Payment Network Clearing Irreversible Transactions
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Solution Overview
Problem
The existing clearing and settlement processes for payment account transactions, particularly for irreversible transactions, are time-consuming, taking multiple days to complete, which burdens acquirers with additional work and delays in transferring funds.
Innovation Solution
A system and method where a payment network intercepts authorized irreversible transactions, appends a flag indicator, and immediately clears and settles them, allowing acquirers to offload these processes, thereby expediting the settlement and reducing acquirers' workload.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of time
If the conventional clearing and settlement process is used for irreversible transactions, then the transactions can be processed with standard procedures, but the settlement time is delayed by multiple days and acquirers bear additional reporting burdens
Solution Approach 1:
The patent extracts irreversible transactions from the conventional multi-day clearing and settlement process. By identifying transactions with specific characteristics (irreversibility, immediate delivery), the system separates these transactions and routes them through an expedited path that bypasses standard clearing procedures, thereby reducing settlement time without affecting other transaction types
Solution Approach 2:
The system performs preliminary identification and flagging of irreversible transactions at the point of authorization. By determining transaction irreversibility upfront and appending indicators before clearing, the system prepares these transactions for expedited processing, eliminating delays associated with later-stage processing and reconciliation
2Ease of operation
If acquirers handle clearing and settlement for all transactions, then they maintain full control over the process, but their workload and operational costs increase significantly
Solution Approach 1:
The patent segments the clearing and settlement responsibilities based on transaction type. Acquirers retain full control over conventional transactions while the payment network assumes responsibility for irreversible transactions. This segmentation reduces acquirer workload for high-volume irreversible transactions while maintaining reliability through specialized handling by the payment network
Solution Approach 2:
The payment network acts as an intermediary that takes over clearing and settlement operations for irreversible transactions. By introducing this intermediary layer, the system relieves acquirers of burdensome reporting and processing tasks while ensuring reliable settlement through the payment network's centralized control and expertise
3Productivity
If immediate settlement is implemented for irreversible transactions, then settlement speed is dramatically improved, but the clearing process requires significant modifications to accommodate real-time processing
Solution Approach 1:
The patent applies local quality by implementing expedited clearing and settlement only for specific transaction types (irreversible transactions) rather than transforming the entire clearing system. By appending indicators to identify these transactions and routing them through specialized pathways, the system achieves high-speed processing for targeted transactions while maintaining standard processes for other transactions, thus limiting complexity increases to localized areas
Data Source
AI summary
Systems and methods are provided for processing network transactions. One exemplary method includes transmitting a network request, received from a first entity, to a second entity; intercepting a network reply from the second entity, when the network reply is associated with the first entity and the first entity is a registered entity; appending an indicator to the network reply when a rule associated with the first entity is satisfied by a parameter of the network reply; and appending a transaction associated with the network reply to a settlement process when the rule is satisfied by the parameter. The exemplary method further includes transmitting the network reply, with the appended indicator, to the first entity, whereby, upon identifying the indicator, the first entity is permitted to omit the transaction from further reporting related to clearing and/or settlement of the transaction.