Methods and systems for providing guaranteed merchant transactions

Abstract

A network arrangement is provided for processing credit transactions. A financial network is used to route communications securely between interfaces with the financial network. Merchant systems are coupled with the interfaces, with each merchant system transmitting requests for authorization of credit transactions through the financial network. An issuer system authorizes credit transactions in response to receipt of requests that specify at least a credit account to be used to support a particular credit transaction and a transaction amount for the particular credit transaction. A guarantor system separate from the issuer system determines whether to guarantee credit transactions in response to the requests and transmits responses indicating whether specific credit transactions are to be guaranteed through the financial network to the merchant systems.

Description

CROSS REFERENCE TO RELATED APPLICATION [0001] This application is a nonprovisional of, and claims the benefit of the filing date of, U.S. Provisional Patent Appl. No. 60 / 566,486, entitled “METHODS AND SYSTEMS FOR PROVIDING GUARANTEED MERCHANT TRANSACTIONS,” filed Apr. 28, 2004 by John Joseph Mascavage et al., the entire disclosure of which is incorporated herein by reference for all purposes.BACKGROUND OF THE INVENTION [0002] This application relates generally to merchant transactions. More specifically, this application relates to methods and systems for providing guaranteed merchant transactions. [0003] Currently, about 31% of all purchases in the United States are made using payment cards, such as credit, debit, and stored value cards, with the remaining purchases being made in cash (about 38%) and by check (about 27%). Although it is not always evident to many consumers, there is a significant difference in different types of transaction types, in that some transactions are “gua...

AI Technical Summary

Benefits of technology

[0013] In another set of embodiments, a request for authorization of a credit transaction between the merchant and a customer is received with a guarantor system. The request includes an identification of a credit account used to support the credit transaction, a transaction amount for the transaction, and an authorization for the transaction provided by an issuer of the credit account. A determination is made with the guarantor system whether to provide a guarantee of payment of the transaction amount to the merchant. A response to th

Problems solved by technology

Until payment is made to the merchant, however, there remains the possibility that the legitimacy of the transaction may be repudiated, such as by an allegation that the credit card had been stolen, was forged, and the like.

The lack of a guarantee thus puts the risk of being defrauded onto the merchant.

The protocol for executing transactions sometimes includes safeguards intended to reduce the chance of fraud, but such safeguards are of limited effectiveness.

Such authorization does not necessarily protect the merchant, however, from presentment of a stolen credit card whose theft has not been reported, or from a variety of other fraud schemes.

Legitimate bases may be asserted by the true cardholder to establish that the use of the card was fraudulent, with the risk of such an assertion for every transaction being borne by the merchant.

For this reason, some merchants may refuse to accept credit cards or may institute procedures to encourage the use of debit cards over credit cards, but such activities sometimes have the effect of discouraging consumers from purchasing at all from those merchants.

In addition, the “Verified by Visa” method currently covers only a small set of chargeback reason codes (two codes), leaving a large number of other potential chargeback codes unaddressed.

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