Transaction Authorization Engine Using Conditional Probability
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Solution Overview
Problem
Existing electronic payment transaction authorization systems face high error rates, leading to increased signal traffic and data processing loads due to erroneous decisions, which can result in reverse transactions and resource consumption.
Innovation Solution
A transaction authorization system and method that utilizes an authorization engine to analyze received requests by accessing a database of past transactions, determining distribution functions, intermediate values, and conditional probabilities to generate a more reliable authorization output.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional authorization analysis is used, then the system is simple to operate, but the decision reliability is low leading to erroneous approvals and declines
Solution Approach 1:
The system performs preliminary actions by pre-calculating and storing distribution functions based on historical transaction records before authorization decisions are needed. When a transaction request arrives, the system uses these pre-computed distribution functions to quickly determine intermediate values and conditional probabilities, improving decision reliability without adding complex real-time processing
Solution Approach 2:
The system transitions from traditional binary authorization decisions (approve/decline) to a multi-dimensional statistical analysis framework. By introducing distribution functions, intermediate values, and conditional probabilities as additional dimensions of analysis, the system achieves more reliable decisions while managing complexity through structured mathematical models
2Productivity
If erroneous authorization decisions are made, then quick processing is achieved, but signal traffic and data processing load increase due to reverse transactions
Solution Approach 1:
The system incorporates feedback mechanisms by continuously analyzing historical transaction records to refine distribution functions and improve authorization decisions. This feedback loop reduces erroneous decisions and subsequent reverse transactions, thereby decreasing unnecessary signal traffic and computing resource consumption while maintaining processing speed
Solution Approach 2:
By pre-computing distribution functions from historical data before transactions occur, the system minimizes real-time computational requirements. This preliminary action enables fast authorization decisions without sacrificing accuracy, preventing erroneous approvals that would otherwise require resource-intensive reverse transactions
Data Source
AI summary
A transaction authorization system comprises an authorization engine (18) configured to perform an analysis in relation to a received request for authorization of a current electronic payment transaction and generate an authorization output based on the analysis, and a database (22) storing a plurality of transaction records for past electronic payment transactions. The authorization engine is configured to:access the database to determine one or more distribution functions based on at least some of the stored transaction records,determine one or more intermediate values in relation to the received authorization request based on the one or more distribution functions,determine a conditional probability in relation to the one or more intermediate values based on at least some of the stored transaction records, the conditional probability indicative of a probability of a predetermined transaction result under the condition of the one or more intermediate values, andgenerate the authorization output based on the determined conditional probability.