Stored Value Product Identification in Payment Authorization
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Solution Overview
Problem
Current fraud detection systems fail to quantify losses from fraudulent transactions involving counterfeit, lost, and stolen payment cards used to fund or purchase stored value products, as there are no indicators in authorization or clearing records to identify these transactions.
Innovation Solution
A method and system are introduced to identify stored value products in purchase transactions by using a stored value product identifier, which allows for the pre-authorization process and the inclusion of stored value funding information in authorization requests, enabling the freeze or blockage of fraudulent accounts and enhancing fraud detection.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If stored value products are processed under general purpose merchant category codes, then retailers can be identified in authorization and clearing records, but fraud indicators cannot be identified and fraud losses cannot be quantified
Solution Approach 1:
The patent segments the merchant category code system by introducing a specific MCC group (598) for stored value products, separating them from general purpose retail categories. This segmentation enables targeted fraud detection while maintaining the overall simplicity of the MCC classification system.
Solution Approach 2:
The patent introduces an intermediary field (stored value product identifier) that bridges the gap between transaction processing systems and fraud detection systems. This intermediary carries stored value product information through authorization and clearing records without disrupting existing payment infrastructure.
2Reliability
If additional information is added to authorization and clearing records to identify stored value products, then fraud detection improves, but record structure complexity increases
Solution Approach 1:
The patent makes the stored value product identifier field universal by allowing it to be populated in multiple scenarios: when stored value products are involved, when not involved (left blank or null), and across different transaction types. This multi-functionality adds fraud detection capability without requiring complete record restructuring.
Solution Approach 2:
The patent changes the parameter structure of existing authorization and clearing records by adding optional fields for stored value product identifier and transaction type. This parameter extension approach enables enhanced fraud detection while maintaining backward compatibility with existing record formats.
3Reliability
If stored value product identifiers are implemented, then fraudulent transactions can be identified and accounts can be blocked, but system implementation complexity increases
Solution Approach 1:
The patent implements preliminary action by requiring stored value product identifiers to be captured and transmitted during the authorization process itself, before the transaction is completed. This early identification enables real-time fraud detection and account blocking while establishing the data collection requirement at the point of sale.
Solution Approach 2:
The patent establishes feedback mechanisms where authorization and clearing records containing stored value product information are transmitted back through the payment network to issuing banks and fraud detection systems. This feedback loop enables continuous monitoring and real-time fraud response.
Data Source
AI summary
A method and system include identifying at least one stored value product is included in a purchase transaction; calculating an amount of stored value on the stored value product; receiving, by a computer from a merchant device, a payment authorization request for the purchase transaction via a payment card product; transmitting information associated with the stored value product to an issuer of the payment card product. Numerous other aspects are provided.