Controlled Payment Numbers for NFI Transaction Security
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Solution Overview
Problem
Non-financial institution entities face challenges in enabling user-to-user and user-to-merchant transactions without requiring financial institution operations, due to limitations in verifying user identities and managing payment transactions securely and efficiently.
Innovation Solution
A system and method for verifying user identities and processing transactions using controlled payment numbers, which involves storing account profiles, generating controlled payment numbers, and updating spending limits, allowing transactions without the need for traditional financial institution operations.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If NFI entity collects user payment information to enable transactions, then users can conduct transactions via the NFI entity, but users may be wary of providing sensitive data and the entity lacks the technical hardware and system security necessary to store and communicate such information
Solution Approach 1:
The patent extracts the sensitive payment information handling function from the NFI entity system. Instead of storing and processing payment information within the NFI entity's infrastructure, the system uses controlled payment numbers that are issued by the NFI entity but processed through external financial institutions' secure payment networks. This removes the security burden from the NFI entity while maintaining transaction capability.
Solution Approach 2:
The patent introduces controlled payment numbers as an intermediary mechanism between the NFI entity and the payment processing system. These controlled payment numbers act as a bridge that allows the NFI entity to enable transactions without directly handling sensitive payment data, thus maintaining both ease of operation and data security.
2Ease of operation
If NFI entity establishes payment accounts with traditional fiat currency to enable transactions, then users can conduct transactions, but the entity must operate as a financial entity requiring costly licensing and significant system modification
Solution Approach 1:
The patent extracts the financial institution operational requirements from the NFI entity system. By using controlled payment numbers that leverage existing financial institutions' infrastructure, the NFI entity avoids the need to establish its own payment account system, thereby eliminating costly licensing requirements and significant system modifications while maintaining transaction capability.
Solution Approach 2:
The controlled payment number system provides multi-functionality by enabling the NFI entity to support various transaction types (user-to-user, user-to-merchant, discounts, rewards) without requiring separate financial systems for each function. This universal approach maintains ease of operation while avoiding the complexity of multiple specialized financial systems.
3Adaptability or versatility
If NFI entity establishes virtual currencies to enable transactions among users, then users can conduct user-to-user transactions, but these currencies cannot be used outside the NFI entity resulting in low adoption and usage
Solution Approach 1:
The controlled payment number system provides universal acceptance both within the NFI entity ecosystem and outside it. Merchants and users can accept controlled payment numbers just like traditional payment card numbers, enabling transactions across multiple platforms and contexts. This universality drives user adoption while maintaining versatile transaction scope.
Solution Approach 2:
The system performs preliminary action by pre-configuring controlled payment numbers with spending limits and authorization rules before transactions occur. This allows users to conduct transactions immediately without requiring separate currency conversion or account setup processes, thereby increasing adoption while maintaining adaptability across different transaction scenarios.
4Reliability
If NFI entity verifies user identity to enable transactions with outside entities, then transaction security is improved, but existing system limitations prevent verification of user identity
Solution Approach 1:
The patent uses controlled payment numbers as an intermediary verification mechanism. The financial institutions that issue these controlled payment numbers already have established identity verification processes in place. By leveraging this existing verification infrastructure, the NFI entity can enable identity verification without adding complex verification systems, thus improving reliability while avoiding increased system complexity.
Data Source
AI summary
A method for verification of user identity includes: storing account profiles, each profile including data related to a user account of a non-financial institution (NFI) entity including an account identifier and an address; receiving a transaction request, the request including a specific account identifier and a transaction amount; identifying an account profile including the specific account identifier; generating a controlled payment number associated with a transaction account of the NFI entity; transmitting a notification to a third party entity including the specific account identifier; transmitting the controlled payment number to a user associated with the user account related to the specific account profile; receiving a data message from the third party entity including the specific account identifier and identification data associated with the user; and updating the specific account profile to include the controlled payment number, the identification data, and a spending limit based on the transaction amount.