Tokenized Payment Authentication for Cardless Secure Transactions
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Solution Overview
Problem
Existing payment systems expose users' financial data to risk of fraud and hacking due to the need to enter sensitive information like credit/debit card details and transmit them over public networks, increasing the likelihood of transactional fraud.
Innovation Solution
A system and method for secure transaction processing using a payment application that tokenizes financial accounts, generates one-time verification codes, and performs multi-level authentication to facilitate secure transactions without requiring users to enter sensitive information.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If users enter financial details at merchant websites or interfaces, then transactions can be processed, but financial data is exposed to merchants and third-party service providers increasing fraud risk
Solution Approach 1:
The patent introduces a tokenization platform as an intermediary between users and merchants. Instead of directly sharing financial details with merchants, the system uses tokens as mediators that represent the actual financial account information. This intermediary layer ensures that merchants can process transactions without ever seeing or storing sensitive financial data, thereby eliminating fraud risk while maintaining ease of operation.
Solution Approach 2:
The patent extracts sensitive financial information from the transaction flow by replacing it with tokens. The actual financial account details are removed from the merchant's view and stored only in the tokenization platform's secure environment. This extraction of harmful elements (sensitive data) from the transaction process allows merchants to operate without exposure to fraud risks.
2Loss of time
If card details are stored as tokens in card on file service, then transactions can be processed without re-entry, but complete card details must be entered at least once exposing data to potential theft
Solution Approach 1:
The patent applies preliminary action by tokenizing financial accounts in advance during the initial registration process. Instead of storing raw card details for future use, the system performs the tokenization action beforehand, creating secure token representations that can be used repeatedly. This preliminary transformation of data into tokens eliminates the need to re-enter card details while preventing data theft since the stored tokens cannot be reverse-engineered to reveal original card information.
3Adaptability or versatility
If sensitive information is transmitted through public internet networks, then remote transactions are enabled, but transmissions are prone to hacking attacks compromising confidentiality
Solution Approach 1:
The patent introduces tokenization as an intermediary mechanism that protects data during transmission through public networks. Instead of transmitting sensitive financial information directly, the system transmits tokens that serve as safe mediators. These tokens can be freely transmitted over the internet without exposing the actual financial account details, enabling remote transactions while preventing hacking attacks from compromising confidential information.
4Ease of operation
If users must use payment cards for point-of-sale or ATM transactions, then traditional payment methods are maintained, but users cannot perform transactions without physical cards
Solution Approach 1:
The patent applies universality by making the tokenized payment system multi-functional across different transaction types and platforms. The same tokenized account can be used for online transactions, point-of-sale payments, and ATM operations, eliminating the need for different payment methods for different scenarios. This universal token-based approach provides both convenience and flexibility, allowing users to perform transactions anywhere without physical cards while maintaining security.
Data Source
AI summary
The present disclosure discloses a system (100) and method (200) for secure transaction processing. The system (100) comprises a payment application (102), a memory (106), and a transaction server (108) hosting the application (102). The application (102) facilitates a registered user to generate a request for initiating a payment transaction. The memory (106) stores a list of identifiers associated with registered users and registration details corresponding to each user. The transaction server (108) generates a first one-time verification code/PIN based on the transaction request and sends it to the application (102). The transaction server (108) receives a second verification code/PIN via a second user interface (20), compares the two codes/PINs, and sends transaction data to the issuing bank (30) of the first user, via an acquirer bank (40), for the completion of the payment transaction when the codes/PINs match. The system (100) enables users to carry out payment transactions without entering their sensitive financial accounts.