Instant Payment Fraud Elimination Using Mobile Verification and FBO Transfer
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Solution Overview
Problem
Traditional payment processing systems are complex, costly, and vulnerable to fraud, with delays and high transaction fees due to multiple intermediaries and disjointed communication between financial institutions.
Innovation Solution
A system that integrates consumer authentication and verification through a mobile device, using a Front Account (FBO) to facilitate instant payments by pulling funds from a consumer's account to a merchant's account, reducing intermediaries and eliminating chargebacks.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional payment processing with multiple intermediaries is used, then transaction security can be maintained through multiple verification points, but system complexity and transaction costs increase significantly
Solution Approach 1:
The patent extracts and eliminates unnecessary intermediaries (payment gateways, acquiring banks, card networks) from the payment processing system, retaining only the essential functions for security and transaction completion. This reduces system complexity while maintaining security through focused verification points at the consumer device and processor level.
Solution Approach 2:
The consumer device is given multi-functional capabilities, serving as both the authentication point and the transaction initiation point. The single processor handles multiple functions including fraud evaluation, fund transfer, and settlement processing, reducing the need for multiple specialized intermediaries while maintaining security.
2Reliability
If traditional payment processing with multiple intermediaries is used, then transaction verification can be thorough, but transaction speed decreases due to multiple processing steps
Solution Approach 1:
The system performs preliminary fraud risk evaluation and consumer authentication before the transaction is initiated. The consumer device verifies ownership and authenticates the consumer in advance, so that when the transaction proceeds, these verification steps are already completed, enabling instant payment without delay.
Solution Approach 2:
The patent eliminates intermediate processing steps between authentication and fund transfer. Once the consumer is authenticated and fraud risk is evaluated, the system rushes through the transaction by directly transferring funds from the consumer account to the merchant account without batch processing or additional intermediary approvals, achieving instant settlement.
3Reliability
If traditional payment processing with multiple intermediaries is used, then fund transfer can be secure, but transaction fees increase due to multiple fee layers
Solution Approach 1:
The patent removes multiple fee-generating intermediaries from the payment chain. By eliminating payment gateways, acquiring banks, and card networks that each charge their own fees, the system reduces the cumulative transaction fees while maintaining fund transfer security through direct processor-to-account transfers and fraud evaluation protocols.
4Productivity
If instant payment processing is implemented, then fund availability to merchant is immediate, but fraud risk evaluation becomes more challenging
Solution Approach 1:
The system performs comprehensive fraud risk evaluation and consumer authentication before the instant payment is executed. The processor evaluates fraud risk based on transaction data and consumer history in advance, and the consumer device verifies ownership and authenticates the consumer beforehand, enabling instant payment with pre-completed security checks.
Solution Approach 2:
The system uses real-time feedback from consumer authentication results, fraud risk evaluation data, and transaction history to dynamically adjust fraud detection parameters. This feedback mechanism enables the processor to quickly assess and respond to potential fraud risks while maintaining instant payment capability for legitimate transactions.
Data Source
AI summary
A computer-implemented method comprising receiving a payment request for a payment transaction from a consumer to a merchant using a payment account of the consumer. The method also can include at least one of evaluating fraud risk for the payment transaction based on an integration of (i) a verification that the consumer owns the payment account, and (ii) an authentication of the consumer and a verification of the payment request through a mobile device of the consumer; or processing the payment transaction using an FBO account to make funds from the payment transaction available to the merchant in an instant. Processing the payment transaction can include pulling funds from the payment account to the FBO account; and one of (i) transferring funds from a consumer ledger of the FBO account to a merchant ledger of the FBO account, and sending funds from the merchant ledger of the FBO account to a merchant account of the merchant, (ii) sending funds from the FBO account for consumers to a second FBO account for merchants, and sending funds from the second FBO account to a merchant account of the merchant; or (iii) sending funds from the FBO account to a DDA account for the merchant, and sending funds from the DDA account for the merchant to a merchant account of the merchant. Other embodiments are described.