Real-Time Payment Processing with Backup Credit Card Authorization
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Solution Overview
Problem
Existing electronic transaction systems face challenges in real-time surcharge calculation and payment security, particularly with automated clearing house (ACH) transactions, which can be delayed and result in losses for merchants, and do not allow for fair processing fee minimization for consumers.
Innovation Solution
A system that enables real-time electronic transaction processing with a primary e-check payment and a back-up credit card payment, allowing for pre-authorization and immediate charge if the e-check bounces, while providing context for disputes and refunding excessive processing fees, and allowing consumers to choose payment methods based on merchant and payment source types.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of energy
If ACH transactions are used for electronic payments, then processing fees can be minimized, but transaction finalization is delayed taking days to process
Solution Approach 1:
The system performs preliminary actions by pre-authorizing backup credit card payments before the ACH transaction completes. This ensures that if the ACH transaction fails, the backup payment is already authorized and can immediately cover the transaction, eliminating the time delay while maintaining low ACH processing fees.
Solution Approach 2:
The system provides beforehand cushioning by establishing a backup credit card payment mechanism that acts as a safety net for ACH transactions. This cushioning ensures transaction security and immediate finalization capability while primarily using the lower-fee ACH processing method.
2Loss of energy
If ACH transactions are used, then lower processing fees are charged, but there is risk that the transaction will not finalize
Solution Approach 1:
The system implements beforehand cushioning by pre-authorizing backup credit card payments before ACH transactions are initiated. This creates a safety cushion that ensures transaction reliability - if the ACH transaction fails to finalize, the pre-authorized backup payment immediately covers the transaction, eliminating merchant risk while maintaining low ACH fees.
Solution Approach 2:
The backup credit card payment system acts as an intermediary that bridges the reliability gap of ACH transactions. It provides a secondary payment mechanism that activates only if needed, ensuring transaction finalization reliability while allowing the primary ACH process to proceed with its lower fees.
3Speed
If real-time electronic transaction processing is implemented, then transaction speed is improved, but system complexity increases
Solution Approach 1:
The system achieves real-time processing speed by performing preliminary actions - pre-authorizing backup credit card payments before the ACH transaction completes. This allows the system to provide immediate transaction finalization capability without the complexity of building an entirely new real-time ACH processing infrastructure.
Data Source
AI summary
A system and method to conduct secure electronic financial transactions are provided. The method includes identifying, by a computing system, a first payment source account held by an account holder; receiving, by computing system, transaction data associated with a transaction initiated by the account holder with a merchant using the first payment source account, the transaction having a transaction amount; requesting, by a computing system, via a first network a first transfer of the transaction amount from the first payment source account within a predetermined time; receiving a virtual signature from the account holder; encrypting the virtual signature; storing the encrypted virtual signature in a database; and transferring the transaction amount to pay the merchant.