U.S. patent application number 09/853541 was filed with the patent office on 2002-05-23 for method and apparatus for processing checks to reserve funds.
Invention is credited to Jorasch, James A., Tedesco, Daniel E..
Application Number | 20020062286 09/853541 |
Document ID | / |
Family ID | 22313811 |
Filed Date | 2002-05-23 |
United States Patent
Application |
20020062286 |
Kind Code |
A1 |
Tedesco, Daniel E. ; et
al. |
May 23, 2002 |
Method and apparatus for processing checks to reserve funds
Abstract
A bank device communicates with an account holder device, such
as a telephone or computer operated by the account holder. The bank
device receives therefrom check data that includes an account
identifier, a check identifier, and an amount of funds. The account
identifier indicates a financial account and the check identifier
indicates a check drawn on the financial account. The amount of
funds represents an amount to reserve for payment with the check.
The bank device in turn makes the amount of funds unavailable for
use in the financial account so the account holder may not withdraw
or otherwise remove the amount of funds. The bank device generates
a code that indicates the check, and transmits the code to the
account holder device. Subsequently, a payee, such as a merchant
presented with the specified check, may verify that the check does
indeed have an amount of funds reserved for payment therewith. The
bank device receives the code from the payee, and determines the
amount of funds that are reserved for payment with the check. An
appropriate message that indicates the reserved amount of funds is
transmitted to the payee.
Inventors: |
Tedesco, Daniel E.; (New
Canaan, CT) ; Jorasch, James A.; (Stamford,
CT) |
Correspondence
Address: |
WALKER DIGITAL
FIVE HIGH RIDGE PARK
STAMFORD
CT
06905
US
|
Family ID: |
22313811 |
Appl. No.: |
09/853541 |
Filed: |
May 11, 2001 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
09853541 |
May 11, 2001 |
|
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09106888 |
Jun 29, 1998 |
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Current U.S.
Class: |
705/45 |
Current CPC
Class: |
G06Q 20/04 20130101;
G06Q 20/042 20130101; G06Q 20/108 20130101; G06Q 40/128 20131203;
G06Q 20/40 20130101; G06Q 20/10 20130101 |
Class at
Publication: |
705/45 |
International
Class: |
G06F 017/60 |
Claims
What is claimed is:
1. A method for processing checks, comprising: receiving check data
that includes an account identifier, a check identifier, and an
amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; making the amount of funds unavailable for use
in the financial account; generating a code that indicates the
check; and transmitting the code.
2. The method of claim 1, further comprising: receiving an
authorization identifier before the step of making the amount of
funds unavailable for use in the financial account.
3. The method of claim 2, further comprising: determining whether
the authorization identifier is valid.
4. The method of claim 3, in which the step of making the amount of
funds unavailable for use in the financial account is performed if
the authorization identifier is valid.
5. The method of claim 3, further comprising: determining whether
the authorization identifier corresponds to at least one
predetermined authorization identifier.
6. The method of claim 1, in which the check data further includes
an indication of at least one of: an expiration date, a presentment
period within which the check should be presented for payment,
payee, and a bank maintaining the financial account.
7. The method of claim 1, in which the code further indicates: the
amount of finds.
8. The method of claim 1, in which the code further indicates at
least one of: an expiration date, a presentment period within which
the check should be presented for payment, a payee, a bank
maintaining the financial account, and a time the code was
generated.
9. The method of claim 1, in which the code includes the account
identifier and the check identifier.
10. The method of claim 1, in which the step of generating a code:
encrypting at least the account identifier and the check identifier
to generate the code.
11. The method of claim 1, in which the step of encrypting
comprises: encrypting the amount of finds to generate the code.
12. The method of claim 1, in which the step of encrypting
comprises: encrypting supplementary check data to generate the
code, the supplementary check data including an indication of at
least one of an expiration date, a presentment period within which
the check should be presented for payment, a payee, a bank
maintaining the financial account, and a time the code was
generated.
13. The method of claim 1, farther comprising: creating a record
that is identified by the account identifier and the check
identifier, the record storing the amount of funds.
14. The method of claim 13, in which the record further stores an
indication of at least one of the amount of funds, an expiration
date, a presentment period within which the check should be
presented for payment, a payee, a bank maintaining the financial
account, and a time the code was generated.
15. The method of claim 1, in which the step of making the amount
of funds unavailable for use in the financial account comprises:
adjusting an unavailable balance of the financial account based on
the amount of funds.
16. The method of claim 1, in which the step of making the amount
of funds unavailable for use in the financial account comprises:
transferring the amount of funds from the financial account.
17. The method of claim 16, in which the step of transferring the
amount of funds from the financial account comprises: transferring
the amount of funds from the financial account to an inaccessible
account.
18. The method of claim 1, further comprising: determining an
available balance of the financial account; and in which the step
of making the amount of funds unavailable is performed only if the
available balance is not less than the amount of funds.
19. A method for processing checks, comprising: receiving a code;
determining check data based on the code, the check data including
an amount of funds that is unavailable for use in a financial
account, the amount of funds reserved for payment with a check; and
transmitting a message that indicates the amount of funds.
20. The method of claim 19, further comprising: receiving a signal
representing a request to ascertain whether the check has been
claimed; determining whether the check has been claimed; and
transmitting a message indicating whether the check has been
claimed.
21. The method of claim 20, further comprising: if the check has
not been claimed, storing an indication that the check has been
claimed.
22. The method of claim 19, in which the check data further
includes an account identifier that indicates the financial
account, and a check identifier that indicates the check, the check
being drawn on the financial account.
23. The method of claim 19, in which the message further indicates
at least one of the financial account and the check.
24. The method of claim 19, further comprising: determining
supplementary check data based on the code, the supplementary check
data including an indication of at least one of an expiration date,
a presentment period within which the check should be presented for
payment, a payee, a bank maintaining the financial account, a time
the code was generated, and whether the check was cashed.
25. The method of claim 24, in which the message further indicates
the supplementary check data.
26. The method of claim 19, further comprising: receiving a request
indicating a requested amount; and in which the step of
transmitting a message comprises: transmitting a message indicating
whether the requested amount is greater than the amount of
funds.
27. A method for processing checks, comprising: receiving a signal
indicating a request to pay on a check, the signal further
representing a check identifier, an account identifier and a first
amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; and making the first amount of funds available
for use in the financial account.
28. A method for processing checks, comprising: receiving a code
that is encrypted with an amount of funds, the amount of funds
reserved for payment with a predetermined check; and decrypting the
code to determine the amount of funds.
29. The method of claim 28, further comprising: receiving a request
indicating a requested amount; and transmitting a message
indicating whether the requested amount is greater than the amount
of funds.
30. The method of claim 28, in which the code is further encrypted
with an account identifier indicating a financial account and a
check identifier indicating the predetermined check which is drawn
on the financial account; and in which the step of decrypting
comprises: decrypting the code to determine the financial account
and the check identifier.
31. The method of claim 28, in which the code is further encrypted
with an indication of at least one of an expiration date, a
presentment period within which a check should be presented for
payment, a payee, a bank, and a time the code was generated.
32. The method of claim 28, in which the step of decrypting
comprises: decrypting the code to determine at least one of the
expiration date, the presentment period within which the check
should be presented for payment, the payee, the bank, and the time
the code was generated.
33. A method for processing checks, comprising: receiving check
data that includes an account identifier, a check identifier, and
an amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; receiving an authorization identifier;
determining whether the authorization identifier is valid; making
the amount of funds unavailable for use in the financial account if
the authorization identifier is valid; generating a code that
indicates the check; and transmitting the code if the authorization
identifier is valid.
34. The method of claim 33, further comprising: determining whether
the authorization identifier corresponds to at least one
predetermined authorization identifier.
35. A method for processing checks, comprising: receiving check
data that includes an account identifier, a check identifier, a
payee identifier and an amount of funds, the account identifier
indicating a financial account, the check identifier indicating a
check drawn on the financial account, the payee identifier
indicating a payee; reserving the amount of funds for the payee;
generating a code that indicates the check; and transmitting the
code.
36. A method for processing checks, comprising: receiving check
data that includes an account identifier indicating a financial
account and a check identifier indicating a check drawn on the
financial account; determining whether the check data indicates an
amount of funds unavailable for use in the financial account;
determining whether the check has expired; and making the amount of
funds available for use in the financial account if the check has
expired.
37. The method of claim 36, in which the step of determining
whether the check has expired comprises: determining an expiration
date based on the check data; determining a current date; and
determining whether the current date is after the expiration
date.
38. A method for processing checks, comprising: receiving a code;
determining check data based on the code, the check data including
a check identifier that indicates a check drawn on a financial
account, and an indication of a first amount of funds that is
unavailable for use in the financial account, the first amount of
funds reserved for payment with the check; and receiving an
indication of a second amount of funds; receiving an authorization
identifier; determining whether the authorization identifier is
valid; if the authorization identifier is valid, making unavailable
for use in the financial account an amount of funds that is based
on the first amount of funds and the second amount of funds.
39. A method for processing checks, comprising: receiving a code;
determining check data based on the code, the check data including
a check identifier that indicates a check drawn on a financial
account, and an indication of an amount of funds that is
unavailable for use in the financial account, the amount of funds
reserved for payment with the check; and receiving a signal
representing a request to make the amount of funds available for
use in the financial account; receiving an authorization
identifier; determining whether the authorization identifier is
valid; if the authorization identifier is valid, making the amount
of funds available for use in the financial account.
40. The method of claim 39, in which the step of making the amount
of funds available comprises: determining a current date;
determining an authorization date based on the code; determining
whether the current date is after the authorization date; and
making the amount of funds available for use in the financial
account if the current date is after the authorization date.
41. A method for processing checks, comprising: receiving check
data that includes an account identifier, a check identifier, and
an amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; making the amount of funds unavailable for use
in the financial account; generating a code that indicates the
check; transmitting the code; receiving the code; determining the
check data based on the code; and transmitting a message that
indicates the amount of funds.
42. A method for processing checks, comprising: receiving check
data that includes an account identifier, a check identifier, and
an amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; making the amount of funds unavailable for use
in the financial account; generating a code that indicates the
check; transmitting the code; receiving a signal indicating
clearance of a check, the signal further representing the check
identifier, the account identifier and a first amount of funds;
determining, based on the account identifier and the check
identifier, a second amount of funds that is unavailable for use in
the financial account; determining whether the first amount of
funds is not greater than the second amount of funds; and making
the second amount of funds available for use in the financial
account if the first amount of funds is not greater than the second
amount of funds.
43. A method for processing checks, comprising: receiving a code;
determining check data based on the code, the check data including
a check identifier that indicates a check drawn on a financial
account; determining whether the check has been claimed; and
transmitting a message indicating whether the check has been
claimed.
44. The method of claim 43, further comprising: if the check has
not been claimed, storing an indication that the check has been
claimed.
45. An apparatus for processing checks, comprising: a voice
response unit operative to receive signals from a telephone, the
signals representing check data that includes an account
identifier, a check identifier, and an amount of funds, the account
identifier indicating a financial account and the check identifier
indicating a check drawn on the financial account; means for making
the amount of funds unavailable for use in the financial account;
and means for generating a code that indicates the check; and in
which the voice response unit is further operative to transmit the
signals representing the code to the telephone.
46. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive check data
that includes an account identifier, a check identifier, and an
amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; make the amount of funds unavailable for use in
the financial account; generate a code that indicates the check;
and transmit the code.
47. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving check data that includes an account
identifier, a check identifier, and an amount of funds, the account
identifier indicating a financial account and the check identifier
indicating a check drawn on the financial account; making the
amount of funds unavailable for use in the financial account;
generating a code that indicates the check; and transmitting the
code.
48. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive a code;
determine check data based on the code, the check data including an
amount of funds that is unavailable for use in a financial account,
the amount of funds reserved for payment with a check; and transmit
a message that indicates the amount of funds.
49. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving a code; determining check data based on the
code, the check data including an amount of funds that is
unavailable for use in a financial account, the amount of funds
reserved for payment with a check; and transmitting a message that
indicates the amount of funds.
50. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive a signal
indicating a request to pay on a check, the signal further
representing a check identifier, an account identifier and a first
amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; and make the first amount of funds available for
use in the financial account.
51. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving a signal indicating a request to pay on a
check, the signal further representing a check identifier, an
account identifier and a first amount of funds, the account
identifier indicating a financial account and the check identifier
indicating a check drawn on the financial account; and making the
first amount of funds available for use in the financial
account.
52. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive a code that is
encrypted with an amount of funds, the amount of funds reserved for
payment with a predetermined check; and decrypt the code to
determine the amount of funds.
53. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving a code that is encrypted with an amount of
funds, the amount of funds reserved for payment with a
predetermined check; and decrypting the code to determine the
amount of funds.
54. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive check data
that includes an account identifier, a check identifier, and an
amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; receive an authorization identifier; determine
whether the authorization identifier is valid; make the amount of
funds unavailable for use in the financial account if the
authorization identifier is valid; generate a code that indicates
the check; and transmit the code if the authorization identifier is
valid.
55. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving check data that includes an account
identifier, a check identifier, and an amount of funds, the account
identifier indicating a financial account and the check identifier
indicating a check drawn on the financial account; receiving an
authorization identifier; determining whether the authorization
identifier is valid; making the amount of funds unavailable for use
in the financial account if the authorization identifier is valid;
generating a code that indicates the check; and transmitting the
code if the authorization identifier is valid.
56. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive check data
that includes an account identifier, a check identifier, a payee
identifier and an amount of funds, the account identifier
indicating a financial account, the check identifier indicating a
check drawn on the financial account, the payee identifier
indicating a payee; reserve the amount of funds for the payee;
generate a code that indicates the check; and transmit the
code.
57. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving check data that includes an account
identifier, a check identifier, a payee identifier and an amount of
funds, the account identifier indicating a financial account, the
check identifier indicating a check drawn on the financial account,
the payee identifier indicating a payee; reserving the amount of
funds for the payee; generating a code that indicates the check;
and transmitting the code.
58. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive check data
that includes an account identifier indicating a financial account
and a check identifier indicating a check drawn on the financial
account; determine whether the check data indicates an amount of
funds unavailable for use in the financial account; determine
whether the check has expired; and make the amount of funds
available for use in the financial account if the check has
expired.
59. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving check data that includes an account
identifier indicating a financial account and a check identifier
indicating a check drawn on the financial account; determining
whether the check data indicates an amount of funds unavailable for
use in the financial account; determining whether the check has
expired; and making the amount of funds available for use in the
financial account if the check has expired.
60. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive a code;
determine check data based on the code, the check data including a
check identifier that indicates a check drawn on a financial
account, and an indication of a first amount of funds that is
unavailable for use in the financial account, the first amount of
finds reserved for payment with the check; receive an indication of
a second amount of funds; receive an authorization identifier;
determine whether the authorization identifier is valid; and if the
authorization identifier is valid, make unavailable for use in the
financial account an amount of funds that is based on the first
amount of funds and the second amount of funds.
61. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving a code; determining check data based on the
code, the check data including a check identifier that indicates a
check drawn on a financial account, and an indication of a first
amount of funds that is unavailable for use in the financial
account, the first amount of funds reserved for payment with the
check; and receiving an indication of a second amount of funds;
receiving an authorization identifier; determining whether the
authorization identifier is valid; if the authorization identifier
is valid, making unavailable for use in the financial account an
amount of funds that is based on the first amount of funds and the
second amount of funds.
62. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive a code;
determine check data based on the code, the check data including a
check identifier that indicates a check drawn on a financial
account, and an indication of an amount of funds that is
unavailable for use in the financial account, the amount of funds
reserved for payment with the check; and receive a signal
representing a request to make the amount of funds available for
use in the financial account; receive an authorization identifier;
determine whether the authorization identifier is valid; if the
authorization identifier is valid, make the amount of funds
available for use in the financial account.
63. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving a code; determining check data based on the
code, the check data including a check identifier that indicates a
check drawn on a financial account, and an indication of an amount
of funds that is unavailable for use in the financial account, the
amount of funds reserved for payment with the check; and receiving
a signal representing a request to make the amount of funds
available for use in the financial account; receiving an
authorization identifier; determining whether the authorization
identifier is valid; if the authorization identifier is valid,
making the amount of funds available for use in the financial
account.
64. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive check data
that includes an account identifier, a check identifier, and an
amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; make the amount of funds unavailable for use in
the financial account; generate a code that indicates the check;
transmit the code; receive the code; determine the check data based
on the code; and transmit a message that indicates the amount of
funds.
65. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving check data that includes an account
identifier, a check identifier, and an amount of funds, the account
identifier indicating a financial account and the check identifier
indicating a check drawn on the financial account; making the
amount of funds unavailable for use in the financial account;
generating a code that indicates the check; transmitting the code;
receiving the code; determining the check data based on the code;
and transmitting a message that indicates the amount of funds.
66. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive check data
that includes an account identifier, a check identifier, and an
amount of funds, the account identifier indicating a financial
account and the check identifier indicating a check drawn on the
financial account; make the amount of funds unavailable for use in
the financial account; generate a code that indicates the check;
transmit the code; receive a signal indicating clearance of a
check, the signal further representing the check identifier, the
account identifier and a first amount of funds; determine, based on
the account identifier and the check identifier, a second amount of
funds that is unavailable for use in the financial account;
determine whether the first amount of funds is not greater than the
second amount of funds; and make the second amount of funds
available for use in the financial account if the first amount of
funds is not greater than the second amount of funds.
67. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving check data that includes an account
identifier, a check identifier, and an amount of funds, the account
identifier indicating a financial account and the check identifier
indicating a check drawn on the financial account; making the
amount of funds unavailable for use in the financial account;
generating a code that indicates the check; transmitting the code;
receiving a signal indicating clearance of a check, the signal
further representing the check identifier, the account identifier
and a first amount of funds; determining, based on the account
identifier and the check identifier, a second amount of funds that
is unavailable for use in the financial account; determining
whether the first amount of funds is not greater than the second
amount of funds; and making the second amount of funds available
for use in the financial account if the first amount of funds is
not greater than the second amount of funds.
68. An apparatus for processing checks, comprising: a storage
device; and a processor connected to the storage device, the
storage device storing a program for controlling the processor; and
the processor operative with the program to: receive a code;
determine check data based on the code, the check data including a
check identifier that indicates a check drawn on a financial
account; determine whether the check has been claimed; and transmit
a message indicating whether the check has been claimed.
69. A computer readable medium encoded with processing instructions
for implementing a method for processing checks, the method
comprising: receiving a code; determining check data based on the
code, the check data including a check identifier that indicates a
check drawn on a financial account; determining whether the check
has been claimed; and transmitting a message indicating whether the
check has been claimed.
Description
FIELD OF THE INVENTION
[0001] The present invention relates to methods and apparatus for
processing checks drawn on a financial account.
BACKGROUND OF THE INVENTION
[0002] Personal checks are used by many people that are not able or
willing to pay by other means, such as with currency.
Unfortunately, many people are unwilling to accept personal checks
because of the possibility that the check will not clear and thus
payment will not be received. For example, the check may be written
for an amount that exceeds the available balance of the financial
account on which the check is drawn. The check may also be drawn on
a financial account that has been closed or is otherwise inactive.
Consequently, many people who would like to pay using a personal
check are not allowed to do so, even if their check would
clear.
[0003] U.S. Pat. No. 5,703,344 to Bezy et al. describes a real-time
point-of-transaction funds confirmation system in which a draft
presented by a payor to a payee is confirmed against the account on
which the draft is drawn. A bank number and account number are
printed on the face of the draft in a machine-readable format,
usually in the form of a line of magnetic ink computer readable
digits and punctuation (a "MICR line").
[0004] In the system of the '344 patent, the merchant scans the
MICR line of the draft using a MICR line reader, and enters the
amount of the draft manually or automatically via a cash register.
A request record is generated therefrom and transmitted to a payor
bank. The
[0005] Another drawback is that an unscrupulous party may
unilaterally secure any amount of funds if he has possession of
stolen drafts. Such a party may secure an amount of funds equal to
the entire available balance of the financial account.
[0006] U.S. Pat. No. 4,630,201 to White describes a system
utilizing a smart card and a portable transaction device. The smart
card stores an account number, account balance and secret password.
The portable transaction device allows checks to be written against
the balance stored on the smart card, and can be used to receive
money transfers from the bank into the account balance stored in
the card. Transactions can thus be carried out in an off-line
manner and be subject to later verification at a central processing
unit of the bank. However, the transaction device requires an
on-line connection when funds are transferred from the bank to
replenish the account balance in the card.
[0007] A central processor of the bank generates a table of random
numbers which are associated with a sequence of transaction
numbers. The sequence of transaction numbers are equivalent to
successive check numbers. The set of random numbers and the
associated check numbers are supplied to storage means at the
portable transaction device.
[0008] When a check is to be written, the customer enters into the
transaction device a parameter associated with the transaction,
preferably the transaction amount. If the amount in the stored
account balance is sufficient to cover the check, the account
balance is debited and the transaction allowed to proceed. However,
if the account balance is insufficient, the transaction will be
halted. The customer will be required to transfer funds from his
bank account to the card in an on-line manner.
[0009] The transaction device determines the random number
associated with the next available check number and combines data
representative of that random number with the payor bank in turn
secures a hold on funds from the account or generates an effective
hold, and returns a response record to the merchant. Following
receipt of the response record, the merchant accepts or rejects the
transaction. The prudent merchant will reject a rejected
transaction at this point or request other security. A hold is
removed when a draft corresponding to the hold is presented for
clearing.
[0010] The system described by the '344 patent suffers from several
drawbacks. The real-time system verifies whether there are
insufficient funds at the time of the transaction. Unfortunately,
many people do not know precisely how much funds they have
available in their account. Such people can be embarrassed at the
time of the transaction to find that their draft is not accepted
due to insufficient funds.
[0011] The above-referenced system requires specialized apparatus,
such as the MICR line reader. The requirement for specialized
apparatus limits the number of merchants that may perform the
above-described process of the '344 patent to those that are
willing and able to purchase and install such apparatus. In
addition, the apparatus may break or otherwise fail to operate
properly.
[0012] Another drawback of the system of the '344 patent is that
the payee controls the amount of funds which are secured. This may
not always be desirable, especially when the payee is not a trusted
merchant. For example, a payor may wish to conduct a single
transaction with a party he has never met, such as someone selling
goods by telephone or on the Internet.
[0013] Furthermore, the system of the '344 patent secures a hold on
funds at the time of the transaction. Such a limitation is not
desirable for transactions that do not occur in "real time", such
as checks that are mailed to a payee. transaction amount using an
algorithmic encryption technique. The resulting output defines a
security code which is associated with the check. The security code
can be printed on the check.
[0014] When the check reaches the bank, its authenticity is
verified by the central processor. If so, the transaction can be
authorized and the check paid. The merchant may verify the
authenticity and value of the check at the time it is presented.
The bank can immediately verify the security code for the merchant
thereby guaranteeing the check.
[0015] The system described by the '201 patent suffer from several
drawbacks. Since the system is for writing checks drawn on a
balance stored in a smart card, it is inapplicable to normal
checking accounts, which are more widely used than smart cards. By
one estimate, checks accounted for approximately 62 trillion
transactions in 1995 alone, and half of all households in the U.S.
use checks. The system of the '201 patent also requires a
specialized hardware, including the smart card and the portable
transaction device. Such a requirement has hindered the acceptance
of smart cards.
[0016] Furthermore, since smart cards store an account balance,
even the most secure smart cards are susceptible to fraud and
tampering, especially by skilled hardware and cryptography
practitioners. For example, as described in an article entitled
"Code Breaker Cracks Smart Cards' Digital Safe" on page 1 of The
New York Times, Jun. 22, 1998, a four-man consulting firm has
employed personal computers and several thousand dollars of
electronics equipment to crack the latest versions of smart cards.
Through tampering, the card balance could be increased. Worse, the
balance could be increased and many checks could be written, each
for the entire stored balance. The '201 patent does not describe a
manner to protect against such a security compromise, nor does it
describe a manner to permit merchants to verify that checks remain
guaranteed after such a compromise in security. It is undesirable
for a bank to be isolated from transactions since they are then
unable to maintain security over the financial data of their
accounts. Another drawback of smart cards in general is that they
may be lost or damaged, preventing the stored balance from being
used.
[0017] It would be advantageous to provide a method and apparatus
for processing checks that reduced or eliminated some of the
above-described drawbacks.
SUMMARY OF THE INVENTION
[0018] It is an object of the present invention to provide a method
and apparatus that reduces the hesitancy to receive checks.
[0019] In accordance with the present invention, a bank device
communicates with an account holder device, such as a telephone or
computer operated by the account holder. The bank device receives
therefrom check data that includes an account identifier, a check
identifier, and an amount of funds. The account identifier
indicates a financial account and the check identifier indicates a
check drawn on the financial account. The amount of funds
represents an amount to reserve for payment with the check. The
bank device in turn makes the amount of funds unavailable for use
in the financial account so the account holder may not withdraw or
otherwise remove the amount of funds. The bank device generates a
code that indicates the check, and transmits the code to the
account holder device.
[0020] Subsequently, a payee, such as a merchant presented with the
specified check, may verify that the check does indeed have an
amount of funds reserved for payment therewith by contacting the
bank device using a payee device. The bank device receives the code
from the payee, and determines the amount of funds that are
reserved for payment with the check. An appropriate message that
indicates the reserved amount of funds is transmitted to the
payee.
BRIEF DESCRIPTION OF THE DRAWINGS
[0021] FIG. 1 is a schematic illustration of a network comprising a
bank device in communication with an account holder device and a
payee device.
[0022] FIG. 2 is a schematic illustration of the bank device of
FIG. 1.
[0023] FIG. 3 is a schematic illustration an account database of
the bank device of FIG. 2.
[0024] FIG. 4 is a schematic illustration a reserved checks
database of the bank device of FIG. 2.
[0025] FIG. 5 is a flowchart illustrating a method for processing a
request to reserve a check.
[0026] FIG. 6 is a flowchart illustrating a method for processing a
request to verify a code that may indicate a reserved check.
[0027] FIG. 7 is a flowchart illustrating a method for processing a
request to claim a check that is associated with a code.
[0028] FIG. 8 is a flowchart illustrating a method for processing a
request to change an amount of funds reserved for a payee of a
check.
[0029] FIG. 9 is a flowchart illustrating a method for processing a
request to pay on a check.
[0030] FIG. 10 is a flowchart illustrating a method for determining
whether any reserved checks have expired without being cashed.
[0031] FIGS. 11A, 11B and 11C illustrate a flowchart illustrating
an exemplary method for processing commands received from the
account holder device and the payee device.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
[0032] Referring to FIG. 1, a network 10 comprises a bank device
12, which is in communication with an account holder device 14 and
a payee device 16. The bank device 12 is a computer or similar
device, as described further below. Each of the account holder
device 14 and the payee device 16 may be a telephone, computer or
other device that can transmit data to and receive data from the
bank device 12. For example, the account holder device 14 and/or
the payee device 16 may be a telephone that transmits dual tone
multi-frequency ("DTMF") signals. Alternatively, the account holder
device 14 and/or the payee device 16 may be a computer that
transmits digital signals over a network in a known manner.
[0033] The bank device 12 may be in communication with the account
holder device 14 and the payee device 16 via any suitable
communication medium, such as a publicly-switched telephone network
or the Internet. Although one account holder device 14 and one
payee device 16 are shown in FIG. 1, those skilled in the art will
understand that a plurality of like devices may also be in
communication with the bank device 12. Further, a plurality of
other bank devices may be in communication with the account holder
device 14 and one payee device 16.
[0034] Referring to FIG. 2, the bank device 12 of FIG. 1 is
typically a computer operated by or on behalf of a bank or other
entity that maintains financial accounts. The bank device 12
comprises a processor 20, such as one or more conventional
microprocessors typically included in conventional computers. The
processor 20 is in communication with a data storage device 22,
such as an appropriate combination of magnetic, optical and/or
semiconductor memory. The processor 20 and the storage device 22
may each be (i) located entirely within a single computer or other
computing device; (ii) in communication with each other by a remote
communication link, such as a serial port cable, telephone line or
radio frequency transceiver; or (iii) a combination thereof. For
example, the bank device 12 may comprise one or more computers that
are in communication with a remote server computer for maintaining
databases.
[0035] The processor 20 is further in communication with an input
device 24, a printer 26, a display device 28 and a clock 29. The
input device 24 may comprise a keypad for transmitting input
signals, such as signals representative of operator commands, to
the processor 20. The printer 26 is for registering indicia on
paper or other material, thereby printing account statements as
commanded by the processor 20. The display device 28 is a video
monitor for displaying alphanumeric characters and/or images as
commanded by the processor 20. The clock 29 is a device for
generating signals representing the date and/or time. Many types of
input devices, printers, display devices and clocks are known to
those skilled in the art, and need not be described in detail
herein.
[0036] The storage device 22 stores a program 30 for controlling
the processor 20. The processor 20 performs instructions of the
program 30, and thereby operates in accordance with the present
invention, and particularly in accordance with the methods
described in detail herein. The program 30 furthermore includes
program elements that may be necessary, such as an operating system
and "device drivers" for allowing the processor 20 to interface
with computer peripheral devices. Appropriate device drivers and
other necessary program elements are known to those skilled in the
art, and thus need not be described in detail herein.
[0037] The storage device 22 also stores an account database 32 and
a reserved checks database 34. The databases 32 and 34 are
described in detail below and depicted with exemplary entries in
the accompanying figures. As will be understood by those skilled in
the art, the schematic illustrations of and accompanying
descriptions of the databases presented herein are exemplary
arrangements for stored representations of information. A number of
other arrangements may be employed besides the tables shown.
Similarly, the illustrated entries represent exemplary information,
but those skilled in the art will understand that the number and
content of the entries can be different from those illustrated
herein.
[0038] Referring to FIG. 3, a table 300 represents an embodiment of
the account database 32 of FIG. 2. The table 300 includes rows 302,
304, 306 and 308, each of which represents an entry (also known as
a "record") of the account database 32. Each entry defines a
financial account maintained by a bank. In particular, each entry
includes (i) an account identifier 310 that uniquely identifies the
financial account, (ii) a balance 312 of funds in the financial
account, (iii) an available balance 314 of the financial account;
(iv) an unavailable balance 316 of the financial account; and (v)
an authorization identifier 318 for verifying that inquiries and
commands are initiated by authorized parties. The available balance
defines the portion of the balance that is available for use in the
financial account. Conversely, the unavailable balance defines the
portion of the balance that is unavailable for use in the financial
account. For example, if a check for $20 is deposited to a
financial account, the balance is increased by $20, but the $20 is
typically unavailable for use in the financial account until the
check clears. Accordingly, the unavailable balance would likewise
increase by $20, while the available balance would be unaffected by
the $20 deposit. When the check clears, the unavailable balance
would decrease by $20, while the available balance would increase
by $20. For each financial account, the balance is the sum of the
available balance and the unavailable balance.
[0039] Referring to FIG. 4, a table 400 represents an embodiment of
the reserved checks database 34 of FIG. 2. The table 400 includes
rows 402, 404, 406, 408 and 410, each of which represents an entry
of the reserved checks database 34. Each entry defines a reserved
check, which is a check that has a corresponding amount of funds
that are reserved for a payee. The amount of funds is unavailable
for use in the financial account on which the check is drawn. Thus,
the amount of funds cannot be withdrawn or otherwise removed from
the financial account except for payment with the specified
check.
[0040] Each entry includes (i) a code 412, also referred to herein
as a "reservation code", that uniquely identifies the entry, and
thus indicates the check; (ii) an account identifier that indicates
a financial account on which the check is drawn; (iii) a check
identifier 416 which indicates the check, and which may be a check
number or any set of alphanumeric characters; (iv) an amount of
funds 418 reserved for a payee of the check; (v) an expiration date
420 after which funds reserved for the check are made available if
the check has not yet been cashed; (vi) a presentment period 422
indicating a period within which the check should be presented for
payment, and thus indicating a time after which check should not be
accepted by a merchant unless so desired; (vii) a payee identifier
424; (viii) a time 426 the code was generated; (ix) an indication
of whether and when the check was claimed 428; and (x) an
indication of whether and when the check was cashed 430.
[0041] The description that follows is arranged into the following
sections: Creating a Reservation Code, Verifying a Reservation
Code, Check Clearing and Determining Whether Checks Have
Expired.
Creating a Reservation Code
[0042] Referring to FIG. 5, a method 500 is performed by the bank
device 12 (FIG. 1) when an account holder transmits from the
account holder device 14 (FIG. 1) to the bank device 12 a request
to reserve an amount of funds for payment with a check. For
example, the account holder may call a predetermined telephone
number that connects him to an automated voice-response unit
("VRU"). The account holder may then actuate buttons on the keypad
of his telephone to transmit DTMF signals to the VRU. The VRU, in
turn, operates in accordance with commands represented by the DTMF
signals. The design of appropriate VRUs are known to those skilled
in the art. Alternatively, the account holder may operate a
computer to access a site on the "World Wide Web" that is
associated with the bank device 12.
[0043] The bank device 12 (FIG. 1) receives check data from the
account holder (step 502). The check data includes an account
identifier, a check identifier, and an amount of finds. The account
identifier indicates a financial account and the check identifier
indicates a check drawn on the financial account. The check data
may further indicate such information as an expiration date, a
presentment period, a payee, and/or a bank maintaining the
financial account.
[0044] In addition, the account holder may transmit commands to the
bank device 12. For example, the account holder may specify that
the amount of finds is made available provided that the check has
not been claimed, as is described below.
[0045] The account holder may also transmit to the bank device 12
an authorization identifier (step 504) to verify that he is
authorized to reserve a check. The bank device 12 then determines
if the authorization identifier is valid (step 506). For example,
the bank device 12 may determine whether the authorization
identifier corresponds to at least one predetermined authorization
identifier of the financial account, such as may be stored in the
account database 32 (FIG. 2).
[0046] If the authorization identifier is valid, then it is
determined whether the amount of funds is less than or equal to the
available balance of the financial account (step 508). If so, then
the bank device 12 makes the amount of funds unavailable for use in
the financial account (step 510). A code indicating the check is
generated (step 512), and the code is transmitted to the account
holder device 14 of FIG. 1 (step 514).
[0047] In one embodiment, the account holder may also transmit to
the bank device 12 an indication of a bank. In such an embodiment,
the bank device 12 is in communication with a plurality of banks,
and could process checks for account holders of those banks. The
bank device 12 would determine which bank was indicated by the
account holder, and perform the appropriate method steps for a
financial account of that bank.
[0048] The code that indicates the check may include the account
identifier and the check identifier, or portions thereof. For
example, the code may be generated by concatenating the account
identifier and the check identifier. In addition, one or more
randomly-selected alphanumeric characters may be concatenated to
the account identifier and the check identifier to generate the
code.
[0049] In another embodiment, codes may be generated sequentially.
Thus, a code may be generated by adding a predetermined amount to a
previously generated code, such as the last-generated code.
[0050] Alternatively, the code that indicates the check can be
generated such that a valid code is extremely difficult to guess,
even if another code is known. For example, it may be undesirable
in some embodiments to generate codes that are sequential numbers
since knowledge of one code might allow another (sequential) code
to be determined. Accordingly, codes may be randomly generated. If
the code comprises a large number of characters, then the code is
even less likely to be determined by others. For example, the bank
device 12 may generate a code comprising sixteen randomly generated
alphanumeric characters. In addition, the generated code must be
unique, so a randomly-generated code should be compared with
existing codes to assure that the code is unique. If not,
additional codes may be generated until a unique code results.
Those skilled in the art will understand that there are many
methods for generating secure, unique, random codes.
[0051] To store the check data and other data relevant to the
check, the bank device may create a record such as a record of the
reserved checks database 34, described above with reference to FIG.
4. The created record may store the amount of funds, an expiration
date, a presentment period within which the check should be
presented for payment, a payee, a bank maintaining the financial
account, and/or a time the code was generated. The record can be
identified by the account identifier and the check identifier. For
example, the records of the reserved checks database 34 may be
sorted by account identifier and check identifier so knowledge of
the account identifier and check identifier provides easy access to
the record indicated thereby. Alternatively (or additionally), the
record may be identified by the code, and so the code would
indicate the information stored in the record.
[0052] In another embodiment, the account identifier and the check
identifier can be encrypted to generate the code that indicates the
check. In addition, the amount of funds and supplementary check
data (e.g. an expiration date, a presentment period, a payee, a
bank, and/or a time the code was generated) can be encrypted to
generate the code. Such an encrypted code may be used to indicate
the encrypted data. Encryption and decryption techniques are
described in "Applied Cryptography: Protocols, Algorithms and
Source Code in C, Second Edition", by Bruce Schneier, published
1996. Those skilled in the art will understand that the code would
be generated by a cryptographic algorithm such that it would be
extremely difficult for a party to generate a valid code, much less
a code that indicates valid data. Encrypting the data to generate
the code allows the data to be determined from the code without
communication with the bank device 12 or other location where the
data may be stored.
[0053] For example, data may be encrypted with the private key of a
bank. Since the bank holds the private key confidential, parties
without the private key would typically be unable to falsify a
code. The account holder (or other party) would use the public key
of the bank to decrypt the code, and determine the data
therefrom.
[0054] The step 510 of making the amount of funds unavailable for
use in the financial account assures a payee that the check will
clear and the corresponding payment will be received. Thus, the
amount of funds cannot be withdrawn, paid out using another check,
or accessed by wire transfer; the amount of funds can only be used
for payment with the specified check. In one embodiment, making the
amount of funds unavailable comprises adjusting the unavailable
balance of the financial account based on the amount of funds.
Typically, the unavailable balance is increased by the amount of
funds. For example, if the unavailable balance is $10, and the
amount of funds is $20, the unavailable balance is increased from
$10 to $30.
[0055] Alternatively, making the amount of funds unavailable can
comprise transferring the amount of funds from the financial
account to an inaccessible account. An inaccessible account is an
account that is inaccessible to the account holder. Accordingly,
the transferred amount cannot be withdrawn by the account holder or
otherwise accessed. For example, the inaccessible account may be a
predetermined account maintained and owned by the bank with no
access by bank customers (such as account holders). Other methods
of making funds unavailable will be understood by those skilled in
the art.
[0056] The bank may desire to charge account holders for the
privilege of using reserved checks. Accordingly, the bank may
charge for each reserved check, and apply the charge to the
financial account of the account holder. The bank may alternatively
charge by providing a shared-revenue line, such as a "900 number",
to call in order to request to reserve a check. Further methods of
charging account holders will be understood by those skilled in the
art.
Verifying a Reservation Code
[0057] Referring to FIG. 6, a method 600 is performed by the bank
device 12 (FIG. 1) when the payee device 16 (FIG. 1) transmits a
request to verify a code that may indicate a reserved check. For
example, the payee may call a predetermined telephone number that
connects him to an automated voice-response unit ("VRU"). The payee
may then actuate buttons on the keypad of his telephone to transmit
DTMF signals to the VRU. The VRU, in turn, operates in accordance
with commands represented by the DTMF signals. Alternatively, the
payee may operate a computer to access a site on the "World Wide
Web" that is associated with the bank device 12.
[0058] The bank device 12 (FIG. 1) receives a code from the payee
device 16 (step 602). From the code, the bank device 12 determines
check data, such as an amount of funds that is unavailable for use
in a financial account (step 604). For example, the code may be
used to identify a record of the reserved checks database 34 (FIG.
2). The record may store the amount of funds as well as other data,
as described above. Accordingly, other data may be determined from
the code as well (step 606).
[0059] Alternatively, the code may be encrypted with the amount of
funds and other data, as described above. Thus, to determine the
amount of funds and other data from the code, the code is decrypted
using any of a number of techniques known to those skilled in the
art. In one embodiment, decrypting a code obviates the need for the
payee device 16 to communicate with a device storing data such as
the amount of funds. Accordingly, such an embodiment can allow for
a faster determination of the amount of funds. The decryption may
be performed by a computer running decryption software, and such a
computer may be operated directly by the payee or may be a computer
remotely accessible through a network such as the Internet. For
example, a payee may ascertain the public key of a bank (e.g. the
public key may be published or provided with the check). The public
key enables the data to be determined from the code using a
decryption algorithm.
[0060] Once the amount of funds (and any other desired data) is
determined, the bank device 12 transmits a message to the payee
device 16 (step 608). The message indicates the amount of funds,
and any other data determined from the code. The message may
explicitly specify the amount of funds. Such a message may be a
pre-recorded or synthesized audio message, such as "Twenty-five
dollars has been reserved for check number 193 on account number
7346528735". Alternatively, a message may indicate whether the
amount of funds is sufficient to cover a requested amount specified
by the payee. For example, the payee device 16 may transmit a
requested amount (e.g. "$20") to the bank device 12, and the bank
device responds by transmitting a message indicating whether the
requested amount is less than (or greater than) the amount of funds
(e.g. "sufficient" or "yes"). Of course, if the code does not
correspond to a reserved check, or if insufficient funds are
available, then an appropriate message is transmitted.
[0061] The message may also indicate the presentment period, which
is a period within which the check should be presented for payment.
Such a presentment period is typically specified by the account
holder, and is useful in communicating to the merchant when the
check is intended to be presented. For example, a merchant may
specify that it will accept checks only if a presentment period is
indicated by a code and the check is presented during the
presentment period. This would reduce the ability of an account
holder to present copies of the same check to more than one
merchant.
[0062] Referring again to FIGS. 4 and 6, the process 600 (FIG. 6)
is described with reference to exemplary data depicted in the table
400 (FIG. 4). The bank device 12 receives a code "12346128982001"
from the payee device 16. From the code, the bank device 12
identifies the record 410 (FIG. 4) which stores the amount of funds
"$19" as well as other data, such as a check identifier "121" and
an expiration date "Sep. 3, 1999". The bank device 12 then
transmits to the payee device 16 a message "$19 has been reserved
for check number 121 of account 123456789".
[0063] Referring to FIG. 7, a method 700 is performed by the bank
device 12 (FIG. 1) when the payee device 16 (FIG. 1) transmits a
request to "claim" a check that is associated with a code. Claiming
a check includes identifying the check as having been presented as
payment. Thus, a payee would claim a check to indicate to others
(especially other payees) that they should not accept the same
check (e.g. a photocopy or other duplicate of the check, which
would have the same check number and account number). Claiming a
check may also be considered an indication of a payee's intent to
cash the check. The method 700 may be performed in conjunction with
or separately from the method 600 (FIG. 6). For example, the bank
device may include a VRU that allows the caller to select from
several options. Accordingly, the VRU may transmit a message, such
as "Press 1 to verify an amount of reserved funds, press 2 to claim
a check", and process received DTMF signals to select an
appropriate option.
[0064] The bank device 12 (FIG. 1) receives a code from the payee
device 16 (step 702). From the code, the bank device 12 determines
a check corresponding to the code (step 704). It is then determined
whether the check has been claimed (step 706). For example, the
code may be used to identify a record of the reserved checks
database 34 (FIG. 2). The record may store an indication of whether
and when the check was claimed and/or cashed, as described above.
Other data may be determined from the code as well.
[0065] If the check has been claimed, the bank device 12 transmits
an appropriate message indicating that the check has been claimed
(step 708). If not, then the bank device 12 stores an indication
that the check was claimed (step 710), typically in the
corresponding record of the reserved checks database 34. The bank
device 12 further transmits an appropriate message indicating that
the check had not yet been claimed (step 712), but has now been
claimed pursuant to this transaction.
[0066] Referring again to FIGS. 4 and 7, the process 700 (FIG. 7)
is described with reference to exemplary data depicted in the table
400 (FIG. 4). The bank device 12 receives a code "111345870426703"
from the payee device 16. From the code, the bank device 12
determines a check corresponding to the code, as represented by the
entry 406. It is then determined from the entry 406 that the check
has not been claimed. The bank device 12 stores in the entry 406 an
indication that the check was claimed, and transmits a message
"Check number 120 of account number 123456789 for $85 was not yet
claimed. You have now claimed it." Optionally, the bank device may
offer the payee the option of claiming the check before storing an
indication that the check was claimed.
[0067] Referring to FIG. 8, a method 800 is performed by the bank
device 12 (FIG. 1) when the account holder device 14 (FIG. 1)
transmits a request to change the amount of funds reserved for a
payee of a check. In particular, the account holder desires to
change the amount reserved from a first amount to a second amount.
Such a method is advantageous when the account holder has
designated an amount of funds that is greater than or less than
what he desired. For example, an account holder may have designated
a check as having $20 reserved, in anticipation of a purchase of
desired goods. Subsequently, the account holder may discover that
the price of the desired goods are in fact $30. He may then
transmit a request to change the amount of funds reserved from $20
to $30.
[0068] The bank device 12 (FIG. 1) receives a code from the account
holder device 14 (step 802). From the code, the bank device 12
determines a first amount of funds (step 804), which is the amount
reserved for a payee of a certain check. For example, the code may
be used to identify a record of the reserved checks database 34
(FIG. 2). The record may store an indication of the first amount of
funds, as described above. Other data may be determined from the
code as well.
[0069] The bank device 12 also receives from the account holder
device 14 an indication of a second amount of funds (step 806) and
an authorization identifier (step 808). If it is determined that
the authorization identifier is valid (step 810), then the banking
device 12 determines whether the second amount of funds is greater
than the first amount of funds (step 812). If so, then the account
holder desires to increase the amount of funds reserved.
Accordingly, if the amount of the increase (i.e. the difference
between the second amount of funds and the first amount of funds)
is less than or equal to the available balance of the corresponding
financial account (step 814), then the amount of the increase is
made unavailable for use in the financial account (step 816).
Otherwise, there are not enough available funds, so the request to
increase the amount of funds reserved is denied.
[0070] If the second amount of funds is not greater than the first
amount of funds, then the account holder desires to decrease the
amount of funds reserved. Accordingly, the difference between the
first amount of funds and the second amount of funds is made
available for use in the financial account (step 818). The ability
of an account holder to decrease the amount of funds reserved may
be subject to limitations. For example, the amount of funds
reserved may be decreased provided that the check has not been
claimed. Alternatively, the amount of funds reserved may be
decreased only after a predetermined time, such as after the
expiration date, one month after the code is generated, or one week
after the presentment period.
[0071] If the second amount of funds is zero, then the first amount
of funds is made available for use in the financial account. In
such a situation, the account holder has requested to make the
first amount of funds (the reserved amount) available for use in
the financial account. Alternatively, instead of specifying a
second amount of funds, the account holder device 14 may transmit
to the bank device 12 a signal representing a request to make the
amount of funds of a reserved check available for use in the
financial account. The bank device would then make the amount of
funds of the reserved check available for use in the financial
account, subject to limitations as described above.
[0072] In one embodiment, making the amount of funds available
comprises adjusting the unavailable balance of the financial
account based on the amount of funds to make available. Typically,
the unavailable balance is decreased by the amount of funds. For
example, if the unavailable balance is $40, and the amount of funds
is $25, then the unavailable balance is decreased from $40 to $15
and the available balance is increased by $25. Alternatively,
making the amount of funds available can comprise transferring the
amount of funds from an inaccessible account to the financial
account. Other methods of making funds available will be understood
by those skilled in the art.
[0073] Referring again to FIGS. 3, 4 and 8, the process 800 (FIG.
8) is described with reference to exemplary data depicted in the
table 300 (FIG. 3) and the table 400 (FIG. 4). The bank device 12
receives a code "1386511042792" from the account holder device 14.
From the code, the bank device 12 identifies the record 404 of the
reserved checks database 34. The record stores an indication of the
first amount of funds, "$95", and an account identifier
"876123983". The bank device 12 also receives from the account
holder device 14 an indication of a second amount of funds "$110"
and an authorization identifier "ABCD". The banking device 12 also
determines from the entry 306 (FIG. 3) that the valid authorization
identifier for account identifier "876123983" is "ABCD", so it is
thus determined that the authorization identifier is valid.
[0074] The banking device 12 then determines that the second amount
of funds "$110" is greater than the first amount of funds "$95", so
the amount of the increase is "$15" (15=110-95). The banking device
12 also determines from the entry 306 (FIG. 3) that the available
balance for account identifier "876123983" is "$3". Since the
amount of the increase "$15" is greater than the available balance
"$3", the amount of the increase cannot be made unavailable for use
in the financial account, and the request to change the amount of
funds reserved is denied.
[0075] The bank may desire to charge payees and/or account holders
for the information provided. Accordingly, the bank may charge for
verifying a code, and require a credit card number to be entered as
payment. The bank may alternatively charge by providing a
shared-revenue line, such as a "900 number", to call. Further
methods of charging payees will be understood by those skilled in
the art.
Check Clearing
[0076] Referring to FIG. 9, a method 900 is performed by the bank
device 12 (FIG. 1) when receiving a request to pay on a check. The
bank device typically receives such a request after the check has
been deposited by a payee at a payee bank.
[0077] The bank device 12 (FIG. 1) receives a signal that indicates
a request to pay on a check (step 902). The signal further
represents a check identifier, an account identifier and a
requested amount of funds. As described above, the account
identifier indicates a financial account and the check identifier
indicates the check, which is drawn on the financial account. The
requested amount of finds indicates the amount for which the check
is written, and is thus the amount that the payee expects to
receive by depositing the check.
[0078] From the account identifier and the check identifier, the
bank device 12 determines whether the check is a reserved check
(step 904). For example, the bank device may search the reserved
checks database 34 (FIG. 2) for entries corresponding to the
account identifier and the check identifier. If the check is not a
reserved check, then the check is processed in a known manner (step
906). Otherwise, the amount of finds reserved for a payee of the
check is determined (step 908).
[0079] If the requested amount is greater than the reserved amount
(step 910), then there may not be enough funds in the financial
account to pay the requested amount. For example, the account
holder may have indicated that $20 be reserved for a particular
check, yet he may have also written the amount of the check to be
$30. In such a situation, the payee may not have verified a code
indicating the check, or may have accepted the check regardless of
the insufficient reserved amount. Accordingly, it may be possible
to pay the requested amount with additional funds beyond those
funds reserved for the check. It is determined whether the
requested amount of funds is less than or equal to the sum of the
reserved amount of funds and the available balance of the financial
account (step 912). If not, the bank device 12 transmits an
"insufficient funds" message (step 914) or similar appropriate
transmission to indicate that there are insufficient funds to pay
the requested amount.
[0080] If there are enough funds in the financial account to pay
the requested amount, the reserved amount of funds is made
available for use in the financial account (step 916), and the
requested amount is paid (step 918). The balance, available balance
and unavailable balance of the financial account are adjusted
accordingly (step 920) to reflect the paid amount and the amount
made available.
[0081] Referring again to FIGS. 3, 4 and 9, the process 900 (FIG.
9) is described with reference to exemplary data depicted in the
table 300 (FIG. 3) and the table 400 (FIG. 4). The bank device 12
receives a signal that indicates a request to pay $90 on a check
"120" of a financial account "123456789". From the account
identifier "123456789" and the check identifier "120", the bank
device 12 determines that the check is a reserved check by
searching the reserved checks database 34 (FIG. 2) for entries
corresponding to the account identifier "123456789" and the check
identifier "120". In particular, the entry 406 corresponds to the
account identifier "123456789" and the check identifier "120". The
amount of funds reserved for a payee of the check is determined to
be $85.
[0082] Since the requested amount $90 is greater than the reserved
amount $85, there may not be enough funds in the financial account
to pay the requested amount. Referring to the entry 302, the
available balance of the financial account "123456789" is
determined to be $796. It is then determined that the requested
amount $90 is less than $881 (the sum of the reserved amount $85
and the available balance $796). The reserved amount $85 is made
available for use in the financial account, and the requested
amount $90 is paid. The balance is reduced by $90, the available
balance is reduced by $5 ($90-$85), and the unavailable balance is
reduced by $85.
Determining Whether Checks Have Expired
[0083] It is possible that a reserved check will never be deposited
by a payee. For example, the reserved check may be lost or stolen,
or the account holder may have changed his mind and never provided
the reserved check to the payee. Accordingly, it is advantageous to
determine whether any reserved checks have "expired" without being
cashed so the reserved funds may be made available for use in the
financial account.
[0084] Referring to FIG. 10, a method 1000 is performed by the bank
device 12 (FIG. 1) periodically in order to determine whether any
reserved checks have "expired" without being cashed. If so, the
funds reserved for the checks are made available for use in the
corresponding financial accounts. At step 1002, a record of the
reserved checks database 34 (FIG. 2) is selected. For example, the
first record may be selected. Alternatively, the records may be
sorted by expiration date and a record including an expiration date
within a predetermined range of expiration dates is selected. The
bank device 12 then receives a check identifier and an account
identifier from the record (step 1004). If there are funds reserved
for use with the indicated check (step 1006), and the check has
expired (step 1008), then the reserved amount of funds is made
available for use in the financial account (step 1010). Determining
whether the check has expired typically includes determining the
expiration date of the record, determining the current date (e.g.
from the clock 29), and then determining whether the current date
is after the expiration date. The bank device may also store an
indication that the reserved funds were made available (step 1012).
Such an indication may be used in printing statements alerting the
account holder that the reserved check has expired.
[0085] If there aren't funds reserved for use with the indicated
check, or if the check has not expired, then it is determined
whether there are any records remaining to be examined as described
above (step 1014). If so, another record is selected (step 1016)
and the check identifier and the account identifier are received
from the record (step 1004) and processed, as described above.
[0086] Referring to FIGS. 11A, 11B and 11C, an exemplary method
1100 is performed by the bank device 12 (FIG. 1) for processing
commands that are received from the account holder device and/or
the payee device. In one embodiment described with reference to
FIGS. 11A, 11B and 11C, the commands are DTMF signals received from
a telephone and processed by a VRU of the bank device 12. In
another embodiment, the commands may be signals received from a
computer via a network connection.
[0087] The VRU receives a signal indicating a caller has connected
(step 1102). In response, the VRU transmits a message, such as
"press 1 if you are a payee of a check, press 2 if you are an
account holder" (step 1104). If the latter command is entered (step
1106), then the VRU transmits a message requesting that the account
holder enter his authorization identifier (step 1108). The VRU then
receives DTMF signals representing an entered authorization
identifier (step 1110). If the entered authorization identifier is
not valid (step 1112), then the VRU transmits an appropriate
message to the caller (step 1114) that informs him of the invalid
authorization identifier.
[0088] Otherwise, the VRU transmits a message, such as "press 1 to
reserve funds for a check, press 2 to change an amount of reserved
funds" (step 1116). If the former command is entered (step 1118),
then the bank device 12 processes the request to reserve an amount
of funds for payment with a check (step 1120), as described above
with reference to FIG. 5. If the latter command is entered, then
the bank device 12 processes the request to change the amount of
funds reserved for a payee of a check (step 1122), as described
above with reference to FIG. 8.
[0089] If at step 1106 the former command is entered, then the VRU
transmits a message requesting that the payee enter the code (step
1124). The VRU then receives DTMF signals representing an entered
code (step 1126). The VRU transmits a message, such as "press 1 to
determine an amount of funds reserved for a check, press 2 to claim
a check" (step 1128). If the former command is entered (step 1130),
then the bank device 12 determines the amount of funds and other
data from the code (step 1132) as described above. The VRU then
transmits a message to the caller informing him of the amount of
funds and the other data (step 1134).
[0090] If at step 1130 the latter command is entered, then the bank
device 12 determines whether the check indicated by the code has
been claimed (step 1136). If so, then the VRU transmits a message
to the caller informing him that the check has already been claimed
(step 1138). If the check has not been claimed, then the bank
device 12 stores an indication that the check has been claimed
(step 1140) pursuant to this caller's command, and the VRU
transmits an appropriate message so indicating (step 1142).
[0091] In summary, the present invention offers many advantages. An
account holder can reserve an amount of funds for payment with a
particular check a significant amount of time before a transaction.
Thus, well before the transaction the account holder can assure
that sufficient funds will be available for payment with the check.
In addition, the payee is likewise able to verify that the check
will clear and that he will thus receive payment.
[0092] Further, in one embodiment of the present invention, account
holders and payees may use conventional telephones, including car
telephones and mobile (hand-held) telephones, to communicate with
the bank device. Accordingly, a large number of parties may take
advantage of the present invention, and may do so from a variety of
locations or even while in transit. For example, two parties on a
train in motion could perform the above-described methods of the
present invention.
[0093] In the present invention, the account holder, not the payee,
specifies the amount of funds to reserve for payment with a
particular check. The account holder may transmit the reservation
code to an unknown party, such as someone selling on the Internet.
The reservation code could then be verified by the party, well
before the corresponding check could be delivered to the party.
[0094] Although the present invention has been described with
respect to a preferred embodiment thereof, those skilled in the art
will note that various substitutions may be made to those
embodiments described herein without departing from the spirit and
scope of the present invention.
* * * * *