Merchant-issued Debit Card via ACH Network Decoupling
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Solution Overview
Problem
Current payment systems in retail environments do not allow merchants to act as direct issuers of card-not-present debit cards through systems like the Federal Reserve ACH or Electronic Payments Network, decoupling the card from traditional bank relationships, and enabling shoppers to use their mobile phones for payments without needing a card issued by their financial institution.
Innovation Solution
A method and system that enable a merchant to receive signals from a mobile device, determine payment capability, and initiate debit transactions through the ACH or EPN system, allowing shoppers to use their checking accounts for payments using a variety of tokens, such as driver's licenses or mobile devices, without requiring a card with a magnetic stripe or bar code.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If a traditional bank-issued debit card system is used, then the cardholder has a reliable payment method linked to their checking account, but the system requires affiliation with a traditional financial institution and uses physical cards with magnetic stripes or bar codes
Solution Approach 1:
The patent extracts the essential payment functionality (debit capability linked to checking account) from the traditional bank-issued card system, allowing merchants to issue their own debit cards directly through the ACH/EPN network without requiring shoppers to have cards from traditional financial institutions
Solution Approach 2:
The patent introduces the ACH/EPN network as an intermediary that enables direct debit transactions between merchant-issued cards and shoppers' checking accounts, eliminating the need for traditional bank card issuance while maintaining reliable payment processing
2Ease of operation
If a merchant-issued debit card system through ACH/EPN is implemented, then shoppers can use their existing checking accounts without traditional bank cards, but the system requires integration with ACH/EPN networks and new infrastructure
Solution Approach 1:
The patent makes the ACH/EPN network serve multiple functions: it acts as both the payment authorization network and the card issuance backbone, allowing merchant-issued cards to function similarly to traditional debit cards while using existing checking accounts
Solution Approach 2:
The patent requires shoppers to enroll their checking accounts with the merchant's payment system in advance, so that when they receive a merchant-issued debit card, the payment pathway is already established and validated through the ACH/EPN network
3Reliability
If physical payment cards are required for transactions, then the payment method is reliable and recognizable, but shoppers need to carry additional physical items beyond their checking accounts
Solution Approach 1:
The patent creates a functional copy of the traditional debit card experience through merchant-issued cards that work with existing checking accounts, providing the reliability of card-based payment verification while allowing shoppers to use accounts they already have
Data Source
AI summary
Disclosed are payment system and methods in which a shopper pays with a temporary payment token that is a number (such as a 7-digit number that appeared on the screen of the shopper's mobile phone) at a POS device, without the shopper needing have his own mag-stripe card.