Secure Financial Transaction System with Backup Pre-authorization
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Solution Overview
Problem
Electronic transactions, particularly ACH transactions, face risks due to delayed processing, and consumers may incur high surcharges depending on the card used, with no real-time fee detection or secure payment mechanisms, especially for tips and restaurant payments.
Innovation Solution
A system that enables real-time electronic transaction processing with a primary e-check and backup credit card payment, allowing merchants to secure payments by pre-authorizing the credit card in case the e-check bounces, and providing consumers with the option to choose payment methods based on merchant and payment source types, including QR code scanning for mobile payments.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of energy
If ACH transactions are used for electronic payments, then processing costs are reduced, but transaction finalization is delayed taking days to complete
Solution Approach 1:
The system performs preliminary actions by pre-authorizing the backup credit card before the ACH transaction is initiated. This ensures that if the ACH transaction fails, the backup payment is already authorized and can immediately cover the transaction, eliminating the delay in finalization while maintaining the lower cost benefit of ACH processing.
2Speed
If credit card is used for payment, then transaction speed is improved, but processing fees increase
Solution Approach 1:
The system applies partial action by using the credit card only as a backup payment method rather than the primary method. The primary ACH transaction is attempted first to minimize fees, and the credit card is activated only partially (as backup) if needed, thus balancing speed and cost without always incurring high processing fees.
Solution Approach 2:
The system changes the parameter of payment method selection dynamically based on transaction conditions. It switches from ACH (low cost, slow) to credit card (high cost, fast) only when necessary, optimizing the balance between processing fee and transaction speed by adapting to the specific transaction context.
3Loss of information
If real-time fee detection is implemented, then consumer awareness of surcharges is improved, but system complexity increases
Solution Approach 1:
The system introduces an intermediary component that automatically detects and communicates fee information to consumers during the payment process. This intermediary handles the complexity of real-time fee detection and presentation, providing transparent fee information without requiring the entire system to become significantly more complex.
4Reliability
If backup credit card pre-authorization is implemented, then payment security is improved, but consumer convenience is reduced
Solution Approach 1:
The system provides beforehand cushioning by pre-authorizing the backup credit card before the ACH transaction is initiated. This creates a safety cushion that ensures payment security without requiring immediate action from the consumer if the ACH transaction fails, as the backup is already in place and ready to execute automatically.
Data Source
AI summary
A system and method to conduct secure electronic financial transactions are provided. The method includes receiving a request, from a user, to perform a transaction with a merchant; generating a virtual check comprising a checking account number, a bank routing number, and a date; displaying the virtual check on at least one of a display of an electronic device of a user or the merchant; receiving input from the user corresponding to at least one of a plurality of check fields; receiving a virtual signature from the user; encrypting the virtual signature; storing the encrypted virtual signature in a database; decrypting and embedding, in the image of the virtual check, the virtual signature received from the user; populating the virtual check based on the received input and depositing the virtual check.