Transaction Authentication Risk Signaling for Accurate Authorization
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
There is information asymmetry between commerce systems and authorization systems during transaction processing, leading to incorrect authorization outcomes due to the lack of shared data, resulting in false positives and false negatives.
Innovation Solution
Implementing a risk analysis system within the commerce platform that generates a risk indicator to be shared with the authorization system, utilizing machine learning models to calculate a risk score and repurpose existing data fields or enhanced APIs to enhance data sharing, allowing the authorization system to make more informed decisions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If the authorization system operates independently without shared data from the commerce system, then its operational independence is maintained, but authorization accuracy deteriorates due to information asymmetry
Solution Approach 1:
The patent merges the commerce system and authorization system into a unified architecture where the commerce system includes both transaction processing and authorization functions. This integration eliminates information asymmetry by allowing seamless data sharing between previously separate systems, thereby improving authorization accuracy without sacrificing operational independence through standardized API interfaces.
Solution Approach 2:
The patent introduces an intermediary mechanism in the form of shared data structures and communication protocols that enable information exchange between the commerce system and authorization system. This intermediary layer allows the authorization system to access necessary transaction data from the commerce system while maintaining architectural independence, resolving the information asymmetry problem.
2Reliability
If additional data sharing mechanisms are implemented between commerce system and authorization system, then authorization accuracy improves, but system complexity increases
Solution Approach 1:
The patent implements universal data structures and communication protocols that serve multiple functions within the system. The same data fields and API interfaces are used for both transaction processing and authorization purposes, eliminating the need for separate complex communication channels and reducing overall system complexity while improving authorization accuracy.
Solution Approach 2:
The patent performs preliminary data preparation and validation in the commerce system before transmitting information to the authorization system. By pre-processing and structuring data in advance according to authorization requirements, the system reduces the complexity of real-time data exchange and eliminates the need for complex post-processing mechanisms.
3Measurement precision
If risk analysis is performed using machine learning models, then false positives and negatives are reduced, but computational requirements and processing time increase
Solution Approach 1:
The patent implements a risk-based processing approach where machine learning models are applied selectively based on transaction risk indicators. For low-risk transactions, simplified validation rules are used, while machine learning analysis is reserved for transactions exhibiting risk factors. This partial application of complex analysis reduces overall processing time while maintaining high accuracy for problematic cases.
Solution Approach 2:
The patent performs preliminary risk assessment using lightweight rules and heuristics before invoking computationally intensive machine learning models. By pre-filtering transactions and identifying only those requiring advanced analysis, the system reduces computational overhead and processing time while maintaining measurement precision for risk assessment.
Data Source
AI summary
A method and apparatus for authenticating a transaction are described. The method may include: receiving, at an authentication device, an electronic transaction request as part of authenticating a card-originated transaction between a merchant and a consumer; determining, based on characteristics of the electronic transaction request, a risk value associated with the electronic transaction request; selecting a first identification value or a second identification value based on a comparison of the risk value to a risk threshold, wherein the first identification value indicates that the risk value exceeds the risk threshold and the second identification value indicates that the risk value does not exceed the risk threshold; generating a communication to transmit to an authorization device, the communication comprising a first data field having the selected first identification value or the selected second identification value; and transmitting the communication to the authorization device.