Recurring Transaction Verification System for Payment Accounts
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Solution Overview
Problem
Consumers lack control over recurring transactions charged to their payment accounts, as existing systems often authorize and clear transactions without their contemporaneous approval, leading to potential unauthorized charges.
Innovation Solution
A system and method that verifies recurring transactions by transmitting verification requests to consumers before authorization and clearing, allowing them to approve or decline transactions, with the payment network holding authorization requests until a response is received.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If the payment network automatically authorizes and clears recurring transactions without consumer intervention, then transaction processing speed and productivity are improved, but consumer control and authorization reliability deteriorate
Solution Approach 1:
The system sends a verification request to the consumer before the recurring transaction is finalized. The consumer has the opportunity to approve or decline the transaction in advance, ensuring authorization reliability is maintained while still enabling automated processing. This preliminary consumer action prevents unauthorized charges before they occur.
2Reliability
If the payment network holds authorization requests until consumer verification is received, then authorization reliability is improved, but transaction processing time increases
Solution Approach 1:
The system implements a feedback loop where the consumer receives notification of the recurring transaction and provides verification feedback. The payment network holds the authorization request temporarily until this feedback is received. This ensures reliable consumer authorization while maintaining a time-bound process that limits delays.
Data Source
AI summary
Systems and methods are provided for verifying recurring transactions to payment accounts. One exemplary method includes initially receiving an authorization request for a transaction to a payment account and involving a merchant, where the authorization request includes a recurring payment indicator. The method also generally includes transmitting, by at least one computing device, a verification request to a consumer associated with the payment account, and inhibiting, by the at least one computing device, at least one or authorization or clearing of the transaction until a verification of the transaction, based on a direction from the consumer, is recognized, whereby the consumer is able to verify the transaction before the transaction is cleared.