Virtual Check Payment System with Backup Pre-authorization
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Solution Overview
Problem
Current electronic transaction systems face challenges in real-time surcharge calculation and payment security, particularly with automated clearing house (ACH) transactions, which can take days to process, leading to risks for both consumers and merchants, and do not allow for surcharging on tips collected at restaurants after the consumer has left.
Innovation Solution
A system that enables real-time electronic transactions by using a primary e-check payment and a backup credit card payment, allowing for pre-authorization to secure the e-check, ensuring that if the e-check bounces, the credit card payment can be immediately charged, and if it succeeds, the credit card payment is released, thus securing the transaction and allowing merchants to recoup losses.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of energy
If ACH transactions are used for electronic payments, then processing fees can be reduced, but the transaction finalization is delayed taking days to process
Solution Approach 1:
The system performs preliminary actions by pre-authorizing backup payment methods before the primary ACH transaction completes. This allows the merchant to have a guaranteed backup payment source ready in advance, enabling real-time settlement while maintaining the low-cost ACH primary transaction path.
Solution Approach 2:
The system introduces an intermediary payment guarantee mechanism that mediates between the slow ACH network and the merchant's need for immediate payment certainty. The backup pre-authorized payment acts as an intermediary safety net, allowing the primary ACH transaction to proceed at its own pace while ensuring merchant protection.
2Reliability
If backup pre-authorized credit card payment is implemented, then payment security is improved, but device complexity increases
Solution Approach 1:
The system implements self-service by automatically managing the backup payment authorization and release processes without requiring manual merchant intervention. The payment guarantee system autonomously monitors the primary ACH transaction status and automatically captures or releases the backup pre-authorized payment, reducing operational complexity despite the added security layer.
Solution Approach 2:
The backup pre-authorized payment serves as a temporary security measure that is discarded (released) once the primary ACH transaction succeeds. This allows the system to maintain high security during the vulnerable processing period while automatically recovering the backup authorization funds when no longer needed, preventing permanent complexity overhead.
3Ease of operation
If real-time surcharge calculation is implemented, then consumer fairness is improved, but processing complexity increases
Solution Approach 1:
The system replaces complex manual surcharge calculation mechanics with automated electronic determination based on pre-configured payment method rates. The system automatically identifies the payment method and applies the corresponding surcharge rate through automated processing, eliminating the need for complex real-time manual calculations while ensuring consumer fairness through transparent, consistent application of fees.
Data Source
AI summary
A system and method to conduct secure electronic financial transactions are provided. The method includes receiving a request, from a user, to perform a transaction with a merchant, generating a virtual check comprising a checking account number, a bank routing number, and a date, displaying the virtual check on at least one of a display of an electronic device of a user or the merchant, receiving input from the user corresponding to at least one of a plurality of check fields, automatically generating meta data, in real-time, on the virtual check, wherein the meta data comprises a location of check creation and a time of check creation, embedding, in the image of the virtual check, at least part of the meta data, populating the virtual check based on the received input; and depositing the virtual check.