Registers – Records – Magnetic
Reexamination Certificate
2000-05-15
2003-07-15
Le, Thien M. (Department: 2876)
Registers
Records
Magnetic
C235S449000
Reexamination Certificate
active
06592044
ABSTRACT:
FIELD OF THE INVENTION
The present invention is in the field of credit cards and other cards, such as banking cards, which contain information in a magnetic stripe.
BACKGROUND OF THE INVENTION
Credit cards have been used for decades. A credit card typically has a 16-digit number (credit card number), a 4-digit number (expiration date), and a cardholder's name and business affiliation (if any) embossed on the front side of the card. The logo of the credit association or acquiring bank, or both, is also printed on the front side. On its back side is a magnetic stripe wherein all the pertinent personal information of the cardholder, such as primary account number, name, expiration date and encrypted Personal Identification Number (PIN) are encoded. The information contained in the magnetic stripe is not visible or readable directly from the card except with the use of special decoding equipment, such as a magnetic stripe reader. Also appearing on the backside is a space for accommodating the cardholder's personal signature and more printed information about the credit card issuer and/or Automatic Teller Machine (ATM) locations.
Prior to the ever-increasing use of online credit card purchases of good and services on the Internet over the past several years, there were only two common forms of credit card transactions used by the general public. According to the parlance of the credit card industry, the first form of transaction is dubbed “face-to-face.” A face-to-face transaction is one when the merchant establishes visual contact with the cardholder and the credit card and is therefore able to check the signature, verifying expiration date, etc. during a transaction. The second form of transaction is dubbed “MOTO” which stands for “Mail Order Telephone Order”. A MOTO transaction is one when the consumer uses mail, phone or facsimile to order goods or services and the merchant does not have direct visual contact with the credit card or the credit card holder.
Unauthorized or fraudulent use of credit card purchases for goods and services has been with the industry ever since its inception. Although consumers generally face little financial risk because federal law caps consumer liability for unauthorized charges on credit cards at $50, the loss to merchants and card issuers is far more significant and amounts to hundreds of millions of dollars per year. For face-to-face transactions, if the unauthorized use of a credit card occurs despite the merchant following all the rules established by the credit card associations, it is the issuer or acquiring bank that will be responsible for such a loss. For MOTO transactions, on the other hand, it is the merchant that will bear the brunt of the responsibility for fraudulent credit card charges. With the advent of the Internet and the incredible rate of increase in online credit card transactions for goods and services, the issue of credit card fraud has once again grasped the attention of the industry. Since an online credit card transaction is treated as a MOTO transaction, it is merchants that bear the brunt of the responsibility if any fraud should occur.
Over the past two decades, many different ideas, methodologies and hardware have been advanced in the field of credit card transactions with the hope of providing a more secure credit card to the user. These efforts have, in large part, been especially concerned with protecting against stolen credit cards or their unauthorized use by a perpetrator who falsely assumes someone else's identity. While the prior art is replete with various and diverse secured or even smart credit card systems, credit card fraud is still a serious and widespread problem. This is because many attempts to provide a smart, secure credit card system in the past have proven to be too complex and user-unfriendly, and this is believed why such cards, with the exception of American Express' Smart or Blue Card (see below), have not gained user acceptance.
One conspicuous example among many can be found in U.S. Pat. No. 4,614,861 issued in 1988 to Parlov et al. In this patent, the inventors advanced the idea of a unitary, self-contained credit card which has the ability to verify a personal identification number (PIN) which is entered directly into the card by way of a keyboard without the use of an outside terminal. Furthermore, a transaction identification code (TIC), which varies for each transactional use of the credit card, is automatically generated for later transaction validity verification after a valid PIN is entered and accepted by the card. While the methodology advanced at the time was indeed novel in its capability of eliminating unauthorized or fraudulent use other than by the card owner, it suffered nonetheless from a number of major drawbacks. First and foremost is the complexity of the system itself. The instructions of how to use the credit card alone are a major burden to card owners in order to ready the card for even a simple routine transaction. In other words, the credit card system is extremely user-unfriendly. Second, the system requires the additional use of a peripheral device and also a card validation device in order to safeguard and facilitate the transaction algorithm for achieving the level of security for the system. Such a requirement of additional equipment further complicates the utility and elevates the already expensive components cost of the system. Third, the system is incompatible with existing credit card transaction infrastructure and merchants who opt to use such a system must invest in new and expensive equipment in order to reap the system benefits. Consequently, such a credit card system has not achieved a widespread level of acceptance and usage by the general public.
In U.S. Pat. No. 4,650,978 issued to Hudson et al. in 1987, a similarly complicated “bank” cash card system is advanced for handling fund transfer transactions between a payor and a payee having a magnetic “hysteresis” security arrangement. A cash card has a magnetic stripe on which the available cash balance, the identification and security information are scramble recorded. A transaction register machine reads data from the card, carries out the transaction and records the new account balance on the card. The modified information is “restored” on the card in the form of a re-scrambled code. The transaction register machine also includes a magnetic tape of the cassette type or disk for storing each transaction thereon for further processing of the information at a remote data processing center. The transaction register machine further includes a main keyboard on the side of the payee for displaying the cash balance, for entering the total amount of the sale and recording the new cash balance on the card. The main keyboard is responsive to the cardholder's keyboard which has a slot for insertion of the card for verification by entering the correct identification number known only to the card holder. Again, the complexity of such a system, together with its inherent incompatibility with the existing credit card transaction infrastructure, has proved to be too much of a barrier for the system to be widely accepted and implemented by the financial community.
In U.S. Pat. No. 4,868,376 issued to Lessin et al. in 1989, a general purpose, re-programmable intelligent card is advanced. The card includes an alphanumeric keyboard, an alphanumeric display and one or more input/output ports controlled by a microprocessor and programs stored in a memory associated with the microprocessor. The microprocessor is provided with an operating system and may be programmed or reprogrammed for a specific application or for a variety of applications. While the card can serve multiple functions, it still suffers from several drawbacks that prevent it from being widely accepted by the general public, including its complexity in use, its innate incompatibility with existing credit card transaction infrastructure and the resultant high cost of operating such a system.
In U.S. Pat. No. 5,818,030 issued to Rey
Anderson Roy L.
Wong Jacob Y.
Anderson Roy L.
Caputo Lisa M.
Le Thien M.
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