Cardholder Device Transaction Initiation via Inversion
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Solution Overview
Problem
Traditional payment card systems rely on merchant-controlled points of interaction, exposing card and account information to potential fraud and incurring high costs for merchants, who may struggle with equipment and data transmission expenses, limiting their ability to participate in payment-by-card systems.
Innovation Solution
A cardholder-controlled input device initiates financial transactions, transmitting authorization requests and responses directly to the payment network, reducing the need for merchant-controlled points of interaction and lowering costs by using wireless communication links.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If merchant-controlled points of interaction are used for payment card transactions, then transaction processing can be performed, but card and account information are exposed to potential fraud and merchants incur high equipment and data transmission costs
Solution Approach 1:
The patent inverts the traditional payment initiation model by allowing the cardholder device to initiate transactions directly to the payment network, rather than requiring merchant-controlled points of interaction. This reversal eliminates the need for merchants to maintain expensive POS equipment and reduces card information exposure, as the cardholder's own device securely transmits authorization requests.
Solution Approach 2:
The cardholder device acts as an intermediary between the payment network and the transaction initiation process. By using the cardholder's mobile device as the intermediary point of interaction, the system eliminates the need for traditional merchant POS terminals while maintaining secure transaction processing through the payment network's infrastructure.
2Productivity
If merchants use merchant-controlled points of interaction for payment processing, then transactions can be processed, but merchants face high equipment and data transmission costs that limit their ability to participate
Solution Approach 1:
The system enables self-service transaction initiation where the cardholder's mobile device performs the functions previously requiring merchant POS equipment. The cardholder device captures card information, generates authorization requests, and transmits them directly to the payment network, eliminating the need for merchants to maintain complex processing equipment.
Solution Approach 2:
The cardholder device serves multiple functions: it acts as the point of interaction, stores card information securely, generates authorization requests, and communicates with the payment network. This multi-functional approach replaces the need for dedicated merchant POS terminals, making payment processing accessible to any merchant with internet connectivity.
3Ease of operation
If traditional merchant environment is used for card transactions, then account numbers can be entered into merchant systems, but the card and account number are exposed to potential fraud
Solution Approach 1:
The patent extracts the card information storage and transmission function from the merchant environment and places it directly in the cardholder device. By taking out the sensitive card data handling from the merchant's system, the invention eliminates the security vulnerability of exposing account numbers in the merchant environment while maintaining ease of transaction initiation through the cardholder's mobile device.
Data Source
AI summary
A method and system for processing a financial transaction initiated by a cardholder with a merchant. The cardholder initiates the transaction using a cardholder input device and transmits an authorization request message including transaction data received by the cardholder input device from a point of sale (POS) device associated with the merchant. The authorization request message is received by a computer system. The transaction data is validated, and an authorization response message is transmitted after validation. The cardholder input device may forward the authorization response message to the POS device for completing the transaction.