Trusted Intermediary Routing for Credit Card Fraud Reduction
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Solution Overview
Problem
Current point of sale credit card transaction systems lack user involvement, leading to a high risk of unauthorized transactions and fraud, as the authorized user is not directly involved in the authentication process.
Innovation Solution
Implementing an independently-routed verification system where the authorized user communicates with the credit card issuer through a trusted intermediary, using a mobile device or IVR, to authorize or deny transactions, thereby involving the user in the payment process and reducing fraud.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional point of sale credit card transaction systems are used, then transaction speed is maintained, but fraud risk increases due to lack of user involvement
Solution Approach 1:
The patent introduces a mobile device as an intermediary between the credit card issuer and the point of sale terminal. This mobile device receives authorization requests, presents them to the cardholder for verification, and relays the cardholder's decision back to the issuer. This intermediary layer enables direct user involvement in the authorization process without requiring fundamental changes to existing POS or issuer systems, thereby reducing fraud risk while maintaining reasonable system complexity.
2Reliability
If user involvement is added to the authorization process, then fraud protection improves, but transaction time increases
Solution Approach 1:
The system performs preliminary actions by pre-configuring the mobile device with the cardholder's authorization preferences and contact information before a transaction occurs. When a transaction request is received, the mobile device can immediately present the authorization request and receive a decision, eliminating the need for real-time user interaction during the transaction itself in many cases. This preliminary setup enables fast authorization decisions while maintaining security.
3Measurement precision
If independent verification routing is implemented, then fraud detection capability improves, but communication infrastructure complexity increases
Solution Approach 1:
The mobile device performs multiple functions within a single platform: it receives authorization requests from issuers, displays them to the cardholder, collects the cardholder's decision, and relays the response back to the issuer. By utilizing the existing multi-functional capabilities of mobile devices (messaging, web browsing, contact management), the system achieves independent verification routing without requiring dedicated specialized communication infrastructure, thereby maintaining verification accuracy while limiting infrastructure complexity.
Data Source
AI summary
The risk of fraud in point of sale credit card transactions is reduced by providing independently-routed verification by communication between the authorized user of the credit card and the issuer of the credit card through a trusted intermediary.