Registers – Systems controlled by data bearing records – Banking systems
Reexamination Certificate
1998-04-14
2001-02-20
Le, Thien M. (Department: 2876)
Registers
Systems controlled by data bearing records
Banking systems
C235S380000, C705S042000, C705S045000
Reexamination Certificate
active
06189785
ABSTRACT:
BACKGROUND OF THE INVENTION
1. Field of the Invention
The present invention relates generally to point of sale systems and more particularly to a demand deposit account data processing system whereby demand deposit account data may be recorded and processed in order to verify and settle transactions electronically.
2. Description of the Prior Art
The technology and hardware to accomplish electronic transfers of funds have been known in the art for some time. For instance, merchants presently have at their disposal devices such as checkreaders, terminals for magnetic cards such as credit cards and automated teller machine (ATM) debit cards, manual input of account information, or some combination thereof in order to obtain authorization for and settlement of transactions at the point of sale.
A typical prior art electronic funds transfer system
10
is shown in
FIGS. 1
a
and
1
b.
The prior art system
10
comprises a point of sale terminal
22
that includes a printer, a display monitor, and a magnetic card and/or a checkreader. The point of sale terminal
22
also has associated therewith a microfilm camera
23
that photographs a completed check
20
presented by a purchaser. When a roll of microfilm is complete, the merchant delivers
24
the film cassette to the merchant's financial institution. The point of sale terminal
22
is connected to a central processing/communication system
25
by a direct line or by dial-up communications, and this central system
25
is adapted to review information received from the point of sale terminal
22
in order to determine whether a transaction should be authorized or denied
28
and to record and log
40
all information relating to the transaction for later retrieval and analysis.
In practice, a check
20
or bank card
21
is presented by a customer to a merchant and swiped through the checkreader or magnetic card reader, respectively. The checkreader portion of the point of sale terminal
22
reads by either magnetic ink character recognition (MICR) or optical character recognition (OCR) the American Banking Association (ABA) account indications printed on the face of the check
20
and converts this information to digital signals. The customer is prompted to key in the personal identification number (PIN) associated with his or her account, and the merchant then enters the sale data that indicates the amount of the transaction to be authorized. All this information is converted to digital signals and communicated to the central system
25
to begin the authorization process
28
.
These digital signals, referred to hereinafter as “the transaction,” enter the authorization process
28
and the central system
25
verifies the transaction by authorization algorithms, an ABA account number-PIN pair database
29
, and a funds verification check
30
. The ABA account number-PIN pair database
29
maintains a file of ABA account numbers and the PINs assigned to those numbers. The funds verification check
30
is a software program adapted to communicate with a paying financial institution
50
A in order to determine that sufficient funds exist to cover the transaction.
The central system
25
then logs the MICR information
40
, creates a transaction identification number
40
, and, if the PIN is found to match
29
the account number and sufficient funds are determined to exist
30
, an approval number is assigned
40
. The central system
25
then creates
41
the electronic debit and credit files for submission to an automated clearing house (ACH) or federal reserve network computer. These electronic files
41
instruct the customer's bank, the paying financial institution
50
A, to deposit the necessary funds in the merchant's bank, the depositing financial institution
50
B. The ACH or federal reserve computers execute
42
these debit and credit file instructions., and the paying financial institution
50
A deposits the customer's funds into the depositing financial institution
50
B. Upon receipt by the point of sale terminal
22
of an approval message for a transaction, the merchant may issue an instruction to void
26
the transaction or to reverse
27
the previous transaction instruction, whether that previous instruction was to credit the merchant's account or to credit the customer's account.
All transaction information relating to approved transactions is recorded in the central system's data warehouse
51
for the merchant's future reference. These prior art systems
10
generally update their information on a daily basis in a batch process, and daily reports
52
may be generated to provide both detailed and summary records of transaction information.
While these prior art electronic funds transfer systems
10
represent a great advance over traditional check handling procedures that require transfer of a paper check among numerous financial institutions, they nonetheless suffer from a number of disadvantages. For example, these prior art systems
10
do not include or contemplate any mechanism for dealing with exception conditions such as an invalid PIN number or a denial due to insufficient funds. If exception conditions arise, prior art systems
10
simply decline to authorize the transaction and customers are left to find another form of payment or to abandon the transaction. As well, if the point of sale terminal
22
is not operating properly or not operating at all, merchants have no option but to submit the customer's check
20
into the traditional paper check processing stream for deposit at the merchant's financial institution
50
B, thereby submitting themselves to the risks associated with this old payment method.
Most old systems rely upon the automated clearing house network to accomplish the actual crediting and debiting of funds. Regarding recording customer information to deal with exception conditions, the best method that prior art systems offer is a microfiche recording of the transaction. There is no means by which to accomplish real time posting of the point of sale debit transaction, nor do the old processing systems incorporate any method by which a transaction can be guaranteed in the absence of a successful communication with the customer's financial institution. A further significant disadvantage of these prior art systems concerns the inability of these systems to recognize and deal with exception conditions in real time so that a merchant can obtain all necessary information from the customer before the customer leaves the point of sale.
Examples of relevant prior art devices include U.S. Pat. No. 4,321,762 issued Mar. 23, 1982; U.S. Pat. No. 5,237,159 issued Aug. 17, 1993; U.S. Pat. No. 5,412,190 issued May 2, 1995; U.S. Pat. No. 5,484,988 issued Jan. 16, 1996; and U.S. Pat. No. 5,532,464 issued Jul. 2, 1996; and reference patents listed therein. However, this prior art leaves significant room for improvement, both in terms of the ability to settle transactions on line and in terms of the ability to deal with exception conditions. The present invention is addressed to such improvement.
SUMMARY OF THE INVENTION
Briefly describing one aspect of the present invention, there is provided a demand deposit account data processing system which facilitates on line settlement of point of sale funds transfer transactions. The present invention incorporates new technology and processing architecture to automate not only the initial capture of payment and payor information, the transaction authorization process, and the settlement of transactions at a point of sale terminal, but also the entire process for dealing with transaction exceptions such as redeposited items, corrected items, returned items, their collection, and the significant data management required for merchant risk reduction, legal compliance, and efficient customer service.
In one form of the invention, a demand deposit account data processing system is provided which comprises demand deposit account data having a data source, said data source being one selected from the group
Cyr Daniel St.
International Check Services
Le Thien M.
Woodard Emhardt Naughton Moriarty & McNett
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