Open Banking Micropayments With Variable Recurring Payment Limits
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Solution Overview
Problem
Existing digital micropayment systems face high transaction costs, fraud risks, and inconsistent consumer experiences due to the inefficiencies of existing transaction infrastructures and existing methods, particularly in social network environments, and existing payment methods.
Innovation Solution
The use of an open banking system with variable recurring payments and an open banking system with session security and transaction security to enable micropayments to take place safely and efficiently without the need for a full authorization process for every payment.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional card rails payment infrastructure is used for micropayments, then transactions can be processed through existing systems, but the per-transaction cost becomes relatively high due to fixed authorization, clearing, and interchange fees
Solution Approach 1:
The system performs preliminary actions by establishing a payment mandate and setting payment limits in advance. The customer authorizes the merchant to make micropayments up to a predetermined limit, and the open banking provider pre-approves these transactions within the established parameters. This eliminates the need for real-time full authorization for each micropayment, reducing transaction costs while maintaining security through pre-established controls.
2Loss of energy
If closed payment systems with tokens are introduced to mitigate merchant costs, then per-transaction costs are reduced, but the system becomes inconvenient for both sender and recipient
Solution Approach 1:
The open banking system provides multi-functionality by serving as both the authorization mechanism and the payment rail. It combines the functions of traditional payment systems with micropayment optimization, allowing standard bank accounts to be used directly without requiring conversion to tokens or specialized payment instruments. This maintains user convenience while achieving cost efficiency through the VRP framework.
3Reliability
If full authorization process is performed for every micropayment, then transaction security is maintained, but consumer experience deteriorates due to heavy interaction requirements
Solution Approach 1:
The system applies partial authorization action by performing security checks only to the extent necessary. The open banking provider verifies that each micropayment falls within the pre-established payment limits and mandate parameters, rather than requiring full re-authorization. This partial verification maintains security for the critical elements (limits, mandate validity) while eliminating excessive interaction steps that would degrade consumer experience.
4Productivity
If micropayments are processed through existing transaction infrastructures, then payment processing is possible, but fraud risk increases due to lack of specific guard measures
Solution Approach 1:
The system implements feedback mechanisms through the open banking provider's verification process. The provider continuously monitors micropayments against the established mandate parameters and payment limits, providing real-time feedback on transaction validity. This feedback loop enables the system to identify and reject fraudulent transactions that exceed authorized parameters while maintaining high processing capability for legitimate micropayments.
Data Source
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AI summary
A method of making micropayments using an open banking system is described. This may be used for a customer (1) registered for micropayments to a merchant (2) using an open banking provider (71) within established payment limits using variable recurring payments. A suitable registration process is also described. The method comprises on initiation of a payment by the customer (1) to the merchant (2), first determining the payment to be secure and not fraudulent. If the payment is determined to be secure and not fraudulent, the open banking provider (71) authorises the payment if it is within the established payment limits. A suitable transaction system is also described.