Encrypted Payment Token for Fraud-Resistant Consumer Transactions
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Solution Overview
Problem
Existing systems that use tokens for transactions are vulnerable to fraud as the token itself may be exposed to merchants, allowing for interception and misuse, leading to potential theft even for single-use tokens.
Innovation Solution
A user device generates a payment token that includes an account token, encrypted with a cryptographic checksum, which is transmitted to a point of sale, ensuring that only the user device can decrypt and modify the transaction, thus protecting the payment credentials from exposure and fraud.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If tokens are used for transactions, then payment credentials are protected from exposure, but the tokens themselves become exposed to merchants and vulnerable to interception and fraud
Solution Approach 1:
The patent introduces an encrypted payment token as an intermediary between the original payment credentials and the transaction processing system. The token is encrypted using the merchant's public key, creating a secure mediator that allows the merchant to process transactions without ever exposing the actual payment credentials or the decrypted token. This intermediary layer prevents both credential exposure and token interception fraud.
Solution Approach 2:
The patent replaces the traditional token-based system with a cryptographic encryption system. Instead of relying on token uniqueness and secrecy that can be compromised by interception, the system uses public-key cryptography to provide mathematical guarantees of security. The encryption mechanism substitutes the mechanical/token-based security approach with a cryptographically secure approach.
2Reliability
If tokens are generated for single use, then fraud resistance is improved, but tokens can still be intercepted and used later for unauthorized transactions
Solution Approach 1:
The patent replaces the single-use token mechanism with a cryptographic encryption mechanism. The security no longer relies on the token being used once and then discarded, but rather on the mathematical properties of public-key encryption. Even if the encrypted token is intercepted, it cannot be decrypted without the merchant's private key, and cannot be reused because each transaction requires fresh cryptographic verification.
Solution Approach 2:
The system performs preliminary encryption of the payment token using the merchant's public key before transmission. This advance cryptographic protection ensures that even if the token is intercepted during transmission or stored by the merchant, it remains insecurely encrypted and cannot be used for unauthorized transactions without the corresponding private key.
3Productivity
If payment credentials are transmitted to point of sale, then transactions can be processed, but credentials are exposed to the point of sale system
Solution Approach 1:
The encrypted payment token serves as an intermediary that enables transaction processing at the point of sale without exposing the actual payment credentials. The token is encrypted with the merchant's public key, allowing the POS system to handle and process the transaction while the credentials remain protected within the encryption. The merchant can process the transaction using the encrypted token without ever seeing or exposing the underlying credentials.
Data Source
AI summary
A method for consumer-initiated transactions with encrypted tokens includes: storing a first cryptographic key pair comprising an account public key and an account private key, a merchant public key, an account token associated with a transaction account, an account identifier, and an issuing institution identifier; receiving transaction data for a proposed payment transaction including a transaction amount; generating a transaction order including the transaction data; generating a cryptographic checksum for the generated transaction order; generating a digital signature over the cryptographic checksum using the account private key; generating a payment token including the issuing institution identifier, the account identifier, the transaction amount, and the account token; encrypting the payment token using the account private key; and transmitting the encrypted payment token and signed cryptographic checksum to a point of sale device.