Routing Processor for International Credit Transfer Validation

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Solution Overview

Problem

Inbound International Automated Clearing House (ACH) credit transfers often fail to clear due to inoperable routing and account information, leading to returned or rejected transactions, which cause hardships for receivers, originators, and intermediaries.

Innovation Solution

A system and method that redirects or returns international credits by using a routing processor to compare routing and account numbers with a predetermined table, forwarding credit transfers to either the ACH or wire transfer service based on operability, and updating tables to indicate inoperable combinations, thereby ensuring successful posting and settlement.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If IATs are routed through the U.S. ACH network with inoperable routing and account information, then the transaction follows the standard clearing process, but the RDFI will reject the IAT and it will be returned

Engineering Contradiction:

Improvetransaction clearance success rateVSAvoidrouting and account information validation complexity

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The system performs preliminary validation of routing and account information before submitting IATs to the ACH network. By checking the operability of routing and account numbers in advance, the system prevents submissions that would inevitably be rejected, thereby improving clearance success rates without adding complex validation mechanisms at the RDFI level.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The patent introduces an intermediary validation layer between the IAT submission and the ACH network. This intermediary checks routing and account information and either validates it before submission or redirects the transaction to an alternative pathway, acting as a mediator that prevents rejected transactions from reaching the ACH network in the first place.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Productivity

If the system validates routing and account information before processing, then returned transactions are reduced, but the processing time and system complexity increase

Engineering Contradiction:

Improvenumber of successfully cleared IATsVSAvoidtransaction processing time

Core Design Contradiction:

ProductivityVSLoss of time

Solution Approach 1:

Validation of routing and account information is performed preliminarily and automatically as part of the initial processing workflow. By embedding this validation in the preliminary stage rather than as a subsequent check, the system minimizes additional processing time while maximizing the number of successfully cleared transactions.

Inventive Principle:

Principle #10Preliminary action

3Reliability

If inoperable IATs are returned to the originator, then the RDFI is protected from processing failures, but the originator and receiver experience hardship and increased costs

Engineering Contradiction:

ImproveRDFI processing reliabilityVSAvoidtransaction failure impact on originator and receiver

Core Design Contradiction:

ReliabilityVSObject-generated harmful factors

Solution Approach 1:

The system converts the potential harm of transaction failures into a benefit by proactively identifying and addressing inoperable routing and account information before submission. Instead of allowing failures to occur and then returning transactions (which causes hardship), the system uses preliminary validation to prevent failures altogether, transforming a harmful outcome into a beneficial preventive measure.

Inventive Principle:

Principle #22Blessing in disguise (Convert harm into benefit)

Data Source

PatentUS8700510B2Redirecting or returning international credit transfers

Publication Date: 2014.04.15 US FEDERAL RESERVE BANK OF ATLANTA

AI summary

Redirecting or returning international credit transfers is described. In one embodiment a system for redirecting or returning international credits is described including a gateway operator that receives a credit transfer from a foreign originator, compares routing and account numbers of the credit transfer with a predetermined table of routing and account numbers, and forwards the credit transfer based on the comparison of the routing and account numbers with the predetermined table, an Automated Clearing House (ACH) that presents the credit transfer to a Receiving Depository Financial Institution (RDFI) for clearing and settlement, and a wire transfer service that presents the credit transfer to the RDFI for clearing and settlement. In another embodiment a method for redirecting or returning international credits is described.