Dynamic bin allocation for payment card transactions

Abstract

Preauthorized payments may be made to service providers, repair shops and even vendors serving employees on business trips through credit card processing. The approved payment amount is authorized on a virtually created payment card which is then sent to the payee. These transactions incur interchange fees for the card processing. Therefore, unlike a check or EFT payment, the payee receives the approved payment less interchange fees. Interchange rates vary based on the payment card product offered by an issuing bank in addition to factors relating to how the payment card is processed. The current invention is a method of automatically generating a virtual payment card and/or processing the card in a manner to achieve a target interchange fee.

Description

CROSS-REFERENCE TO RELATED APPLICATIONS[0001]This nonprovisional application is a continuation of and claims priority to provisional application No. 61 / 704,765 entitled “Payment System and Method,” filed September 24, 2012 by the same inventor.BACKGROUND OF THE INVENTION[0002]1. Field of the Invention[0003]This invention relates to facilitating payments by a third party. More specifically, it relates to automatically adjusting the effective interchange rate incurred for pre-approved or pre-authorized card payments to payees.[0004]2. Brief Description of the Related Art[0005]Interchange is a fee paid between banks for the acceptance of card-based transactions (such as VISA and MASTERCARD charges). Usually it is a fee that a merchant's bank (the “acquiring bank”) pays a customer's bank (the “issuing bank”) however there are instances where the interchange fee is paid from the issuer to acquirer. This is sometimes called reverse interchange.[0006]In a credit card or debit card transact...

AI Technical Summary

Benefits of technology

[0023]However, in an alternative embodiment of the invention the remittance advice and the virtual payment card are sent to the service provider directly. In this case, a specific BIN product may be selected close to the target interchange rate without any variance on the interchange factors. Alternatively, certain factors such as including or excluding the PIN may help to fine-tune the effective interchange rate close to the target rate.

Problems solved by technology

Banks do not expect to make a significant amount of money from late fees and interest charges from creditworthy customers that pay their monthly bill in full.

Therefore, when a product or service is purchased by credit card, there is typically some uncertainty as to the exact amount the merchant will net because the interchange is variable.

However, these virtual payments do incur interchange fee overhead.

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