Interchange pricing for financial transactions
A method of processing financial transactions is provided for determining tailored interchange prices for individual financial transactions. Financial data from a plurality of financial transactions is collected and segregated among different attributes. The attributes may include attribute types like transaction attributes, merchant attributes, issuer attributes and user attributes. The attributes may also include fixed and dynamic attributes for each attribute type. Attribute values are then determined for each attribute of each financial transaction. An interchange price is then determined for each financial transaction using a plurality of attribute values for the particular financial transaction.
1 . A method of processing financial transactions, comprising:
collecting financial transaction data from many financial transactions executed through a multi-party payment card network system, the many financial transactions being stored in a computer database;
segregating the financial transaction data into a plurality of attribute types;
segregating the financial transaction data into fixed attributes and dynamic attributes;
determining a plurality of attribute values for each of the many financial transactions, the plurality of attribute values for each of the many financial transactions comprising attribute type values determined using the financial data segregated into the plurality of attribute types, fixed attribute values determined using the financial data segregated into the fixed attributes, and dynamic attribute values determined using the financial data segregated into the dynamic attributes, wherein the dynamic attribute values are determined using the financial transaction data that is segregated into each dynamic attribute, the financial transaction data being ordered within each dynamic attribute and the dynamic attribute values being assigned based on an order of each financial transaction; and
determining an interchange price for each of the many financial transactions using the plurality of attribute values determined for each of the many financial transactions, each of the interchange prices being stored in another computer database; and
transmitting each of the interchange prices to one or more of a merchant, acquirer, card issuer or transaction processor.
2 . The method of processing financial transactions according to claim 1 , wherein the plurality of attribute types comprises transaction attributes.
3 . The method of processing financial transactions according to claim 2 , wherein the financial transaction data that is segregated into transaction attributes is further segregated into fixed attributes and dynamic attributes.
4 . The method of processing financial transactions according to claim 1 , wherein the plurality of attribute types comprises merchant attributes.
5 . The method of processing financial transactions according to claim 4 , wherein the financial transaction data that is segregated into merchant attributes is further segregated into fixed attributes and dynamic attributes.
6 . The method of processing financial transactions according to claim 1 , wherein the plurality of attribute types comprises issuer attributes.
7 . The method of processing financial transactions according to claim 6 , wherein the financial transaction data that is segregated into issuer attributes is further segregated into fixed attributes and dynamic attributes.
8 . The method of processing financial transactions according to claim 1 , wherein the plurality of attribute types comprises user attributes.
9 . The method of processing financial transactions according to claim 8 , wherein the financial transaction data that is segregated into user attributes is further segregated into fixed attributes and dynamic attributes.
10 . The method of processing financial transactions according to claim 1 , wherein the financial transaction data that is segregated into each of the plurality of attribute types is further segregated into fixed attributes and dynamic attributes associated with each of the plurality of attribute types.
11 . The method of processing financial transactions according to claim 1 , wherein the fixed attribute values are determined using a database with preassigned fixed attribute values based on possible financial transaction data segregated into each fixed attribute.
12 . The method of processing financial transactions according to claim 1 , wherein machine learning is used to determine the interchange price using the plurality of attribute values.
13 . The method of processing financial transactions according to claim 12 , wherein the machine learning comprises a gradient boosting regressor model.
14 . The method of processing financial transactions according to claim 1 , wherein the financial transaction data is collected over a period of time, and individual interchange prices are determined for each of the many financial transactions occurring during the period of time.
15 . The method of processing financial transactions according to claim 1 , wherein the computer database storing the many financial transactions and the another computer database storing the interchange prices consist of the same computer database.
16 . The method of processing financial transactions according to claim 1 , wherein each merchant associated with each of the many financial transactions pays the interchange price determined for each one of the respective financial transactions.
17 . The method of processing financial transactions according to claim 16 , wherein machine learning is used to determine the interchange price using the plurality of attribute values, the financial transaction data is collected over a period of time, and individual interchange prices are determined for each of the many financial transactions occurring during the period of time.
18 . The method of processing financial transactions according to claim 17 , wherein the financial transaction data that is segregated into each of the plurality of attribute types is further segregated into fixed attributes and dynamic attributes associated with each of the plurality of attribute types.
19 . The method of processing financial transactions according to claim 18 , wherein the fixed attribute values are determined using a database with preassigned fixed attribute values based on possible financial transaction data segregated into each fixed attribute, and the dynamic attribute values are determined using the financial transaction data that is segregated into each dynamic attribute, the financial transaction data being ordered within each dynamic attribute and the dynamic attribute values being assigned based on an order of each financial transaction.