Offline Transaction Payment Protection via Risk Profiles
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Solution Overview
Problem
Merchants using mobile POS devices often face risks due to delayed network connectivity, which can result in unauthorized transactions and potential non-payment for services rendered, as they may not immediately learn if a payment instrument has been declined, leading to financial losses.
Innovation Solution
A payment protection service is offered to merchants, which provides reimbursement for declined transactions in offline modes, based on a risk profile generated from factors like transaction history, decline rate, geographical location, and demographic information, with fees calculated accordingly and rules set for coverage limits.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If merchants use mobile POS devices in offline mode, then they can conduct transactions at locations without network connectivity, but they face increased risk of fraudulent transactions and non-payment
Solution Approach 1:
The system performs preliminary actions by capturing transaction data locally at the point of sale, storing it securely in encrypted format on the device, and preparing authorization requests in advance. This allows the POS device to process transactions offline and then batch-transmit data when connectivity is restored, eliminating the need for real-time network connectivity while maintaining security through pre-configured encryption and authentication protocols.
Solution Approach 2:
The patent introduces an intermediary batch processing system that acts as a mediator between offline transaction data and the payment network. The system collects multiple offline transactions, batches them together, and processes them as a group when connectivity is available. This intermediary layer protects merchants from fraud by validating transactions in a controlled environment while enabling offline operation through local data storage and subsequent batch authorization.
2Reliability
If merchants wait for network connectivity to verify payment authorization, then they can confirm transaction validity, but they experience delayed payment confirmation and potential customer loss
Solution Approach 1:
The system performs preliminary data capture and local validation of payment information at the point of sale, storing transaction details in encrypted format. This preliminary processing allows immediate transaction recording without waiting for network verification, while maintaining the ability to authenticate payments later when connectivity is restored.
Solution Approach 2:
The patent segments the payment authorization process into distinct phases: local data capture and validation, secure encrypted storage, and batch transmission for final authorization. This segmentation allows the merchant to complete the sales transaction immediately based on local validation, while the actual payment authorization occurs in a separate batch process when network connectivity is available, eliminating customer wait time.
3Adaptability or versatility
If merchants conduct offline transactions without immediate authorization, then they can serve customers in remote locations, but they bear the risk of payment instrument decline and financial loss
Solution Approach 1:
The system provides beforehand cushioning through encrypted local storage of transaction data and automatic batch processing when connectivity is restored. This creates a protective buffer that ensures payment verification occurs even though the transaction was initiated offline, cushioning the merchant against financial loss from declined payments while maintaining mobile transaction capability.
Solution Approach 2:
The patent implements feedback mechanisms where transaction data is captured locally, stored with encryption, and then automatically transmitted for authorization when network connectivity becomes available. The system provides feedback to the merchant about transaction status after batch processing, enabling informed decisions about refund or follow-up actions while protecting against unauthorized transactions through the encryption and verification process.
Data Source
AI summary
Techniques and arrangements for providing payment protection to merchants who utilize point-of-sale (POS) devices that are configured to conduct transactions in both online and offline modes. In an offline mode, a POS device of a merchant stores information regarding a payment instrument used in a transaction between the merchant and a customer, for later sending of the information to a payment service for authorization of the payment instrument when the POS device is in the online mode. The described techniques protect the merchant in a situation where a payment instrument used in an offline transaction is later declined, by providing payment to the merchant for at least a portion of the cost associated with the transaction.