Debit-Linked Microloan Approval for Middle-Ticket Purchases
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Solution Overview
Problem
Consumers face challenges in purchasing consumer goods that fall between small-ticket and big-ticket items due to high cash requirements, lengthy approval processes for personal loans, or high-interest credit card financing, making traditional financing options undesirable.
Innovation Solution
A debit-based microloan computing system that allows customers to apply for and receive microloans at the point of sale, using customer data and debit card information to generate and authorize microloan options, which are repaid from a checking account, facilitating immediate purchase of goods or services.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional personal loan financing is used for middle-ticket items, then the customer can obtain financing, but the approval process becomes lengthy and interest rates become substantial
Solution Approach 1:
The system performs preliminary risk assessment and customer verification by collecting and analyzing customer data from multiple sources before the actual purchase transaction. This preliminary action enables instant approval decisions at the point of sale, eliminating lengthy approval processes while maintaining financing reliability
Solution Approach 2:
The patent introduces a microloan computing system as an intermediary between customers and traditional lending institutions. This intermediary automates the approval process by using algorithms to assess customer risk and instantly authorize microloans, significantly reducing approval time while maintaining reliable financing availability
2Speed
If high-APR credit card financing is used for middle-ticket items, then the customer can purchase immediately, but the interest rate becomes prohibitively high
Solution Approach 1:
The system changes the key parameter of interest rate by offering microloans with substantially lower APRs compared to credit cards. By using automated risk assessment and debit card repayment mechanisms, the system can afford to charge lower interest rates while maintaining immediate purchase availability, thus reducing the cost of financing
3Loss of energy
If cash payment is required for middle-ticket items, then the customer avoids interest, but the cash requirement becomes prohibitive
Solution Approach 1:
The patent extracts the interest cost component from the financing equation by using debit card repayment with substantially lower APRs. This allows customers to purchase middle-ticket items without paying prohibitive cash amounts upfront, while avoiding the high interest costs associated with traditional credit card financing
4Reliability
If traditional financing options are used for middle-ticket items, then the customer can obtain credit, but the process becomes complex and undesirable
Solution Approach 1:
The system merges the application, approval, and disbursement processes into a single integrated transaction at the point of sale. By combining customer data collection, risk assessment, loan authorization, and fund disbursement into one streamlined process, the system maintains credit availability while eliminating the complexity of traditional multi-step financing procedures
Data Source
AI summary
Methods, systems, and apparatuses, including computer programs encoded on computer-readable media are disclosed for processing microloans. A network-enabled microloan computing system receives microloan applications that include identifying customer information and a desired loan amount. Information relating to the risks of issuing a microloan to a subject customer is collected and used to generate at least one microloan option containing a set of microloan terms. The customer can select among available microloan options and provide debit card information to the microloan computing system, at which point the microloan computing system can authorize the selected microloan to issue.