Digital Credit Payment Rails Bypass Card-Processing Intermediaries
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Solution Overview
Problem
Conventional banking and payment systems are inefficient, with lengthy transaction completion times and high transaction fees due to the involvement of numerous intermediaries, particularly in credit card transactions.
Innovation Solution
A mobile payment system that allows users to access digital credit via computer-readable media like QR codes or NFC, directly through real-time payment rails, bypassing traditional credit card processors and networks, using open banking APIs and real-time payment systems for instantaneous fund transfers.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If conventional credit card processors and payment networks are used, then credit transactions can be processed through established infrastructure, but transaction completion time increases and transaction fees increase due to numerous intermediaries
Solution Approach 1:
The patent extracts and removes credit card processors and payment networks from the transaction pipeline, allowing banks to communicate directly with each other through real-time payment rails. This eliminates the intermediary layer that causes delays and reduces transaction completion time while maintaining reliability through direct bank-to-bank connectivity.
Solution Approach 2:
The patent introduces real-time payment rails as a new intermediary that enables direct communication between banks without requiring traditional credit card processors. This mediator provides the infrastructure for instantaneous fund transfers while eliminating the need for plastic/virtual card management intermediaries.
2Reliability
If conventional credit card processors and payment networks are used, then credit transactions can be processed through established infrastructure, but transaction fees increase due to numerous intermediaries charging fees
Solution Approach 1:
The patent removes credit card processors and payment networks from the value chain, eliminating the multiple intermediaries that each charge transaction fees. By enabling direct bank-to-bank transfers through real-time payment rails, the system reduces the number of fee-charging intermediaries and lowers overall transaction costs.
Solution Approach 2:
The patent introduces real-time payment rails as a streamlined intermediary that facilitates direct bank communications without the layered intermediary structure of traditional credit card processing. This reduces the cumulative transaction fees that would otherwise be charged by multiple intermediaries in the conventional pipeline.
3Ease of operation
If plastic or virtual cards are issued by third parties, then users can access credit lines, but device complexity increases and management costs increase
Solution Approach 1:
The patent extracts the card issuance function from third-party credit card processors and returns it to the banks themselves. Users access credit directly through their bank accounts via real-time payment rails, eliminating the need for physical or virtual cards and the complex infrastructure required to issue, manage, and secure them.
Solution Approach 2:
The patent replaces physical cards with digital representations of bank account credentials that can be transmitted electronically. Instead of managing plastic cards with embedded chips and magnetic stripes, the system uses digital copies of account information that can be securely shared through real-time payment networks, reducing device complexity while maintaining ease of operation.
Data Source
AI summary
Systems and processes are disclosed for executing digital credit transactions over real-time payment rails. The disclosure includes generating, for a transaction, scannable computer readable media representative of user's payment account at a financial institution and transmitting the scannable computer readable media to an electronic computing device operated by the user. A merchant device can scan the scannable computer readable media from the electronic computing device to request payment for the transaction. A backend system can generate and transmit a payment request parameters based on an open banking application programming interface (API) corresponding to the financial institution and based on real-time payment rails operatively connected to the financial institution. The system can receive, from the financial institution, real-time payment rails metadata corresponding to the request for payment. The system can process the real-time payment rails metadata to determine a successful payment.