Incremental Payment Settlement System for Delayed Clearing

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Solution Overview

Problem

Current payment systems face challenges in handling card-not-present transactions and recurring payments, particularly in situations where funds are not immediately available, leading to service disruptions or late fees.

Innovation Solution

Implementing an incremental payments billing system that allows billers to receive payments in increments over a selected time period, regardless of the account's immediate availability, through a payment network with a standard clearing and settlement time period, enabling delayed clearing and settlement.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Productivity

If standard clearing and settlement time period is used for payment transactions, then payment processing efficiency is improved, but cardholders with insufficient immediate funds cannot complete payments leading to service disruptions

Engineering Contradiction:

Improvepayment processing efficiencyVSAvoidpayment completion reliability

Core Design Contradiction:

ProductivityVSReliability

Solution Approach 1:

The patent divides the payment into multiple incremental portions that are settled at different times. Instead of requiring full payment within the standard clearing and settlement period, the system segments the total amount into multiple installments, each with its own settlement timing, allowing cardholders to manage cash flow while ensuring eventual payment completion.

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The system performs preliminary authorization where the biller receives advance approval from the payment network to implement incremental payments. This preliminary action establishes the payment framework before the actual transaction occurs, enabling the system to handle payments that would otherwise be rejected due to insufficient immediate funds.

Inventive Principle:

Principle #10Preliminary action

2Adaptability or versatility

If incremental payments over extended time period are implemented, then cardholder payment flexibility is improved, but clearing and settlement time period is extended beyond standard requirements

Engineering Contradiction:

Improvepayment schedule flexibilityVSAvoidclearing and settlement time period

Core Design Contradiction:

Adaptability or versatilityVSLoss of time

Solution Approach 1:

The payment timeline is segmented into multiple discrete settlement events distributed over an extended period. Each incremental payment has its own settlement window, allowing the system to maintain standard processing speeds for each individual transaction while achieving overall payment flexibility across multiple time periods.

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The system dynamically adjusts the clearing and settlement timing based on the incremental payment schedule. Rather than using a fixed standard time period for all transactions, the system adapts the settlement timing to match the agreed-upon incremental payment rhythm, extending the overall timeline while maintaining efficient processing for each installment.

Inventive Principle:

Principle #15Dynamics

3Ease of operation

If payment authorization is granted without immediate fund availability check, then payment acceptance is improved, but risk of non-payment increases

Engineering Contradiction:

Improvepayment acceptance easeVSAvoidpayment assurance

Core Design Contradiction:

Ease of operationVSReliability

Solution Approach 1:

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The payment network provides feedback to the biller about the cardholder's payment capability and the incremental payment arrangement. This feedback mechanism allows the system to authorize payments based on projected future funds rather than immediate availability, while maintaining risk management through ongoing monitoring of the payment schedule compliance.

Inventive Principle:

Principle #23Feedback

Data Source

PatentUS10535067B2Electronic incremental payments

Publication Date: 2020.01.14 MASTERCARD INT INC

AI summary

An authorization request for a payment transaction is obtained, from a given one of a plurality of billers, over a payment network having a standard clearing and settlement time period. Via the payment network, a special incremental payments approval authorization request response to the authorization request for the payment transaction is passed, indicating that the given one of the plurality of billers will be paid in connection with the payment transaction in a plurality of incremental payments made in time increments over a selected time period following the authorization request, optionally regardless of whether funds are available for an account associated with the payment transaction. The selected time period is longer than the standard clearing and settlement time period. The payment transaction is not settled until expiration of the selected time period.