Payment Processor Selection via Transaction Profile Routing
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Solution Overview
Problem
Current payment processing systems incur high fees for merchants due to generic pricing schemes based on interchange rates, which do not account for specific transaction profiles or merchant preferences, leading to suboptimal cost management.
Innovation Solution
A method and system that optimize payment processing by receiving a transaction profile, comparing it to merchant-specified preferences, and routing transactions through a computer communications network to select the most cost-effective payment processor based on card type, customer type, and merchant identification, thereby minimizing interchange fees.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of manufacture
If generic pricing schemes based on interchange rates are used, then payment processing is simple and standardized, but transaction costs for merchants are high and cannot be optimized
Solution Approach 1:
The system dynamically selects payment processors based on real-time comparison of transaction profiles against merchant preferences, allowing the routing decision to adapt to each specific transaction rather than using a static generic pricing scheme
Solution Approach 2:
The system changes the parameter of processor selection by comparing multiple factors including card type, customer type, and merchant identification to determine the optimal processor that minimizes interchange fees
2Loss of energy
If transaction routing is optimized by comparing transaction profiles to merchant preferences, then transaction costs are reduced, but system complexity increases
Solution Approach 1:
The system segments the payment processing function by separating the optimization logic into a distinct module that compares transaction profiles against merchant preferences, allowing the complex decision-making to be isolated from the core processing functions
Solution Approach 2:
The system introduces an intermediary optimization layer that sits between the merchant and multiple payment processors, comparing transaction characteristics against stored preferences to select the optimal processor without requiring changes to the underlying processing infrastructure
3Loss of energy
If multiple payment processors are used with different routing criteria, then cost effectiveness improves, but processing time increases
Solution Approach 1:
The system performs preliminary actions by pre-storing merchant preferences and processor characteristics, allowing rapid comparison and selection during actual transaction processing without requiring real-time analysis of multiple processors
Solution Approach 2:
The system applies different selection criteria locally to different transaction types by comparing specific transaction profile attributes against corresponding preference rules, enabling fast targeted matching rather than exhaustive comparison
Data Source
AI summary
Embodiments of the present invention provide a method, system and computer program product for cash management optimization method for payment processing. In an embodiment of the invention, a cash management optimization method for payment processing can include receiving a transaction profile for a proposed transaction as payment for a purchase by a purchaser from a merchant at a card processing terminal configured to identify a card number for a card. The method further can include comparing the transaction profile to merchant-specified preferences mapping different transaction profiles to different payment processors. A payment processor for the proposed transaction can be selected based upon the comparison of the transaction profile to the merchant-specified preferences. Thereafter, the proposed transaction can be routed over a computer communications network to the selected payment processor for payment processing.