Real-Time Payment Routing via Competitive Bidding
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Solution Overview
Problem
Traditional interbank payment processing is inefficient due to the need for pre-negotiated agreements, which fail to adapt to changing financial conditions and often result in suboptimal routing through intermediate banks, leading to slower and more expensive transactions.
Innovation Solution
An online competitive payment bidding and route selection system that allows banks to submit payment requests with desired properties, which are matched with bids from banks offering specific payment properties, using pathfinding algorithms to determine the optimal payment route based on current market conditions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If pre-negotiated agreements are used for payment routing, then payment processing can be established between banks, but the system cannot adapt to changing financial conditions and results in suboptimal routing
Solution Approach 1:
The patent implements dynamic payment routing by replacing static pre-negotiated agreements with real-time bidding mechanisms. Banks submit bids for payment routes based on current market conditions, and the system dynamically selects optimal routes using pathfinding algorithms. This allows the payment system to adapt to changing financial conditions in real-time while maintaining high processing efficiency through automated route selection.
Solution Approach 2:
The system changes the parameters of payment routing from fixed contractual terms to variable bid-based parameters. Instead of relying on predetermined agreement terms, the system uses real-time bid submissions that include pricing, routing preferences, and capacity information. This parameter transformation enables the system to respond to market changes while optimizing payment processing through algorithmic route selection.
2Adaptability or versatility
If intermediate banks are used for routing, then payments can be transferred between banks without direct agreements, but the process becomes slower and more expensive
Solution Approach 1:
The patent implements self-service payment routing by enabling banks to autonomously submit bids for payment routes based on their own capacity and pricing. The system automatically processes these bids and selects optimal routes using pathfinding algorithms, eliminating the need for manual intervention or complex negotiation processes. This self-service approach maintains routing flexibility while significantly reducing processing time through automation.
Solution Approach 2:
The system replaces the mechanical process of manual payment routing and negotiation with automated computational algorithms. Pathfinding algorithms automatically calculate optimal routes based on bid submissions, replacing the need for manual coordination through intermediate banks. This substitution maintains the flexibility to route payments through multiple banks while dramatically reducing the time required for processing.
3Reliability
If static payment agreements are used, then bank relationships are established, but the system cannot respond to real-time market conditions
Solution Approach 1:
The patent implements feedback mechanisms by continuously monitoring market conditions and using this information to adjust payment routing decisions. Banks receive feedback about payment requests and market conditions, allowing them to submit updated bids that reflect current realities. This feedback loop maintains reliable payment processing while enabling real-time adaptation to market changes through iterative bid submissions and route selections.
Data Source
AI summary
Disclosed in some examples are methods, systems, and machine readable mediums for online competitive payment bidding and route selection. A payment route matching and selection service may be a network accessible computer based service which allows banks to submit payment requests that are bid on by banks that wish to handle the payment, or part of the payment. Payment requests may specify one or more desired payment properties (such as cost, speed, and the like). Bids may specify offered payment properties (e.g., cost, speed, and the like). The payment route matching and selection service may then attempt to find a payment route (including zero or more payment legs) that most closely (relative to the other routes) matches the desired payment properties of the payment request based upon the offered payment properties of the submitted bids.