Blockchain Transaction Authorization for Low-Cost Member Networks
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Solution Overview
Problem
Current credit card transaction systems involve multiple intermediaries, leading to high processing costs and fees, making them expensive and inefficient.
Innovation Solution
A blockchain-based system where consumers and merchants maintain copies of transaction data, enabling fast and accurate validation without the need for traditional intermediaries, thus reducing costs.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional credit card processing intermediaries are used, then transaction reliability is maintained through centralized clearing houses, but processing costs increase due to multiple fees from card associations and acquiring banks
Solution Approach 1:
The patent extracts the intermediary clearing house function from the traditional payment system. Instead of using centralized card associations and acquiring banks, the system allows merchants to directly validate transactions by comparing account values against their own stored blockchain copies, eliminating the need for expensive intermediate processors while maintaining transaction reliability through decentralized consensus
Solution Approach 2:
The patent implements copying by distributing identical blockchain copies to multiple merchants. Each merchant maintains a local copy of the blockchain ledger and uses it to independently validate transactions. This copying approach enables decentralized validation without requiring centralized clearing, reducing processing costs while preserving transaction reliability through consistent data replication across the network
2Reliability
If centralized fiat currency management is used, then account state validation is reliable through centralized clearing houses, but transaction processing time increases due to multiple intermediary steps
Solution Approach 1:
The patent segments the centralized validation function into distributed validation capabilities at each merchant location. Instead of all transactions routing through centralized clearing houses, each merchant independently validates transactions locally by comparing against their stored blockchain copy. This segmentation enables parallel processing of transactions across multiple merchants simultaneously, reducing overall processing time while maintaining validation reliability through consistent blockchain data
Solution Approach 2:
The patent applies preliminary action by pre-storing blockchain copies at each merchant's POS device before transactions occur. Merchants have the complete transaction history and account balances already downloaded and cached locally. When a transaction occurs, validation is immediate through local comparison rather than requiring real-time communication with centralized systems, dramatically reducing processing time while maintaining reliability through pre-synchronized data
3Reliability
If multiple intermediaries are involved in credit card transactions, then transaction security is maintained through centralized oversight, but system complexity increases due to multiple parties involved
Solution Approach 1:
The patent merges the functions of card associations, acquiring banks, and merchants into a single decentralized blockchain network. Instead of separate entities performing sequential validation steps, all validation logic is combined into the blockchain protocol itself. Merchants directly validate transactions using their local blockchain copies, eliminating the need for multiple intermediary systems and reducing overall system complexity while maintaining security through cryptographic verification
Solution Approach 2:
The patent implements self-service by enabling merchants to independently validate their own transactions without requiring external intermediaries. Each merchant uses their locally stored blockchain copy to autonomously verify account balances and transaction validity. This self-service approach eliminates complex intermediary relationships and reduces system complexity while maintaining security through decentralized consensus mechanisms
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.