Blockchain Promissory Notes for Transparent Net Settlement

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Solution Overview

Problem

Traditional payment transaction settlement processes are centralized, leading to bottlenecks, lack of transparency, and uncertainty in settlement amounts, affecting merchants, acquiring institutions, and other entities due to unpredictable time-sensitive variables like foreign exchange rates.

Innovation Solution

A system that generates cryptographic promissory notes for posting to a blockchain, enabling decentralized processing and providing transparent, immutable transaction records, allowing merchants and acquiring institutions to monitor and verify settlement accuracy in real-time.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If centralized payment network systems are used for settlement, then control and coordination are improved, but processing speed and settlement time deteriorate due to bottlenecks

Engineering Contradiction:

Improvesettlement controlVSAvoidsettlement speed

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The patent segments the centralized settlement process into individual cryptographic promissory notes for each payment transaction, allowing parallel processing and settlement of multiple transactions simultaneously on the blockchain network, thereby eliminating the bottleneck of centralized sequential processing

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The patent introduces a blockchain network as an intermediary settlement layer that receives cryptographic promissory notes from payment network systems and executes settlements automatically through smart contracts, decoupling the control function from the execution bottleneck

Inventive Principle:

Principle #24Intermediary (Mediator)

2Device complexity

If centralized settlement processes are used, then transaction processing is simplified, but transparency and visibility of settlement data deteriorate

Engineering Contradiction:

Improveprocess simplicityVSAvoidsettlement transparency

Core Design Contradiction:

Device complexityVSLoss of information

Solution Approach 1:

The patent creates cryptographic copies of settlement data in the form of immutable blockchain records that are transparently visible to all authorized parties, allowing multiple entities to simultaneously view and verify settlement information without compromising the simplicity of the underlying process

Inventive Principle:

Principle #26Copying

Solution Approach 2:

The patent implements real-time feedback mechanisms where cryptographic promissory notes and settlement status are continuously updated and visible on the blockchain, providing transparent information flow back to merchants, acquiring institutions, and other stakeholders

Inventive Principle:

Principle #23Feedback

3Device complexity

If traditional settlement systems are used, then infrastructure requirements are reduced, but accuracy and reliability of settlement amounts deteriorate due to unpredictable variables

Engineering Contradiction:

Improveinfrastructure requirementVSAvoidsettlement amount accuracy

Core Design Contradiction:

Device complexityVSMeasurement precision

Solution Approach 1:

The patent performs preliminary actions by generating cryptographic promissory notes that lock in settlement amounts and exchange rates at the time of transaction authorization, eliminating the impact of subsequent fluctuations in time-sensitive variables like foreign exchange rates

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The patent uses cryptographic promissory notes as disposable digital instruments that encapsulate settlement terms, allowing for precise and immutable recording of settlement amounts without requiring complex infrastructure for maintaining accuracy over time

Inventive Principle:

Principle #27Cheap short-living objects (Disposable)

Data Source

PatentEP4125018B1Method and system for net settlement by use of cryptographic promissory notes issued on a blockchain

Publication Date: 2025.12.10 MASTERCARD INT INC

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AI summary

A blockchain network (114) for supporting net settlement of transactions is described. The blockchain network comprises a plurality of blocks, each block including one or more blockchain transactions. Each of the one or more blockchain transactions corresponds to a payment transaction, wherein each of the one or more blockchain transactions comprises an encrypted promissory note including at least a transaction amount and a wrapped symmetric key comprising a symmetric encryption key used to encrypt the encrypted promissory note wrapped by a public key of an acquirer of the payment transaction. Each blockchain transaction is stored at a blockchain address associated with the acquirer (106) of the corresponding payment transaction, the blockchain network (114) thereby being adapted for the acquirer (106) to perform net settlement of payment transactions posted to its blockchain address. A method of net settlement by an acquirer (106) using such a blockchain network is also described.