Onboarding System Using Payment Hardware for Lower Interchange
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Solution Overview
Problem
The onboarding process for applications often deters users by requiring payment information upfront, and this leads to higher card-not-present interchange rates due to the lack of payment processing hardware during initial access.
Innovation Solution
A system and method that allows users to access applications without initial payment information, using payment processing hardware on a provider's device, which processes payment information later, thereby reducing interchange rates and improving user onboarding.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If payment information is required during initial onboarding, then payment security is improved, but user signup completion deteriorates
Solution Approach 1:
The patent segments the payment collection process into two distinct phases: (1) initial onboarding phase where no payment information is required, allowing users to sign up freely, and (2) subsequent service delivery phase where payment information is collected through payment processing hardware. This segmentation resolves the contradiction by separating user acquisition from payment collection, improving signup completion while maintaining payment security through the use of card-present processing methods.
Solution Approach 2:
The patent applies preliminary action by allowing users to complete onboarding and access application services before providing payment information. Users can download, install, and begin using the application during the preliminary onboarding phase, with payment information collected afterward through integrated payment processing hardware, thus removing the barrier to signup while ensuring payment capability is established.
2Ease of operation
If payment information is collected via application without payment processing hardware, then onboarding simplicity is improved, but interchange rate deteriorates
Solution Approach 1:
The patent introduces payment processing hardware as an intermediary device that bridges the application and the payment card. This hardware intermediary enables card-present processing methods (such as NFC, contactless, or physical card reading) which achieve lower interchange rates compared to card-not-present processing. The hardware acts as a mediator that maintains onboarding simplicity while optimizing payment processing costs.
Solution Approach 2:
The patent changes the payment processing parameter from card-not-present (application-based entry) to card-present (hardware-based processing). By utilizing payment processing hardware to read payment cards directly, the system transitions to a card-present transaction model, which fundamentally changes the interchange rate parameter in favor of lower costs while preserving the simplicity of the user experience.
3Loss of energy
If payment processing hardware is integrated, then interchange rate is improved, but device complexity deteriorates
Solution Approach 1:
The patent leverages the universality of payment processing hardware that can perform multiple functions: (1) serving as the payment collection interface during service delivery, (2) providing secure element storage for payment tokens, and (3) enabling both card-present and contactless processing modes. This multi-functionality justifies the added device complexity by consolidating multiple capabilities into a single hardware component that optimizes interchange rates.
Solution Approach 2:
The payment processing hardware is designed to operate autonomously, automatically detecting and processing payment cards through NFC, contactless, or physical insertion methods without requiring complex software integration or manual configuration. The hardware performs self-service functions including card detection, data reading, and secure transmission, thereby minimizing the complexity burden on the overall system while achieving card-present processing benefits.
Data Source
AI summary
Method to generate onboarding flow for application starts with on-boarding server receiving request from electronic device to activate application. On-boarding server determines whether request is initial request. Request is determined to be initial request when minimal set of information associated with user is not stored in on-boarding server. When request is determined to be initial request, on-boarding server signals to electronic device to display request for minimal set of information associated with user which includes at least one of: user identification, legal name, phone number, or email address. Minimal set of information associated with user is then received and stored in on-boarding server. On-boarding server signals to allow initial access to application. Signaling to allow initial access includes signaling that user requires access to payment processing hardware to process user's physical payment instrument. On-boarding server receives default payment information entered using payment processing hardware. Other embodiments are also described.