Intermediary Payment Network for Cross-Merchant Gift Card Authorization
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Gift card recipients are limited to using funds only at the issuing merchant, lacking flexibility and convenience, and closed systems often have inadequate fraud detection, making it cumbersome to exchange or use gift cards across different merchants.
Innovation Solution
A method allowing prepaid cards to communicate through a payment processing network, enabling recipients to use gift cards issued by one merchant at another merchant, utilizing merchant identification numbers and secure channels for authorization and transaction processing, and incorporating advanced fraud detection mechanisms.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If gift cards are issued by a specific merchant using closed system processing, then the issuing merchant receives payment for the value of the gift card, but the recipient is limited to using the gift card only at the issuing merchant
Solution Approach 1:
The patent introduces a payment processing network as an intermediary between the issuing merchant and the transaction merchant. This network enables authorization requests to be routed from the transaction merchant through to the issuing merchant, allowing gift cards to be used across multiple merchants while maintaining the original closed-system payment security model. The intermediary facilitates communication without requiring the transaction merchant to have a direct relationship with the issuing merchant.
2Reliability
If closed system processing is used for gift cards, then the issuing merchant maintains control over the funds, but the recipient must travel to or shop at the issuing merchant's location
Solution Approach 1:
The payment processing network acts as a mediator that enables the recipient to use the gift card at any participating merchant without needing to visit the issuing merchant. The network handles the authorization and communication between merchants, making the transaction process as convenient as using a standard debit or credit card while the issuing merchant retains control over the funds through the established authorization protocol.
3Device complexity
If merchants operate closed systems with prepaid cards, then each merchant can manage their own transactions, but fraud detection systems become unsophisticated and inadequate
Solution Approach 1:
The patent merges the fraud detection capabilities of multiple merchants into a centralized payment processing network. By combining resources and data from multiple participating merchants, the network can implement sophisticated fraud detection algorithms that would be impossible for individual small to medium-sized merchants to develop independently. This maintains system independence for transaction processing while enhancing fraud detection through collaboration.
4Adaptability or versatility
If gift card exchange services are provided, then recipients can use gift cards at different merchants, but the exchange process becomes cumbersome requiring website visits and mailing
Solution Approach 1:
The payment processing network eliminates the need for cumbersome gift card exchange services by enabling direct use of gift cards at any participating merchant. The intermediary network handles the compatibility and authorization processes in the background, allowing recipients to simply use their existing gift cards at different merchants without visiting websites, mailing cards, or going through exchange procedures.
Data Source
AI summary
In one embodiment of the invention, a method is described. The method comprises receiving at a server computer, an authorization request message from a first merchant computer operated by a first merchant that includes information associated with a transaction conducted by a consumer using a prepaid device associated with a second merchant, determining, based on the information in the authorization request message, the second merchant associated with the prepaid device, transmitting the authorization request message to a second merchant computer operated by the second merchant, receiving an authorization response message from the second merchant computer, and sending the authorization response message to the first merchant computer.