Tokenization Authorization System for Fraud Risk Reduction

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Solution Overview

Problem

Existing digital transaction systems face increased risk of information breaches due to the storage and transmission of primary transaction account information, even with tokenized accounts, as the primary account may not have use restrictions, leading to potential high fraud losses.

Innovation Solution

An authorization system that receives a payment account identifier, constructs a query with the identifier as a search condition, and retrieves payment account information from a database, sending a decline response if the identifier matches a primary account identifier, thereby protecting the primary account from unauthorized transactions.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If tokenized accounts are used to protect primary accounts, then fraud risk is reduced, but the primary account identifier can still be compromised and stored at multiple locations increasing breach risk

Engineering Contradiction:

Improvefraud risk protectionVSAvoidinformation breach risk

Core Design Contradiction:

ReliabilityVSObject-affected harmful factors

Solution Approach 1:

The patent extracts the primary account identifier from the transaction flow by introducing a tokenization mechanism. The tokenized account identifier is used for transactions while the primary account identifier remains hidden and protected, eliminating the need to store and transmit the primary identifier at multiple locations.

Inventive Principle:

Principle #2Taking out (Extraction)

Solution Approach 2:

The patent introduces a tokenized account identifier as an intermediary between the primary account identifier and the transaction system. This intermediary layer allows transactions to occur without exposing the primary account identifier, reducing breach risk while maintaining transaction functionality.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Ease of operation

If primary account information is stored at multiple locations including digital wallets and merchant systems, then transaction convenience is improved, but the risk of information breach increases

Engineering Contradiction:

Improvetransaction convenienceVSAvoidinformation breach risk

Core Design Contradiction:

Ease of operationVSObject-affected harmful factors

Solution Approach 1:

The patent extracts the primary account identifier from storage at multiple locations by implementing tokenization. Only the tokenized account identifier is stored at digital wallets and merchant systems, while the primary account identifier remains protected and inaccessible to these systems.

Inventive Principle:

Principle #2Taking out (Extraction)

Solution Approach 2:

The patent creates a copy of the account identifier in the form of a tokenized account identifier that can be stored and transmitted safely. This copy maintains transaction functionality while the original primary account identifier remains protected and cannot be compromised.

Inventive Principle:

Principle #26Copying

3Device complexity

If primary account identifiers are used for transactions, then transaction processing is simplified, but the potential loss from fraud is significantly high

Engineering Contradiction:

Improvetransaction processing complexityVSAvoidpotential fraud loss

Core Design Contradiction:

Device complexityVSLoss of energy

Solution Approach 1:

The patent extracts the primary account identifier from the transaction processing flow by introducing tokenization. The tokenized account identifier is used for transactions, which simplifies the system architecture while preventing direct exposure of the primary account identifier to fraudsters.

Inventive Principle:

Principle #2Taking out (Extraction)

Solution Approach 2:

The patent applies beforehand cushioning by implementing tokenization before transactions occur. The tokenized account identifier is prepared in advance and used for all transactions, creating a protective layer that prevents direct compromise of the primary account identifier and reduces potential fraud losses.

Inventive Principle:

Principle #11Beforehand cushioning (Prior cushioning)

Data Source

PatentUS11250432B2Systems and methods for reducing fraud risk for a primary transaction account

Publication Date: 2022.02.15 AMERICAN EXPRESS TRAVEL RELATED SERVICES CO INC

AI summary

The system protects an account through the use of tokens, thereby eliminating the need to expose the primary account identifier during a transaction. If a primary account identifier is compromised, any use of the primary account identifier to facilitate a fraudulent purchase or settlement transaction may be blocked by the system. The system is configured to receive a payment authorization request including a payment account first identifier. The payment account first identifier serves as a search condition for a query, which is executed against a database to retrieve payment account information, if the payment account information exists. The system sends a decline response in response to the payment account first identifier and a primary account identifier from the payment account information being the same, indicating that a primary account is being used.