Modulo Encryption for Fraud Detection in Payment Systems
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Solution Overview
Problem
Current payment processing systems face significant challenges in detecting fraudulent transactions, particularly when transactions are conducted using encrypted accounts, as existing methods fail to accurately identify fraudulent attempts before the transaction is completed and often cannot determine the source of the fraudulent account.
Innovation Solution
The system employs character-by-character modulo operation encryption for sensitive data fields in transaction data, allowing for the detection of fraudulent transactions by comparing encrypted data with previous transaction records, and sends notifications accordingly, while maintaining the appearance of valid account information to prevent interception-based fraud.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Object-affected harmful factors
If encrypted account information is transmitted in transactions, then security against interception is improved, but the ability to detect fraudulent transactions deteriorates
Solution Approach 1:
The patent introduces an intermediary verification mechanism using encrypted historical transaction data stored in a database. When a new transaction occurs, the system encrypts the account information using the same algorithm and searches for matching encrypted records in the database. This intermediary encrypted database acts as a mediator that enables fraud detection without compromising the security of transmitted account information.
Solution Approach 2:
The system performs preliminary encryption of account information and stores it in a database before actual transactions occur. By pre-encrypting and storing account data in the database, the system creates a reference framework that enables rapid fraud detection during transactions without affecting transmission security or requiring real-time complex computations.
2Loss of information
If standard encryption is used for account data, then data protection is improved, but the ability to trace fraud sources deteriorates
Solution Approach 1:
The patent creates encrypted copies of account information and stores them in a database. These encrypted copies serve as traceable records that maintain the protective encryption while enabling fraud source identification. When fraud occurs, the system can search the encrypted database to trace the origin of fraudulent transactions without exposing the actual account information.
Solution Approach 2:
The system changes the parameter of encryption from being solely a protective measure to also serving as a traceable identifier. By using consistent encryption algorithms and storing encrypted records, the system transforms encrypted data into a dual-purpose element that both protects information and enables fraud tracing through pattern recognition in the encrypted domain.
Data Source
AI summary
A merchant conducting a transaction on an account forms transaction data with a sensitive data field. To obscure the account prior to transmitting information about the transaction, for each character in the sensitive data field, a combined character is formed with a character of a generated pad. A replacement character is formed by a modulus operation on the combined character and is stored in the corresponding position in the sensitive data field. A transmission containing the sensitive data field with replacement characters is delivered to the merchant's acquirer.