Intermediary Payment Platform Netting for Faster Settlement
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Solution Overview
Problem
Existing payment processing systems face delays in settling transactions with multiple payment flows, particularly when service providers make purchases or perform services on behalf of customers, leading to inherent delays in reconciling and settling transactions due to separate payment flows.
Innovation Solution
A payment processing entity acts as both the card issuer and processor, streamlining settlement by handling both payment flows and enabling netting of transactions, thereby reducing delays and facilitating real-time authorization and settlement.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If separate payment flows are used for customer payments and service provider purchases, then transaction security and authorization are improved, but settlement time and reconciliation efficiency deteriorate
Solution Approach 1:
The patent merges the customer payment flow and service provider purchase flow into a unified payment ecosystem where a single payment account holds both customer funds and service provider funds. This allows the payment processor to net offset transactions between the two flows, settling the net amount rather than processing separate settlements, thereby reducing settlement time while maintaining security through centralized control.
Solution Approach 2:
The payment processor acts as an intermediary platform that receives both customer payments and service provider purchases, holds them in a unified payment account, and performs netting calculations. This intermediary role enables the system to maintain the security benefits of separate authorization flows while achieving faster settlement through centralized netting, eliminating the delay caused by sequential processing.
2Adaptability or versatility
If multiple third-party payment processors are used for different payment flows, then service versatility is improved, but system complexity and reconciliation difficulty increase
Solution Approach 1:
The patent creates a universal payment account that can hold and manage multiple types of funds (customer payments, service provider purchases, and other transaction types) within a single account structure. This multi-functional account design allows the system to handle diverse payment scenarios without requiring separate accounts or processors for each flow, thereby reducing system complexity while maintaining service versatility.
Solution Approach 2:
The patent segments different transaction types (customer payments, service provider purchases, refunds, etc.) into distinct transaction categories within the unified payment account. This segmentation allows the system to apply specific processing rules and netting logic to each transaction type while maintaining overall system simplicity, avoiding the need for separate complex systems for each transaction type.
3Speed
If real-time authorization is implemented for all transactions, then transaction approval speed is improved, but processing load and operational complexity increase
Solution Approach 1:
The patent implements preliminary authorization by placing transaction holds in the unified payment account before final settlement. Customer payments are authorized and held, and service provider purchases are authorized and held, allowing real-time approval decisions to be made. The actual fund transfer is then performed as a simple netting operation based on these pre-authorized holds, reducing the complexity of real-time processing while maintaining fast authorization speed.
Data Source
AI summary
A payment processing method and apparatus for using an intermediary platform are described. In one embodiment, the method comprises electronically receiving approval from an intermediary platform associated with a payment processor user of a first authorization request for a first transaction; electronically receiving for approval, at the payment processing system, a second authorization request for a second transaction from a merchant using a payment instrument used by an agent of the service provider; and settling transactions associated with the service provider, including clearing a batch of records corresponding to the service provider on a predetermined time basis by comparing, with a tracking engine of the payment processing system, transaction tracking information associated with authorization requests to net out individual transactions.