Blockchain Transaction Authorization Without Payment Intermediaries
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Solution Overview
Problem
Current credit card transaction systems are expensive due to multiple intermediaries involved in the processing, leading to high fees for merchants and consumers.
Innovation Solution
A blockchain-based system where both consumers and merchants maintain copies of transaction records, enabling fast and reliable authorization without the need for traditional intermediaries, using blockchain control logic for authentication and validation.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional credit card processing intermediaries are used, then transaction reliability is ensured through centralized validation, but transaction costs increase due to multiple fees from issuers, associations, and acquiring banks
Solution Approach 1:
The patent extracts the centralized validation function from traditional intermediaries (credit card associations and issuing banks) and redistributes it to individual nodes in the payment network. Each node maintains a copy of the blockchain and can independently validate transactions, eliminating the need for centralized clearing houses while maintaining transaction reliability through distributed consensus.
Solution Approach 2:
The system enables nodes to perform self-validation of transactions using their local blockchain copies. Merchants, payment processors, and other network participants can independently verify transaction authenticity and authorization without requiring approval from centralized authorities, thereby reducing intermediary fees while maintaining security and reliability.
2Ease of operation
If centralized fiat currency management is used, then currency state management is simplified through central control, but system complexity increases due to multiple intermediaries and fee structures
Solution Approach 1:
The patent segments the centralized currency management function into distributed ledger copies held by multiple nodes. Instead of one central authority managing all currency state, each node maintains its own copy of the blockchain, dividing the management responsibility across the network while simplifying individual node operations through standardized validation protocols.
Solution Approach 2:
The blockchain data structure serves multiple functions simultaneously: it acts as a transaction record, a validation reference, an authorization mechanism, and a state management system. This multi-functionality reduces the need for separate systems and intermediaries, simplifying the overall payment network structure while maintaining ease of currency management.
Data Source
AI summary
In the disclosed transaction processing system, members of an authorized network of consumers and merchants manage account information using blockchain ledgers. Because both consumers and merchants maintain copies of the blockchain, for any consumer/merchant transaction, both entities can quickly validate the transaction because both are aware, via their blockchain entries, of the current status of the account sourcing the transaction, allowing fast and accurate transaction validation without the need to incur the processing charges inherent in traditional fiat currency credit transactions.