Tokenized Payment Service Network for Real-Time Fund Transfers
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Solution Overview
Problem
Existing systems for transferring funds over electronic money transfer networks, such as ACH networks, are limited in accessibility and efficiency, particularly for individuals without accounts at financial institutions, and often incur high fees, making it difficult to transfer money between individuals, especially those without access to financial systems.
Innovation Solution
A method and system that securely transfers funds by using tokenized financial instruments, allowing senders and recipients to transfer funds without disclosing financial account information, enabling transactions between individuals with accounts at different financial institutions, and facilitating real-time payments through a payment service network.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If traditional wire transfers are used between financial institutions, then funds can be transferred securely, but transaction fees are high and accessibility is limited to individuals with accounts at financial institutions
Solution Approach 1:
The patent introduces a payment service as an intermediary that operates on top of existing financial infrastructure. This payment service enables transfers to individuals without requiring them to have accounts at traditional financial institutions, while still utilizing the secure ACH network for actual fund movements. The intermediary layer provides accessibility to underbanked populations without compromising the security of the underlying financial system.
2Productivity
If traditional ACH network transfers are used, then transaction costs are reduced, but transfer speed is slow and not real-time
Solution Approach 1:
The system performs preliminary actions by pre-authorizing transfers and preparing transaction data before actual fund movements. The payment service validates transactions, checks account balances, and routes transactions in advance, allowing for faster processing while maintaining the cost-effectiveness of ACH network transfers. This preliminary preparation enables near real-time transfer initiation without sacrificing the low-cost benefits of batch processing.
3Reliability
If tokenized financial instruments are used to protect account information, then security is enhanced, but system complexity increases
Solution Approach 1:
The patent uses tokenization to create simplified representations (copies) of sensitive financial account information. Instead of transmitting actual account numbers and routing numbers, the system uses tokenized identifiers that reference the original account data stored securely. This copying approach maintains security by preventing exposure of sensitive information while reducing system complexity compared to implementing end-to-end encryption and secure key management across all transaction points.
Data Source
AI summary
A method including receiving a request based on a sender initiating a funds transfer, wherein the funds transfer is for the sender to make a payment to a non-financial institution. The sender has a sender account at a sender financial institution. The method also can include obtaining sender identifying information from the sender. The method additionally can include sending at least a recipient public identifier and a payment amount for the payment to the sender financial institution to cause the sender financial institution to send a funds transfer request to a computer-implemented funds transfer network to initiate the payment from the sender account at the sender financial institution to a recipient account at a recipient financial institution. The funds transfer request does not include an account number of the recipient account. The computer-implemented funds transfer network is operated by an entity that is different from the recipient financial institution and the sender financial institution. Other embodiments are disclosed.