Waterfall Payment Processing with Priority Segmentation
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Solution Overview
Problem
Existing autopayment systems are prone to increased costs and inconvenience for both billers and consumers due to overdrafts or exceeding credit limits, and lack flexibility, leading to unsatisfied bills, penalties, and negative credit impacts.
Innovation Solution
A method for prioritized processing of multiple payment accounts, where a biller or billing agent submits transactions against a plurality of payment sources in order of priority, allowing consumers to select and configure their payment sources and rules, such as checking and credit accounts, to ensure timely payments and avoid penalties.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Extent of automation
If a single payment source is used for autopayment, then the payment process is simple and automated, but the account may be overdrawn or exceed credit limits causing penalties and nonpayment
Solution Approach 1:
The payment source is divided into multiple segments or layers (primary payment source, secondary payment source, tertiary payment source, etc.). When the primary source cannot satisfy the payment, the system automatically segments the payment obligation across multiple sources in priority order, preventing nonpayment while maintaining automation.
2Reliability
If multiple payment sources are used to prevent overdrafts, then payment reliability improves, but the system complexity increases
Solution Approach 1:
The consumer pre-configures multiple payment sources and their priority order in advance. This preliminary action establishes the payment hierarchy before any payment due date arrives, allowing the system to automatically execute the waterfall processing without real-time complexity when payments are due.
3Ease of manufacture
If fixed term autopayment structures are offered, then the payment process is straightforward for billers, but consumers lack flexibility to meet their particular needs
Solution Approach 1:
The payment system transitions from a static, fixed-term structure to a dynamic, configurable structure. Consumers can dynamically adjust their payment hierarchy, designate different payment sources in priority order, and modify their payment preferences over time, while the system adapts to these changes without requiring complex reconfiguration by billers.
Data Source
AI summary
The invention comprises a system and method for “waterfall” type payment processing using multiple alternative payment sources. A payor provides account information for multiple payment sources, such as a bank checking account, savings account, first credit card account, second credit card account, and so forth. The multiple payment sources are prioritized so that one is a primary payment source, another is a secondary payment source, another is a tertiary payment source, and so forth. After setting up the waterfall payment arrangement, when a bill becomes due a payee or third party payment administrator submits transactions against the payment sources in their order of priority until the payment is satisfied. Other variations and enhancements are disclosed.