Virtual Transaction Card Authorization with Merchant Matching

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Solution Overview

Problem

Existing transaction management systems face challenges in reducing false card declines and conserving resources by performing unnecessary authorization procedures, which can lead to a negative user experience and increased processing costs.

Innovation Solution

A transaction management platform that generates virtual transaction cards and performs a first authorization procedure to verify the merchant and transaction timing, thereby determining whether to forego a second authorization procedure, reducing unnecessary processing and minimizing false declines.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If multiple authorization procedures are performed to ensure transaction security, then fraud detection reliability is improved, but processing time and system resources are increased

Engineering Contradiction:

Improvefraud detection reliabilityVSAvoidprocessing time

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

The system performs preliminary actions by establishing associations between virtual transaction cards, time stamps, and merchant identifiers at the time of card generation. This pre-processing enables rapid verification during actual transactions without requiring multiple sequential authorization procedures, thus reducing processing time while maintaining security.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The authorization process is segmented into two distinct procedures: a first authorization procedure that verifies merchant identifier matches and timing constraints (which can be performed rapidly), and a second authorization procedure that provides additional security verification (performed only when necessary). This segmentation allows the system to balance speed and security by not always requiring the full multi-step process.

Inventive Principle:

Principle #1Segmentation

2Reliability

If multiple authorization procedures are performed to verify transaction authenticity, then fraud detection accuracy is improved, but processing resources are consumed unnecessarily

Engineering Contradiction:

Improvetransaction authenticity verificationVSAvoidprocessing efficiency

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The authorization system dynamically adjusts the level of verification based on risk assessment. The first authorization procedure is performed for all transactions to establish basic validity, while the second authorization procedure is dynamically selected and performed only when the first procedure indicates potential fraud or when additional verification is warranted, optimizing resource utilization.

Inventive Principle:

Principle #15Dynamics

Solution Approach 2:

By pre-establishing associations between virtual transaction cards, time stamps, and merchant identifiers during card generation, the system performs preliminary verification work that eliminates the need for redundant authorization procedures during actual transactions, thereby improving processing efficiency without compromising verification accuracy.

Inventive Principle:

Principle #10Preliminary action

3Reliability

If strict authorization procedures are enforced to prevent fraud, then security is improved, but false card declines increase

Engineering Contradiction:

ImprovesecurityVSAvoidfalse card declines

Core Design Contradiction:

ReliabilityVSObject-affected harmful factors

Solution Approach 1:

The system performs preliminary actions by pre-establishing accurate associations between virtual transaction cards, time stamps, and merchant identifiers. This ensures that when transactions occur, the first authorization procedure can rapidly verify authenticity without errors, reducing false declines while maintaining strong security through proper verification.

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system uses feedback from the first authorization procedure to determine whether the second authorization procedure is necessary. By analyzing the results of the first procedure (merchant identifier matching and timing verification), the system can provide feedback that guides the decision to perform additional verification or approve the transaction, reducing false declines while maintaining security.

Inventive Principle:

Principle #23Feedback

Data Source

PatentUS12211030B2Relaxed fraud detection for transactions using virtual transaction cards

Publication Date: 2025.01.28 CAPITAL ONE SERVICES LLC

AI summary

A device may receive an authorization request, associated with a transaction made by a user device as part of a checkout procedure of a website, that includes a virtual transaction card identifier of a virtual transaction card that is being used for the transaction, and a first merchant identifier for a merchant associated with the website. The device may perform a first authorization procedure to determine whether the first merchant identifier, included in the authorization request, satisfies a threshold level of similarity with a second merchant identifier associated with a request to generate the virtual transaction card that occurred prior to receiving the authorization request. The device may determine whether to forego a second authorization procedure based on a result of the first authorization procedure, and cause an authorization response, that includes an indication of whether the transaction is approved, to be provided to another device associated with the merchant.