Blockchain Payment Routing via Distributed Ledger Preferences
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Solution Overview
Problem
Traditional payment authorization and settlement systems rely on centralized communication channels that require routing through third-party credit card providers, leading to inefficiencies and a need for a distributed network to facilitate transactions.
Innovation Solution
A system and method that connects with a blockchain distributed network to route payment authorization and settlement based on specified parameters, using a distributed ledger to determine preferences and optimize routing through available network nodes and rails.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If traditional payment rails are used for authorization and settlement, then existing infrastructure compatibility is maintained, but routing efficiency and transaction speed are reduced due to third-party intermediaries
Solution Approach 1:
The system segments the payment routing process by separating authorization and settlement functions, allowing independent optimization of each pathway. The distributed ledger enables segmented routing decisions based on specific transaction parameters, eliminating the need for monolithic third-party routing infrastructure.
Solution Approach 2:
The patent introduces a distributed dimension to traditional centralized payment routing. By leveraging blockchain technology, the system adds a new dimensional layer for routing decisions that operates parallel to traditional rails, enabling more efficient multi-path routing without compromising infrastructure compatibility.
2Reliability
If distributed blockchain network is implemented for routing, then transaction routing efficiency and security are improved, but system complexity and implementation difficulty increase
Solution Approach 1:
The distributed ledger system serves multiple functions simultaneously: it provides secure routing decisions, maintains transaction history, stores participant preferences, and enables consensus-based validation. This multi-functionality reduces the need for separate specialized systems, thereby managing complexity while enhancing security.
Solution Approach 2:
The system incorporates feedback mechanisms where transaction results and network status information are fed back into the distributed ledger. This enables dynamic routing decisions based on real-time conditions, improving reliability while the automated feedback loops reduce manual intervention complexity.
3Adaptability or versatility
If multiple routing preferences are stored in distributed ledger, then routing flexibility and adaptability are improved, but data storage and processing requirements increase
Solution Approach 1:
The system stores routing preferences locally at participating nodes rather than centrally. Each node maintains its own copy of relevant preference data, enabling distributed processing and reducing the data volume requirement at any single location while maintaining overall system adaptability.
Solution Approach 2:
Routing preferences are pre-stored in the distributed ledger before transactions occur. This preliminary action eliminates the need for real-time data queries and processing, reducing instantaneous data requirements while maintaining high routing flexibility for diverse transaction types.
Data Source
AI summary
Embodiments enable a system operatively connected with a block chain distributed network to use the block chain for routing of process authorization and settlement based on specified parameters. Embodiments receive a transaction record associated with a payment transaction, wherein the transaction record comprises transaction data indicating a payor, a payee and an amount; access a distributed ledger stored in the memory device, wherein the distributed ledger is updated based on communications from a block chain distributed network; determine, using the accessed distributed ledger, one or more preferences associated with the payee of the transaction data; and route at least one of the process authorization and transaction settlement based on the accessed one or more preferences. In some cases, the preferences include a settlement routing preference and the transaction settlement is routed based on the settlement routing preference.