Combination Payment Card with Dynamic Merchant Routing
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Solution Overview
Problem
Existing prepaid cards are limited in their functionality, as closed-loop cards can only be used at specific merchants and open-loop cards lack the flexibility to support multiple networks, leading to inefficiencies in transaction processing.
Innovation Solution
A combination payment card is introduced, which is associated with both a closed-loop and an open-loop account, allowing it to be used at any merchant within the sponsoring network or at specific affiliated merchants, with transaction processing determined by the processor based on merchant identification and account balances.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If a closed-loop prepaid card is used, then the card can be used at specific affiliated merchants, but the card cannot be used at other merchants outside the closed-loop network
Solution Approach 1:
The patent merges a closed-loop prepaid account and an open-loop prepaid account into a single combination payment card. The card can be used at both affiliated merchants (closed-loop) and any merchant accepting the sponsoring network (open-loop), effectively combining the advantages of both card types while eliminating the need for separate cards for different merchant networks.
Solution Approach 2:
The combination payment card is designed to perform multiple functions: it operates as a closed-loop card at affiliated merchants and as an open-loop card at other merchants. This multi-functionality allows a single card to replace multiple specialized cards, providing universal acceptance across different merchant types while maintaining the benefits of both closed-loop and open-loop systems.
2Adaptability or versatility
If an open-loop prepaid card is used, then the card can be used at any merchant within the sponsoring network, but the card cannot be optimized for specific affiliated merchants
Solution Approach 1:
The combination payment card dynamically switches between closed-loop and open-loop processing modes based on the merchant type. When a transaction occurs at an affiliated merchant, the system automatically routes through the closed-loop account; when a transaction occurs at other merchants, it routes through the open-loop account. This dynamic routing optimizes transaction processing for each merchant type without requiring manual intervention.
3Device complexity
If a single account is used for both closed-loop and open-loop transactions, then the system is simpler, but the available funds are not optimized for each merchant type
Solution Approach 1:
The patent segments the payment card into two distinct accounts: a closed-loop prepaid account for affiliated merchants and an open-loop prepaid account for other merchants. Each account maintains its own balance and transaction rules, allowing funds to be optimized and managed separately for each merchant type while both accounts are accessed through the single combination payment card.
Data Source
AI summary
Systems and methods for processing payment transactions using combination payment cards. The combination payment card is associated with an open-loop account and one or more closed-loop accounts. Transaction information is received from a point-of-sale device. At least one of the closed-loop and open-loop account is debited.