Foreign Exchange Transaction Detection and Chargeback Filtering

Solution Overview

Problem

Current electronic payment systems face challenges in efficiently identifying and managing foreign exchange transactions, leading to unnecessary chargebacks due to currency conversion discrepancies, which result in financial losses and increased costs for all parties involved.

Innovation Solution

Implementing a system with a host computing device that identifies foreign exchange transactions and applies chargeback loss mitigation rules to filter out chargebacks related to currency conversion discrepancies, notifying cardholders and obtaining their acceptance of potential transaction amount discrepancies before the transaction is approved, thereby preventing unnecessary chargebacks.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Adaptability or versatility

If currency conversion is performed for foreign exchange transactions, then the transaction can be settled between different countries, but the transaction amount may differ between transaction date and settlement date due to fluctuating conversion rates

Engineering Contradiction:

Improvecross-border transaction capabilityVSAvoidtransaction amount accuracy

Core Design Contradiction:

Adaptability or versatilityVSManufacturing precision

Solution Approach 1:

The system performs preliminary identification of foreign exchange transactions at the time of transaction authorization, before settlement occurs. This allows the system to flag these transactions in advance and apply special handling rules during settlement to prevent automatic chargebacks based on currency conversion differences.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system introduces an intermediary filtering mechanism that sits between the transaction processing system and the chargeback system. This intermediary layer identifies foreign exchange transactions and prevents them from triggering automatic chargebacks, thereby mediating between the need for currency conversion and the need to avoid false disputes.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Productivity

If automatic chargeback filtering is implemented for foreign exchange transactions, then unnecessary chargebacks are reduced, but additional processing steps are required to identify and filter these transactions

Engineering Contradiction:

Improvechargeback processing efficiencyVSAvoidtransaction monitoring system complexity

Core Design Contradiction:

ProductivityVSDevice complexity

Solution Approach 1:

The system performs preliminary identification of foreign exchange transactions at the time of transaction authorization, before settlement occurs. This allows the system to flag these transactions in advance and apply special handling rules during settlement to prevent automatic chargebacks.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system uses automatically generated transaction data and metadata to identify foreign exchange transactions without requiring manual intervention. The filtering mechanism operates autonomously by comparing transaction currency against settlement currency, eliminating the need for complex manual review processes.

Inventive Principle:

Principle #25Self-service

3Reliability

If cardholders are notified of potential amount discrepancies before transaction approval, then chargeback prevention is improved, but the transaction process becomes more time-consuming

Engineering Contradiction:

Improvechargeback prevention effectivenessVSAvoidtransaction processing time

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

The system performs preliminary identification of foreign exchange transactions at the time of transaction authorization, before settlement occurs. This allows the system to flag these transactions in advance and apply special handling rules during settlement to prevent automatic chargebacks based on currency conversion differences.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system uses lightweight, automated notification messages that are generated and processed quickly. These notifications are simple text-based communications that provide essential information about potential currency conversion differences without requiring complex interactions or extending transaction processing time significantly.

Inventive Principle:

Principle #27Cheap short-living objects (Disposable)

Data Source

PatentUS11100508B2Multi-party payment card processing systems and methods with foreign exchange transaction detection and chargeback loss mitigation

Publication Date: 2021.08.24 MASTERCARD INT INC

AI summary

An electronic payment card processing system and method includes at least one computing device in communication with a multi-party payment processing system and network for processing payment card transactions. The computing device receives transaction data for a plurality of payment card transactions identifies foreign exchange transactions based on the received transaction data, and applies a chargeback loss mitigation rule to filter a chargeback request for a disputed transaction charge that relates to an identified foreign exchange transaction, thereby preventing an unnecessary chargeback for the foreign exchange transaction.