Automated Merchant Identity Verification via Payment Network Refunds
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Solution Overview
Problem
Traditional methods for verifying a merchant's identity are time-consuming, labor-intensive, and rely on subjective human judgment, making them inconsistent, inaccurate, and difficult to scale for large volumes of transactions.
Innovation Solution
A system and method that verify a transacting entity's identity by controlling both a point of sale system and a transaction account, using a processing server to transmit a transaction amount, process a payment transaction, and issue multiple refund messages to ensure the entity has access to both systems, preventing impersonation without control of both.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If traditional manual verification methods are used to verify merchant identity, then verification accuracy can be maintained through human judgment, but the process becomes time-consuming and labor-intensive
Solution Approach 1:
The patent replaces manual human verification processes with an automated electronic system that uses payment network transactions to verify merchant identity. The system automatically initiates test transactions, processes refunds, and validates merchant control without human intervention, eliminating the time-consuming nature of manual verification while maintaining accuracy through objective transaction data.
Solution Approach 2:
The verification system allows the merchant to prove their own identity through their existing control of payment systems. By initiating test transactions and processing refunds through their own merchant account and point-of-sale system, the merchant self-verified their identity without requiring external human judgment, thus speeding up the process while maintaining accuracy.
2Adaptability or versatility
If manual verification personnel are used to verify merchant identity, then subjective judgment can be applied, but the system becomes difficult to scale for large volumes of transactions
Solution Approach 1:
The patent replaces the mechanical system of human verification personnel with an automated electronic verification system that processes transactions through the payment network. This automated system can handle large volumes of verification requests simultaneously without the bottlenecks of manual processing, dramatically increasing throughput while maintaining the flexibility to adapt to different merchant scenarios through configurable verification protocols.
3Stability of the object's composition
If traditional verification methods relying on human judgment are used, then consistency in verification decisions can be maintained, but the system becomes labor-intensive and costly
Solution Approach 1:
The patent replaces human judgment-based verification with an automated system that uses objective transaction data from the payment network. The system consistently applies the same verification logic across all merchants by automatically initiating test transactions, monitoring refund processing, and validating results, ensuring uniform consistency while eliminating the labor and resource costs associated with human verification personnel.
4Productivity
If automated verification systems are implemented to reduce human intervention, then verification speed and scalability improve, but system complexity increases
Solution Approach 1:
The patent uses the existing payment network as an intermediary to facilitate verification without requiring a completely new complex system. The verification system leverages the payment network's existing infrastructure for transaction processing and refund management, reducing the complexity burden by reusing established, reliable systems rather than building verification-specific infrastructure from scratch.
Solution Approach 2:
The verification system is designed to use the merchant's existing multi-functional payment infrastructure (merchant account, point-of-sale system, refund capability) for verification purposes. By making the verification process compatible with the merchant's existing systems rather than requiring separate dedicated verification infrastructure, the patent reduces overall system complexity while maintaining high throughput.
Data Source
AI summary
A method for verifying a transacting entity includes: receiving a verification request including an entity identifier; transmitting a transaction amount; receiving a transaction message for a payment transaction including a controlled payment number, the transaction amount, and the entity identifier; transmitting at least two refund messages including the controlled payment number and a refund amount, where a total of the refund amount included in each refund message equals the transaction amount; receiving a verification message including the entity identifier and two or more return amounts; and verifying that the two or more return amounts correspond to the refund amounts included in the two or more refund messages.