Cross-Border Transaction Processing System with Currency Conversion
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Solution Overview
Problem
Current global payment card processing systems face challenges in efficiently identifying and processing cross-border transactions, which often require currency conversion, and incur additional fees due to differing regulatory environments and currency exchange regulations across national borders.
Innovation Solution
A method and system for processing cross-border payment card transactions that evaluate inbound transaction messages to determine if currency conversion is needed, perform necessary conversions, and assess fees or rebates among entities, ensuring seamless global processing and cost allocation.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If currency conversion is performed by multiple entities in the payment network, then the transaction can be processed across different currencies, but additional currency conversion fees are incurred
Solution Approach 1:
The system performs preliminary identification of cross-border transactions by evaluating inbound transaction messages against stored cross-border transaction data before routing. This early detection allows the system to proactively manage currency conversion needs and prevent unnecessary conversions by downstream entities, thereby reducing cumulative fees while ensuring required conversions are performed
2Measurement precision
If the system identifies all cross-border transactions, then currency conversion fees can be accurately allocated, but the complexity of evaluating transaction messages increases
Solution Approach 1:
The system maintains a copy of cross-border transaction data (including country codes, currency codes, and regulatory information) in its storage medium. Instead of performing complex real-time analysis of transaction messages, the system compares message data against this pre-stored reference copy, significantly simplifying the evaluation process while maintaining high identification accuracy
3Reliability
If currency conversion is performed at each entity level, then local regulatory requirements are met, but the overall processing cost increases
Solution Approach 1:
The system provides feedback to downstream entities (acquirers, merchants) by indicating whether a transaction has been identified as cross-border and whether currency conversion has already been performed. This feedback mechanism allows downstream entities to adjust their processing accordingly, performing conversion only when necessary to meet local regulatory requirements, thereby reducing redundant conversions and overall processing costs
Data Source
AI summary
A method and a system for processing cross-border transactions in a multiple party payment card processing network is disclosed. A party evaluates an inbound transaction message received from a downstream party to determine if the corresponding payment transaction is a cross-border transaction and if it requires currency conversion processing. Based on the evaluations, a cross-border and currency conversion status indicator that is attached to outbound transaction messages sent to upstream entities in the payment network. Currency conversion service fees and/or rebates may be assessed to other entities in the payment card network according to the results of the evaluations.