Proxy Payment Account Product Type Matching

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Solution Overview

Problem

Existing mobile payment systems face an interchange fee imbalance when using prepaid debit accounts versus credit cards, resulting in significant financial losses for program administrators due to differing interchange rates.

Innovation Solution

Implementing a system where a mobile device uses a proxy payment account with a product type matching the primary payment account selected by the user, ensuring that both the proxy and primary accounts are assessed the same interchange fee, thereby eliminating the fee imbalance.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Ease of operation

If a prepaid debit account is used for mobile payment transactions, then the transaction can be processed through the payment network, but a higher interchange rate is assessed resulting in financial loss for the program administrator

Engineering Contradiction:

Improvemobile payment transaction processingVSAvoidinterchange fee imbalance

Core Design Contradiction:

Ease of operationVSLoss of energy

Solution Approach 1:

The system changes the product type parameter of the payment account from prepaid debit to credit card to match the primary payment account type. This parameter change results in different interchange rates being applied, thereby eliminating the interchange fee imbalance and financial loss for the program administrator while maintaining seamless mobile payment processing

Inventive Principle:

Principle #35Parameter changes

2Device complexity

If the program administrator uses a fixed interchange rate for all payment accounts, then the system operation is simplified, but significant financial losses occur due to interchange rate imbalances between prepaid debit and credit cards

Engineering Contradiction:

Improveinterchange rate managementVSAvoidinterchange fee imbalance

Core Design Contradiction:

Device complexityVSLoss of energy

Solution Approach 1:

The system dynamically determines and applies interchange rates based on the product type of the selected primary payment account. Instead of using a fixed interchange rate, the system adapts the interchange rate to match the primary account type (credit or debit), thereby eliminating financial losses while adding dynamic logic to the interchange rate management system

Inventive Principle:

Principle #15Dynamics

Data Source

PatentUS10147084B2Methods and systems for providing a payment account with adaptive interchange

Publication Date: 2018.12.04 MASTERCARD INT INC

AI summary

Pursuant to some embodiments, systems, methods, apparatus, and means for conducting payment transactions using mobile devices are provided in which a mobile device is presented at a point of sale for use in a payment transaction. A selection of a primary account is received from a user of the mobile device, and the mobile device automatically identifies a product type of the primary payment account. The mobile device selects and transmits a proxy payment account identifier having a product type equivalent to the product type of the primary payment account to the point of sale for use in the payment transaction. The point of sale causes a first payment authorization request message to be routed to an issuer of the proxy payment account.