Payment Rail Selection for Near-Real-Time Cross-Border Payouts
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Solution Overview
Problem
Existing payment systems suffer from latency issues, particularly in cross-border transactions, which can hinder smaller merchants and service providers from receiving payments promptly, leading to inventory and operational challenges.
Innovation Solution
A system and method that utilizes a network of payment rails to determine the fastest available payment rail for executing payouts based on specific rules and user account information, enabling near real-time transactions by leveraging a network of funding agencies and optimizing transaction paths.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Speed
If traditional payment processing systems are used, then transaction reliability is maintained, but payout speed deteriorates due to latency in payment settlements
Solution Approach 1:
The system performs preliminary actions by pre-validating payment information, pre-selecting optimal payment rails, and pre-arranging funding sources before the actual payout is requested. This allows the payout to be executed immediately when funds are available, eliminating post-transaction processing delays that occur in traditional systems.
Solution Approach 2:
The payment processing system is segmented into independent modular components including payment rail selection module, validation module, execution module, and funding agency coordination module. Each segment operates autonomously and can process different aspects of the payout simultaneously, reducing overall processing time while maintaining reliability through specialized handling of each function.
2Speed
If multiple payment rails are evaluated to find the fastest option, then payout speed improves, but system complexity increases
Solution Approach 1:
The system introduces an intermediary payment processing platform that sits between the user and multiple payment rails. This intermediary automatically evaluates available payment rails, selects the optimal one based on speed and reliability criteria, and manages the complexity of coordinating between different funding agencies and payment networks, shielding users from the underlying complexity.
Solution Approach 2:
The system dynamically changes evaluation parameters for payment rail selection based on real-time conditions such as current processing speeds, availability, costs, and reliability metrics of different payment rails. This allows the system to adapt to changing conditions and select the fastest available option without requiring complex manual configuration or decision-making.
3Reliability
If real-time fund verification is implemented, then payout reliability improves, but processing time increases
Solution Approach 1:
The system performs fund verification as a preliminary action during account setup or before funds are deposited, rather than at the moment of payout request. Once verified, the fund availability is cached and can be quickly confirmed during payout operations, ensuring reliability without adding verification time to each transaction.
Solution Approach 2:
The system implements continuous feedback loops that monitor fund availability, payment rail status, and transaction outcomes in real-time. This feedback mechanism allows the system to proactively detect and resolve potential issues before they affect payout reliability, while maintaining fast processing through automated real-time updates rather than batch verification.
Data Source
AI summary
A system and method for implementing a fast payment is described. A request to execute a payout to a payee account is received, where the request includes information about the payout. At least one payment rail available for the requested payout is determined from a plurality of payment rails based on the included information. Rules associated with each of the at least one payment rail are identified. A fastest payment rail is determined from the at least one payment rail for executing the payout based on the identified rules and the information about the payout. The payout is then executed over the determined fastest payment rail.