Decoupled Mobile Debit Payment Routing via Merchant Issuance
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Solution Overview
Problem
Current payment systems in retail environments do not allow merchants to act as direct issuers of card-not-present debit cards through systems like the Federal Reserve ACH or Electronic Payments Network, decoupling the card from traditional bank/depository institutions, enabling shoppers to use their mobile phones to pay retailers without needing a card issued by their financial institution.
Innovation Solution
A method and system that enable a merchant to receive signals from a payment token, such as a mobile device, to determine if payment can be made through the ACH or EPN system, allowing a transfer of funds from the cardholder's account to the merchant, without requiring a card issued by the financial institution, using a routing system and association between the signal and account information stored in a separate system.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Device complexity
If a traditional bank-issued debit card system is used, then payment reliability is ensured through established financial institutions, but device complexity increases due to requiring separate card issuance and management infrastructure
Solution Approach 1:
The patent extracts the card issuance function from traditional banks and transfers it to merchants. The merchant system directly issues debit cards to shoppers using the merchant's own account number, eliminating the need for separate card issuance infrastructure and reducing overall system complexity while maintaining payment reliability through established ACH networks
Solution Approach 2:
The merchant account number serves multiple functions: it acts as both the merchant identifier for receiving payments and as the debit card number for issuing cards to shoppers. This multi-functionality eliminates the need for separate card numbering systems and reduces infrastructure complexity
2Reliability
If shoppers carry traditional debit or credit cards, then payment capability is ensured, but loss of substance occurs due to requiring physical cards that can be lost or stolen
Solution Approach 1:
The patent creates a digital copy of the payment mechanism by encoding the merchant account number and shopper identifier into a digital format that can be stored on mobile devices. This digital copy replaces physical cards, eliminating the risk of physical loss while maintaining payment capability through electronic transmission of account information
3Ease of operation
If mobile devices are used for payments, then ease of operation improves, but device complexity increases due to integration requirements with existing payment networks
Solution Approach 1:
Instead of requiring mobile devices to communicate directly with traditional bank card networks, the patent inverts the approach by having the mobile device store the merchant account number directly. The payment transaction flows from shopper to merchant through the ACH network using the merchant's account number, bypassing the need for complex integration with traditional card issuance systems
Data Source
AI summary
Disclosed are payment system and methods such as decoupled debit payment methods usable with the Federal Reserve Automated Clearing House system and/or the Electronic Payments Network (EPN) system.