Data aggregation for transaction banking partnerships

#Underwriting refers to the process of assessing the eligibility of a customer to receive financial products (e.g., equity capital, insurance, mortgage, credit, etc.). The name derives from the historical maritime insurance market. Financial bankers, who would accept some of the risk on a given venture (historically a sea voyage with associated risks of shipwreck) in exchange for a premium, would literally write their names under the risk information that was written on a venture agreement.

#A merchant account is a type of bank account that allows businesses to accept payments by a payment card, such as a debit or a credit card. A merchant account is part of merchant service provided by a debit/credit card payment processor and/or ISO (referred to as the merchant service provider) based on an agreement (referred to as the merchant service agreement) between a merchant (e.g., a retailer), a financial institution (e.g., a merchant bank that issues the debit/credit card), the payment processor and/or ISO for the settlement of debit/credit card transactions and any necessary financial institutions or independent sales organizations (ISOs). In particular, the payment processor and/or ISO may be a bank or underwritten by a bank. Specifically, the transaction steps in settling debit/credit card transactions include authorization, clearing, funding, and chargebacks. Generally, an ISO is an entity that solicits merchants on behalf of an Acquiring Bank for payment card acceptance and enables card payments from customers. An ISO generally holds responsibility for providing customer service, merchant-level support, merchant-level compliance with regulatory rules and underwriting of merchant accounts.

#During the authorization step, the cardholder pays for the purchase and the merchant submits the transaction to the payment processor and/or ISO and/or ISO who verifies the credit card number, the transaction type, and the transaction amount with the card-issuing merchant bank before reserving the transaction amount from the cardholder's credit limit for the merchant. During the clearing step, the payment processor and/or ISO and/or ISO sends the transactions, typically in batches, through the credit card association, which debits the card-issuing merchant bank for payment and credits the payment processor and/or ISO and/or ISO. Essentially, the card-issuing merchant bank pays the payment processor and/or ISO for the transactions. Once paid, the payment processor and/or ISO, in turn, pays the merchant during the funding step. The merchant receives the transaction amount deducting various tiers of fees and/or required holdbacks to pay for the merchant service in processing the transactions. A chargeback is an event, typically initiated by the cardholder, when funds in a merchant account are held due to a dispute relating to the transaction. In the event of a chargeback, the card-issuing merchant bank returns the transaction to the payment processor and/or ISO for resolution. The payment processor and/or ISO then forwards the chargeback to the merchant, who must either accept the chargeback or contest it.

#FIG. 1 shows a schematic diagram of a system of data aggregation for banking partnerships in accordance with one or more embodiments of the invention.

#FIG. 2 shows a flowchart of a method of data aggregation for banking partnerships in accordance in accordance with one or more embodiments of the invention.

#FIGS. 3A-3B show an example of data aggregation for banking partnerships in accordance in accordance with one or more embodiments of the invention.

#Specific embodiments of the invention will now be described in detail with reference to the accompanying figures. Like elements in the various figures are denoted by like reference numerals for consistency.

#In the following detailed description of embodiments of the invention, numerous specific details are set forth in order to provide a more thorough understanding of the invention. However, it will be apparent to one of ordinary skill in the art that the invention may be practiced without these specific details. In other instances, well-known features have not been described in detail to avoid unnecessarily complicating the description.

#In general, embodiments of the invention provide a system and method to assign a score to an entity involved in a transaction where the score is used to manage risk for a transaction underwriter. As used in this disclosure, the entity is defined as an individual, a business entity, and/or any other type of entity that can be involved in a transaction. The score represents the ability of the entity to fulfill a financial obligation separate from the transaction where failure to fulfill the financial obligation by the entity results in defaulting on the transaction.