Virtual Payment Number Verification for Merchant Fraud Protection

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Solution Overview

Problem

Merchants are apprehensive to accept virtual payment numbers for in-person transactions due to concerns about fraud and the ease of replicating numbers, especially when they are not provided via traditional physical payment cards and may have unfamiliar bank identification number (BIN) ranges.

Innovation Solution

A system and method for processing financial transactions that includes receiving product details and a virtual payment number, generating an authorization request with a data element indicating the virtual payment number as a limited use number, and transmitting this request to a payment network, providing additional security and recognition to merchants.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If virtual payment numbers are provided via non-traditional methods (e.g., smartphone display), then consumer flexibility and fraud protection are improved, but merchant acceptance and transaction reliability deteriorate due to fraud concerns and unfamiliar BIN ranges

Engineering Contradiction:

Improvefraud protectionVSAvoidmerchant acceptance

Core Design Contradiction:

ReliabilityVSAdaptability or versatility

Solution Approach 1:

The patent introduces an intermediary verification system that mediates between the virtual payment number provider and the merchant. The system includes a verification server that receives the virtual payment number, verifies its authenticity against the issuer's database, and provides confirmation to the merchant. This intermediary process resolves the contradiction by maintaining fraud protection while enabling merchant acceptance through third-party verification.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The patent implements preliminary verification actions before the actual transaction is authorized. The system performs advance validation of the virtual payment number by checking it against the payment issuer's database, verifying the number's authenticity, associated account status, and transaction limits. This preliminary action ensures reliability is established before the merchant processes the transaction, resolving the acceptance concern.

Inventive Principle:

Principle #10Preliminary action

2Ease of operation

If virtual payment numbers are used without physical payment cards, then electronic issuance and distribution flexibility are improved, but security verification and authenticity confirmation deteriorate

Engineering Contradiction:

Improveelectronic issuanceVSAvoidsecurity verification

Core Design Contradiction:

Ease of operationVSReliability

Solution Approach 1:

The patent replaces the mechanical system of physical payment cards with an electronic verification system. Instead of relying on physical card presence for security verification, the system uses electronic communication between the merchant's device, the verification server, and the payment issuer's database. This substitution maintains ease of electronic issuance while establishing new electronic-based security verification mechanisms.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

3Device complexity

If merchants verify virtual payment numbers using traditional methods, then processing simplicity is maintained, but fraud detection capability and transaction security deteriorate

Engineering Contradiction:

Improveprocessing simplicityVSAvoidfraud detection

Core Design Contradiction:

Device complexityVSReliability

Solution Approach 1:

The patent creates a universal verification system that can handle both traditional physical card transactions and modern virtual payment number transactions through a single integrated platform. The verification server is designed to work with multiple payment types and methods, providing enhanced fraud detection for virtual numbers while maintaining simple processing for traditional cards. This multi-functionality resolves the contradiction by not requiring separate complex verification processes for different payment types.

Inventive Principle:

Principle #6Universality (Multi-functionality)

Data Source

PatentUS10552832B2System and method for processing financial transactions funded via limited use virtual payment numbers

Publication Date: 2020.02.04 MASTERCARD INT INC

AI summary

A method for processing a financial transaction funded via a virtual payment number includes: receiving, by an input device of a merchant, product details for at least one product to be purchased in a financial transaction; receiving, by the input device, a virtual payment number; receiving, by the input device, an indication of the virtual payment number as being a limited use number associated with a payment account, wherein said merchant can recognize said virtual payment number as a limited use number; generating, by a processing device, an authorization request for a financial transaction, wherein the authorization request includes at least transaction data, the virtual payment number, and a data element, wherein the data element indicates the virtual payment number as a limited use number; and transmitting, by a transmitting device, the authorization request to a payment network.