Credit-Based Split-Commission Payment Network
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Solution Overview
Problem
Traditional payment card transactions and digital peer-to-peer payments incur high costs for merchants and payees due to multiple entities involved and high fees, with slow fund transfer times, making them inefficient for many transactions.
Innovation Solution
A community payment network that uses credits backed by currency, allowing payee fees to be split among entities like payment services, users, and charities, reducing the number of participants and communication needed, and enabling faster transactions with lower fees.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional payment card transactions are used, then merchants can accept payments with established infrastructure, but processing costs are high due to multiple entities and fees
Solution Approach 1:
The patent extracts and eliminates unnecessary intermediaries from the payment processing chain. By removing card networks, issuers, and multiple processors from the transaction path, the system retains only essential functions while dramatically reducing fees and processing costs.
Solution Approach 2:
The patent introduces a new type of intermediary - a distributed ledger system that enables direct peer-to-peer transactions without traditional financial intermediaries. This mediator provides trust and settlement functions while eliminating the need for multiple fee-charging entities.
2Loss of energy
If traditional peer-to-peer payment processors are used, then transaction costs are reduced, but fund transfer time increases to days
Solution Approach 1:
The patent implements continuous real-time settlement through the distributed ledger system. Transactions are processed and settled immediately without batch processing delays, enabling instant fund transfers while maintaining low costs through automated continuous operation.
Solution Approach 2:
The patent replaces the mechanical banking settlement system with an electronic distributed ledger system. This substitution enables instantaneous verification and transfer of funds without relying on traditional batch processing cycles and intermediary bank transfers.
3Reliability
If multiple entities are involved in payment processing, then transaction security is enhanced, but the number of communications and processing steps increases
Solution Approach 1:
The patent merges multiple separate processing functions (authorization, clearing, settlement) into a single distributed ledger system. This consolidation maintains security through cryptographic verification while eliminating the need for multiple communication steps between separate entities.
Solution Approach 2:
The distributed ledger system performs multiple functions simultaneously - it acts as the transaction network, the settlement system, the record-keeping mechanism, and the trust verification authority. This multi-functionality reduces the number of participants needed while maintaining comprehensive security.
Data Source
AI summary
Techniques are described for conducting an electronic transaction using a split-commission payment service. Techniques can include using currency-based credits, wherein credits are also provided as commissions to a referrer of the payor and a previous payee of the payor. The techniques can include one or more of a payment service providing a payment application to a user device of a user, causing a financial account to be opened on a user's behalf at a financial institution affiliated with the payment service, transferring funds from a funding source of a user to the financial account, associating a user profile of a user with credits equivalent to a balance of the financial account, receiving transaction data for a transaction, determining a payee fee for the transaction, transferring currency or credits equivalent to the transaction amount from payor to payee, splitting the payee fee between at least the payment service, referring user, and previous payee, and distributing currency or credits accordingly.