Fund Transfer System Using Tokenized Identifiers
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Solution Overview
Problem
Existing systems for transferring funds over electronic money transfer networks, such as ACH networks, face limitations in accommodating individuals without access to financial institutions, are costly, and do not facilitate real-time transactions, particularly for those lacking direct access to financial accounts or using non-financial institution payment terminals.
Innovation Solution
A method and system that securely transfers funds by using tokenized financial instruments, public and private identifiers, and ACH messages to enable transactions between senders and recipients with different financial institutions, allowing for fund transfers through non-financial institution payment terminals and online processes, without revealing account information, and facilitating real-time payments.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional wire transfers are used between financial institutions, then funds can be transferred securely, but transaction costs increase and accessibility decreases for individuals without financial institution accounts
Solution Approach 1:
The patent introduces a payment network as an intermediary layer between senders and recipients. This network uses tokenized financial instruments and public/private identifier systems to enable transfers without requiring direct access to traditional financial institution accounts. The intermediary handles the complex authentication and routing, making the system accessible to underbanked populations while maintaining security through established financial institution partnerships.
Solution Approach 2:
The patent creates simplified copies of traditional banking functionality through tokenized representations of financial instruments. Instead of requiring actual bank accounts, the system uses tokenized identifiers that replicate account functionality. These tokens can be stored on mobile devices or physical terminals, creating a portable copy of banking access that works through the payment network without needing traditional bank infrastructure.
2Reliability
If traditional wire transfer systems are used, then funds can be transferred between financial institutions, but transaction fees increase and real-time transfer capability decreases
Solution Approach 1:
The system performs preliminary actions by pre-tokenizing financial instruments and establishing public/private identifier associations before actual transfers are needed. Tokenization converts sensitive account information into secure tokens in advance, and the payment network pre-establishes routing relationships. When a transfer is initiated, these pre-prepared tokens and routing information enable immediate processing without traditional batch processing delays.
Solution Approach 2:
The patent replaces the mechanical, batch-oriented wire transfer system with an electronic, real-time processing system. Instead of relying on scheduled batch transfers between financial institutions, the system uses electronic token validation and instant clearing house messaging to process transfers continuously. This substitution of the underlying mechanism enables real-time or near-real-time transfer capability while maintaining the reliability of institutional-level security.
3Ease of operation
If tokenized financial instruments and public identifiers are used, then accessibility and cost-effectiveness improve, but system complexity increases
Solution Approach 1:
The patent segments the complex fund transfer system into distinct functional modules: token generation, token validation, public identifier management, private identifier association, and clearing house messaging. Each module handles a specific aspect of the transfer process independently. This segmentation allows the system to manage complexity by dividing it into manageable, specialized components that can be developed, maintained, and scaled independently while working together through standardized interfaces.
Data Source
AI summary
A method including receiving, by a computer system over a computer network from a recipient financial institution, (i) a public identifier associated with a recipient and (ii) a private profile identifier that was generated by the recipient financial institution. The method also can include storing, by the computer system, a record including the public identifier and the private profile identifier in an information directory. The method additionally can include receiving, by the computer system over the computer network, a funds transfer request to transfer funds from a sender account of the sender at a sender financial institution to the recipient account at the recipient financial institution. The method further can include determining, by the computer system, the private profile identifier for the recipient based on the public identifier in the funds transfer request and using the record stored in the information directory. The method additionally can include in response to receiving the funds transfer request, providing the private profile identifier, by the computer system over the computer network, to the sender financial institution to facilitate a transfer of the funds from the sender account at the sender financial institution to the recipient financial institution. Other embodiments are disclosed.