Loan Payment Retry Scheduling After Failed Bank Debits
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Solution Overview
Problem
Existing payment systems charge late fees when payment failures occur due to insufficient funds, which is unpopular with consumers.
Innovation Solution
A system that automatically reschedules payments after a failure without charging late fees, allowing retries on specific dates when the consumer is likely to have sufficient funds, such as Fridays or payday dates, and provides options for users to cancel retries through user interfaces.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional payment systems charge late fees for payment failures, then payment reliability is enforced, but customer satisfaction deteriorates
Solution Approach 1:
The system performs preliminary actions by automatically retrying payments on scheduled dates before charging late fees. The payment system proactively attempts to collect payments on retry dates, giving consumers an opportunity to pay without penalties before reliability enforcement kicks in.
Solution Approach 2:
The system provides a cushioning mechanism by implementing a grace period with automatic retries before applying late fees. This buffer allows consumers to correct payment failures without immediate penalty, cushioning the impact on customer satisfaction while maintaining eventual payment reliability.
2Reliability
If automatic payment retries are implemented, then payment success rate improves, but system complexity increases
Solution Approach 1:
The system implements periodic action through scheduled retry attempts on specific dates (e.g., Fridays or payday dates). Instead of continuous monitoring, the system performs discrete periodic retry operations, simplifying the implementation while maintaining high payment success rates.
Solution Approach 2:
The system provides self-service functionality by automatically managing retry logic without requiring consumer intervention. The payment system autonomously schedules and executes retry attempts, reducing the need for complex user-facing controls while maintaining high success rates.
3Reliability
If payments are rescheduled on specific dates like Fridays or payday, then payment success rate increases, but loss of time occurs during the rescheduling period
Solution Approach 1:
The system performs preliminary action by proactively scheduling retry dates in advance (e.g., next Friday or next payday) rather than waiting for failure. This allows the system to prepare for potential payment issues before they occur, capturing payments when consumers are most likely to have funds.
Solution Approach 2:
The system applies parameter changes by dynamically selecting retry dates based on consumer payment patterns and financial cycles. Instead of fixed intervals, the system adapts retry timing parameters to match consumer behavior, optimizing success rates while minimizing unnecessary delays.
Data Source
AI summary
When a loan payment failure occurs, a loan server can retry a payment from a client's financial institution sources rather than immediately charging the client for the payment failure. The payment retry is scheduled on a Friday that is at least three days after the payment failure. If a payment failure from the financial institution sources to the loan server occurs between a Friday and the following Monday the payment retry by the loan server to the financial institution sources will occur on the first following Friday and if the payment failure occurs on Tuesday, Wednesday or Thursday, the payment retry will occur on the second following Friday which is the Friday of the following week from the failure date.