Virtual Account Settlement Architecture for Rapid Merchant Funding
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Solution Overview
Problem
Current transaction settlement processes are time-consuming, especially for small-to-medium businesses, due to multiple entities involved in authorization and verification procedures, leading to delays in fund receipt after transaction processing.
Innovation Solution
A system utilizing a virtual account managed by a single entity that combines issuer and acquirer functions, enabling rapid settlement through a simplified payment processing architecture with straight-through processing and single-use virtual primary account numbers.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If conventional authorization and verification procedures are implemented by multiple entities, then transaction security and reliability are improved, but transaction settlement time increases significantly
Solution Approach 1:
The patent merges the functions of multiple entities (issuer, acquirer, processor) into a single entity that can perform all authorization, verification, and settlement functions internally. This consolidation eliminates the need for back-and-forth communication between separate entities while maintaining all necessary security checks and verification procedures within the unified system.
Solution Approach 2:
The single entity performs multiple functions that traditionally required separate entities including issuer functions, acquirer functions, and processing functions. This multi-functionality allows the system to maintain comprehensive transaction security and verification while eliminating inter-entity communication delays.
2Reliability
If multiple entities are involved in transaction processing, then authorization and verification thoroughness are improved, but communication overhead and computational resources increase
Solution Approach 1:
By combining multiple processing entities into one, the patent eliminates the complex communication infrastructure required for inter-entity message passing. All authorization and verification operations occur within the single entity, removing the need for multiple communication channels and reducing overall system complexity.
3Reliability
If traditional settlement processes are used, then fund transfer accuracy is improved, but settlement speed deteriorates to days instead of minutes
Solution Approach 1:
The system performs preliminary authorization and verification actions during the transaction processing phase itself, rather than deferreing these checks to a separate settlement phase. This allows the settlement to occur immediately with already-validated transaction data, achieving both speed and accuracy.
Solution Approach 2:
By merging authorization, verification, and settlement into a single unified process within one entity, the system eliminates the temporal separation between these functions. This allows all security checks to be performed and settlement to occur in a single continuous operation, achieving instantaneous settlement without sacrificing accuracy.
Data Source
AI summary
An automation computer can receive a set of instructions pertaining to a transaction. The automation computer can generate a request to generate and activate a virtual account, where the virtual account is associated with a transaction value and a transaction amount. The virtual account can be managed by an authorization computer that can load a transaction value onto the virtual account in an amount equal to the transaction amount. The authorization computer managing both issuer and acquirer functionality in a transaction settlement can settle the transaction rapidly using the loaded virtual account by depositing the transaction value associated with the virtual account directly into an account of a resource provider.