Payment Network Mapping Indicators for Same-Day Fund Settlement
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Solution Overview
Problem
Existing payment networks face challenges in efficiently tracking and settling funds across multiple financial institutions, leading to delayed transactions and difficulties in detecting money laundering due to incomplete transaction records and lack of comprehensive data visibility.
Innovation Solution
Implementing a payment network system with funding and disbursement APIs that include mapping indicators to facilitate same-day settlement and comprehensive transaction record tracking, enabling accurate monitoring and analysis of fund movements.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of time
If traditional multi-institutional settlement processes are used, then funds can be transferred between financial institutions, but settlement is delayed and transaction tracking is incomplete
Solution Approach 1:
The system segments the settlement process into distinct transfer requests between financial institutions, with each request containing a mapping indicator. This segmentation allows parallel processing of multiple transfers while maintaining individual tracking, enabling same-day settlement across multiple institutions without information loss.
Solution Approach 2:
The payment network acts as an intermediary that receives transfer requests from multiple financial institutions, stores transaction records with mapping indicators, and facilitates same-day settlement. The intermediary maintains complete transaction data visibility across all participating institutions, resolving the information asymmetry problem.
2Loss of information
If comprehensive transaction tracking is implemented across multiple institutions, then complete accounting is achieved, but system complexity increases
Solution Approach 1:
The payment network system provides multiple functions through a unified platform: receiving transfer requests, storing transaction records, facilitating settlements, and enabling tracking. The mapping indicator serves as a universal key that links related transactions across different institutions, reducing overall system complexity despite the multi-institutional environment.
Solution Approach 2:
The system adds a new dimension of tracking by incorporating mapping indicators as a separate data element in transaction records. This additional dimension enables comprehensive tracking and accounting without fundamentally restructuring the existing settlement architecture, allowing complete information visibility while maintaining system simplicity.
3Speed
If same-day settlement is implemented across multiple institutions, then transaction speed improves, but data tracking and coordination become more difficult
Solution Approach 1:
The system performs preliminary actions by storing transaction records with mapping indicators before settlement occurs. This preliminary data preparation enables rapid same-day settlement execution, as all necessary tracking information is already in place and coordinated, eliminating the need for complex real-time coordination during the actual settlement process.
Data Source
AI summary
A system on a payment network can facilitate a method including receiving a first request to transfer a first funding amount from a first financial institution to a second financial institution, the first request comprising a mapping indicator; requesting approval, from the first financial institution, of the first funding amount for the second financial institution; receiving the approval from the first financial institution; storing a first transaction record including the mapping indicator; receiving a second request to transfer the first funding amount from the second financial institution to a third financial institution, the second request comprising the mapping indicator; storing a second transaction record including the mapping indicator; and settling funds between the first financial institution and the payment network, the payment network and the second financial institution, the second financial institution and the payment network and the payment network and the third financial institution on the same day.