit overall financial exposure and reduce the risk of fraud or abuse by capping the total redemption amount per member within a set timeframe.
Business Rules/Logic
- The system must sum the total dollar value of a member's redemptions during the current calendar day at the moment of each new redemption attempt.
- Only redemptions that contribute to the cap (non-exempt redemptions) are included in the tally.
- If the cumulative redemption value exceeds the configured limit (for example, $1,000), the redemption is denied.
- The cap resets on a rolling basis and is not tied to calendar days.
- The cap value is configurable at the program level.
Members who reach their daily cap cannot redeem more points until 24 hours after their first capped redemption(s).
Daily Redemption Cap Exemptions
Overview
Selected ad hoc redemption identifiers or redemption catalog identifiers can be configured to be exempt from the daily redemption cap. For example, special use cases—such as charitable donations or partner offers—are supported by allowing selected redemption types to bypass daily cap calculations.
Redemption types flagged as "exempt" do not contribute to a member's daily redemption limit, allowing unlimited access to certain redemptions for qualified transactions.
Business Rules/Logic
- Redemption types are flagged as "cap exempt" in the admin console.
- Exempt redemptions do not increment the member's daily redemption sum.
- Non-exempt redemptions are always included in the daily cap tally.
- Changes to exemption status are applied immediately and are auditable.
After reaching a daily cap, members can continue to redeem qualified exempt offers (for example, charity gifts).
Tier Redemption Cap
Overview
The tier redemption cap limits the value a member in a specific tier can redeem within a 24-hour period. For example, it could limit cumulative redemption transactions to $1,000.
The purpose is to enforce a tier-based cap on point redemptions, such that the highest eligible tier cap is applied at the time of redemption. This applies to all redemption channels, including partner locations, web, app, and POS.
Business Rules/Logic
- The system must determine a member's current eligible redemption tier at the time each redemption transaction is initiated.
- The maximum allowable redemption value is governed by the member's current highest eligible tier cap.
- Tier caps are enforced globally, regardless of which channel is used for redemption. The redemption cap must aggregate all redemption activity across every channel.
- When a member initiates any redemption, the system must "hold" or "reserve" the full value of the highest available tier cap—even if the member is redeeming less than that cap in a single transaction.
- Subsequent redemption attempts must check the held cap and prevent further redemptions if the cap is reached or reserved, even if the member still has points available.
Members may be prevented from redeeming more than once at their highest eligible tier cap, even if they have points remaining below that cap. The system must display the following message to members who attempt to redeem after their cap is held:
"You have reached your redemption limit for your tier. Please check your redemption history or contact support."
The member may be unable to redeem additional points until the cap hold is released, or until their tier status is updated or reset.
Redeemable Balance
A member's redemptions are also capped by how many points are "redeemable" for that member. This includes their "available" points less any holds, such as time-based holds on newly earned rewards. The client may also require that redeemable rewards be in discrete increments (for example, $100, $125, $150) rather than exactly reflecting the available balance. Therefore, a member's redeemable points are always equal to or less than their available points.
If a member is part of a household, redeemable points and value are calculated based on the aggregated rewards accumulated by all members in that household. The following is an example from a member detail page for a member who belongs to a household.
Technical/System Requirements
The following technical and system requirements apply to the tier redemption cap:
- Channel enforcement: Tier cap logic is enforced consistently across all redemption interfaces (partner, web, app, POS). All redemption requests, regardless of channel, are validated against the held tier cap.
- Real-time holds: Upon redemption initiation, the system holds the full value of the member's highest eligible tier cap. Redemption holds are recognized immediately across all channels.
- Redemption attempts: If a member attempts to redeem again on any channel and their tier cap is already held, the system denies the additional redemption attempt.
- Lower-tier redemption: If a member redeems at a lower tier and then attempts to redeem again up to their cap, the original hold on the highest tier cap still applies.
- Reporting and auditing: All redemption requests, holds, and cap enforcement events are captured with timestamps and channel information for auditing purposes.
- Exceptions and limitations: A member's redeemable points may exceed the tier redemption cap, but any excess cannot be redeemed until the cap is reset (for example, at the next program cycle or after a tier upgrade). Member support teams should have override visibility but should not be able to manually release holds unless authorized.
Use Cases – Card/Currency (redeemable / daily limit / tier limit)
Notes:
- The amounts in each use case title are in dollars, formatted as: (member's redeemable balance / daily redemption limit / redemption tier limit).
- Full RDM = full redemption of all redemption requests made that day; Partial RDM = partial redemption of one or more requests, which may include partial fulfillment; Fail RDM = failure to fulfill any redemption requests.
- Use cases highlighted in orange indicate redemptions that are blocked due to holds on previous redemptions.
Use Case 1 – RDM Giftcards/Currency (1200/1000/500)
Member's redeemable balance = 1,200,000 points ($1,200) | Daily redemption limit = $1,000 | Redemption tier limit = $500
| No. | Redemption Test | Status | Comments |
|---|---|---|---|
| TC1 | Redeem $500 giftcard in a single transaction | Full RDM | $500 is below the daily limit, so the full redemption is processed. |
| TC2 | Execute TC1 × 2 on the same day | Full RDM | $500 × 2 = $1,000, which is still within the daily limit. |
| TC3 | Execute TC1 × 2 plus a third redemption of $100 on the same day | Partial RDM | $500 × 3 = $1,500. The first two attempts pass, but the third attempt fails as it exceeds the daily limit. |
| TC4 | Execute TC1 + Redeem $501 on the same day | Partial RDM | The first attempt ($500) passes, but the second transaction returns the tier limit ($500) as the redeemable amount, for a total redemption of $1,000. Working as expected. |
| TC5 | Redeem $1,000 giftcard in a single transaction | Partial RDM | The transaction returns only the tier limit ($500) as the redeemable amount. Working as expected. |
| TC6 | Redeem $400 giftcards × 3 on the same day | Partial RDM | 1st transaction passed – redeemable balance of $500 returned based on tier limit; actual redemption = $400. 2nd transaction passed – redeemable balance of $500 returned based on tier limit; daily limit check on $400 + $500; actual redemption = $400. 3rd transaction failed – redeemable balance of $500 returned based on tier limit; daily limit check on $400 (1st) + $400 (2nd) + $500 = $1,300; reservation failed due to daily limit exceeded. Ideally, the redeemable balance returned should be the lower of the remaining daily redemption limit and the member balance—in this case $200 ($1,000 – $800)—so that the POS does not attempt to reserve the incorrect number of points. |
Use Case 2 – RDM Giftcards/Currency (900/1000/500)
Member's redeemable balance = 900,000 points ($900) | Daily redemption limit = $1,000 | Redemption tier limit = $500
| No. | Redemption Test | Status | Comments |
|---|---|---|---|
| TC7 | Redeem $500 giftcard in a single transaction | Full RDM | $500 is below the daily limit. |
| TC8 | Execute TC7 × 2 on the same day | Partial RDM | 1st transaction passed – redeemable balance of $500 returned based on tier limit; actual redemption = $500. 2nd transaction failed – returns a redeemable balance of $400 ($900 redeemable balance minus $500 first transaction). The balance is less than the remaining tier limit, so the system reserves $400. However, this is less than what the member needs to redeem the item, so no redemption is attempted. Working as expected. |
| TC9 | Redeem the full redeemable balance of $900 in a single transaction | Partial RDM | The transaction returns only the tier limit ($500) as the redeemable amount. Working as expected. |
| TC10 | Execute TC6 plus redeem $100 on the same day | Full RDM | 1st transaction passed – tier limit of $500 reserved; actual redemption = $500. 2nd transaction passed – tier limit of $500 reserved; actual redemption = $100. |
Use Case 3 – RDM Giftcards/Currency (1200/1000/1000)
Member's redeemable balance = 1,200,000 points ($1,200) | Daily redemption limit = $1,000 | Redemption tier limit = $1,000
| No. | Redemption Test | Status | Comments |
|---|---|---|---|
| TC11 | Redeem $500 giftcard in a single transaction | Full RDM | $500 is below the tier and daily limit. |
| TC12 | Execute TC11 × 2 on the same day | Partial RDM | 1st transaction passed – redeemable balance of $1,000 returned based on tier limit; actual redemption = $500. 2nd transaction failed – redeemable balance of $1,000 returned based on tier limit; daily limit check on $500 (1st) + $1,000 = $1,500. Reservation failed because the daily limit was exceeded when adding the first redemption and the hold (equal to the tier limit) on the second transaction. Ideally, the redeemable balance should be the lower of the remaining daily redemption limit and the member balance—in this case $500 ($1,000 – $500)—so that the POS does not attempt to reserve the incorrect number of points. |
Use Case 4 – RDM Giftcards/Currency (1200/1000/1000)
Member's redeemable balance = 1,200,000 points ($1,200) | Daily redemption limit = $1,000 | Redemption tier limit = $1,000
| No. | Redemption Test | Status | Comments |
|---|---|---|---|
| TC13 | Redeem $500 giftcard in a single transaction | Full RDM | $500 is below the tier and daily limit. |
| TC14 | Execute TC13 × 2 on the same day | Partial RDM | 1st transaction passed – redeemable balance of $1,000 returned based on tier limit; actual redemption = $500. 2nd transaction failed – redeemable balance of $1,000 returned based on tier limit; daily limit check on $500 (1st) + $1,000 = $1,500. Reservation failed because the daily limit was exceeded when adding the first redemption and the hold on the second transaction. |
| TC15 | Redeem the full balance of $900 in a single transaction | Full RDM | The transaction reserves the tier limit ($1,000) as the redeemable amount, but actual redemption completed = $900. Working as expected. |
| TC16 | Execute TC13 + Redeem $100 on the same day | Full RDM | 1st transaction passed – redeemable balance of $900 returned based on remaining balance (below max tier); actual redemption = $500. 2nd transaction passed – redeemable balance of $400 returned based on remaining balance (below max tier); daily limit check on $500 (1st) + $400 = $900; $400 reserved; actual redemption = $100. Working as expected. |
Use Case 5 – RDM Giftcard/Season's Pass (1800/1000/1000)
Member's redeemable balance = 1,800,000 points ($1,800) | Daily redemption limit = $1,000 | Redemption tier limit = $1,000
| No. | Redemption Test | Status | Comments |
|---|---|---|---|
| TC17 | Redeem $10 giftcard + $185 season's pass card | Partial RDM | 1st transaction passed – redeemable balance of $1,000 returned based on tier limit; actual redemption = $10. 2nd transaction failed – redeemable balance of $1,000 returned based on tier limit; daily limit check on $10 (1st) + $1,000 = $1,010; reservation failed due to daily limit exceeded. Ideally, the redeemable balance should be the lower of the remaining daily redemption limit and the member balance—in this case $990 ($1,000 – $10)—so that the POS does not attempt to reserve the incorrect number of points. |
Use Case 6 – RDM Giftcard/Season's Pass (1800/1000/500)
Member's redeemable balance = 1,800,000 points ($1,800) | Daily redemption limit = $1,000 | Redemption tier limit = $500
| No. | Redemption Test | Status | Comments |
|---|---|---|---|
| TC18 | Redeem $10 giftcard + $185 season's pass card | Full RDM | 1st transaction passed – redeemable balance of $500 returned based on tier limit; actual redemption = $10. 2nd transaction passed – redeemable balance of $500 returned based on tier limit; daily limit check on $10 (1st) + $500 = $510, which is within the daily redemption limit. |
Use Case 7 – RDM Giftcard/Season's Pass (1800/500/500)
Member's redeemable balance = 1,800,000 points ($1,800) | Daily redemption limit = $500 | Redemption tier limit = $500
| No. | Redemption Test | Status | Comments |
|---|---|---|---|
| TC19 | Redeem $500 giftcard in a single transaction | Full RDM | $500 is within the daily and tier limit, but no further redemptions are permitted for the day. |
| TC20 | Redeem $10 giftcard + $185 season's pass card | Partial RDM | 1st transaction passed – redeemable balance of $500 returned based on tier limit; actual redemption = $10. 2nd transaction failed – redeemable balance of $500 returned based on tier limit; daily limit check on $10 (1st) + $500 = $510; reservation failed due to daily limit exceeded. Ideally, the redeemable balance should be the lower of the remaining daily redemption limit and the member balance—in this case $490 ($500 – $10)—so that the POS does not attempt to reserve the incorrect number of points. |
Use Case 8 – RDM Giftcard/Season's Pass (1800/500/250)
Member's redeemable balance = 1,800,000 points ($1,800) | Daily redemption limit = $500 | Redemption tier limit = $250
| No. | Redemption Test | Status | Comments |
|---|---|---|---|
| TC21 | Redeem $500 giftcard in a single transaction | Fail RDM | Transaction failed due to tier limit exceeded. |
| TC22 | Redeem $10 giftcard + $185 season's pass card | Full RDM | 1st transaction passed – redeemable balance of $250 returned based on tier limit; actual redemption = $10. 2nd transaction passed – redeemable balance of $250 returned based on tier limit; daily limit check on $10 (1st) + $250 = $260, which is within the daily redemption limit. |