Virtual Card Present Status for Digital Wallet Transactions
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Solution Overview
Problem
Current retail systems lack efficient methods to evaluate shopper loyalty and purchase history for offering favorable credit terms and risk assessment during transactions, especially when digital wallets are used, leading to potential fraud and missed opportunities for personalized promotions.
Innovation Solution
A method that receives shopper credentials, evaluates their purchase history across multiple merchants to determine virtual card present status and generate a financial risk score, enabling more favorable credit terms and personalized promotions by analyzing loyalty program participation, transaction amounts, return frequency, and other purchase behaviors.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If digital wallets are used for payment, then transaction convenience is improved, but fraud risk increases due to lack of card present verification
Solution Approach 1:
The patent introduces a digital wallet as an intermediary between the shopper and the payment system. The digital wallet stores payment information and transmits it to the merchant system, enabling contactless payment while maintaining security through encrypted communication and tokenization of sensitive data.
Solution Approach 2:
The patent replaces the mechanical verification of physical card presence with electronic verification methods. Instead of requiring the physical card to be present at the terminal, the system uses digital authentication protocols, cryptographic signatures, and electronic device verification to confirm transaction legitimacy.
2Adaptability or versatility
If purchase history evaluation is implemented, then personalized promotions are enabled, but system complexity increases
Solution Approach 1:
The patent creates a unified payment and analytics platform that handles multiple functions: processing payments, evaluating purchase history, assessing credit risk, and delivering personalized promotions. This multi-functional system eliminates the need for separate systems for each function, reducing overall complexity while enabling personalized services.
Solution Approach 2:
The patent performs purchase history evaluation and credit assessment in advance of the actual transaction. By pre-processing customer data and determining credit terms before the payment moment, the system enables personalized promotions and credit decisions without adding complexity to the point-of-sale interface.
3Productivity
If virtual card present status is granted based on purchase history, then favorable credit terms are offered, but fraud detection capability is reduced
Solution Approach 1:
The patent implements a feedback mechanism where purchase history data continuously informs credit decisions. The system monitors shopping patterns, transaction amounts, and product categories, using this feedback to dynamically adjust credit terms and detect anomalies that may indicate fraud, even when virtual card present status is granted.
Solution Approach 2:
The patent performs preliminary credit assessment and fraud risk evaluation based on established purchase history before granting virtual card present status. By pre-vetting customers through their historical buying behavior, the system can offer favorable credit terms to low-risk customers while maintaining fraud detection capabilities through ongoing monitoring of transaction patterns.
Data Source
AI summary
A method includes performing operations as follows on at least one processor: receiving credentials from a shopper, the credentials being associated with a purchase from a merchant, evaluating a history of purchases by the shopper from the merchant, determining that the shopper is entitled to virtual card present status from a financial institution based on evaluating the history of purchases, and sending a payment authorization request message for the purchase to the financial institution that comprises an indication that the shopper is entitled to virtual card present status.