Methods and systems for initiating a financial transaction by a cardholder device

A cardholder input device for processing a financial transaction initiated by a cardholder with a merchant, said cardholder input device in communication with a merchant point of sale (POS) device and a payment network computing device, said cardholder input device comprising:

• a memory device configured to store account data associated with the cardholder, wherein the account data includes a cardholder input device cryptographic key;
• a communication interface configured to communicate with the merchant POS device, and the payment network computing device;
• and
• a processor coupled to said memory device and said communication interface, said processor programmed to:
• electronically pair with the merchant POS device, said processor further programmed to i) transmit payment account data to the merchant POS device, wherein the payment account data is associated with a payment card issued to the cardholder, and wherein the payment account data includes a cardholder input device cryptographic key, ii) recognize a merchant POS device cryptographic key embedded within merchant data received from the merchant POS device, and iii) authenticate the merchant POS device by validating the merchant POS device cryptographic key;
• receive, from the merchant POS device, transaction data associated with the financial transaction, and merchant data associated with the merchant;
• generate an authorization request message relating to the financial transaction using the account data stored within the memory device, and the transaction data and the merchant data received from the merchant POS device, and
• transmit the authorization request message to the payment network computing device via said communication interface, wherein the authorization request message includes the transaction data, the account data, and the merchant data,
• wherein the authorization request message is configured to enable the payment network computing device to generate a merchant authentication request message and transmit the merchant authentication request message to an acquiring bank computing device associated with the merchant for validation, the merchant authentication request message including the merchant data, and
• wherein the authorization request message is further configured to enable the payment network computing device to transmit the authorization request message to an issuer bank computing device having an account associated with the cardholder for validation;
• receive an authorization response message from the payment network computing device after validation of each of the authorization request message by the issuer bank computing device and validation of the merchant authentication request message by the acquiring bank computing device;
• transmit the authorization response message to the merchant POS device;
• receive a decline authorization response message from the payment network computing device when at least one of the transaction data and the merchant data is not successfully validated.

A computer-based method for processing a financial transaction initiated by a cardholder via a cardholder input device with a merchant, the cardholder input device being in communication with a merchant point of sale (POS) device and with a payment network computing device, said method comprising:

• electronically pairing the cardholder input device with the merchant POS device by i) transmitting payment account data to the merchant POS device, wherein the payment account data is associated with a payment card issued to the cardholder, and wherein the payment account data includes a cardholder input device cryptographic key, ii) recognizing a merchant POS device cryptographic key embedded within merchant data received from the merchant POS device, and authenticating the merchant POS device by validating the merchant POS device cryptographic key;
• receiving, by the cardholder input device from the merchant POS device, transaction data and merchant data;
• generating, at the cardholder input device, an authorization request message relating to the financial transaction, wherein the authorization request message includes:
• the payment account data stored on the cardholder input device,
• the transaction data received from the merchant POS device, and
• the merchant data received from the merchant POS device;
• transmitting the authorization request message from the cardholder input device to the payment network computing device to enable the payment network computing device to:
• (i) generate a merchant authentication request message that includes the merchant data,
• (ii) transmit the merchant authentication request message to an acquiring bank computing device associated with the merchant for validation, and
• (iii) transmit the authorization request message to an issuer bank computing device for validation,
• receiving, by the cardholder input device, an approved authorization response message transmitted from the payment network computing device when the transaction data and merchant data are successfully validated;
• transmitting the approved authorization response message from the cardholder input device to the merchant POS device;
• and
• receiving, by the cardholder input device, a decline authorization response message transmitted from the payment network computing device when at least one of the transaction data and the merchant data is not successfully validated.

A payment network computing system for processing a financial transaction between a cardholder and a merchant initiated through a cardholder input device associated with the cardholder that is in communication with a merchant point of sale (POS) device, said payment network computing system comprising:

• a memory device for storing a plurality of data including payment account data, transaction data, and merchant data;
• and
• a processor configured to communicate with said memory device, said processor programmed to:
• receive an authorization request message relating to the financial transaction transmitted from the cardholder input device without the merchant PUS device communicating with the payment network computing device, wherein the cardholder input device electronically pairs with the merchant POS device, said processor further programmed to i) transmit payment account data to the merchant POS device, wherein the payment account data is associated with a payment card issued to the cardholder, and wherein the payment account data includes a cardholder input device cryptographic key, ii) recognize a merchant POS device cryptographic key embedded within merchant data received from the merchant POS device, and iii) authenticate the merchant POS device by validating the merchant PUS device cryptographic key, and wherein the authorization request message includes:
• payment account data stored within the cardholder input device, and
• transaction data and merchant data received by the cardholder input device from the merchant PUS device;
• transmit the authorization request message to an issuer bank computing device associated with the payment account;
• generate a merchant authentication request message, by filtering out a portion of the authorization request message that includes the merchant data;
• transmit the merchant authentication request message to an acquiring bank computing device associated with the merchant;
• generate a first approved authorization response message after successful validation of each of the authorization request message by the issuer bank computing device and the merchant authentication request message by the acquiring bank computing device;
• transmit the first approved authorization response message from the payment network computing device to the cardholder input device in lieu of transmission of the first approved authorization response message to the merchant POS device, causing the cardholder input device to forward the approved authorization response message to the merchant POS device for completing the transaction;
• and
• generate a first declined authorization response message after unsuccessful validation of at least one of the authorization request message and the merchant authentication request message.

One or more non-transitory computer-readable media having computer-executable instructions embodied thereon, wherein when executed by a cardholder input device associated with a cardholder, the computer-executable instructions cause the cardholder input device to:

• initiate a financial transaction with a point of sale (POS) device associated with a merchant;
• electronically pair with the POS device, wherein the computer-executable instructions further cause the cardholder input device to i) transmit payment account data to the merchant POS device, wherein the payment account data is associated with a payment card issued to the cardholder, and wherein the payment account data includes a cardholder input device cryptographic key, ii) recognize a merchant POS device cryptographic key embedded within merchant data received from the merchant POS device, and iii) authenticate the merchant POS device by validating the merchant PUS device cryptographic key;
• receive transaction data relating to the financial transaction and merchant data relating to the merchant from the PUS device;
• transmit, to a payment network computing device, an authorization request message that includes the transaction data, the merchant data, and account data stored at the cardholder input device, wherein the authorization request message is configured to enable generation, by the payment network computing device, of a merchant authentication request message to be sent to an acquiring bank computing device associated with the merchant;
• receive, by the cardholder input device, an approved authorization response message after successful validation of the transaction data, the account data, and the merchant data and forward the approved authorization response message to the POS device;
• and
• receive, by the cardholder input device, a decline authorization response message when at least one of the transaction data and the merchant data is not successfully validated.