Debit Transaction Routing by Predicted Approval and Breakeven Cost

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Solution Overview

Problem

Merchants face challenges in routing electronic payment transactions efficiently due to complex factors influencing interchange rates, regulatory rules, and unpredictable transaction declines, making it difficult to determine the ideal routing for cost savings.

Innovation Solution

A system and method for routing electronic payment transactions using payment pseudo-networks and electronic transaction simulation, which involves generating pseudo-networks to simulate routing options, predicting authorization acceptance, and identifying the least cost PIN-less debit network based on transaction-related information.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Adaptability or versatility

If merchants use multiple payment networks and processors to route transactions, then transaction routing flexibility improves, but system complexity increases

Engineering Contradiction:

Improvetransaction routing flexibilityVSAvoidsystem complexity

Core Design Contradiction:

Adaptability or versatilityVSDevice complexity

Solution Approach 1:

The system segments the complex payment network environment into discrete, manageable components including payment networks, processors, and routing decisions. Each transaction is evaluated against segmented criteria (interchange rates, network preferences, regulatory status) to determine optimal routing, transforming an overwhelming complex system into a series of manageable decision points

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The patent introduces an intermediary routing system that mediates between merchants and multiple payment networks/processors. This intermediary layer analyzes transaction characteristics, predicts authorization outcomes, and selects optimal routing paths, shielding merchants from the underlying complexity while maintaining flexibility across multiple networks

Inventive Principle:

Principle #24Intermediary (Mediator)

2Loss of energy

If merchants analyze transaction costs and routing options in real-time, then cost savings improve, but processing time increases

Engineering Contradiction:

Improvetransaction costVSAvoidprocessing time

Core Design Contradiction:

Loss of energyVSLoss of time

Solution Approach 1:

The system performs preliminary actions by pre-analyzing payment network characteristics, interchange rate structures, and authorization patterns before transactions occur. Historical data and network preferences are pre-processed to create routing guidelines and cost models, enabling rapid real-time decisions without extensive analysis during transaction processing

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The patent replaces manual or rule-based routing mechanics with automated machine learning models that predict authorization outcomes and optimize routing decisions. These intelligent systems process transaction data and network parameters instantaneously, substituting complex mechanical analysis with algorithmic predictions that deliver both cost optimization and speed

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

3Loss of energy

If merchants route transactions through networks with lower interchange rates, then transaction fees decrease, but authorization approval probability may worsen

Engineering Contradiction:

Improvetransaction feeVSAvoidauthorization approval probability

Core Design Contradiction:

Loss of energyVSReliability

Solution Approach 1:

The system dynamically changes routing parameters based on transaction characteristics, network conditions, and predicted authorization probabilities. Instead of static low-rate routing, the system adjusts routing decisions by modifying parameters such as network selection, processor choice, and transaction presentation methods to balance fee minimization with approval probability optimization

Inventive Principle:

Principle #35Parameter changes

Solution Approach 2:

The patent implements feedback loops where authorization outcomes and transaction results are continuously monitored and fed back into the routing system. This feedback enables the system to learn from actual authorization patterns, refine predictions of approval probability for different routing options, and continuously optimize the balance between transaction fees and approval rates

Inventive Principle:

Principle #23Feedback

Data Source

PatentUS12469016B2Systems and methods for routing electronic transactions using predicted authorization approval

Publication Date: 2025.11.11 WORLDPAY LLC

AI summary

A method for routing electronic payment transactions includes receiving transaction-related information from a merchant, extracting transaction routing criteria from the received transaction-related information, dynamically identifying one or more eligible payment networks based on extracted transaction routing criteria, predicting a likelihood of authorization acceptance for each identified network based on the transaction-related information, dynamically identifying one or more breakeven transaction amounts for each identified eligible payment network, each breakeven transaction amount defining a point at which two or more eligible payment networks have the same expenses for a given transaction amount, the expenses including costs associated with a low predicted likelihood of authorization acceptance, and routing signature debit transactions from the merchant to a least cost PIN-less debit network selected from the eligible payment networks based on identification of a desired breakeven transaction amount for the PIN-less debit network.