System and method for assigning an initial transaction fee tier to a vendor in a payment system with a variable transaction fee

• US 20120290469A1
• Filed: 08/09/2011
• Published: 11/15/2012
• Est. Priority Date: 05/13/2011
• Status: Active Grant

• Current Assignee: Bottomline Technologies Incorporated
• Original Assignee: Bottomline Technologies Incorporated
• Inventors: Hoke, Amy Beth, Martin, Christopher Curtis, Vadney, Claire Tierney
• Granted Patent: US 8,521,646 B2
• Time in Patent Office: Days
• US Class Current: 705/39
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions

Abstract

A system for making payments from each payer of a community of payers to each vendor of a community of vendors assesses a variable transaction fee to each vendor. The system comprises a database which associates, for each payer, identification a selected rate tier assigned to each vendor. A rate tier assignment application determines an initial rate tier to assign to a vendor by: i) determining an industry sensitivity score, the industry sensitivity score being representative of how sensitive a typical vendor in the same type of business as the vendor is to payment of transaction fees; ii) determining a payer centric spend score; iii) determining a payer centric frequency score; iv) determining a network spend score; and iv) determining a network frequency score. These scores are used to determine an initial rate tier to associate with the vendor. A payment application, when making payment from the payer to the vendor, determines a transaction fee to apply to the payment, the transaction fee being a product of the amount of the payment and the transaction rate associated with the selected rate tier.

Claims

1. A system for making payments from each payer of a community of payers to each vendor of a community of vendors and assessing a transaction fee to the vendor, the system comprising:

a database, the database comprising, in association with each payer of the group of payers;

a rate tier sub database identifying a transaction fee rate applicable to each rate tier of a group of rate tiers;

a vendor sub database identifying each vendor in a subgroup of vendors to which the payer makes payment, the subgroup of vendors being fewer vendors than the community of vendors; and

within the vendor sub database, in association with each vendor of the subgroup of vendors, identification a selected rate tier assigned to the vendor, the selected rate tiers being one of the rate tiers of the group of rate tiers;

a rate tier assignment application, the rate tier assignment application comprising instructions stored in a memory and executed by a processor, for determining the selected rate tier for each vendor identified in the vendor sub database, the instructions comprising;

determining an industry sensitivity score for the vendor, the industry sensitivity score being representative of how sensitive a typical vendor in the same type of business as the vendor is to payment of transaction fees

using the industry sensitivity score to determine the selected rate tier to associate with the vendor and writing the selected rate tier to the vendor sub database in association with the vendor;

a payment application for executing a payment from the a selected payer to a selected vendor, the payment application comprising instructions stored in a memory and executed by a processor, the instructions comprising;

looking up, in the vendor sub database associated with the selected payer, the selected rate tier associated with the selected vendor;

looking up, in the rate tier sub database, the transaction rate associated with the selected rate tier associated with the selected vendor;

determining a transaction fee to apply to the payment, the transaction fee being a product of the amount of the payment and the transaction rate associated with the selected rate tier associated with the selected vendor;

initiating payment to an account of the selected vendor a net amount equal to the payment less the transaction fee.

2. The system of claim 1, wherein:

the database further includes a sensitivity score sub database, the sensitivity score sub database associating each of a group of industry codes with a sensitivity rating, the sensitivity rating being one of a group of discrete sensitivity rating values; and

determining the industry sensitivity score for the vendor comprises;

obtaining the vendor'"'"'s industry code, the vendor'"'"'s industry code being an industry code of the group of industry codes;

looking up in the sensitivity score sub database, the sensitivity rating associated with the vendor'"'"'s industry code; and

determining the industry sensitivity score for the vendor to be the sensitivity rating associated with the vendor'"'"'s industry code.

3. The system of claim 2, wherein the instructions of the rate tier assignment application further:

determine a payer centric spend score for the vendor, the payer centric spend score being a function of the aggregate amount of all payments the selected payer expects to pay the vendor during a predetermined period;

determine a payer centric frequency score for the vendor, the payer centric frequency score being a function of the total quantity of payments the selected payer expects to pay the vendor during the predetermined period;

determining an overall score, the overall score being a function of the industry sensitivity score for the vendor, the payer centric spend score for the vendor, and the payer centric frequency score for the vendor; and

using the industry sensitivity score to terming the selected rate tier to associate with the vendor comprising using the overall score to determine the selected rate tier to associate with the vendor.

4. The system of claim 3, wherein determining the overall score comprises:

multiplying the industry sensitivity score for the vendor by a first weight factor to determine a weighted industry sensitivity score;

multiplying the payer centric spend score for the vendor by a second weight factor to determine a weighted payer centric spend score;

multiplying the payer centric frequency score for the vendor by a third weight factor to determine a weighted payer centric frequency score;

calculating the overall score as the average of the weighted industry sensitivity score, the weighted payer centric spend score, and the weighted payer centric frequency score.

5. The system of claim 3, wherein the instructions of the rate tier assignment application further:

determine a network spend score for the vendor, the network spend score for the vendor being a function of the aggregate amount of all payments expected to be paid to the vendor by multiple payers within the group of payers during the predetermined period;

determine a network frequency score for the vendor, the network frequency score being a function of the total quantity of payments expected to be paid to the selected vendor by multiple payers within the group of payers during the predetermined period; and

wherein the overall score is a function of the industry sensitivity score for the vendor, the payer centric spend score for the vendor, the payer centric frequency score for the vendor, the network spend score for the vendor and the network frequency score for the vendor.

6. The system of claim 5, wherein determining the overall score comprises:

multiplying the industry sensitivity score for the vendor by a first weight factor to determine a weighted industry sensitivity score;

multiplying the payer centric spend score for the vendor by a second weight factor to determine a weighted payer centric spend score;

multiplying the payer centric frequency score for the vendor by a third weight factor to determine a weighted payer centric frequency score;

multiplying the network spend score for the vendor by a fourth weight factor to determine a weighted network spend score;

multiplying the network frequency score for the vendor by a fifth weight factor to determine a weighted network frequency score; and

calculating the overall score as the average of the weighted industry sensitivity score, the weighted payer centric spend score, and the weighted payer centric frequency score, the weighted network spend score, and the weighted network frequency score.

7. The system of claim 2, wherein the instructions of the rate tier assignment application further:

determine a network spend score for the vendor, the network spend score for the vendor being a function of the aggregate amount of all payments expected to be paid to the vendor by multiple payers within the group of payers during a predetermined period;

determine a network frequency score for the vendor, the network frequency score for the vendor being a function of the total quantity of payments expected to be paid to the vendor by multiple payers within the group of payers during the predetermined period;

determining an overall score, the overall score being a function of the industry sensitivity score for the vendor, the network spend score for the vendor, and the network frequency score for the vendor; and

using the industry sensitivity score for the vendor to determine the selected rate tier to associate with the vendor comprises using the overall score to determine the selected rate tier to associate with the vendor.

8. The system of claim 7, wherein determining the overall score comprises:

multiplying the industry sensitivity score for the vendor by a first weight factor to determine a weighted industry sensitivity score;

multiplying the network spend score for the vendor by a second weight factor to determine a weighted network spend score;

multiplying the network frequency score by a third weight factor to determine a weighted network frequency score;

calculating the overall score as the average of the weighted industry sensitivity score, the weighted network spend score, and the weighted network frequency score.