Secure Payment System with ACH Backup and Real-Time Surcharges
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Solution Overview
Problem
Existing electronic transaction systems face challenges in real-time surcharge calculation and payment security, particularly with automated clearing house (ACH) transactions, which can take days to process, leading to risks for merchants and consumers, and do not allow for fair processing fee minimization or secure tip handling.
Innovation Solution
A system that enables real-time electronic transaction processing with a primary e-check payment and a back-up credit card payment, using GPS location and other data for context, and allowing consumers to choose payment methods based on merchant and payment source types, with a cap on surcharge fees and no surcharging for debit cards.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of energy
If ACH transactions are used for electronic payments, then processing fees are reduced and payment is settled similarly to checks, but transaction processing time increases to several business days
Solution Approach 1:
The system performs a preliminary ACH payment attempt before finalizing the transaction. If the ACH payment fails to clear within a predetermined time period, the system automatically initiates a backup credit card charge to ensure payment completion. This preliminary action allows the system to benefit from lower ACH fees while mitigating the risk of delayed or failed transactions.
Solution Approach 2:
The system provides beforehand cushioning by requiring consumers to pre-authorize a backup credit card payment before the ACH transaction is finalized. This pre-arranged backup mechanism cushions against the risks of ACH payment failures or delays, ensuring that the merchant receives payment even if the primary ACH transaction does not clear on time.
2Ease of operation
If real-time surcharge calculation is implemented, then consumers can determine total payment before processing and choose optimal payment methods, but system complexity increases
Solution Approach 1:
The system implements real-time feedback by calculating and displaying the total payment amount including surcharges to the consumer before the transaction is finalized. The consumer receives immediate feedback about the exact amount they will be charged and can use this information to choose the optimal payment method. The system also provides feedback about payment status and allows consumers to review transaction details before completion.
3Reliability
If backup credit card payment is added to secure ACH transactions, then payment reliability improves, but transaction processing steps increase
Solution Approach 1:
The system performs a preliminary ACH payment attempt before finalizing the transaction. If the ACH payment fails to clear within a predetermined time period, the system automatically initiates a backup credit card charge to ensure payment completion. This preliminary action allows the system to benefit from lower ACH fees while mitigating the risk of delayed or failed transactions.
Solution Approach 2:
The system uses an intermediary payment processing platform that manages both the ACH and credit card payment components. This intermediary system coordinates the payment sequence, monitors ACH clearance status, and automatically triggers backup credit card charges when necessary, reducing the complexity burden on individual merchants while maintaining high payment reliability.
Data Source
AI summary
A method for facilitating secure and cost-effective transactions using a Tap to Pay (TTP) functionality is disclosed. The method includes receiving Bank Identification Number (BIN) data associated with a customer's payment card during a transaction initiation, generating a Personal Identification Number (PIN) based on the received BIN data, displaying the generated PIN on the customer's smartphone or smart device for authentication purposes during the transaction, utilizing the displayed PIN for added authentication, reducing the need for physical tokens or additional hardware, and enhancing security and reducing the risk of fraud by requiring the use of the displayed PIN during the transaction.