Real-Time Payment Refund via Card Network Intermediary
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Solution Overview
Problem
Real-time payment networks do not support refund transactions or reversals of payment transactions, posing a challenge in implementing refunds when customers return purchased goods to merchants in the context of P2M payments.
Innovation Solution
A payment system that includes a supplemental payment services computer and a payment card settlement system, which handles refund requests by messaging through a payment card network to obtain authorization from the issuer bank, transferring funds from the merchant's account to the issuer, and settling the refund via the payment card network settlement system.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Speed
If real-time payment networks are used for P2M payments, then payment speed and efficiency are improved, but refund capability is lost
Solution Approach 1:
The patent introduces a payment card network as an intermediary system that bridges the real-time payment network and the refund processing requirement. The payment card network receives refund requests from the real-time payment network, processes them through its existing infrastructure, and executes the refunds. This intermediary approach allows the real-time payment network to maintain its speed advantage while gaining refund capability through the payment card network's infrastructure.
2Adaptability or versatility
If refund transactions are added to real-time payment networks, then refund capability is improved, but system complexity increases
Solution Approach 1:
The patent leverages the universal infrastructure of the payment card network to handle multiple transaction types including both original P2M payments and refund transactions. By using the payment card network's existing message processing, authorization systems, and settlement infrastructure, the solution achieves multi-functionality without requiring dedicated refund processing systems, thereby minimizing the increase in overall system complexity.
3Productivity
If refunds are processed through payment card network messaging, then refund processing efficiency is improved, but messaging complexity increases
Solution Approach 1:
The patent modifies the messaging parameters and protocols of the payment card network to accommodate refund transactions. By changing message types, flags, and processing parameters within the existing payment card network framework, the system achieves efficient refund processing without requiring entirely new messaging infrastructure. The payment card network's existing message routing and processing mechanisms are adapted to handle refund scenarios effectively.
Data Source
AI summary
Methods and systems for providing a refund amount to a customer account for a payment transaction that occurred using a real-time payment network. In an embodiment, a supplemental payment services computer receives a refund request including a transaction reference and a token concerning a payment transaction between a merchant and a customer, determines that the payment transaction was effected in a real-time payment network, determines an issuer financial institution (FI) computer of an issuer FI maintaining a customer account represented by the token, transmits the refund request to the issuer FI computer, receives a favorable authorization response and transmits the authorization response to an acquirer FI computer associated with the merchant. The supplemental payment services computer also transmits a payment card network funds transfer credit message directing the issuer FI to credit the refund amount to the customer account and transmits a payment card network funds transfer debit message directing the acquirer FI to debit the refund amount from an account of the merchant to the acquirer FI computer. Next, the refund amount from the acquirer FI computer to the issuer FI computer is settled via a payment card account network settlement system computer.