Merchant Data Cleansing in Payment Clearing Records
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Solution Overview
Problem
The existing cashless transaction processing systems face issues with poor quality of merchant data, leading to high dispute cases and increased costs due to unrecognized merchants, incomplete, or inaccurate information, especially when merchants are separated from acquirers by third-party payment providers.
Innovation Solution
A method and system for providing cleansed merchant data through the clearing records in real-time, where a network operator compares transaction data to a database of cleansed merchant entries, substituting or appending accurate data to improve data integrity and reduce disputes.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If merchant data is transmitted through third-party payment providers, then transaction processing flexibility is improved, but data quality deteriorates leading to disputes and unrecognized merchants
Solution Approach 1:
The network operator acts as an intermediary between the third-party payment provider and the issuer. It receives merchant data from the third-party provider, cleanses and validates it against its database, and then forwards the validated data to the issuer. This intermediary role ensures data quality is maintained even when third-party providers are involved in the transaction chain.
Solution Approach 2:
The network operator performs preliminary cleansing and validation of merchant data before it reaches the issuer. By proactively identifying and correcting data quality issues in the clearing process, the system prevents disputes and chargebacks that would otherwise occur when customers encounter unrecognized merchants on their statements.
2Reliability
If real-time data cleansing is implemented, then data quality is improved, but processing time and system complexity increase
Solution Approach 1:
The network operator integrates multiple functions into its existing infrastructure: transaction routing, data cleansing, validation, and database management. By leveraging its existing role as a central intermediary in the payment network, the system implements real-time data cleansing without requiring separate dedicated systems, thus minimizing added complexity.
Solution Approach 2:
The system automatically cleanses and validates merchant data using pre-established databases and validation rules. The process is fully automated without requiring manual intervention, and the network operator's existing systems self-adapt to handle the additional validation tasks through integrated software modules.
3Reliability
If comprehensive merchant validation is performed, then dispute reduction is improved, but processing speed may be reduced
Solution Approach 1:
Merchant data is validated and cleansed during the clearing process before transactions are presented to issuers for authorization. By performing validation in advance during clearing rather than during real-time authorization, the system ensures data quality without significantly impacting transaction processing speed at the point of sale.
Solution Approach 2:
The network operator uses pre-established databases of valid merchant information that are periodically updated. Instead of performing exhaustive real-time validation against all possible merchant records, the system compares transaction data against copied, pre-validated reference data, significantly reducing validation time while maintaining high dispute reduction effectiveness.
Data Source
AI summary
A network operator intermediates a cashless transaction by sending a payment device issuer an outbound clearing data file enriched with cleansed merchant data. Issuers that choose to participate in the merchant data cleansing service will be provided with the cleansed, and optionally augmented, merchant information. Providing this data to the issuer could be used to help reduce costs associated with “do not recognize” calls by cardholders, disputed charges, and charge-backs. With cleansed data provided in the clearing record, a device holder would be given access to this cleansed information about the merchant where a transaction took place through their statement. The present disclosure also provides for augmenting the clearing record data to include merchant-specific add-on and/or aggregate data not presently included in the transaction clearing record, yet useful to the issuer both in form and content.