Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Finance
Reexamination Certificate
2000-03-09
2001-12-18
Millin, Vincent (Department: 2164)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Finance
C705S03600T
Reexamination Certificate
active
06332134
ABSTRACT:
FIELD OF THE INVENTION
This invention relates to financial transaction systems, and more particularly, to a system for conducting financial transactions over a computer network.
BACKGROUND OF THE INVENTION
Financial transactions conducted via computers and computer networks are susceptible to fraud or theft of confidential financial information. Computer software engineers continuously strive to improve the security of computer systems in an effort to prevent theft and thereby calm users' fears. Various encryption schemes have been used to provide a layer of security for confidential information, however, for every effort toward increased security, new techniques are developed by hackers to break into encrypted information. Specifically, hackers want to steal credit card numbers and associated personal information.
FIG. 1
shows how a typical credit card transaction is conducted over the Internet. A credit cardholder (purchaser)
102
, contacts a merchant's web site
104
over the Internet. The cardholder
102
makes a shopping selection from the merchant's web site as shown at
108
. Next, the cardholder
102
provides the merchant with a valid credit card number and related personal information, such as expiration date, shipping address and so forth, as shown at
110
.
The merchant
104
receives the cardholder's personal credit information and contacts the cardholder's credit card company
112
to charge the cost of the selected items, as shown at
114
. If the charge against the credit card is successful, the merchant is notified and forwards an order confirmation
116
to the cardholder. The merchant then ships the selected goods to the cardholder. A short time later, the card company makes a payment to the merchant for the cost of the order as shown at
118
. Finally, the card company provides a bill to the cardholder for the cost of the purchase and any accrued interest charges, as shown at
120
.
In the above example, it is easy to see that the cardholder has provided confidential information over the Internet to the merchant. There is a risk when a cardholder transmits this information, since it may travel through several computer systems prior to reaching the merchant. This places the information at risk of being stolen. The merchant stores this information in its internal database, and at some point, the information may be used to generate mailing lists for future product offerings. To generate additional revenues, the merchant may sell all or a portion of the information to third parties. Even if the merchant tries to protect the information, the merchant's database is subject to unauthorized access, which may also put the cardholder's personal information at risk. Although some merchants may take steps to prevent unauthorized access to their internal databases, other merchants may not use adequate security measures. As a result, the cardholder's credit card number and other personal information may be compromised.
Organizing merchants worldwide to adopt consistent security measures has been largely unsuccessful. The secure electronic transaction (SET) protocol, while having promise, has been abandoned by key players in the industry. At this point in time, secure socket layer (SSL) is the fall back position, particularly on the Internet. Other “pre-Internet” problems continue to exist with regard to credit/debit cards. Employee theft, merchant fraud, recurring charges, and theft by others cause massive expense and hardship, such as with identity theft. These problems have had a chilling effect on electronic commerce. Reports estimate that 70%-80% of Internet purchases are left uncompleted. Either the cardholder backs out of the electronic transaction completely or telephones the company directly to verbally place the order.
The threshold for merchants to accept and process credit card purchases remains high. Merchants, for the most part, still rely on phone and fax orders. They must buy terminal software and subscribe to third party processing companies. Internet merchants pay the highest discount rates and are limited to methods of shipping that require a signature evidencing receipt. Additionally, Internet merchants are unsupported in charge back disputes, which may occur if a product is shipped to an address other than the credit card billing address.
SUMMARY OF THE INVENTION
The present invention includes a financial transaction system that solves the problem of security for consumer credit card information transmitted over the Internet. The financial transaction system reverses the process with regard to card transactions conducted via computers and computer networks. Instead of cardholders transmitting their card numbers to merchants, the system obtains merchant information and requests that the cardholder's own card company pay the merchant. The cardholder's credit card number never travels across the Internet. The merchant never learns of the cardholder's card number. In one embodiment, only a shipping address is disclosed to the merchant, which comes directly from the card company along with a notification that the payment has been made.
Multiple user identifiers (IDs) and passwords can be assigned to different people to obtain credit from the same credit card. For example, the cardholder's own employees can be authorized to use the cardholder's credit card and never have to know the card number. The cardholder can delete or change user IDs as employees come or go or as family members gain or lose privileges. The user IDs can also be used to associate purchases with one or more shipping addresses that are different from the cardholder's billing address.
When conducting transactions in accordance with the present invention, third party processing services are not needed. This eliminates multiple transmissions of personal credit card information across the network and the use of other vulnerable card number repositories having associated fees and staff.
The invention provides an opportunity for the card company to stop the transaction if either party is not validated, or if there is insufficient credit to cover the transaction. By inserting the card company at the front of the transaction process, many steps of the current transaction process are eliminated, including but not limited to, the steps of card verification by the merchant, address confirmation, payment submission, much of the charge back activity, and unauthorized merchant recurring charges.
In one embodiment of the present invention, a method is provided for performing a financial transaction, wherein a cardholder makes a purchase from a merchant using credit established at a financial institution. The method begins when the merchant transmits a merchant offer including information about the purchase to the cardholder. The cardholder transmits the merchant information along with cardholder information to the financial institution. The financial institution then transmits payment for the purchase to a merchant account and send a payment notification to the merchant indicating that payment for the item has been made and that the merchant offer has been accepted.
Another embodiment of the present invention includes apparatus for use by a cardholder for conducting a financial transaction between the cardholder and a merchant, wherein the cardholder makes a purchases from the merchant using credit established at a financial institution. The apparatus includes, means for selecting an item to be purchased from the merchant, means for receiving information about the selected item including a merchant identifier, means for combining information about the selected item and the merchant identifier with cardholder information including a cardholder identifier, wherein a request to pay is created, and means for transmitting the request to pay to the financial institution.
Another embodiment of the present invention includes a computer software product for use by a purchasing processor operated by a cardholder. The computer software produc
Akers Geoffrey
Millin Vincent
Townsend and Townsend / and Crew LLP
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