Centralized Payment Intermediary for Fraud Reduction
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Solution Overview
Problem
Existing online payment systems require users to provide payment details for each online merchant, increasing the risk of fraud and inconvenience, as there is no centralized mechanism for managing financial instrument data, leading to exposure and potential misappropriation of financial information.
Innovation Solution
A trusted central intermediary system processes payment authorization requests on behalf of online merchants, allowing users to select payment methods from a stored wallet, reducing the need for repeated input of payment details and enhancing security by interfacing with existing IPSP systems to ensure compliance with card scheme rules and consumer protection.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If users provide payment details for each online merchant, then each merchant can process payments directly, but the risk of fraud and exposure of financial information increases
Solution Approach 1:
The patent introduces a payment service provider (PSP) as an intermediary between users and online merchants. The PSP stores users' financial instrument data centrally and securely, acting as a mediator that allows merchants to initiate payments without directly handling sensitive user data. This resolves the contradiction by improving security through centralized protection while maintaining operational simplicity for merchants.
Solution Approach 2:
The patent extracts the sensitive financial instrument data handling function from the merchant system and places it in a dedicated PSP system. By taking out the storage and management of payment details from the merchant environment, the system improves security while reducing the complexity burden on individual merchants.
2Ease of operation
If users provide payment details for each online merchant, then merchants can process transactions independently, but user convenience decreases due to repeated input requirements
Solution Approach 1:
The patent implements preliminary action by having users store their financial instrument data once in the PSP system before actual transactions. This pre-storage eliminates the need for repeated input during subsequent purchases, significantly improving ease of operation and reducing time loss while maintaining merchant independence.
Solution Approach 2:
The system enables self-service by allowing users to manage their own payment instruments centrally in the PSP. Users can add, remove, and manage their financial data once, and the system automatically uses these stored details for future transactions, eliminating repetitive manual input and improving convenience.
3Adaptability or versatility
If a centralized payment system is implemented, then user convenience and security improve, but system complexity and integration requirements increase
Solution Approach 1:
The PSP system is designed with universality to work with multiple merchants and various financial instruments through standardized interfaces. This multi-functional design provides adaptability and versatility across different scenarios while containing complexity within the centralized PSP rather than requiring complex integrations at each merchant endpoint.
Solution Approach 2:
The PSP acts as an intermediary layer that standardizes communication between users and merchants. By introducing this mediator with standardized APIs and protocols, the system achieves high adaptability and versatility while managing complexity centrally, preventing it from propagating to individual merchant systems.
4Reliability
If merchants handle payment data directly, then transaction processing is straightforward, but the risk of data misappropriation and fraud increases
Solution Approach 1:
The patent extracts sensitive financial data handling from the merchant transaction process and places it in the PSP system. This separation maintains the simplicity of transaction initiation for merchants while improving data integrity through centralized, secure storage and management in the PSP environment.
Solution Approach 2:
The PSP serves as an intermediary that protects financial data integrity while maintaining transaction processing simplicity. The mediator handles sensitive data operations securely, allowing merchants to initiate transactions straightforwardly without directly accessing or handling sensitive information, thus preserving both simplicity and integrity.
Data Source
AI summary
Embodiments of the invention provide a method of processing payment authorization requests for payment transactions to be conducted via a data communications network on behalf of online merchants, the payment authorization requests are conducted as a result of orders by financial instrument holders via a plurality of different online merchant systems. Each of the online merchants has an online merchant identity. The method is conducted by a trusted central intermediary system which is arranged to transmit payment authorization requests to each of a plurality of different online merchant Internet Payment Service Provider (IPSP) systems. Each merchant IPSP system is arranged to transmit payment authorization requests to at least one of a plurality of acquiring bank payment processor systems, and each of said plurality of acquiring bank payment processor systems is responsible for processing payment authorizations for at least one of said acquiring banks. Embodiments of the invention enable a user to select a payment method on a per transaction basis, while removing the requirement for the user to provide payment details to individual online merchant systems or to their merchant IPSP systems. Thus, providing that online merchants, or their merchant IPSPs, subscribe to a service arranged to perform the method, users only have to submit their respective payment details, preferably only once, to a separate, trusted entity.