Preauthorization System for Personal Check Clearance

Solution Overview

Problem

In the modern economy, transactions often occur without face-to-face interaction, making it difficult for merchants to ensure that personal checks will clear, especially when goods are delivered before the check is received, leading to security concerns and a need for more robust tools for check acceptance and settlement.

Innovation Solution

The development of tools that allow preauthorization of personal checks before delivery, followed by full authorization upon receipt, using a paperless settlement process, such as remotely-created drafts or automated clearinghouse transactions, to ensure the check will clear, eliminating the need for merchants to deposit the instrument.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Adaptability or versatility

If a merchant accepts a personal check without face-to-face interaction, then transaction flexibility is improved, but the reliability of check clearance deteriorates

Engineering Contradiction:

Improvetransaction flexibilityVSAvoidcheck clearance assurance

Core Design Contradiction:

Adaptability or versatilityVSReliability

Solution Approach 1:

The system performs preliminary authorization of the check before the merchant delivers goods or services. The authorization processor evaluates the check's validity, the customer's creditworthiness, and the likelihood of clearance in advance, providing the merchant with assurance before the transaction is completed.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

An authorization processor acts as an intermediary between the merchant and the customer's financial institution. This intermediary evaluates the check and provides authorization, bridging the gap between non-face-to-face transaction flexibility and reliable check clearance assurance.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Ease of operation

If goods are delivered before the check is received and evaluated, then customer convenience is improved, but the security risk for the merchant increases

Engineering Contradiction:

Improvecustomer convenienceVSAvoidmerchant security risk

Core Design Contradiction:

Ease of operationVSObject-affected harmful factors

Solution Approach 1:

The system performs preliminary authorization of the check before the merchant delivers goods or services. The authorization processor evaluates the check's validity, the customer's creditworthiness, and the likelihood of clearance in advance, providing the merchant with assurance before the transaction is completed.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system takes preliminary anti-action by evaluating and authorizing the check before delivery occurs. This pre-evaluation prevents the harmful outcome of accepting potentially bad checks after goods have already been delivered.

Inventive Principle:

Principle #9Preliminary anti-action

3Reliability

If a merchant requires physical deposit of checks at their bank, then the reliability of fund securing is improved, but the complexity of the settlement process increases

Engineering Contradiction:

Improvefund securingVSAvoidsettlement process complexity

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

An authorization processor acts as an intermediary between the merchant and the customer's financial institution. This intermediary evaluates the check and provides authorization, bridging the gap between non-face-to-face transaction flexibility and reliable check clearance assurance.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The system replaces the mechanical process of physical check deposit with an electronic authorization and settlement process. The authorization processor electronically evaluates and processes the check, eliminating the need for physical transportation and manual deposit procedures.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Data Source

PatentUS8036938B2Personal check acceptance systems and methods

Publication Date: 2011.10.11 FIRST DATA CORP

AI summary

Tools for facilitating the acceptance of personal checks and other presentation instruments. The tools, in some aspects, allow for preauthorization of a personal check (or other presentation instrument) prior to the merchant receiving the actual check, allowing a merchant, for example, to accept an order by phone, obtain details about the check that will be used to pay for the order, obtain preauthorization to accept the check, and arrange for delivery of the order. Upon delivering the order, the merchant can receive the check, and then obtain a full authorization to accept the check. The full authorization can be based primarily on the preauthorization, giving the merchant assurance that the check will in fact be authorized. In some cases, the tools of the invention also settle the check; in a particular aspect, the check can be settled without requiring the merchant to deposit the check.