Point-of-Sale Real-Time Payment Rail for Secure Instant Transfers
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Solution Overview
Problem
Existing electronic transaction systems often take time to process payments, which is undesirable in certain circumstances, and implement security protocols that delay transactions, leading to inefficiencies and potential fraud.
Innovation Solution
A system enabling real-time or near real-time transactions using two-way communication between a user device and a terminal device, leveraging a payment rail like The Clearing House Real Time Payment (RTP) or FedNow, to facilitate instantaneous fund transfers between accounts, reducing the need for credit card transactions and minimizing security concerns through tokenization and short-range wireless communication.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional credit card or debit card transaction protocols are used, then transaction security is provided, but transaction processing time is delayed
Solution Approach 1:
The system performs preliminary actions by establishing communication channels and preparing transaction data structures in advance. The terminal device and user device exchange transaction data including payment amount and account information before the actual fund transfer, allowing security verification to occur parallel to data preparation rather than sequentially, thus reducing overall processing time while maintaining security protocols
Solution Approach 2:
The patent introduces an intermediary payment rail system (such as RTP or FedNow) that mediates between the user's financial institution and the merchant's account. This intermediary real-time payment rail enables direct account-to-account transfers without traditional card network processing, achieving both security through verified account authentication and speed through direct fund movement, resolving the contradiction between security and processing time
2Reliability
If enhanced security protocols are implemented, then transaction security is improved, but transaction speed decreases
Solution Approach 1:
The system implements self-service security mechanisms where the user device automatically provides credential information and the terminal device automatically verifies transaction data without manual intervention. The devices autonomously exchange authentication information and execute the transaction based on pre-established security parameters, reducing the time security protocols add to processing while maintaining rigorous verification standards
Solution Approach 2:
Security credentials and transaction parameters are prepared and verified in advance during the data exchange phase between terminal and user devices. By performing security verification actions preliminarily during the setup phase rather than during the execution phase, the system ensures security requirements are met before fund transfer begins, enabling faster actual transaction processing
3Speed
If real-time payment rail is used, then transaction speed is improved, but system complexity increases
Solution Approach 1:
The terminal device and user device are designed with multi-functionality to handle multiple communication protocols and data formats. The system can operate across different real-time payment rails (RTP, FedNow) and traditional payment methods through a unified interface, reducing the apparent complexity by providing a consistent user experience despite varied backend systems, thus managing system complexity while enabling real-time transfers
4Reliability
If traditional payment processing is used, then system reliability is maintained, but productivity is reduced
Solution Approach 1:
Transaction data including payment amount, account identifiers, and payment rail information are prepared and exchanged in advance between terminal and user devices. This preliminary data preparation allows the actual fund transfer to execute immediately once initiated, increasing transaction throughput while maintaining reliable verification of all transaction parameters before execution
Solution Approach 2:
The real-time payment rail acts as an intermediary that enables direct, high-speed fund transfers between financial institutions while maintaining the reliability of traditional banking protocols. This intermediary layer provides a dedicated real-time clearing channel that increases transaction throughput without compromising the established reliability standards of the banking system
Data Source
AI summary
A method includes determining a payment amount based in response to receiving a transaction request; providing transaction data to a user device in response to initiating a transaction with a user device, the transaction data including the payment amount; receiving user data from the user device, the user data including a request to provide funds via a payment rail and account information identifying a first institution associated with the user device; and receiving a funds received confirmation from a second institution computing system. The funds received confirmation is provided to the terminal device in response to a fund transfer corresponding with the payment amount being received by the second institution computing system from a payment rail. The payment rail receives the fund transfer from the first institution computing system in response to the transaction data being provided to the first institution computing system from the user device.