Payment Platform Segmentation for Crypto Fiat Conversion
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Solution Overview
Problem
Cryptocurrencies face limited adoption due to long transaction times and security concerns related to anonymous identities, which deter merchants from accepting them, leading to poor transaction security and exposure to money laundering risks.
Innovation Solution
Integration of a payment processing platform with a peer-to-peer payment platform to facilitate real-time transactions and manage cryptocurrency allocations, allowing merchants to receive funds in fiat currency while optionally converting them to cryptocurrency at favorable exchange rates, using APIs and SDKs to manage cryptocurrency wallets and ledgers separately from public blockchains.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If cryptocurrencies are used for transactions, then direct peer-to-peer payment capability is achieved, but transaction processing time becomes impractically long
Solution Approach 1:
The system segments the transaction process into two distinct parts: (1) immediate fiat currency transaction processing through traditional payment networks, and (2) separate cryptocurrency conversion and allocation. This segmentation allows the time-sensitive payment aspect to be handled quickly by fiat networks while the cryptocurrency conversion occurs asynchronously, resolving the contradiction between direct transaction capability and processing speed.
Solution Approach 2:
The payment processing platform acts as an intermediary between the customer's cryptocurrency payment and the merchant's receipt. The platform receives cryptocurrency payments, converts them to fiat currency through integrated payment networks, and then allocates funds to the merchant. This intermediary approach enables customers to pay with cryptocurrency while merchants receive funds through fast fiat currency transactions.
2Adaptability or versatility
If cryptocurrencies are accepted for payment, then decentralized digital asset transactions are enabled, but security risks increase due to anonymous identities
Solution Approach 1:
The payment processing platform serves as a trusted intermediary that verifies customer identities and ensures compliance with anti-money laundering regulations. The platform collects and verifies KYC information from customers making cryptocurrency payments, then uses this verified information to process transactions securely. This intermediary verification layer maintains the benefits of cryptocurrency transactions while eliminating security risks associated with anonymous identities.
Solution Approach 2:
The system performs preliminary identity verification and security checks on customers before processing their cryptocurrency payments. The payment processing platform verifies customer identities, checks compliance status, and validates transaction purposes in advance. This preliminary action ensures that only verified, compliant customers can transact, preventing money laundering and security issues while maintaining cryptocurrency transaction capabilities.
3Reliability
If cryptocurrency transactions are processed directly on public blockchains, then decentralized verification is achieved, but computational resources are excessively consumed
Solution Approach 1:
The system segments the verification process into decentralized cryptocurrency network verification for payment receipt and centralized fiat currency payment network verification for fund allocation. By separating these verification processes, the system maintains decentralized verification benefits for cryptocurrency transactions while using efficient centralized verification for the faster fiat currency settlement, reducing overall computational resource consumption.
Solution Approach 2:
The system applies partial decentralized verification only where necessary (cryptocurrency payment receipt) rather than requiring full decentralized verification for the entire transaction flow. The fiat currency portion uses efficient centralized verification, reducing computational overhead while maintaining adequate security and reliability through the combination of both verification approaches.
Data Source
AI summary
A payment service configured to allocate proceeds of payment authorization requests between user accounts. In examples, the payment service receives, from a user device, a user's preference regarding how to allocate proceeds received in association with payment authorization requests. The payment service receives, from a payment application executing on the user device, a payment authorization request associated with one or more transactions between the user and another user. Based on the user's preference, the payment service determines a first portion of proceeds to be allocated for deposit into a first account of a user and a second portion to be allocated for deposit into a second account of the user. The payment service then causes the portions to be deposited accordingly.