Escrow Payment Flow for Trustworthy Peer-to-Peer Transactions
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Solution Overview
Problem
Establishing trust and ensuring recourse in peer-to-peer transactions is challenging, particularly in digital payments and online marketplaces, where buyers may receive incorrect goods or fail to pay the agreed amount, and sellers may not receive payment as promised.
Innovation Solution
Implementing a system that uses a payment agreement computer program to manage escrow transactions, where funds are initially transferred to an escrow account, verified by the seller, and released upon confirmation of goods receipt or renegotiated if necessary, utilizing smart contracts and distributed ledgers for secure transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If peer-to-peer transactions are enabled directly between buyers and sellers, then transaction efficiency and ease of operation are improved, but trust establishment and transaction security deteriorate
Solution Approach 1:
The patent introduces an escrow account as an intermediary between buyer and seller. The escrow account receives funds from the buyer, verifies the transaction with the seller, and only releases funds when the buyer confirms receipt and acceptance of goods. This mediator structure enables direct peer-to-peer transactions while maintaining security and trust through automated verification steps.
2Speed
If funds are transferred immediately to sellers upon buyer initiation, then transaction speed is improved, but buyer protection and transaction security deteriorate
Solution Approach 1:
The system performs preliminary actions by first transferring funds to an escrow account rather than directly to the seller. The escrow account then verifies the transaction details with the seller before releasing funds. This preliminary verification step protects buyers while maintaining relatively fast transaction processing through automated checks.
Solution Approach 2:
The system implements feedback mechanisms where the buyer receives notification when funds are placed in escrow, and must provide confirmation of goods receipt and acceptance before funds are released to the seller. This feedback loop ensures buyer protection while maintaining transaction efficiency through automated communication and verification.
3Reliability
If automated escrow verification processes are implemented, then transaction security is improved, but system complexity and processing time increase
Solution Approach 1:
The escrow account operates as an automated self-service system that independently verifies transactions, communicates with buyers and sellers, and releases funds based on predetermined conditions. The buyer simply needs to confirm goods receipt, and the system automatically handles verification and fund release, reducing manual intervention while maintaining security.
Data Source
AI summary
are disclosed. A method may include: receiving, at a payment agreement computer program executed by a backend and from a buyer computer program, a selection of a payment agreement option for a purchase involving a good from a seller; receiving, by the payment agreement computer program and from the buyer computer program, a transaction amount and a seller account identifier; transferring, by the payment agreement computer program, the transaction amount from a buyer account to an escrow account; notifying, by the payment agreement computer program, a seller computer program for the seller that the transaction amount is in the escrow account; receiving, by the payment agreement computer program and from the seller computer program, verification that the transaction amount is correct; and transferring, by the payment agreement computer program, the transaction amount from the escrow account to a seller account.