Distributed Payment Network Using Smart Contracts for Interoperability
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Existing electronic payment systems face challenges such as limited counterparty trust, varying authentication controls, expensive and labor-intensive agreement management, lack of standards for liability and warranty enforcement, and fragmented API adoption, leading to slow adoption of electronic payments due to manual processes and proprietary networks with non-uniform data formats.
Innovation Solution
A distributed network system enabling interoperable payment information exchange across disparate payment systems, using standardized rules and APIs, transport layer security, private certificates, and message signing to ensure data security and authenticity, with a decentralized ledger for data storage and smart contracts for validation and auditing, allowing trusted communication among credentialed service providers without a central data store.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If a centralized database is used to store payment information, then data access and management become centralized, but data security and participant privacy are compromised
Solution Approach 1:
The patent segments the centralized database into multiple distributed nodes across a blockchain network. Each participant maintains a copy of the ledger, eliminating the need for a single centralized data store while preserving data accessibility and management capabilities through the distributed network architecture.
Solution Approach 2:
The patent introduces cryptographic intermediaries (digital signatures, hashing functions, and encryption protocols) that mediate between data storage and access. These cryptographic mechanisms enable secure data management without requiring a centralized authority, thus maintaining both ease of operation and data security.
2Reliability
If bilateral agreements are used for information exchange, then counterparty trust is established, but authentication controls vary and agreement management becomes expensive and labor-intensive
Solution Approach 1:
The patent implements a universal smart contract platform that serves multiple functions: establishing counterparty trust, enforcing authentication controls, and automating agreement management. This single multi-functional system replaces numerous bilateral agreements, reducing complexity while maintaining reliability through standardized cryptographic verification.
Solution Approach 2:
The patent enables self-service through automated smart contracts that automatically execute and enforce agreements without manual intervention. The system self-manages authentication, validation, and compliance checks, eliminating the need for expensive and labor-intensive agreement management while preserving counterparty trust through cryptographic verification.
3Reliability
If proprietary networks with permissioned access are used, then data security is maintained, but interoperability among different networks is limited
Solution Approach 1:
The patent creates a universal blockchain network that functions as both a secure data storage mechanism and an interoperable communication platform. The same cryptographic protocols and smart contract mechanisms that ensure data security also enable cross-network interoperability, allowing participants from different proprietary networks to interact securely without sacrificing either security or adaptability.
4Measurement precision
If manual processes are used for payment information exchange, then data accuracy can be verified, but processing speed and adoption rate are reduced
Solution Approach 1:
The patent replaces manual verification processes with automated cryptographic validation mechanisms. Smart contracts automatically verify data accuracy through predefined validation rules and cryptographic proofs, eliminating the need for manual review while maintaining measurement precision. This substitution dramatically increases processing speed and enables faster adoption of electronic payments.
Data Source
AI summary
Disclosed is a system and method for implementing a network enabling an interoperable exchange of electronic payment information, which connects two parties to a transaction using established rules, technology, and trust model. Such systems and methods provide a shared set of rules and common APIs, and enable validation of the accuracy of all data exchanged via API. In order to maintain data, the systems and methods described herein enable each participant to only see interactions and information that is relevant and permissioned to such participant, all while maintaining no central data store for the sensitive electronic payment information. Each participant is vetted and authorized by a system administrator as a validated “Credential Service Provider” (“CSP”) and governed by rules created and managed by the administrator. Further, an auditable trail of all transactions is maintained by logging metadata to track events and changes to permissions.