Pre-authorization System Using Predictive Modeling

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Solution Overview

Problem

Current transaction authorization processes are inefficient, leading to delays and reduced transaction volumes due to the need for real-time fraud checks and sufficient fund verification, which can discourage consumers and reduce merchant revenue.

Innovation Solution

Implementing a pre-authorization system that predicts future transactions based on previous consumer patterns, generating an authorization before the transaction is initiated, and sending it to the merchant or consumer for immediate use when the transaction is likely to occur, thereby reducing the need for real-time authorization requests and easing network strain.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If real-time authorization requests are processed for each transaction, then fraud detection accuracy is maintained, but transaction processing time increases and merchant revenue decreases

Engineering Contradiction:

Improvefraud detection accuracyVSAvoidtransaction processing speed

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The system performs preliminary fraud analysis and generates authorizations in advance based on predicted transaction patterns. By analyzing historical transaction data and consumer behavior patterns beforehand, the system prepares authorizations that can be quickly deployed when predicted transactions occur, eliminating the need for time-consuming real-time authorization requests while maintaining fraud detection accuracy

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system skips the traditional real-time authorization step for predicted transactions by using pre-generated authorizations. When a transaction is predicted based on pattern recognition, the system can immediately use the pre-prepared authorization without going through the standard real-time processing queue, thereby rushing through the authorization process and significantly reducing transaction delays

Inventive Principle:

Principle #21Skipping (Rushing through)

2Reliability

If real-time authorization requests are sent for every transaction, then fraud checks are performed, but network resources are consumed and processing efficiency decreases

Engineering Contradiction:

Improvefraud check completenessVSAvoidnetwork resource consumption

Core Design Contradiction:

ReliabilityVSLoss of energy

Solution Approach 1:

The system performs fraud checks selectively rather than for every transaction. By using pattern recognition to identify predicted transactions with high confidence, the system applies fraud checks only to those cases where prediction accuracy is sufficient, performing partial authorization actions that reduce network resource consumption while maintaining adequate fraud detection coverage

Inventive Principle:

Principle #16Partial or excessive action

Solution Approach 2:

The system creates copies of authorization decisions in advance based on predicted transaction patterns. Instead of generating unique authorization requests for each transaction, the system replicates pre-approved authorization templates for predicted transactions, significantly reducing network resource consumption while maintaining fraud check completeness through the predictive modeling process

Inventive Principle:

Principle #26Copying

3Productivity

If authorization is obtained in advance based on predicted transactions, then transaction speed increases, but the complexity of the authorization system increases

Engineering Contradiction:

Improvetransaction processing efficiencyVSAvoidauthorization system complexity

Core Design Contradiction:

ProductivityVSDevice complexity

Solution Approach 1:

The authorization system performs self-service by automatically analyzing transaction patterns, generating predictions, and creating authorizations without requiring complex manual intervention or highly complex decision-making algorithms. The system uses straightforward pattern recognition on historical data and automated rule-based prediction, allowing it to serve itself in the authorization process while maintaining relatively simple system architecture

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The system replaces complex mechanical authorization processes with data-driven predictive modeling. Instead of using complicated multi-step authorization workflows and manual reviews, the system substitutes these with automated pattern recognition algorithms that analyze transaction history and generate predictions, simplifying the overall system complexity while improving transaction processing efficiency

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Data Source

PatentUS10423962B2Pre-authorization of a transaction using predictive modeling

Publication Date: 2019.09.24 VISA INTERNATIONAL SERVICE ASSOCIATION

AI summary

Systems, apparatus, and methods are provided for efficiently authorizing a transaction initiated by a consumer. An authorization can be generated before the consumer actually initiates the transaction. For example, a future transaction can be predicted, and an authorization can be generated for the predicted transaction. In this manner, the authorization can be ready and quickly used when the consumer does initiate the transaction. Previous transactions made by the consumer can be used to predict when the future transaction is likely. In various examples, the authorization can be sent to a specific merchant or to the consumer for use when the consumer initiates the predicted transaction, or saved by an authorization server for use in response to an authorization request from the merchant.