U.S. patent application number 10/697114 was filed with the patent office on 2004-05-13 for electronic payments with risk based selection of type of debiting of the payer's deposit account.
This patent application is currently assigned to CHECKFREE CORPORATION. Invention is credited to Christenson, Tamara K., Cook, Kenneth, Johnson, Mark A., Kight, Peter J., Lach, Regina, Pointer, Philip.
Application Number | 20040093305 10/697114 |
Document ID | / |
Family ID | 24958395 |
Filed Date | 2004-05-13 |
United States Patent
Application |
20040093305 |
Kind Code |
A1 |
Kight, Peter J. ; et
al. |
May 13, 2004 |
Electronic payments with risk based selection of type of debiting
of the payer's deposit account
Abstract
A computerized payment system by which a consumer may instruct a
service provider by telephone, computer terminal, or other
telecommunications means to pay various bills without the consumer
having to write a check for each bill. The system operates without
restriction as to where the consumer banks and what bills are to be
paid. The service provider collects consumers' information,
financial institutions' information and merchant information and
arranges payment based on a financial risk analysis to the
merchants according to the consumers' instructions.
Inventors: |
Kight, Peter J.;
(Alpharetta, GA) ; Johnson, Mark A.; (Duluth,
GA) ; Christenson, Tamara K.; (Gahanna, OH) ;
Lach, Regina; (Galius, OH) ; Pointer, Philip;
(Columbus, OH) ; Cook, Kenneth; (Gahanna,
OH) |
Correspondence
Address: |
ANTONELLI, TERRY, STOUT & KRAUS, LLP
1300 NORTH SEVENTEENTH STREET
SUITE 1800
ARLINGTON
VA
22209-9889
US
|
Assignee: |
CHECKFREE CORPORATION
Dublin
OH
|
Family ID: |
24958395 |
Appl. No.: |
10/697114 |
Filed: |
October 31, 2003 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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10697114 |
Oct 31, 2003 |
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09250711 |
Feb 16, 1999 |
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09250711 |
Feb 16, 1999 |
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08372620 |
Jan 13, 1995 |
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5873072 |
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08372620 |
Jan 13, 1995 |
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07736071 |
Jul 25, 1991 |
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5383113 |
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Current U.S.
Class: |
705/40 |
Current CPC
Class: |
G06Q 20/105 20130101;
G06Q 20/108 20130101; G06Q 40/02 20130101; G06Q 20/102 20130101;
G06Q 20/40 20130101; G06Q 40/025 20130101; G06Q 20/0425 20130101;
G06Q 20/10 20130101; G06Q 20/1085 20130101; G06Q 20/14 20130101;
G06Q 30/04 20130101; G06Q 20/085 20130101; G06Q 20/04 20130101;
G06Q 20/042 20130101; G06Q 20/385 20130101 |
Class at
Publication: |
705/040 |
International
Class: |
G06F 017/60 |
Claims
We claim:
1. A method of paying bills using a computer, comprising the steps
of: receiving requests to pay a plurality of bills of a particular
merchant on behalf of a plurality of particular consumers;
searching a database of deposit account numbers, each representing
a respective deposit account maintained at one of a plurality of
associated financial institutions by a plurality of consumers
including each of the plurality of particular consumers, to
identify the deposit account numbers of the deposit accounts of
each of the plurality of particular consumers; paying the plurality
of bills of each of the plurality of particular consumers by a
single financial instrument.
2. The method of claim 1 wherein the step of paying the plurality
of bills by a single financial instrument includes the step of
directing payment of the plurality of bills from funds in a deposit
account of a service provider.
3. The method of claim 2 further comprising the step of:
transferring funds to the deposit account of the service provider
from the deposit accounts represented by each of the identified
deposit account numbers.
4. The method of claim 2 wherein the step of paying the plurality
of bills includes the step of preparing a check written on funds in
the deposit account of the service provider.
5. The method of claim 2 wherein the step of paying the plurality
of bills includes the step of initiating an electronic funds
transfer from funds in the deposit account of the service
provider.
6. The method of claim 3 wherein the step of transferring funds to
the deposit account of the service provider includes the step of
preparing a draft written on funds in the deposit account
represented by a particular consumer's identified deposit account
number.
7. The method of claim 3, wherein the step of transferring funds to
the deposit account of the service provider includes the step of
initiating an electronic funds transfer from funds in the deposit
account represented by a particular consumer's identified deposit
account number.
8. A method of paying bills using a computer, comprising the steps
of: receiving a request to pay a bill of a particular merchant on
behalf of a particular consumer; searching a database of deposit
account numbers, each representing a respective deposit account
maintained at one of a plurality of associated financial
institutions by one of a plurality of consumers including the
particular consumer, to identify a deposit account number of the
deposit account of the particular consumer; and, directing payment
of the bill from funds in the deposit account represented by the
identified deposit account number.
9. The method of claim 8 wherein the step of directing payment of
the bill from funds in the deposit account further comprises the
step of: preparing a draft drawn on funds in the deposit
account.
10. The method of claim 9 further comprising the step of: including
posting information on the draft.
11. The method of claim 8 wherein the step of directing payment of
the bill from funds in the deposit account further comprises the
step of: initiating an electronic funds transfer from the deposit
account.
12. A method of paying bills using a computer, comprising the steps
of: receiving an instruction to pay a bill of a particular merchant
on behalf of a particular consumer; searching a database having
deposit account numbers, each representing a respective deposit
account maintained at one of a plurality of associated financial
institutions by a plurality of consumers including the particular
consumer, to identify the deposit account number of the deposit
account of the particular consumer; selecting a payment type; and,
directing payment of the bill by the type of payment selected from
funds in the identified deposit account.
13. The method of claim 12 wherein the step of selecting a payment
type includes the step of comparing the amount of the bill to be
paid to a predetermined amount.
14. The method of claim 12 wherein the step of selecting a payment
type includes the step of identifying a payment type indicator
associated with the particular merchant.
15. The method of claim 14 wherein the step of identifying a
payment type indicator associated with the particular merchant
includes the step of searching a merchant database having a payment
type indicator associated with each of a plurality of merchants
including the particular merchant.
16. The method of claim 12 further comprising the steps of:
receiving a deposit account number representing a deposit account
maintained at one of a plurality of associated financial
institutions by a particular consumer; storing the deposit account
number in a database of deposit account numbers; comparing a
particular consumer's deposit account number in the deposit account
number database with the particular consumer's deposit account
number in a financial institutions database to determine if the
consumer's deposit account number in the deposit account number
database is correct; and, correcting the deposit account number if
the deposit account number in the deposit account number database
is not correct.
17. The method of claim 12 wherein said step of selecting a payment
type further comprises the step of: selecting a payment type from a
check written on funds in a deposit account other than the deposit
account represented by the identified deposit account number, a
draft written on funds in the deposit account represented by the
identified deposit account number, and an electronic funds transfer
of finds in the deposit account represented by the identified
deposit account number;
18. The method of claim 12 further comprising the steps of:
determining if the request to pay the bill is a duplicate of a
previous request; and, terminating the request if the request is a
duplicate request.
19. A method of paying bills using a computer, comprising the steps
of: receiving a request to pay a bill of a particular merchant on
behalf of a particular consumer; searching a database of deposit
account numbers, each representing a respective deposit account
maintained at one of a plurality of associated financial
institutions by one of a plurality of consumers including the
particular consumer, to identify a deposit account number of the
deposit account of the particular consumer; paying the bill from
funds in a deposit account of the service provider; and,
transferring funds to the deposit account of the service provider
from the deposit account represented by the identified deposit
account number.
20. The method of claim 19 further comprising the steps of:
determining if the request to pay the bill is a duplicate of a
previous request; and, terminating the request if the request is a
duplicate request.
21. An article of manufacture, comprising: a computer readable
medium; and computer software stored on the computer readable
medium, the computer software comprising a set of instructions
directing a computer to perform the steps of: receiving requests to
pay a plurality of bills of a particular merchant on behalf of a
plurality of particular consumers; searching a database of deposit
account numbers, each representing a respective deposit account
maintained at one of a plurality of associated financial
institutions by a plurality of consumers including each of the
plurality of particular consumers, to identify the deposit account
numbers of the deposit accounts of each of the plurality of
particular consumers; and, paying the plurality of bills of each of
the plurality of particular consumers by a single financial
instrument.
22. An article of manufacture, comprising: a computer readable
medium; and computer software stored on the computer readable
medium, the computer software comprising a set of instructions
directing a computer to perform the steps of: receiving a request
to pay a bill of a particular merchant on behalf of a particular
consumer; searching a database of deposit account numbers, each
representing a respective deposit account maintained at one of a
plurality of associated financial institutions by one of a
plurality of consumers including the particular consumer, to
identify a deposit account number of the deposit account of the
particular consumer; paying the bill from funds in a deposit
account of the service provider; and, transferring funds to the
deposit account of the service provider from the deposit account
represented by the identified deposit account number.
23. An article of manufacture, comprising: a computer readable
medium; and computer software stored on the computer readable
medium, the computer software comprising a set of instructions
directing a computer to perform the steps of: receiving a request
to pay a bill of a particular merchant on behalf of a particular
consumer; searching a database of deposit account numbers, each
representing a respective deposit account maintained at one of a
plurality of associated financial institutions by one of a
plurality of consumers including the particular consumer, to
identify a deposit account number of the deposit account of the
particular consumer; and, directing payment of the bill from funds
in the deposit account represented by the identified deposit
account number.
24. An article of manufacture, comprising: a computer readable
medium; and computer software stored on the computer readable
medium, the computer software comprising a set of instructions
directing a computer to perform the steps of: receiving an
instruction to pay a bill of a particular merchant on behalf of a
particular consumer; searching a database having deposit account
numbers, each representing a respective deposit account maintained
at one of a plurality of associated financial institutions by a
plurality of consumers including the particular consumer, to
identify the deposit account number of the deposit account of the
particular consumer; selecting a payment type; and, directing
payment of the bill by the type of payment selected from funds in
the identified deposit account.
25. A system for paying bills using a computer, comprising: means
for receiving requests to pay a plurality of bills of a particular
merchant on behalf of a plurality of particular consumers; a
database of deposit account numbers, each representing a respective
deposit account maintained at one of a plurality of associated
financial institutions by a plurality of consumers including each
of the plurality of particular consumers, searchable by the
computer to identify the deposit account numbers of the deposit
accounts of each of the plurality of particular consumers at one of
the plurality of associated financial institutions; means for
paying the plurality of bills of each of the plurality of
particular consumers by a single financial instrument.
26. A system for paying bills using a computer, comprising: means
for receiving a request to pay a bill of a particular merchant on
behalf of a particular consumer; a database of deposit account
numbers, each representing a respective deposit account maintained
at one of a plurality of associated financial institutions by one
of a plurality of consumers including the particular consumer,
searchable by the computer to identify a deposit account number of
the deposit account of the particular consumer; and, means for
directing payment of the bill from funds in the deposit account
represented by the identified deposit account number.
27. The system of claim 26 further comprising: means for selecting
a payment type.
28. A system for paying bills using a computer, comprising: means
for receiving a request to pay a bill of a particular merchant on
behalf of a particular consumer; a database of deposit account
numbers, each representing a respective deposit account maintained
at one of a plurality of associated financial institutions by one
of a plurality of consumers including the particular consumer,
searchable by the computer to identify a deposit account number of
the deposit account of the particular consumer; means for paying
the bill from finds in a deposit account of the service provider;
and, means for transferring funds to the deposit account of the
service provider from the deposit account represented by the
identified deposit account number.
29. A system for paying bills using a computer, comprising: a
communications switch connected to a network for receiving requests
to pay a plurality of bills of a particular merchant on behalf of a
plurality of particular consumers; a database of deposit account
numbers, each representing a respective deposit account maintained
at one of a plurality of associated financial institutions by a
plurality of consumers including each of the plurality of
particular consumers, searchable by the computer to identify the
deposit account numbers of the deposit accounts of each of the
plurality of particular consumers; and, a computer processor in
communication with the network and the database for paying the
plurality of bills of each of the plurality of particular consumers
by a single financial instrument.
30. A system for paying bills using a computer, comprising: a
communications switch connected to a network for receiving a
request to pay a bill of a particular merchant on behalf of a
particular consumer; a database of deposit account numbers, each
representing a respective deposit account maintained at one of a
plurality of associated financial institutions by one of a
plurality of consumers including the particular consumer,
searchable by the computer to identify a deposit account number of
the deposit account of the particular consumer; and, a computer
processor in communication with the network and the database for
directing payment of the bill from funds in the deposit account
represented by the identified deposit account number.
31. The system of claim 30 wherein the computer processor selects a
payment type.
32. A system for paying bills using a computer, comprising: a
communications switch connected to a network for receiving a
request to pay a bill of a particular merchant on behalf of a
particular consumer; a database of deposit account numbers, each
representing a respective deposit account maintained at one of a
plurality of associated financial institutions by one of a
plurality of consumers including the particular consumer,
searchable by the computer to identify a deposit account number of
the deposit account of the particular consumer at one of the
plurality of associated financial institutions; and, a computer
processor in communication with the network and the database for
paying the bill from funds in a deposit account of the service
provider and transferring funds to the deposit account of the
service provider from the deposit account represented by the
identified deposit account number.
33. A database for use with a system for paying bills using a
computer, comprising: deposit account numbers, each representing a
respective deposit account maintained at one of a plurality of
associated financial institutions by one of a plurality of
consumers including the particular consumer, the database being
searchable by the computer to identify a deposit account number of
the deposit account of the particular consumer at one of the
plurality of associated financial institutions.
Description
RELATED APPLICATIONS
[0001] This is a continuation of co-pending Application for U.S.
Ser. No. 08/372,620, filed Jan. 13, 1995, which will issue as U.S.
Pat. No. 5,873,072 on Feb. 16, 1999, which was a continuation of
co-pending application for U.S. Ser. No. 07/736,071, filed on Jul.
25, 1991, which issued as U.S. Pat. No. 5,383,113 on Jan. 17, 1995,
each having the common assignee of the present invention and each
incorporated herein by reference for all purposes.
BACKGROUND AND SUMMARY OF THE INVENTION
[0002] The present invention relates generally to apparatus and
methods for paying bills. More particularly, the present invention
is a computerized system for paying bills whereby a consumer may
contact a single source from a remote location via a telephone, a
computer terminal with modem, or other electronic means, to direct
the single source to pay the consumer's bills instead of the
consumer writing checks for each bill. A microfiche appendix has
been submitted with the parent case of this application Ser. No.
07/736,071, which issued as U.S. Pat. No. 5,383,113 on Jan. 17,
1995, which contains the program code of the present invention and
which in its entirety is incorporated herein by reference. An
additional hard copy of the appendix is attached as Exhibit A.
[0003] It has been common for many years for consumers to pay
monthly bills by way of a personal check written by the consumer
and sent by mail to the entity from which the bill or invoice was
received. Consumers have used other ways to pay bills, including
personally visiting the billing entity to make a cash payment. In
today's economy, it is not unusual for a consumer to have several
regular monthly invoices to pay. Writing individual checks to pay
each invoice can be time-consuming and costly due to postage and
other related expenses.
[0004] A need exists for a method whereby a consumer can contact a
single source and inform the source to pay various bills of the
consumer, to have the source adjust the consumer's account with the
consumer's financial institution (i.e., bank, credit union, savings
and loan association, etc.) to reflect a bill payment, and to
actually pay the billing entity a specified amount by a particular
time. The system should be efficient and not unreasonably expensive
and relatively simple for a consumer to interact with. Some banks
have attempted to provide a service for making payment to a few
billing entities to which the banks have established relations. The
banks that do provide that type of service are limited in that they
provide the service only for their own customers since the banks
have not developed a system for accurately acquiring and processing
account numbers and balances of customers of all other banking
institutions and coordinating that information with bill payment.
Furthermore, banks have not developed a system for managing the
risks involved in providing such a service and the inherent
complexities of providing the service to consumers other than the
bank's own customers. Therefore, a need exists for a single source
bill payment system that would be available to any consumer,
regardless of where the consumer banks and regardless of what bills
are to be paid.
[0005] The present invention is designed to fulfill the above
listed needs. The invention provides a universal bill payment
system that works regardless of the consumer's financial
institution and bill to be paid. The present invention provides a
computerized system by which a consumer may pay bills utilizing the
telephone, a computer terminal, or other electronic, data
transmission means. Transactions are recorded against the
consumer's account wherever he or she banks. The consumer may be an
individual or a business, large or small. The present invention
works regardless of where the consumer banks.
[0006] The method of the present invention includes: gathering
consumer information and creating a master file with banking
information and routing codes; inputting payment instructions by
the consumer at a convenient location (e.g., at home), typically
remote from the payment service provider, by using an input
terminal such as a push-button telephone; applying the payment
instructions to the consumer's file; using computer software of the
present invention to examine various files to determine such things
as what is the appropriate form of payment based on variables
involving banking institutions and merchants; comparing each
transaction against a dynamic credit file and routing based on set
parameters; and, if the payment system determines that everything
is ready for payment to be made, adjusting the consumer's account
(usually by debiting) and making payment directly to the billing
entity. The single source service provider for consumer bill
payment could be any entity with the capability to practice the
invention as described hereinafter. The foregoing and other objects
and advantages will become more apparent when viewed in light of
the accompanying drawings and following detailed description.
BRIEF DESCRIPTION OF THE DRAWINGS
[0007] FIG. 1 is a diagrammatical representation of the creation of
a consumer database;
[0008] FIG. 2 is a diagrammatical representation of the
establishment of a merchant's (billing entities) database and the
making of payments;
[0009] FIG. 3 is a diagrammatical representation of the creation of
a consumer pay table;
[0010] FIG. 4a is a diagrammatical representation of a payment
processing cycle;
[0011] FIG. 4b is a continuation of the diagram of FIG. 4a;
[0012] FIG. 4c is a continuation of the diagram of FIG. 4b;
[0013] FIG. 5 is a diagrammatical representation of a computer
hardware system that may be used for accomplishing the present
invention; and
[0014] FIG. 6 is a diagrammatical representation of another
computer hardware system that may be used for accomplishing the
present invention.
DESCRIPTION OF PREFERRED EMBODIMENT(S)
[0015] Referring now to the drawings, FIG. 1 illustrates the steps
in the creation of a consumer database for use with the present
invention. The first step in the process is to establish a
consumer's data records on the system. This may be accomplished by
the consumer completing an authorization form 20 which would
contain the needed information to input into the system concerning
the consumer. This information may include the consumer's name,
address, telephone number and other applicable information. The
consumer would also provide a voided check from the consumer's
personal checking account. The consumer's information may then be
manually input via a keyboard 52 into the consumer database record
22. Default amounts may be set for an individual credit line
parameter and for a total month-to-date parameter. These amounts
establish the maximum unqualified credit risk exposure the service
provider is willing to accept for an individual transaction and for
the collective month-to-date transactions of a consumer. As
explained hereinafter, the service provider may be at risk when
paying a consumer's bills by a check written on the service
provider's account.
[0016] From the voided check, the consumer's bank routing transit
and individual account numbers at an institution are input into the
computer system. This information may be edited against an internal
financial institutions file (FIF) database 24 of the present
invention. FIF 24 is a database of financial institutions'
identification codes and account information for the consumer. This
file edits the accuracy of the routing transit number and the bank
account number. If the numbers do not correspond with the correct
routing and bank numbers, they are rejected and the data entry is
done again. FIF 24 in conjunction with the software of the present
invention also updates the consumer database 22 for both electronic
and paper draft routing and account information. The needed
information may be obtained from each banking institution and each
consumer.
[0017] The consumer is notified by the service provider of his or
her local phone number access and personal security code for
informing the service provider that a bill is to be paid. This
information may be stored in a phone access table 26. The personal
security code may be much like an ATM machine four digit code. In
addition, to comply with federal law, an electronic pre-note 28
will be created to be sent to the consumer's bank to inform the
bank that the service provider is authorized to debit the
consumer's account. For further security to the service provider, a
consumer credit record 30 may be obtained. The default credit limit
amounts over which the service provider may be unwilling to assume
financial risk may be modified based on the information obtained
from the credit report 30.
[0018] In FIG. 2 the steps are shown for establishing merchants to
be paid and the making of a payment. The consumer must inform the
service provider or processor of a merchant's name, address, phone
number and the consumer's account number with the merchant 32. The
term "merchant" as used herein is intended to pertain to any person
or entity that the consumer wishes to pay and is not to be limited
to the usual merchants most consumers pay, such as the electric
company, a home mortgage lender, etc. This information is put into
a merchant master file database 42 (MMF). The consumer may also
indicate whether the merchant is a variable or fixed merchant. A
variable merchant is one in which the date and amount of payment
will vary each month. A fixed merchant is one in which the date and
amount remain the same each month. If the merchant is fixed, the
frequency of payment may be other than monthly, such as weekly,
quarterly, etc. The consumer should inform the service provider of
the date on which the merchant is to be paid and the amount to be
paid.
[0019] Through a telecommunications terminal 34 (e.g., a
push-button telephone or computer terminal), a consumer may
initiate payment of bills. Through the terminal, the consumer may
access his merchant list and input the payment date and amount. The
system may be provided with a payment date editor 36 to insure that
the date is valid and logical (i.e., payment dates already in the
past or possibly a year or more into the future would be
questioned). As payments are initiated, a consumer "checkbook
register" may be created and automatically updated to reflect this
activity. The merchant list can be visible on the consumer's
personal computer screen. On a personal computer a consumer may
enter merchant payment amounts and payment dates on the computer
screen and then transmit this information to the service
provider.
[0020] By telephone, the list may be presented by programmed voice.
The voice may be programmed to ask the consumer if a particular
merchant (selected from the consumer's MMF, which may be updated
from time to time) is to be paid and to tell the consumer to press
1 if yes, or press 2 if no. If yes, the voice may instruct the
consumer to enter the amount to be paid by pressing the numbers on
a touch tone phone. The asterisk button could be used as a decimal
point. After the amount is entered, the voice may ask the consumer
to enter the date on which payment is to be made to the merchant.
This may be accomplished by assigning each month a number, such as
January being month 01. The consumer may then enter month, day and
year for payment. The programmed voice may be accomplished with a
VRU (voice response unit) available from AT&T or other vendors.
It may communicate with a data processor to obtain consumer
information. At the end of the consumer's session on the terminal a
confirmation number may be sent to the consumer, providing a record
of the transaction.
[0021] In FIG. 3 the steps are shown for the creation of the
consumer pay table 38 and making updates to it. The consumer's
files may be received at the service provider on a front end
processor 40 that interfaces with the telecommunications network.
The consumer's records may be edited 44 for validity by comparing
to the merchants' account scheme. Any new merchant records are
added to the consumer's pay table. New merchants are compared to
the MMF 42 and appropriately cross-referenced to the pay table to
check if a merchant record already exists. If no merchant record
exists, a merchant record will be created on the MMF 42.
[0022] Payment records may also be received on the service
provider's processor. The payment may first go through a validation
process against the pay table. The validation process checks for
duplicate payments and if duplicates are found they are sent to a
reject file. The validation process also verifies that merchants
are set up and may check for multiple payments to be paid to a
particular merchant. Orders for payment go to the consumer pay
table to determine when the payment should be released and how it
will be released for payment.
[0023] The service provider may pay merchants by a draft or check
(paper) or by electronic funds transfer. To create a draft that
will pass through the banking system, it must be specially inked.
This may be accomplished by a printer which puts a micr code on
drafts, like standard personal checks. For example, as shown in
FIG. 5, the front end processor 40 may be a DEC VAX which is
connected to an IBM main frame 46 Model 4381. Consumers may call by
telephone 35, a number that passes through the private bank
exchange (PBX) 39 and contacts a voice response unit 41 in
association with the front end processor 40. After the consumer's
payment instructions are received an analysis is performed to
determine the most cost effective and least risk mode of payment
for the service provider to use. One preferred mode of payment is
electronic funds transfer through the Federal Reserve Automated
Clearing House (ACH) Network 47. If the service provider is not a
bank, a bank intermediary may be needed to be connected to the
Federal Reserve Network. Another payment mode is a charge to the
consumer's credit card through the RPS Network 49. Additionally, an
IBM Laser Printer attached to a micr post printer 48 may be used by
the service provider to send drafts 76 or consolidated checks 78 to
merchants. The main frame 46 has data storage means 50 and runs the
FIF 24 and MMF 42 programs. It may also have a tape drive or
telecommunication interface for accomplishing electronic funds
transfer. It should be recognized that various other hardware
arrangements could be used to accomplish the present invention.
FIG. 6 illustrates a similar arrangement for use when the consumer
is using a personal computer 37 to instruct the service provider.
The personal computer may access the front end processor 40 through
the standard X.25 Network 43.
[0024] Referring now to FIGS. 4a, 4b and 4c, the payment process is
shown. The payment process may be cycled 56 each day or more or
less frequently. The first step is to establish when payment items
are to be processed. This may be accomplished through a processing
calendar 58. A processing calendar 58 may be built into the system.
The calendar 58 enables the system to consider each date, including
weekends and the Federal Reserve holidays. Payments are released
from the consumer pay table 38 using the due date. Any bank date,
payments, or payments within a period such as four business days
may be released the same day. All future payment dates would be
stored in the consumer pay table 38. On-line inquiry may be made on
the consumer pay table 38. The service provider has on-line
capability to make changes to the consumer payment upon request
until the day the payment is released. A consumer's merchant change
may also affect the consumer's payment on the pay table 38.
[0025] The method of payment to the merchant may be either paper
(draft or check) or electronic. There are several factors in the
process used to determine if a payment will be released as a paper
item, or an ACH electronic transaction (automated clearing house;
service provider is a party to transaction). Each consumer may be
assigned a status such as: active=good; inactive=bad; and,
pending=uncertain, risky. If a consumer's status is pending 60,
when reviewing the payment file with the processing calendar 58,
the payment should go out as a draft paper to protect the service
provider. When payment is made by draft, the service provider is
not a contractual party to the transaction. The consumer's bank
account codes are actually encoded onto the draft prepared by the
service provider and act much like the consumer's personal check.
The draft has been specially designed for this process. The draft
is payable to either the service provider or the particular
merchant. This allows the draft to be delivered to the merchant for
payment and depositing, but allows the draft to be legally payable
by the bank, with proper authorization. Additionally, posting
information for the merchant is contained on the body of the draft.
To the applicant's knowledge, it is the first time a draft has been
used in such a manner and with this unique design to accomplish
this. If the consumer's bank transit number does not indicate an
electronic bank 62 (i.e., a banking institution that will accept
electronic finds transfer), the program associated with FIF 24
sends the payment as a draft. A pre-note 28 is required any time 64
new banking information is entered on a consumer and the bank shows
on FIF 24 as an electronic receiving bank. The pre-note period is
ten (10) days under federal law. Any payments released during this
period are sent as paper.
[0026] The third manner in which the service provider may pay bills
is by a check written on the service provider's account. A
consolidated check may be written if many customers have asked the
service provider to pay the same merchant. Under this method of
payment the service provider assumes some risk since the service
provider writes the check on its own account. The service provider
is later reimbursed by the (consumer's) banking institution.
[0027] As a means of minimizing risk to the service provider, any
transaction may be compared to the MMF 42 credit limit. For
example, if the check limit is greater than zero and the payment is
$50.00 or less 66, the item may be released as electronic 74 or by
service provider check 78. If the payment is greater than $50.00
but less than or equal to the merchant credit limit 68, the payment
may be released as electronic payment 74 or check 78. Any payments
within the merchant's credit limit 70 are added to the consumer's
monthly ACH balance 72. This provides a monthly total billing day
to billing day summary of the consumer's electronic payment
activity. Any transaction may be compared to the consumer's
database credit limit parameters. If a payment amount is greater
than the consumer's credit limit, the item is released as a draft
76 which is written on the consumer's account. If the payment
amount plus the total of electronic payments in a particular month
is greater than the consumer's credit limit, the item is released
as a draft 76. Items not released as paper are initiated as an ACH
debit against the consumer's account.
[0028] The consumer database may be reviewed for proper electronic
funds transfer (EFT) routing. Payment to the merchant may be
accomplished one of three ways, depending on the merchant's
settlement code. Various merchant's settlement codes may be
established. For example, a merchant set up with a settlement code
"01" results in a check and remittance list 78 being mailed to the
merchant. Merchants with a settlement code, such as "10" produce an
ACH customer initiated entry (CIE). Merchants with a settlement
code, such as, "13" produce a remittance processing system (RPS)
credit.
[0029] In the consumer pay table, for fixed payments, a payment
date gets rolled to the next scheduled payment date on the pay
table. The number of remaining payments counter is decreased by one
for each fixed payment made. For variable payments once made, the
payment date is deleted on the consumer pay table. The schedule
date and amount on the consumer pay table roll to zero. A consumer
payment history may also be provided which show items such as
process date as well as collection date, settlement method, and
check number in addition to merchant name and amount.
[0030] The software of the present invention is designed in part to
make several decisions relating to particular transactions for
consumers. The following example is provided to more fully describe
the software. This example is not intended to limit the application
to the details described in the example and is only provided to
further enhance the description of the invention already stated
above.
[0031] For this example, assume that a consumer has five
transactions of varying amounts for which the consumer has asked
the service provider to arrange payment. For simplicity, assume
that the five payments are to be made on the same day. First, the
consumer database 22 is edited to validate the status, banking
institution, and pre-note flags associated with the consumer's
requested payments. The account numbers provided by the consumer
for the merchants to be paid, are also checked to determine if they
are valid. Assuming the merchant account numbers are valid, the
program begins with the first dollar analysis.
[0032] For purposes of this example, the five payments the consumer
has requested are in the amounts of: $25.00; $75.00; $150.00;
$250.00; and $1,000.00. The program will consider each dollar
amount individually as it goes through the various edit modes. The
first edit may be called a $50.01 edit. In this example, any
transaction that is less than $50.01 is automatically sent as an
ACH debit to the consumer's account. This means that the service
provider uses ACH to electronically transfer funds from the
consumer's account to the service provider's clearing account.
[0033] In this example, the initial payment of $25.00 will satisfy
the $50.01 edit and therefore will be paid without any further
edits being conducted for this particular payment. Continuing with
the example, the next edit may be a merchant dollar edit that is
established for the specific merchant to which the transaction is
being sent. For purposes of this example, this edit is set at
$100.00 for all merchants. Different dollar edits can be
incorporated for different merchants. In the example, the second
payment request of the consumer, for $75.00, meets the $100.00
merchant edit parameter and is sent as an ACH debit to the
consumer's account. Note that the $75.00 payment would not have
satisfied the $50.01 edit and therefore would have passed on to the
second edit which in this case, is the merchant dollar edit.
[0034] The remaining three payments in the example exceed both the
$50.01 edit and the merchant $100.00 edit and therefore, go to the
next edit. In the example, the next edit is for a consumer
individual transaction limit set at $200.00. The $150.00 payment is
less than the $200.00 consumer individual transaction limit and is,
therefore, sent as an ACH debit to the consumer's account and paid.
The other two remaining payments yet to be made exceed the $200.00
limit in this example and pass to the next edit.
[0035] In the next edit, which happens to be the last edit in the
example, the consumer's month-to-date "unqualified" risk limit is
checked. In the example, the month-to-date limit is set at $1,500.
Assume that for this particular consumer $400.00 of month-to-date
payments have already been made on the consumer's behalf. Added to
the $400.00 would be the three payments made above for $25.00,
$75.00 and $150.00. So an additional $250.00 is added to the
$400.00 month-to-date for a total of $650.00 "unqualified" risk for
the current month-to-date amount. The next payment to be made is
for $250.00 and would fall within the $1,500 month-to-date limit
when added to the current $650.00 risk amount. Therefore, the
$250.00 payment is made and an ACH debit is sent to the consumer's
account. This brings the total month-to-date "unqualified" risk
amount to $900.00. The final $1,000 payment has not been paid and
would send the "unqualified" risk amount over $1,500 when added to
the $900.00. Since the final payment of $1,000 in the example fails
the consumer month-to-date limit edit, the $1,000 payment would be
sent as a paper draft directly drawn on the consumer's account, and
for which the service provider has no liability. In the example,
the final step would be updating the consumer month-to-date current
total to $900.00.
[0036] The apparatus for and method of bill payment of the present
invention and many of its attendant advantages will be understood
from the foregoing description. It will be apparent that various
changes may be made in the form and steps thereof without departing
from the spirit and scope of the invention or sacrificing all of
its advantages.
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