Browse Prior Art Database

Efficient Method for Processing Credit Transactions with Micro Payments

IP.com Disclosure Number: IPCOM000021211D
Original Publication Date: 2004-Jan-02
Included in the Prior Art Database: 2004-Jan-02
Document File: 2 page(s) / 21K

Publishing Venue

IBM

Abstract

A process for dealing with micro-transactions on credit cards is much faster than the traditional approach.

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This is the abbreviated version, containing approximately 53% of the total text.

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Efficient Method for Processing Credit Transactions with Micro Payments

With the advent of pervasive technology and a networked world, we are now stepping into a new era in which the notion of cashless transactions is being applied to a new class of micro-transactions; purchasing a cup of coffee and paying for it by a credit card is an example of a micro-transaction. The primary traits of such transactions include:

The monitory value of these transactions is in the order of 10s of pennies, typically under a dollar.

The buyers expect the transaction to complete very first, e.g., one desires to walk away with the

can of beverage as soon as it is dispensed.

An alternative method deals with micro-transactions that significantly reduces the processing time relative to the traditional approach. Rather than settling each transaction as they occur in real time, an "optimistic" method (OTP) is outlined below:f

The buyer supplies information about the credit instrument that he/she would like to use for the

transaction, credit card number and expiration date, cell phone (account) number, etc. The seller records a complete trace of the transaction (i.e., credit information, purchase data,

and the like), assumes that the buyer has sufficient credit, and completes the transaction. Asynchronously, the seller communicates the recorded transactions to the Credit Settlement

Service Provider, who settles and consolidates the transactions as in the traditional approach. This can, for example, occur on a periodic basis.

Clearly the time needed to complete a transaction using the OTP method is very short because the entire process is local to the POS, Moreover this method offers Credit Settlement Service Providers the benefit of dealing with large batches of small transactions instead of a large number of very small transactions.

The disadvantage of this method is its potential risk for loss of revenue because the payment for a transaction may be rejected much later after the completion of the sales. This risk is, however, minimal due to the inherent small monitory value of micro-transactions, and may well be justified by the added benefits of the new method, i.e., expedient processing and lower processing cost.

The High Level Specification of the OTP Metho...