Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Finance
Reexamination Certificate
1997-10-16
2001-08-28
Elmore, Reba I. (Department: 2187)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Finance
C705S044000, C235S375000, C380S029000
Reexamination Certificate
active
06282522
ABSTRACT:
FIELD OF THE INVENTION
The present invention relates generally to a payment system using a computer network. More specifically, the present invention relates to a payment system over an open network such as the Internet using a smart card.
BACKGROUND OF THE INVENTION
With the explosive growth in open networks such as the Internet over the past several years, and the rapid increase in the number of consumers with access to the World Wide Web, there has been a great deal of interest in the development of electronic commerce on the Internet.
A variety of service providers have introduced payment schemes to support the purchase of goods or services on-line in a virtual merchant environment. These schemes have used a variety of approaches with varying degrees of security and protection of payment information as it is transmitted across the Internet. These approaches have used several models based on traditional payment methods existing in the face-to-face retail market, including credit/debit cards, checks and cash. However, for a variety of reasons, various of these numerous schemes have particular drawbacks.
Currently, a consumer may use his or her traditional credit or debit card to make a purchase over the Internet. A consumer simply supplies his card account number which is then transmitted across the Internet to a merchant and the payment transaction is completed in the traditional manner for a credit card. Often, these account numbers are transmitted over the Internet with extremely limited or no security. Security can be improved through use of the “Secure Electronic Transaction” protocol published by Visa International and Mastercard in 1996. These transactions still require some form of card validation and performance of a balance check. These checks are performed on-line between the merchant, an acquirer and an issuing bank, a process which can become time consuming and inefficient when the value of the transaction is low, or when a number of small value transactions will be taking place in a short time span.
Other service providers are establishing Internet payment systems based upon an electronic check model. For example, the Financial Services Technology Consortium, a non-profit membership organization that includes financial services providers, universities, industrial partners, and government agencies, initiated an Internet electronic check product in June, 1995. The electronic check is modeled on the paper check, but is initiated electronically using digital signature and public cryptography. Deposits are gathered by banks via electronic mail and cleared through existing channels such as the Automated Clearing House (ACH). However, use of such an electronic check by a consumer has various drawbacks. For one, digital signatures and public encryption necessitate use of a certifying authority adding additional entities and “net” trips to the transaction. Also, cardholder registration is needed.
Other providers of Internet check-based services include NetCheque at USC, NetChex operated by Net1 in Phoenix, OnLine Check Systems in Denver, and RediCheck in Salt Lake City which all provide on-line services to merchants and consumers based on submission of bank drafts.
Other Internet payment alternatives are modeled on cash transactions and include a variety of schemes. A credit card purchase can also be made using CyberCash, in which the consumer appends his credit card number to an electronic invoice received from the merchant, returns the credit card number to the merchant which is then processed and forwarded on to CyberCash where it is then treated like a normal credit card transaction. However, this technique suffers from some of the disadvantages discussed above with respect to traditional credit card transaction on the Internet. Also, this technique requires additional work by the merchant in processing the credit card number. Debit transactions may also be completed in which a consumer receives prefunded coins in an “electronic wallet”, but require a consumer to open a CyberCash account in advance. Such a scheme requires a consumer to establish ahead of time a relationship between the consumer's bank and CyberCash and to pre-fund the cyber coins. One drawback to this scheme implemented by CyberCash is a minimum purchase price of 25 cents.
A digital, token-based system for Internet transactions has been implemented by DigiCash. With DigiCash, so-called “digital coins” are purchased from DigiCash from a prefunded deposit account and stored on the consumer's hard drive. These digital coins are then used for an Internet transaction with a merchant. For example, to use DigiCash, the consumer sends money to a bank through a credit card or automated teller transaction, and the bank sends the consumer an equivalent amount of cash in the form of digital coins as an encrypted electronic mail message containing a list of 64-bit numbers. Each number corresponds to a specified amount of money, which is recorded by the issuing bank. For instance, if a consumer sends a bank $10.00, the consumer receives an encrypted electronic mail message containing a 64-bit number that is worth the equivalent of $10.00. To purchase something of value on the Internet from a merchant, the consumer sends the merchant the number, the merchant forwards the number to the bank, and the bank credits the merchant account for the $10.00. This scheme has disadvantages in that the consumer must first set up a relationship with DigiCash and use a credit card or similar instrument to purchase these digital coins, which then must be downloaded to the consumer's computer. This transaction can be time consuming for the consumer and is subject to fraud. In addition, a merchant must be set up to not only accept these digital coins, but also to verify their authenticity, to confirm the transaction, and then finally to forward these numbers on to his bank in order to finally get paid. One drawback from the merchant's point of view is that much of the transaction work must be performed by the merchant. In other words, the merchant must keep track of these digital coins and later submit them to either DigiCash or to a bank to get paid.
Another scheme for completing an Internet transaction is offered by First Virtual Holding, Inc. First Virtual offers a software solution based upon a unique identification number and electronic mail confirmation. To use this scheme, a consumer opens a special account with First Virtual and then receives a confidential identification number. When the consumer wishes to purchase a product or service over the Internet, he or she sends an electronic mail message containing the confidential identification number to the merchant. The merchant then sends the number to First Virtual by electronic mail for verification and identification of the customer. First Virtual then confirms with the consumer by electronic mail that the consumer did indeed initiate the transaction and wishes to make the purchase. There are drawbacks to this scheme in that the consumer must first open a special account with First Virtual. Also, the merchant must communicate with First Virtual to identify the customer and to identify the customer's credit card account number that is identified by the confidential identification number. Once the customer's credit card account number has been identified, payment to the merchant occurs in a manner similar to a traditional credit card transaction. Also, there is a minimum of 50 cents and time delays can be long.
Aside from payment schemes over the Internet, a technique in use for performing a financial transaction at a stand-alone terminal uses a smart card. A smart card is typically a credit card-sized plastic card that includes a semiconductor chip for holding the digital equivalent of cash directly, instead of pointing to an account or providing credits. When a card of this kind is used to make a purchase, the digital equivalent of cash is transferred to the merchant's “cash register” and then to a financial institution. Stored-value card
Berg Michael J.
Conklin Fredrick Sidney
Cutino Suzanne C.
Davis Virgil M.
Pringle Steven John
Beyer Weaver & Thomas LLP
Elmore Reba I.
Visa International Service Association
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