Batch Settlement Routing for Dual-to-Single Message Transactions
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Solution Overview
Problem
Existing systems do not allow for seamless conversion of dual-message transactions, such as PIN-less dual message transactions, to single-message transactions, like debit transactions, which could provide cost savings for merchants by accessing debit networks and reducing transaction fees.
Innovation Solution
A method and system for converting dual-message transactions to single-message transactions, enabling batch settlement, by setting conversion flags and routing transactions through a PIN-less debit network, utilizing a batch settlement server and card authorization server to process transactions efficiently.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If dual-message transaction processing is used, then authorization and clearing are separated into distinct messages, but transaction fees are higher and processing resources are consumed
Solution Approach 1:
The patent combines authorization and clearing operations into a single message transmission. Instead of sending separate authorization and clearing messages, the system consolidates both functions into one message that contains all necessary data elements (authorization request, transaction details, and clearing information), thereby reducing message count, processing resources, and fees while maintaining transaction reliability
Solution Approach 2:
The single message is designed to serve multiple functions simultaneously - it performs both authorization and clearing operations. The message structure includes fields that enable the receiving system to both authorize the transaction and process clearing information without requiring additional messages, making the communication protocol more versatile and efficient
2Reliability
If dual-message transaction is used, then issuer financial institution can assess credit risk, but transaction fees are higher due to risk transfer and processing
Solution Approach 1:
By merging authorization and clearing into one message, the patent eliminates the intermediate risk transfer step inherent in dual-message transactions. The single message allows the issuer to assess credit risk directly at authorization time without needing to wait for a separate clearing message, thereby reducing the risk premium embedded in transaction fees
3Productivity
If single-message transaction is used, then processing resources are reduced and fees are lower, but batch settlement compatibility is limited
Solution Approach 1:
The patent segments the single message into distinct functional components - authorization data elements and clearing data elements are separated within the message structure. This segmentation allows receiving systems to process the message in different modes: real-time authorization or batch settlement, depending on how the message is configured and received, thereby achieving both processing efficiency and batch settlement compatibility
Solution Approach 2:
The message structure is designed to be dynamic and adaptable. The same single message format can be processed differently based on system configuration - it can trigger immediate authorization responses or be queued for batch settlement processing. This dynamic processing capability allows the system to optimize for either real-time or batch operations without requiring different message formats
Data Source
AI summary
A computer-implemented method for processing single message transactions with batch settlement may include receiving a dual-message transaction from a merchant, converting the received dual-message transaction to a single-message transaction, setting a flag on the converted single-message transaction indicating the conversion to a single-message transaction, receiving a batch settlement file from the merchant, for each transaction in the batch settlement file, determining whether the single-message transaction conversion flag is set, upon determining that the single-message transaction conversion flag is not set, storing the transaction for later processing, and upon determining that the single-message transaction conversion flag is set, sending the transaction to a payment network.