Payment Tender Steering Controller for Merchant Cost Optimization

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Solution Overview

Problem

Online merchants face varying and often high fees for processing different payment methods, which can impact their profitability. Existing systems do not effectively steer consumers towards payment options that minimize transaction costs for the merchant.

Innovation Solution

A payment processing system with an embedded controller that determines transaction costs for various payment methods and generates tender steering information to recommend a payment method to the consumer, incentivizing the use of lower-cost options.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Adaptability or versatility

If the system provides multiple payment options to consumers, then consumer choice and satisfaction are improved, but transaction costs for the merchant increase due to varying fees from different payment providers

Engineering Contradiction:

Improvepayment optionsVSAvoidtransaction costs

Core Design Contradiction:

Adaptability or versatilityVSLoss of energy

Solution Approach 1:

The system pre-calculates and determines transaction costs for multiple payment methods before the consumer makes their selection. The embedded controller receives payment method information, determines associated transaction costs, and uses this information to generate tender steering recommendations, allowing the consumer to make an informed choice that minimizes merchant costs while maintaining their preferred payment method.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system provides feedback to the consumer by generating tender steering information that includes recommended payment methods based on transaction cost analysis. This feedback loop allows the consumer to see the financial implications of different payment choices and select options that benefit both the consumer and merchant, thereby reducing overall transaction costs while maintaining versatility.

Inventive Principle:

Principle #23Feedback

2Productivity

If the system steers consumers towards lower-cost payment methods, then merchant profitability is improved, but consumer autonomy and choice are reduced

Engineering Contradiction:

Improvemerchant profitabilityVSAvoidconsumer choice

Core Design Contradiction:

ProductivityVSEase of operation

Solution Approach 1:

The embedded controller acts as an intermediary between the merchant and the consumer. It receives payment method information, determines transaction costs, and generates tender steering recommendations that present multiple options to the consumer. This intermediary function allows the system to optimize for merchant profitability while preserving consumer autonomy by presenting informed choices rather than forcing a single payment method.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The system changes the parameters presented to the consumer by providing tender steering information that includes not only the recommended payment method but also explanatory information about transaction costs and incentives. This allows consumers to make informed decisions based on comprehensive information, maintaining their sense of choice while guiding them toward financially beneficial options for both parties.

Inventive Principle:

Principle #35Parameter changes

3Measurement precision

If the system determines and presents transaction cost information to consumers, then payment optimization is improved, but system complexity increases

Engineering Contradiction:

Improvetransaction cost determinationVSAvoidpayment processing system

Core Design Contradiction:

Measurement precisionVSDevice complexity

Solution Approach 1:

The embedded controller performs multiple functions within a single component: it receives payment method information, determines transaction costs for various payment methods, generates tender steering recommendations, and presents this information to the consumer. By consolidating these functions into one multi-functional controller, the system achieves precise transaction cost determination without proportionally increasing overall system complexity.

Inventive Principle:

Principle #6Universality (Multi-functionality)

Data Source

PatentUS20250165940A1System and method for payment tender steering

Publication Date: 2025.05.22 WORLDPAY LLC

AI summary

A payment system reduces transaction costs for online merchants. The payment system receives a transaction amount for the purchase of goods or services by a consumer from an online merchant. The payment system receives bank identification numbers for a plurality of accounts of the consumer that could be used by the consumer to pay for the good or services. The payment system determines transaction costs associated with processing a payment transaction with an acquirer processor using each of the consumer accounts. The payment system determines a recommended consumer account to use for the purchase of the good or services based at least in part on the transaction costs. Tender steering information is generated and sent to the consumer. Tender steering information includes the recommended consumer account information and one or more incentives to incentivize the consumer to use the recommended consumer account for the payment of the goods or services.