Intermediary System for Transit Payment Routing
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Solution Overview
Problem
Public transport operators face increasing regulatory requirements and operational challenges with closed-loop card-based transit solutions, while open-loop systems incur higher transaction costs due to involvement of multiple parties.
Innovation Solution
A system where a regulated entity issues cards and manages monetary accounts for public transport operators, allowing direct routing of transactions and enabling cards to be used across various services, reducing transaction costs and regulatory burdens.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If closed-loop card-based transit solutions are used, then user convenience and operational simplicity are improved, but regulatory requirements and operational challenges increase
Solution Approach 1:
The patent introduces a regulated entity (bank or payment institution) as an intermediary that issues cards and manages monetary accounts for public transport operators. This intermediary assumes the regulatory burden, allowing the public transport operator to maintain simple card-based operations while complying with financial regulations through the intermediary's involvement.
2Device complexity
If open-loop services are used, then operational requirements are reduced, but transaction costs increase due to multiple parties involved
Solution Approach 1:
The regulated entity acts as a direct intermediary between the public transport operator and the payment scheme network, eliminating the need for the operator to interface with multiple acquirers and schemes separately. This consolidated intermediary approach reduces operational complexity while maintaining direct transaction routing to minimize costs.
Solution Approach 2:
The regulated entity provides multiple functions: issuing cards to users, managing monetary accounts for the public transport operator, processing transactions, and interfacing with payment schemes. This multi-functional intermediary consolidates what would otherwise require separate systems, reducing both operational requirements and transaction costs.
3Adaptability or versatility
If dedicated closed-loop cards are issued, then service-specific control is improved, but adaptability and user convenience deteriorate
Solution Approach 1:
The patent enables standard EMV-based payment cards (credit/debit cards) to serve dual purposes: functioning as regular payment cards for general transactions and as transit cards for public transport. The regulated entity implements service-specific control mechanisms (such as identifying card numbers from specific ranges or BINs) to distinguish transit transactions from other payments, maintaining service control while enhancing user convenience through card universality.
Data Source
AI summary
A method of and system for providing a service to a user includes receiving (500), by a first service provider terminal (132(i)), an account number (PAN; DAN) stored in a chip of a mobile device (102; 112; 103), which mobile device is configured to be used in open-loop financial transactions; checking (501), by the first service provider terminal (132(i)) if the received account number (PAN; DAN) is present on a closed-loop list, the closed-loop list identifying account numbers for which a closed-loop service is supported; if so, forwarding (503), by the first service provider terminal (132(i)), the received account number to a service provider server (134(j)) configured to either approve or deny, respectively, the closed-loop service and receiving, from the service provider server (134(j)), either an approval signal (508) or a denial signal (506).