Real-time EFT Settlement Routing for Payment Systems
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Solution Overview
Problem
Existing payment systems typically take two to three days for transaction settlement, which delays merchants' access to funds from sales transactions.
Innovation Solution
Implementing an Electronic Funds Transfer (EFT) system that allows merchants to opt for faster settlement, using either Automated Clearing House (ACH) payments or payment card account networks, with a fallback option to traditional payment card system processing in case of EFT failure.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional payment card system settlement is used, then transaction security and reliability are maintained, but settlement time is delayed (2-3 days)
Solution Approach 1:
The system dynamically switches between EFT settlement mode (for faster settlement) and traditional payment card system settlement mode (for reliability) based on real-time conditions. The settlement mode is not fixed but can be changed during transaction processing to optimize between speed and reliability.
Solution Approach 2:
The payment network acts as an intermediary that bridges EFT settlement and traditional payment card settlement systems. It receives transaction data, determines the appropriate settlement mode, and routes transactions to the appropriate system, enabling seamless transition between different settlement approaches.
2Speed
If EFT settlement option is implemented, then settlement speed is improved (real-time access to funds), but system complexity increases
Solution Approach 1:
The payment network is enhanced to perform multiple settlement functions within a single system framework. It can process both EFT settlements (for speed) and traditional payment card settlements (for reliability) using the same infrastructure, eliminating the need for completely separate systems.
Solution Approach 2:
The payment network serves as an intermediary layer that simplifies the interface between merchants and different settlement systems. It handles the complexity of routing decisions and system communication, presenting a unified interface to merchants while managing the underlying system complexity.
3Adaptability or versatility
If multiple settlement options are provided, then merchant flexibility and working capital management improve, but decision-making complexity increases
Solution Approach 1:
The system incorporates feedback mechanisms where the payment network automatically determines the optimal settlement mode based on real-time conditions such as EFT availability, transaction amount, and system status. This automated feedback loop eliminates the need for merchants to manually evaluate complex decision criteria.
Solution Approach 2:
The payment network performs self-service by automatically selecting and executing the appropriate settlement mode without requiring active merchant intervention. The system monitors its own state and makes decisions about settlement routing independently, reducing the burden on merchants while providing flexible options.
Data Source
AI summary
Systems and apparatus for providing merchants with real-time funds availability for payment card account system transactions. In an embodiment, the system includes a bridging network computer having a processor operably coupled to a storage device and to a communication device, a payment network, a merchant acquirer bank computer, and a plurality of issuer bank computers. The storage device of the bridging network computer stores instructions which when executed cause the processor to receive a payment card account system transaction request, determine that the merchant selected electronic funds transfer (EFT) settlement for the accepted payment card account transaction, determine that the payment card account transaction is eligible for real-time EFT settlement, determine that both the merchant acquirer bank and an issuer are participants in a real-time EFT settlement arrangement, and then transmit instructions to an issuer bank computer to credit a holding account and to execute via an EFT transaction request a transfer of funds in real-time for the transaction amount to the merchant acquirer bank.