Automated Payment Fee Deduction and Routing
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Solution Overview
Problem
Current payment processing systems face challenges in efficiently deducting and routing transaction fees during payment vehicle transactions, particularly for sub-merchants associated with payment facilitators, as existing methods often require sub-merchants to bear the costs of payment facilitation fees directly, which can be cumbersome and inefficient.
Innovation Solution
A computer-implemented payment processing method that creates merchant and sub-merchant accounts on a payment processing platform, where the payment facilitator charges a payment facilitation fee, which is deducted from the transaction funds and routed into a settlement account associated with the payment facilitator, while the remaining funds are credited to the sub-merchant's settlement account, streamlining fee deduction and distribution.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Device complexity
If sub-merchants directly bear payment facilitation fees in existing systems, then fee collection is simplified, but administrative burden and operational complexity increase for sub-merchants
Solution Approach 1:
The payment facilitator acts as an intermediary between the payment processing platform and sub-merchants. The system automatically deducts facilitation fees from transaction funds before distribution, eliminating the need for sub-merchants to manually handle fee collections and reconciliations. This intermediary mechanism resolves the contradiction by simplifying the overall process while maintaining ease of operation for sub-merchants.
Solution Approach 2:
The system implements automated fee deduction and fund distribution where the payment processing platform self-manages the entire fee collection and allocation process without requiring sub-merchant intervention. The platform automatically identifies transactions, deducts applicable fees, and distributes remaining funds to appropriate settlement accounts, thereby reducing administrative burden on sub-merchants while managing process complexity centrally.
2Productivity
If manual fee deduction and routing methods are used, then system implementation is simpler, but transaction processing efficiency and accuracy decrease
Solution Approach 1:
The system performs preliminary actions by pre-configuring fee deduction rules, settlement account mappings, and routing instructions during account setup and transaction authorization phases. By establishing these parameters in advance, the system enables automated real-time fee deduction and fund routing during transaction processing, significantly improving efficiency without requiring complex manual intervention during execution.
Solution Approach 2:
The system dynamically adjusts transaction parameters by automatically calculating and deducting facilitation fees based on pre-defined fee structures, transaction amounts, and routing rules. The platform modifies fund allocation parameters in real-time, directing appropriate portions to facilitator settlement accounts and remaining funds to sub-merchant settlement accounts, thereby enhancing processing efficiency through automated parameter management rather than manual configuration.
3Measurement precision
If payment facilitation fees are not automatically deducted, then sub-merchants have more control over funds, but fee accounting accuracy and transparency decrease
Solution Approach 1:
The system implements feedback mechanisms by providing real-time and post-transaction visibility into fee deductions, allocations, and settlements. Sub-merchants receive detailed transaction records showing original amounts, facilitation fees deducted, and net amounts distributed to their settlement accounts. This feedback loop ensures accurate fee accounting while maintaining transparency, allowing sub-merchants to verify fund management without requiring manual tracking, thereby preserving ease of operation.
Data Source
AI summary
A computer-implemented payment processing system and method is presented that includes creating a merchant account and a sub-merchant account on a payment processing platform where the merchant account is associated with a payment facilitator and the sub-merchant account is associated with a sub-merchant of the payment facilitator. The payment facilitator charges the sub-merchant a payment facilitation fee to facilitate payment processing on behalf of the sub-merchant. The merchant account and the sub-merchant account are associated with a first settlement account and a second settlement accounts held by a first financial institution and a second financial institution respectively. Subsequent to creating the merchant and sub-merchant account, the system and method processes a payment transaction for an initial amount of funds for the sub-merchant account. The payment facilitation fee is distributed into the first settlement account and the remaining funds are distributed into the second settlement account.