Tokenless biometric electronic check transactions

Details Tokenless biometric electronic check transactions Tokenless biometric electronic check transactions

2001-05-03

2003-06-17

Stamber, Eric W. (Department: 3622)

Data processing: financial, business practice, management, or co

Automated electrical financial or business practice or...

Finance

C705S026640, C705S035000, C705S039000, C705S040000, C705S044000, C705S053000, C705S075000, C705S078000, C380S029000, C380S029000, C380S029000, C380S044000, C380S229000, C380S232000

Reexamination Certificate

active

06581042

ABSTRACT:

FIELD OF THE INVENTION
This invention relates to the field of tokenless biometric financial transactions. Specifically, this invention is directed towards a system and method of using biometrics for processing electronic check financial transactions without requiring the payor to directly use or possess any man-made personalized tokens or paper checks. For any transaction designated to be processed as an electronic check, this invention provides a payor, whether an individual or a business, with the ability to pay for goods and services either at the retail point of sale or over the internet using only a biometric sample.
BACKGROUND OF THE INVENTION
Traditionally, a person must directly possess a man-made personalized token whenever attempting authorization for an electronic financial transaction. Tokens such as magnetic ink encoded paper checks, smart cards, magnetic swipe cards, identification cards or even a personal computer programmed with resident user-specific account data, are “personalized” because they are each programmed or encoded with data that is unique and personalized to the authorized user. For examples: at a retail point of sale, the user directly possesses and physically presents personalized checks or cards encoded with his unique account data to the merchant; or, over the internet, the user directly possesses and electronically presents his personal computer's resident user-unique account data to the remote merchant. By contrast, as the disclosed invention is completely tokenless, it does not require the user to directly possess, carry or remember any personalized token that can be lost, stolen or damaged.
Of all such personalized man-made tokens, magnetic ink encoded paper checks have long been used as the token of choice in financial transactions. Currently, around 65 billion paper checks are written annually in the United States. These paper checks are time-consuming to write, costly for both consumers and businesses to handle and process, and prone to fraud. It is currently estimated that these inefficiencies annually cost consumers and businesses over $10 billion in fraud losses and over $40 billion in processing time and personnel resource costs. For example, paper checks are particularly vulnerable to fraud. Because they do not require the use of a personal identification number (“PIN”), a lost or forged paper check can easily be turned into cash by a fraud perpetrator. Counterfeit checks can readily be created by acquiring an accountholder's valid account number and bank routing code, then encoding those numbers as printed magnetic numerical characters on a blank check template. Valid paper checks that are stolen can be selectively moistened with solvents to retain authorized signatures and erase designated financial amounts in order to over-write them with a higher denomination value. These resultant fraudulent checks can then be presented to payees or businesses, with the transaction being charged to the rightful checking account. Check fraud may also be committed by authorized checkholders themselves, whereby they use a check of their own to make purchases, and subsequently claim the check had been lost or stolen, and used without their knowledge.
Of all payment modes, checks take the longest amount of time to complete, authenticate and process. They require additional time to process for deposit, and cost more money for banks to clear and settle. At the retail point of sale, submission of paper checks is often accompanied by a secondary token used for identification, such as a plastic driver's license card, requiring more time and cost. All of these charges are paid by merchants or businesses, and are ultimately borne by the consumer.
Both at a retail site and over the internet, paper checks are presented for real-time remote access to financial accounts via magnetic ink character readers, with magnetic stripe or bar code readers sometimes being used to also automatically read identification cards like a driver's license. In some instances on the Internet, the user's personal checking account data is stored resident within the user's personal computer. In this manner, a PC is the personalized man-made memory token that the user is required directly possessed each time he seeks to authorize an electronic check via the Internet.
Therefore, whether buying services or products, a consumer or a business must rely on the money transfer to be enabled by the consumer directly using personalized man-made memory tokens. The sole functions of such tokens are to attempt to identify both the user and the financial account being accessed to pay for the transaction. However, these tokens can be easily exchanged, either knowingly or unknowingly, between users, thereby de-coupling them from the original intended user. Because these encoded paper checks, identification cards or personal computers storing resident user data are ubiquitous in today's consumer and business transactions as verification of the submitter's check writing authority, and the attendant inconveniences and security vulnerabilities of such tokens are widespread.
Various token-based biometric technologies have been suggested in the prior art, using smart cards, magnetic swipe cards, or paper checks in conjunction with fingerprints, hand prints, voice prints, retinal images, facial scans or handwriting samples. However, because the biometrics are generally either: a) stored in electronic and reproducible form on the token itself, whereby a significant risk of fraud still exists because the comparison and verification process is not isolated from the hardware and software directly used by the payor attempting access, or; b) used in tandem with the user directly using magnetic swipe cards, paper checks or a PC with the user's financial data stored resident therein. Examples of this approach to system security are described in U.S. Pat. No. 4,821,118 to Lafreniere; U.S. Pat. No. 4,993,068 to Piosenka et al.; U.S. Pat. No. 4,995,086 to Lilley et al.; U.S. Pat. No. 5,054,089 to Uchida et al.; U.S. Pat. No. 5,095,194 to Barbanell; U.S. Pat. No. 5,109,427 to Yang; U.S. Pat. No. 5,109,428 to Igaki et al.; U.S. Pat. No. 5,144,680 to Kobayashi et al.; U.S. Pat. No. 5,146,102 to Higuchi et al.; U.S. Pat. No. 5,180,901 to Hiramatsu; U.S. Pat. No. 5,210,588 to Lee; U.S. Pat. No. 5,210,797 to Usui et al.; U.S. Pat. No. 5,222,152 to Fishbine et al.; U.S. Pat. No. 5,230,025 to Fishbine et al.; U.S. Pat. No. 5,241,606 to Horie; U.S. Pat. No. 5,265,162 to Bush et al.; U.S. Pat. No. 5,321,242 to Heath, Jr.; U.S. Pat. No. 5,325,442 to Knapp; U.S. Pat. No. 5,351,303 to Willmore; U.S. Pat. No. 5,832,464 to Houvener et al, all of which are incorporated herein by reference.
Uniformly, the above patents disclose financial systems that require the user's presentation of personalized tokens to authorize each transaction, thereby teaching away from tokenless biometric financial transactions. To date, the consumer financial transaction industry has had a simple equation to balance: in order to reduce fraud, the cost and complexity of the personalized token directly possessed by the user must increase.
As a result, there is a need for a new electronic financial transactions system that is highly fraud-resistant, practical, convenient for the consumer, and yet cost-effective to deploy. More specifically, there is a need for an electronic check financial transaction system that relies solely on a payor's biometric for transaction authorization, and does not require the payor to directly possess any personalized man-made memory tokens such as smart cards, magnetic swipe cards, encoded paper checks or personal computers for identification.
Lastly, such a system must be affordable and flexible enough to be operatively compatible with existing networks having a variety of electronic transaction devices and system configurations.
Accordingly, it is the objective of the present invention to provide a new system and method of tokenless biometric financial transactions for elec

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