POS Controller Dynamic Surcharge Adjustment

Resolve Bottlenecks,
Find Innovative SolutionsGenerate Solutions

Solution Overview

Problem

Current systems for transaction cost recovery in credit card transactions are inefficient, as merchants face high transaction costs that are typically passed on to customers through surcharges, leading to potential reductions in customer spending and revenue due to the complexity of determining optimal surcharge amounts based on various transaction attributes and payment instruments.

Innovation Solution

The development of apparatus and methods for determining merchant-specific transaction cost recovery amounts through the use of surcharge attributes, such as surcharge fractions, payment instrument types, and transaction metrics, allowing for dynamic adjustment of transaction costs based on performance metrics and customer behavior, enabling merchants to recover costs effectively while minimizing the impact on customer spending.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If merchants pass transaction costs to customers through surcharges, then transaction cost recovery is improved, but customer spending may decrease due to the deterrent effect of surcharges

Engineering Contradiction:

Improvetransaction cost recoveryVSAvoidcustomer spending

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The system dynamically adjusts surcharge parameters (amount, percentage, conditions) based on multiple factors including transaction attributes, customer profiles, merchant preferences, and real-time performance metrics. This allows optimization of the balance between cost recovery and customer spending by continuously tuning surcharge parameters rather than applying fixed rates.

Inventive Principle:

Principle #35Parameter changes

Solution Approach 2:

The surcharge system transitions from static, predetermined rates to dynamic, real-time adjustment based on performance metrics such as customer response, transaction volume changes, and revenue impact. The system adapts surcharge levels dynamically to maintain optimal balance between cost recovery and customer behavior.

Inventive Principle:

Principle #15Dynamics

2Measurement precision

If merchants implement complex surcharge determination systems, then transaction cost recovery precision is improved, but system complexity increases

Engineering Contradiction:

Improvesurcharge determination accuracyVSAvoidsystem complexity

Core Design Contradiction:

Measurement precisionVSDevice complexity

Solution Approach 1:

The system segments surcharge determination into multiple independent components: transaction attribute analysis, customer profile evaluation, merchant preference settings, and performance metric monitoring. Each component processes specific data independently, then integrates results to determine optimal surcharge amounts, reducing overall system complexity while maintaining precision.

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The system introduces intermediary elements such as pre-defined surcharge templates, standardized performance metrics, and automated decision rules that mediate between complex input data and final surcharge decisions. These intermediaries simplify the determination process by providing structured frameworks for analysis.

Inventive Principle:

Principle #24Intermediary (Mediator)

3Productivity

If merchants adjust surcharges based on real-time performance metrics, then revenue optimization is improved, but processing time and computational resources increase

Engineering Contradiction:

Improverevenue optimizationVSAvoidprocessing time

Core Design Contradiction:

ProductivityVSLoss of time

Solution Approach 1:

The system performs preliminary actions by pre-calculating and storing performance metric thresholds, surcharge templates, and decision rules before real-time processing. During transaction processing, the system quickly matches current metrics against pre-established criteria rather than performing full calculations, significantly reducing processing time while maintaining optimization capability.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system implements feedback mechanisms where performance metrics are continuously monitored and used to adjust surcharge strategies in near-real-time. The feedback loop processes only changes from baseline conditions rather than re-evaluating all parameters, reducing computational overhead while maintaining revenue optimization.

Inventive Principle:

Principle #23Feedback

Data Source

PatentUS9262756B2Point-of-sale (“POS”) controller

Publication Date: 2016.02.16 BANK OF AMERICA CORP

AI summary

Apparatus and methods are provided for adjusting a transaction cost and/or a transaction cost recovery amount. The adjusting may be based on a comparison of historical usage of a first payment instrument relative to use of a second payment instrument. Usage of the first or second payment instruments may be correlated to imposition of the transaction cost recovery amount. The adjusting may be based on determining a convenience fee and/or a transaction cost recovery amount for a funds transfer. The adjusting may be based on identifying a purchasing behavior. The purchasing behavior may include terminated or reduced spending, relative to historical spending, at a location that imposes a transaction cost recovery amount. The purchasing behavior may include identifying current payment instrument use at a location that imposes a transaction cost recovery amount.