Payment Gateway Interconnecting Closed Loop and Open Loop Systems
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Solution Overview
Problem
Existing payment systems do not support transfers from closed loop systems to open loop systems, limiting the usefulness of closed loop systems in transactions.
Innovation Solution
A payment gateway service is introduced to interconnect closed loop and open loop payment systems by allowing users to establish a shadow account in the open loop system, enabling transactions with merchants outside the closed loop system through a payment gateway that facilitates authorization and settlement processes.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If closed loop payment systems operate independently without interconnection to open loop systems, then the system maintains simplicity and operational control, but the usefulness and adaptability of closed loop accounts is limited
Solution Approach 1:
A payment gateway is introduced as an intermediary system that connects closed loop and open loop payment systems. The gateway receives transaction requests from closed loop systems, converts them into open loop system formats, and routes them appropriately. This mediator enables interoperability between otherwise incompatible systems without requiring complex direct integration between the closed loop and open loop infrastructures.
2Adaptability or versatility
If payment systems support transfers between different system types, then the versatility of the system increases, but the operational complexity and processing difficulty increases
Solution Approach 1:
The payment gateway breaks down the complex cross-system transaction process into distinct segments: (1) receiving and validating the closed loop transaction request, (2) converting the request format and routing information, (3) selecting the appropriate open loop system, and (4) forwarding the converted request. This segmentation isolates complexity within the gateway while keeping the participating systems simple.
Solution Approach 2:
The payment gateway serves as a mediator that handles all the complexity of inter-system communication, format conversion, and routing logic. The closed loop and open loop systems each remain simple and unchanged, while the gateway manages the sophisticated processes required for cross-system transfers.
3Adaptability or versatility
If closed loop systems remain isolated, then the system operation remains simple and direct, but the range of usable merchants and transactions is restricted
Solution Approach 1:
The payment gateway provides universal access functionality, enabling closed loop accounts to transact with any merchant that accepts open loop payments. By implementing a unified gateway interface that supports multiple payment system protocols and formats, the system achieves multi-functionality where a single infrastructure serves both closed loop and open loop transaction types.
Data Source
AI summary
Systems and methods for person-to-person and person-to-merchant remittances from a person having a closed loop system account to merchants who are not members of the closed loop system. In an embodiment, a payment gateway computer receives a remittance transaction request from a payment services provider (PSP) computer associated with a closed-loop system, maps an alias identifier into a shadow account number assigned to the sender in an open-loop payment authorization system, determines that the alias identifier mapped into a valid shadow account number, debits a stored value account for the remittance transaction amount, credits a shadow account in the open-loop payment authorization system for the remittance transaction amount, generates an authorization request for an open-loop payment transaction and transmits it to the open-loop payment authorization system, receives an authorization response from the open-loop payment authorization system, and transmits an approval response.