U.S. patent application number 13/838764 was filed with the patent office on 2013-08-15 for secure authentication and payment system.
This patent application is currently assigned to PAYFONT LIMITED. The applicant listed for this patent is PAYFONT LIMITED. Invention is credited to David Lanc.
Application Number | 20130212022 13/838764 |
Document ID | / |
Family ID | 37545927 |
Filed Date | 2013-08-15 |
United States Patent
Application |
20130212022 |
Kind Code |
A1 |
Lanc; David |
August 15, 2013 |
SECURE AUTHENTICATION AND PAYMENT SYSTEM
Abstract
The present invention provides a service for allowing secure
financial transactions to be carried out, the service involving
authenticating a user's identity and/or status as part of a
financial transaction with another party and in the event that the
user is authenticated arranging for the transaction to be completed
without revealing the user's financial details and/or other
personal details to that other party. Authentication data and
transaction data may be communicated over any suitable
communications channel(s). The invention provides a trusted
authentication and payment environment that protects a user's
financial details, but allows them to be securely authenticated and
arranges for transactions to be fulfilled, whilst providing other
parties with reassurance that transactions will be completed. In
this way, fraud and theft due to misappropriation of financial
details can be minimized.
Inventors: |
Lanc; David; (Edinburgh,
GB) |
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Applicant: |
Name |
City |
State |
Country |
Type |
PAYFONT LIMITED; |
|
|
US |
|
|
Assignee: |
PAYFONT LIMITED
Edinburgh
GB
|
Family ID: |
37545927 |
Appl. No.: |
13/838764 |
Filed: |
March 15, 2013 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
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11692656 |
Mar 28, 2007 |
8423466 |
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13838764 |
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Current U.S.
Class: |
705/44 |
Current CPC
Class: |
G06Q 20/327 20130101;
G06Q 20/4014 20130101; G06Q 20/40 20130101; G06Q 20/32 20130101;
G06Q 20/3255 20130101; G06Q 20/405 20130101; G06Q 20/102 20130101;
G06Q 20/40145 20130101; G06Q 30/06 20130101; G06Q 20/409 20130101;
G06Q 20/325 20130101; G06Q 20/4012 20130101 |
Class at
Publication: |
705/44 |
International
Class: |
G06Q 20/40 20120101
G06Q020/40 |
Foreign Application Data
Date |
Code |
Application Number |
Oct 25, 2006 |
GB |
0621189.0 |
Claims
1. A processor-based identity authentication system for
authenticating one or more users, comprising: an authentication
processor configured to create and implement a user-specific
identity validity indication useable to authenticate the identity
of a first user in a non-predictable manner, wherein said
user-specific identity validity indication includes at least one
dynamically controllable and selectable authentication method
selected from a plurality of authentication methods.
2. The system of claim 1, wherein said at least one dynamically
controllable and selectable authentication method includes at least
one user-defined authentication method.
3. The system of claim 2, wherein said at least one dynamically
controllable and selectable authentication method further includes
at least one pre-defined authentication method.
4. The system of claim 3, wherein said user-specific identity
validation indication further comprises at least one service
interaction option.
5. The system of claim 4, wherein said user-specific identity
validation indication further comprises at least one transaction
channel.
6. The system of claim 5, wherein said user-specific identity
validation indication further comprises at least one user-selected
payment method.
7. The system according to claim 6, further comprising: a
transaction processor configured to, in combination with the at
least one dynamically controllable and selected authentication
method, arrange and securely route at least one financial
transaction using said at least one user-selected payment
method.
8. The system of claim 7, wherein said transaction processor is
configured to arrange and securely route multiple financial
transactions between said first user and multiple other users,
using a single identity authentication by said authentication
processor.
9. The system of claim 1, wherein said user-specific identity
validity indication further includes at least one pre-defined
authentication method.
10. The system of claim 1, wherein said user-specific identity
validation indication further comprises at least one service
interaction option.
11. The system of claim 1, wherein said user-specific identity
validation indication further comprises at least one transaction
channel.
12. The system of claim 1, wherein said user-specific identity
validation indication further comprises at least one user-selected
payment method.
13. The system according to claim 1, further comprising: a
transaction processor configured to, in combination with the at
least one dynamically controllable and selected authentication
method, arrange and securely route at least one financial
transaction using said at least one user-selected payment
method.
14. The system of claim 13, wherein said transaction processor is
configured to arrange and securely route multiple financial
transactions between said first user and multiple other users,
using a single identity authentication by said authentication
processor.
Description
CROSS-REFERENCE TO RELATED APPLICATIONS
[0001] This application is a continuation of U.S. application Ser.
No. 11/692,656, filed Mar. 28, 2007, which is based on, and claims
priority to GB Application No. 0621189.0, filed Oct. 25, 2006, the
entire contents of each of which are hereby incorporated fully by
reference.
FIELD OF THE INVENTION
[0002] The present invention relates to a system, method and
apparatus for identity authentication and/or secure payment.
BACKGROUND OF THE INVENTION
[0003] Technology has revolutionized the way that consumers make
purchases and expanded the range of retail channels. Goods may be
purchased in a range of ways including traditional face-to-face
purchases, mail order and telephone order as well as more recent
retail formats such as Internet shopping, purchase by mobile phone
and other contactless purchase methods. The number of payment
options has also expanded to suit and include credit cards, debit
cards, charge cards, contactless wallet payment systems such as
Oyster, Speedpass and vending cards, direct debit from bank
accounts and payment using mobile phone accounts. This
proliferation of payment and retail systems, whose transactions are
often conducted remotely or between consumers and merchants who
have little or no prior relationship, has led to a change in the
security challenges faced by consumers, merchants and financial
institutions.
[0004] Using existing payment card systems in transactions such as
mail order, Internet shopping and purchases over the telephone, a
consumer gives their complete payment and identity details up front
and has to trust that the goods and services will be delivered and
that the merchant is legitimate and uses the details given only for
processing that order. This exposes the consumer to identity theft,
theft of payment details and payment fraud via, for example,
phishing, swiping cards through non-authorized card readers and
simple misuse or copying of card details. These theft and fraud
threats are not presently secured by existing payment security
methods such as those typically employed by credit card processors.
Similarly, merchants must trust that the consumer has given the
correct identity, is an authorized user of the payment method and
that the payment details are correct. In addition, merchants are
exposed to identity fraud or deception where payment or account
details have been stolen.
[0005] To meet these challenges, credit card companies and
financial institutions are putting security measures into place.
The introduction of chip and PIN (EMV authentication) in the UK for
card transactions has reduced fraud in the face-to-face market.
Whilst this is undoubtedly a significant improvement in security,
face-to-face fraud does still occur, exemplified by some major
merchants withdrawing their chip and PIN payment terminals after
their compromise. Indeed, a direct consequence of chip and PIN at
point of sale is that consumers are now open to greater risk of
shoulder surfing. Further threats to security may arise from the
use of electronic "bugging" equipment in point of sale
terminals.
[0006] Card detail theft is also an issue, with fraudsters using
legitimate card details to perpetrate non-face-to-face and
face-to-face payment theft. This is because existing terminals and
PIN pads are designed to accept many cards from consumers without
requiring specific validation by the merchant or staff members
before use. In addition, terminals that are not validated by the
registered merchant can give rise to high fraud levels if
compromised. This is due to the lack of accountability over their
security, and the nature, size and technical needs of existing
terminals and PIN pads, making it difficult to keep them secure
when not being used. Furthermore, card details taken from the face
and back of payment cards can be fraudulently used across non-chip
and PIN channels.
SUMMARY OF THE INVENTION
[0007] According to the present invention, there is provided a
service for allowing secure financial transactions to be carried
out, the service involving authenticating a user's identity and/or
status as part of a financial transaction with another party and in
the event that the user is authenticated arranging for the
transaction to be completed without revealing the user's financial
details and/or other personal details to that other party.
[0008] Authentication data and transaction data may be communicated
over any suitable communications channel, and in some circumstances
are preferably communicated over different communications
channels.
[0009] The invention provides a trusted authentication and payment
environment that protects a user's financial details, but allows
them to be securely authenticated and arranges for transactions to
be fulfilled, whilst providing other parties with reassurance that
transactions will be completed. In this way, fraud and theft due to
misappropriation of financial details can be minimized.
[0010] Authenticating the user may involve receiving authentication
data input by the user via a communications channel. Multiple
communications channels may be available. For example, user data
may be received via a wireless telecommunications network and/or
the Internet and/or e-mail and/or any other suitable communications
channel. Preferably, the method involves allowing the user to
select a preferred communications channel. Different communications
channels may be selected for different transaction types. For
example, the user may prefer to communicate authentication data via
a mobile telephone network, when transacting via the Internet.
[0011] Communications to the user may be sent via any suitable
communications channel, for example a wireless telecommunications
network and/or the Internet and/or e-mail. Preferably,
communications to the user are sent via a different channel to
those from the user. For example, messages may be sent to the user
via e-mail but received from the user via a mobile telephone
network. Events of which the user may be notified include
authentication failures and/or mismatch of order details supplied
by differing users and/or the order is available for dispatch
and/or the order is only partially fulfilled and/or a payment is
refused and/or a transaction has been referred and/or the consumer
has, or is close to, breach of their operating parameters. A
confirmation may be sent and payment may be withheld until the
confirmation is received. The user being notified may have to
provide identification information before access is given to the
notification.
[0012] The authentication may be two-stage, but preferably is
three-stage. Each authentication stage may involve input of
personal identification numbers and/or code words and/or personal
details and/or answers to challenge questions and/or matching of a
user with a list of authorized users for a transaction device
and/or cross referencing two or more sets of input authentication
data. Authentication may involve comparing the input data with user
related data stored by the system. Authentication may involve
online and/or offline authentication stages.
[0013] The service may allow a user to register one or more payment
means. The user may assign a particular payment means for use in
specified transactions. For example, the user may specify that a
credit card is to be used for Internet transactions, but a debit
card is to be used with person to person transactions. Additionally
or alternatively, the user may specify that a particular card or
account may be used for transactions only with a particular
organization, such as a merchant or retailer. Payment may be made
when the paying user's authentication/identification code is
provided rather than details of the payment means to be used.
[0014] One of the user's payment means may be used in the step of
authenticating the user. The payment means used for authentication
is preferably different from the payment means used to complete the
transaction. This provides an added level of security for the
user.
[0015] The service may further include storing authentication data
associated with at least one user and authentication is by
comparing data supplied by the user with stored authentication
data. The authentication may be associated with a transaction. The
transaction may be a purchase or a cash withdrawal or money
transfer.
[0016] The service may further include defining operating
parameters for a user and checking that transactions do not breach
those operating parameters before making payment.
[0017] The service may further involve allocating a user
identification code to a first user, providing the first user's
identification code to a second user and comparing the first user's
identification code with data stored in user records to confirm
that the first user is a registered user of the system.
[0018] Payment may be held in escrow until goods have been
dispatched. This provides an added level of security for users,
especially when the transaction is via Internet or mail order.
[0019] According to another aspect of the invention, there is
provided a transaction system that is configured to authenticate a
user and arrange a financial transaction with another party based
on the user's authentication and without disclosing the user's
financial details and/or personal identity to that other party.
[0020] Preferably, the transaction is payment for goods and/or
services. Preferably, the system includes authentication means for
authenticating the user and payment means that are functionally
and/or physically separate from authentication means, the payment
means being adapted to arrange for payments.
[0021] By separating authentication from the transaction, users can
be authenticated and transactions authorized without providing the
user's financial details to other users. This provides protection
against misuse of, for example a user's debit or credit card,
should it become compromised. In this way, fraud and theft due to
misappropriation of financial details can be minimized.
[0022] All users that are party to a transaction may be
authenticated in the same way, regardless of whether they are
retailers or consumers. This minimizes fraud on both sides of a
transaction.
[0023] The system may be adapted to receive order details from at
least two users, for example a consumer and a merchant, and to
compare the order details received from each user to ensure that
both sets of orders are identical. The system may be adapted to
arrange payment only if the order details match. In this way the
system can minimize errors in the order process and also fraudulent
altering of transactions.
[0024] The system may be adapted to arrange payment directly from a
user account, for example a credit or debit card account or any
other financial vehicle provided to allow the user to make
payments. Alternatively, before forwarding arranging for payment
from a user account, the system may be adapted to receive payment
and hold it in escrow until goods are dispatched or services
provided and/or the user acknowledges the payment is valid.
[0025] The payment may be a cash withdrawal or cash advance. The
system may be adapted to be used with transactions over one or
multiple transaction channels. This may be achieved by provision of
a communications system for allowing users to interact with the
system via for example the Internet (and other networks using an IP
protocol), telephone or mobile data communications services.
[0026] The transaction channels may include face-to-face, mail
order, telephone order, Internet shopping, user-to-user transfers,
purchase by mobile phone and other contactless purchase methods. In
this way, the system provides a unitary authentication and payment
management system that can be used in many retail formats, allowing
the user to use one account and authentication method to centrally
control many payment means and authenticate and arrange payment in
many transaction channels.
[0027] The system may be adapted to apply the same authentication
regardless of transaction channel, so that a consistent level of
security is applied in all transactions. Alternatively, differing
authentication may be applied to differing transaction channels.
This allows the degree of authentication to be tailored to suit
factors related to the transaction channel such as the inherent
security of the transaction channel.
[0028] The system may be adapted to store authentication data
associated with at least one user on the system. The system may
authenticate the user's identity and/or status by comparing data
supplied by the user with stored authentication data. The system
may be adapted to carry out authentication associated with a
transaction.
[0029] The system may be adapted to receive data from a transaction
device, the transaction device having means for inputting data and
means for communicating data to the system. The means for inputting
data may be a keypad and/or a trackball and/or a joystick and/or a
biometric feature reader and/or a reader. The biometric feature
reader may include a fingerprint reader and/or a retinal scanner
and/or a voice analyzer. The card reader may be a chip card reader
and/or a magnetic strip card reader and/or a radio frequency
identification (RFID) card reader.
[0030] The means for communicating data may include any wireless or
mobile telecommunications apparatus and/or bluetooth communications
apparatus and/or WiFi communications apparatus, such as WiFi
802.11a/b/g communications apparatus and/or infrared communications
apparatus and/or RFID communications apparatus and/or NFC
communications apparatus and/or a USB port and/or a firewire port.
The mobile telecommunications apparatus may be adapted to operate
over GPRS or 3G or GSM or CDMA networks.
[0031] The means for communicating data may be adapted to allow the
transaction device to communicate with payment systems, for example
RFID or NFC based payment systems, to allow the transaction device
to operate in place of the payment means, e.g. a RFID card such as
an Oyster card, associated with the payment system.
[0032] Authentication may involve at least two-stages, and
preferably three. Each authentication stage may require input of
personal identification numbers and/or code words and/or personal
details and/or answers to challenge questions and/or biometric data
and/or matching of a user with a list of authorized users for a
transaction device and/or valid reading of an EMV compliant card or
other registered identity card and/or cross referencing two or more
sets of provided authentication data. Authentication may involve
comparing the input data with user related data stored by the
system. Authentication may involve online and/or offline
authentication stages.
[0033] The system may be adapted to store user names and/or user
identification codes and/or user addresses and/or user address
codes and/or user payment account details and/or user operating
parameters and/or user transaction histories and/or audit
trails.
[0034] The system may be adapted to process orders using a user
identification code and a delivery address code uniquely associated
with a user. The system may be adapted to receive the delivery
address code of a first user, determine the address corresponding
to the delivery address code and to provide the address to at least
a second user only when the at least second user confirms that it
is in a position to fulfill the transaction. By only revealing a
user's address once all the users have been authenticated and only
at a stage in the transaction when the information is necessary,
the disclosure of user information is minimized, helping to prevent
identity fraud.
[0035] The system may be adapted to have more than one payment
means associated with each user. Each payment means may be assigned
for use in specified transactions. The system may be adapted to use
a payment means to carry out a payment after authenticating both
users and when provided with the paying user's identification code
rather than details of the payment means (e.g. PayPal, credit card,
etc.) to be used. This again minimizes the information disclosed by
a user during a transaction and helps prevent identity fraud and
misuse of payment details.
[0036] The system may be adapted to send a notification to users to
confirm events. The notification may be a short message service
(SMS) message, e-mail, telephone call or message sent to a
transaction device. Preferably, the notification is via a different
notification method to the placing of the order. In this way, if a
communications means is compromised and used to place a fraudulent
transaction, then the user will receive notification of the
transaction by a different communications channel, allowing them to
detect and stop the fraudulent transaction.
[0037] Events of which the user may be notified may include
authentication failures and/or mismatch of order details supplied
by differing users and/or the order is available for dispatch
and/or the order is only partially fulfilled and/or a payment is to
be made and/or a payment is refused and/or a transaction has been
referred and/or the consumer has, or is close to, breach of their
operating parameters.
[0038] The system may be adapted to require a confirmation to the
notification before processing a payment. The system may be adapted
to obtain identification information from the user before providing
access to the notification so as to prevent erroneous notification
of someone other than the user.
[0039] The system may be adapted to assign at least one user
identity code to at least a first user, whereby the authentication
means are adapted to validate the identity and/or status of the
first user to a second user upon provision of the first user's
identity code to the system by the second user.
[0040] The user data used for validation may be whether or not a
user is a registered user of the system and/or the user is
transacting within specified criteria and/or the user account has
permission for carrying out that transaction. The specified
criteria may include that transactions values and/or transaction
velocities are within a set limit or that the transaction is of a
specified type. This allows the users to have increased confidence
in transacting with other users.
[0041] Each user may be associated with at least one sub user. The
system may be adapted to register users or sub-users and to only
allow access to the system by registered users or sub-users. For
example, pre-registered and designated staff (sub-users) may
transact on behalf of a retailer (user). This allows for individual
traceability and accountability. Authentication of a user may
include authentication of at least one associated sub-user.
[0042] The system may require re-authentication by at least one
user if a transaction has not been completed within a specified
time-scale. The system may require at least one user to review
and/or accept a transaction if the transaction has not been
completed within a specified time-scale.
[0043] The system may be adapted to allow each user to make or
receive payments in a currency of choice. The system may be adapted
to convert the currency of a payment such that the currency in
which a payment is made is different to the currency in which the
payment is received.
[0044] According to yet another aspect of the invention, there is
provided a transaction device for collecting and communicating
authentication data having data input means and communications
means for use with the method and system of the other aspects.
[0045] According to a fourth aspect of the present invention, there
is provided a computer program, or a storage means containing a
computer program or a server programmed with a computer program for
implementing any of the other aspects of the invention.
[0046] According to yet another aspect of the invention, there is
provided a method involving using an authentication means
associated with a consumer to authenticate a merchant. Preferably,
the authentication means is an authentication device, for example a
mobile wireless authentication device. Preferably the consumer
device comprises a card reader and/or a keypad and/or biometric
feature reader and/or an RFID detector. Preferably the method
further involves arranging payment from the consumer to the
authenticated merchant using the consumer's authentication
means.
BRIEF DESCRIPTION OF THE DRAWINGS
[0047] Various aspects of the invention will now be described by
way of example only and with reference to the accompanying drawings
of which:
[0048] FIG. 1 is an overview of the interaction between an
authentication and payment system, users of the system, payment
account issuers and merchant and payment acquiring banks and
processors;
[0049] FIG. 2 is a schematic representation of how the
authentication and payment system interacts with a user and the
user's accounts;
[0050] FIG. 3 is a schematic of the authentication and payment
system of FIG. 1;
[0051] FIG. 4 is a further schematic of the components of the
authentication and payment system of FIG. 1 and its interaction
with users;
[0052] FIG. 5 shows how users can interact with the system of FIG.
1;
[0053] FIG. 6a is a front view of an authentication device for use
with the transaction system 1 of FIG. 1;
[0054] FIG. 6b is an internal view of an authentication device for
use with the transaction system 1 of FIG. 1;
[0055] FIG. 6c is first side view of an authentication device for
use with the transaction system 1 of FIG. 1;
[0056] FIG. 6d is another side view of an authentication device for
use with the transaction system 1 of FIG. 1;
[0057] FIG. 6e is yet another side view of an authentication device
for use with the transaction system 1 of FIG. 1;
[0058] FIG. 7 is a flow diagram of an authentication and payment
method;
[0059] FIG. 8 is a flow diagram of a user registration method;
[0060] FIG. 9 is a flow diagram of a user maintenance method;
[0061] FIG. 10 is a flow diagram of a notification method;
[0062] FIG. 11 is a flow diagram of a user service review
method;
[0063] FIG. 12 is a flow diagram of a method for authenticating a
user;
[0064] FIG. 13 is a flow diagram of a method for triple
authenticating a merchant;
[0065] FIG. 14 is a flow diagram of a method for validating a
merchant's identity;
[0066] FIG. 15 is a flow diagram of a method for validating a
consumer's identity;
[0067] FIG. 16 is a flow diagram of a method for validating a
consumer's payment ability;
[0068] FIG. 17 is a flow diagram of a method for validating that
goods are ready for dispatch;
[0069] FIG. 18 is a flow diagram of a method for consumer
acceptance/rejection of a payment;
[0070] FIG. 19 is a flow diagram of a method for fulfilling an
order;
[0071] FIG. 20 is a flow diagram of a method for processing
referred consumer transactions;
[0072] FIG. 21 is a flow diagram of a consumer rejection
process;
[0073] FIG. 22 is a flow diagram of a method for processing
chargebacks, and
[0074] FIG. 23 is a flow diagram of a method for processing
credits.
SPECIFIC DESCRIPTION OF THE DRAWINGS
[0075] FIG. 1 shows a secure transaction system 1 that is run by a
system operator for identity authentication and authorizing
payment. The transaction system 1 is able to communicate with users
that are transacting with one another, for example a consumer and a
merchant. It is also able to communicate with the systems of
institutions 2a-c, 4 that provide users with financial services,
for example banks, credit card companies etc. The transaction
system 1 acts as a gateway for authenticating the identities of
users who are parties to transactions and for arranging for
payments to be made without disclosure of a user's financial
details. To do this, the system 1 implements security procedures at
various stages in a transaction and controls and arranges payment
from one user to another user only when one and preferably both
users have been fully authenticated and without the paying user's
financial details, for example credit or debit card details, being
revealed to the other user.
[0076] The transaction system or system operator 1 is not a bank or
payment provider but sits between these providers and the user, and
acts as a secure, trusted system for arranging payment from one
user to another once a transaction has been fulfilled and only once
the identities of both users have been authenticated and
appropriate security checks have been completed. The system 1 is
not designed to replace a merchant's ordering system and
transactions are still conducted between a consumer and the
merchant over conventional commercial channels, such as face-to
face interaction 6, mail order 8, telephone order 10, Internet
shopping 12, contactless 14, mobile 16 and person-to-person 18
payment. Instead, the system 1 allows a user to transact with
merchants over numerous different channels, using a single
authentication means 20 to interact with the system 1, thereby to
be authenticated and arrange for payment, without having to reveal
financial details to the merchant. The system 1 provides
multi-channel, consistent anti-fraud measures and validation
services to users to ensure that the other users involved in the
transaction are who they claim and are transacting within allowed
limits. Transactions can be recorded with the system 1, but only to
allow checks that the transaction is as expected and to release
user information or arrange payment at appropriate stages in the
transaction.
[0077] By having the authentication and security aspects of a
transaction handled separately from the users, banks or other
facilities that can arrange payment and ordering systems, the
system 1 can be implemented to operate consistently with a wide
range of payment means and use a range of transaction channels
6-18. Use of the system brings the same level of security and
protection across multiple commercial channels 6-18. In addition,
authentication is carried out on a transaction level, not on a
payment level. These aspects allow the user to interact with a
single, unitary authentication and security system 1 thereby to
authorize payment from any of their nominated accounts, rather than
having to deal with a multitude of specific authentication and
payment systems tied to certain payment facilities, for example
banks or credit card providers, merchants or transaction
channels.
[0078] As shown in FIG. 2, the single user authentication means 20
can be used for authentication, whilst providing access to at least
some and optionally all payment channels nominated by that user,
for example a contactless tag account 22, a first credit card
account 24a, a second credit card account 24b, a mobile telephone
account 26, a loyalty scheme 28, a first bank account 30a, a second
bank account 30b, and a gift voucher scheme 32. The authentication
means could be for example a dedicated consumer ID card 34/merchant
card 36 and/or consumer authentication device 38/merchant
authentication device 40 or could be a credit or debit card that
the user has nominated for use in the authentication process. Since
the authentication and payment processes are decoupled, even where
a credit or debit card is used for authentication, this does not
necessarily have to be used for payment. Indeed by using one card
for authentication and another for payment, security can be
increased. For example in the arrangement of FIG. 2, a credit card
could be used for authentication, but the user could arrange for
payment via any one or more of the contactless tag account 22, the
first and second credit card accounts 24a,b, the mobile telephone
account 26, the loyalty scheme 28, etc.
[0079] FIG. 3 shows the transaction system 1 in more detail. This
includes a transaction server 42 for applying security procedures
to transactions; an authentication server 44 for authenticating
user identities; a payment server 46 for liaising with the
consumer's payment means 47 and arranging actions, such as payments
or bank transfers, on behalf of users; storage media 48 for storing
data relating to users, transactions and operating parameters; and
a communications system 50 for communicating with users, other
parties such as issuing institutions, and operators of the system.
The transaction server 42, authentication server 44, payment server
46 and any server required by the communications system 50 may be
physically separate. Alternatively, one or more of the transaction
system server functions 42-50 may be incorporated within the same
physical server.
[0080] The transaction system 1 acts as a gateway so that users can
control what information is provided to other users and at which
point in the transaction that information is provided. As all users
are part of a trust network, they can have confidence that certain
information is held on the system 1 and can be used, or
appropriately accessed, to complete the transaction. This negates
the need for a user to supply that information, which prevents it
being used fraudulently by another user. This gateway function is
facilitated by the transaction server 42, which is adapted to carry
out security operations at various stages of the transaction. The
security operations may include storing details of a user and
arranging actions using the user's details rather than revealing
the details to the other users, for example by arranging payments
from one user to another without revealing details of the payment
channel 47. The security operation may only reveal certain details
of the user at an appropriate stage in a transaction, for example,
for non-face-to-face transaction where goods are not provided at
the point of sale, by revealing address details only when goods are
ready for dispatch.
[0081] Further security operations carried out by the transaction
server 42 include allowing users to record expected transactions
with the transaction system 1, the transaction server 42 being
adapted to compare the transactions to ensure that they match. The
transaction server is further adapted to record in the memory 48,
at least in an aggregated or generalized manner, each user's
transaction history and monitor user transactions against a series
of operating parameters to allow further control of the user's
account and to limit exposure to fraud. The transaction server 42
is also adapted to notify the user at various stages in a
transaction using the communications system 50 such that users are
aware of details of the transaction and can detect and stop
fraudulent transactions.
[0082] The transaction system 1 is adapted to register users of the
system only on completion of a series of registration checks. To
ensure that a user wishing to take part in a transaction is the
registered user, the authentication server 44 authenticates their
identity using at least two-stage (double) and typically
three-stage (triple) authentication as will be described in more
detail later. In this way, other users of the system 1 can have
confidence that they are transacting with another member of a
trusted network, upon whom certain checks have been made and whose
identity has been authenticated. The authentication server is also
adapted to allow users to check that other users are registered
with the system 1 by submitting a user identification code, amongst
other details, to the authentication server 44 which is adapted to
compare the supplied consumer identification code and details with
those stored within user records to provide an indication that the
user is a registered user.
[0083] The memory/storage media 48 includes a fast access, high
capacity storage system, such as a hard disk bank, although any
suitable storage means may be used. User records, for example
consumer records 54 and merchant records 56, are stored in the
storage medium 48. These include user data such as name, identity
code, delivery and billing addresses and associated address codes,
details of payment means such as credit card 24a,b, debit card
30a,b or bank account 30a,b details, authentication data such as
passwords, PIN codes and challenge questions such as the user's
mother's maiden name, school, place of birth, etc, data required to
comply with regulating authority regulations, service settings such
as preferred payment methods and operating parameters, such as
maximum transaction volume, value and type settings, transaction
data, audit trails and user/transaction status such as "active",
"on hold", etc.
[0084] The authentication server 44 is able to access the storage
media 48 for recording and accessing user records 54, 56,
transaction histories and audit trails and the communications
system 50 for communicating with users, authentication devices 38,
40 and service operators. Authentication requests and data are
received from users via the communications system 50. The
authentication server 44 is adapted to process the requests and
data via a triple authentication method for requests received from
an authentication device 38, 40, or by a double authentication
method for requests received without use of an authentication
device 38, 40, and return an identity validity indication to the
payment server 46, transaction server 42 or requesting user via the
communications system 50.
[0085] The payment server 46 is operable to process payment
requests and communicates these to the user's payment means issuer
2a-c. The payment server 46 is arranged to process payment requests
only when certain criteria have been met, such as authentication of
both users by the authentication server 44, the transaction leading
to the payment request does not breach operating parameters of
either user or that the transaction expected by each user matches
the transaction expected by other users that are party to that
transaction. As the payment server 46 handles any payment request
and arranges payment, when a consumer and a merchant are
transacting, the consumer's financial details are not available to
the merchant.
[0086] The payment server 46 is able to access the storage means 20
to retrieve user details, such as the user's payment means 22-32,
required to carry out the action. The payment server 46 also has
access via the communications system 50 to the servers of other
parties involved, e.g. issuers of payment means 2a-c, such as a
credit card company or bank. The payment means 22-32 may be a
credit card account 24a,b, a debit card account 30a,b, a bank
account such as a current account, a contactless account 22 such as
an Oyster card, a customer loyalty scheme account 28, a gift card
scheme 32 or a mobile phone service account 26. The payment means
22-32 is operated, and any payment made, by a payment issuer 2a-c
such as a bank or credit card company separate from the transaction
system 1. The payment server 46 is adapted to act as an
intermediary to process payment requests and arrange payment upon
completion of orders, obtain validations of consumer payment means
22-32 from issuers 2a-c upon request from a merchant, or other
authenticated user (for example for user-to-user transactions such
as via PayPal or Western Union transfers), and arrange chargebacks
and credits.
[0087] FIG. 4 shows the communications system 50, which links the
transaction system 1 with various parties involved in the placing
and processing of transactions such as consumers, merchants and
financial institutions/payment issuers 2a-c, 4. Various servers and
associated hardware are provided, such as an Extranet/Internet
server 86 and mobile communications server 88. Also provided are
appropriate firewall routers for fixed line communication 90,
mobile data communication 92 and Internet communication 94. The
communications system 50 is adapted to provide communications by a
range of methods such as Internet communications, e-mail, GPRS,
SMS, RFID, telephone, Interactive Voice Response (IVR) as will be
described in greater detail later. The communications system 50
also provides link to terminals 96 for allowing system operator
staff to access the transaction system 1, for example in response
to telephone enquiries. Users can communicate with the transaction
system 1 by one communications method, and the system 1 can notify
the user of transactions by another communications method. These
communications methods can be pre-defined by the user. For example,
the user may opt to send instructions and/or information to the
system 1 via mobile telephone, but receive information via the
Internet. This helps prevent fraudulent or unauthorized
intervention through unauthorized access to a single communications
medium. In addition, it allows the transaction system 1 to be used
with a variety of transaction types and negates the necessity for
every user to have expensive processing terminals.
[0088] FIG. 5 shows the transaction types supported by the system
1. These include mail order 8, face-to-face 6, Internet ordering
12, telephone ordering 10, Internet 102 and telephone banking and
transactions 16 using mobile communications technology such as
various technologies employing WAP, i-mode, 3G and GPRS. As shown
in FIG. 4, merchants' servers 104 can access the transaction system
1 directly via fixed line communications or over the Internet or
Extranet. Authentication devices 38, 40 belonging to consumers or
merchants access the system via mobile communications capability
directly contained within the authentication device 38, 40 or
indirectly via connection to a user's terminal 106 or via an
adapter or modem 108 to another communications system such as a
telephone line 110. Users may also access the system via voice
telecommunications 110 to an operator 96 or to an IVR service.
Access via a user mobile telephone 110 may additionally include use
of messaging services such as short messaging service (SMS)
messages or access via a mobile browser such as WAP or via a direct
network link such as those available over 3G networks. These
communications are intercepted and decoded by the mobile
communications server 88. Users, whether merchants or consumers,
may access the system from terminals 106 such as PC's over the
Internet, which are via an interactive Extranet or Internet service
and controlled by the Internet server 86.
[0089] FIGS. 6a-e show an authentication device 38, 40 for allowing
input of user authentication data, communications of data to and
from the transaction system 1 and display of instructions from the
transaction system 1 to the user. The authentication device 38, 40
has a display 112; data input devices as appropriate such as a
keypad 114, trackball 116, microphone 118, touch pad (not shown),
and/or buttons 120; a biometric information reader 122 such as
fingerprint scanner or a retinal scanner; a card reader 124 such as
a chip card reader, preferably Europay MasterCard Visa (EMV)
compliant, and/or magnetic strip card reader and/or an RFID card
reader; cable and/or wireless communications means such as a
Bluetooth port 126, an IR port 128, RFID port 130, USB port 132,
Firewire port, 802.11a/b/g wireless ("Wi-Fi") communications
apparatus 136 and/or mobile telecommunications apparatus 138
including a SIM card and SIM card reader; and a rechargeable
battery 140; along with the associated hardware required to run
each of these components, as would be understood by a person
skilled in the art. The authentication device 38, 40 further
contains memory 142 and processing means 144 for storing data,
processing operations and controlling the components. The
authentication device may comprise separate logical and/or physical
memory configurations for payment and other functions.
[0090] The authentication device 38, 40 is associated with certain
users and locked for use by those users. The users authorized to
use the authentication device 38, 40 and associated identification
data required to unlock the device 38, 40, such as PIN code or
consumer ID code are stored in the memory 142 of the authentication
device 38, 40, which is updated from the transaction system 1 via
the communications system 50. The device 38, 40 will only become
operable to communicate authentication data to the transaction
system 1 once a user has validated their identity, for example by
using an identity card and/or PIN and/or ID code. Data can be input
to the device 38, 40 in response to prompts displayed on the
display 112. Activation of individual input devices 114-124 or
operation of the display 112 may be in response to software stored
on the authentication device 38, 40 or in response to instructions
received from the transaction system 1 via at least one of the
communications means 126-138.
[0091] The communications means 126-138 of the authentication
device 38, 40 are adapted to link the authentication device 38, 40
with the transaction system 1 and may be used to send update data,
user data or instructions to the authentication device 38, 40 or to
relay authentication data to the transaction system 1. The
preferred communications route is via encrypted mobile
communications over networks such as GPRS or 3G. In an optional
embodiment, the card reader 124 may be adapted to receive
contactless payment cards, including RFID cards such as Oyster,
Speedpass or vending system cards. The RFID port 130 of the
authentication device can then be used to communicate between the
authentication device 38, 40 and a contactless card system to make
payments. This allows for use of contactless payment cards or
accounts to be made dependant on completion of the authentication
procedures. The contactless card may be used to make payments over
other payment channels 24-32 via the transaction system 1. In this,
case the contactless card could be preloaded with funds and used as
a user's payment account for transactions via the transaction
system 1. Conversely, other payment accounts, e.g. credit 24 or
debit cards 30, could be used to make contactless payments.
[0092] FIG. 7 shows the steps for authenticating users using the
transaction system 1 to facilitate a secure transaction, including
authenticating the identities of users who are parties to a
transaction and controlling delivery and payment. All parties to a
transaction must be registered users of the transaction system 1
before being allowed access to the system 1. A potential user must
first complete a registration procedure 146 to obtain details
necessary for operation of the transaction system 1 and to ensure
that all the details are correct and that all regulatory
requirements are met. The users can be specified as being
consumers, who only use the transaction system 1 to make purchases
from a merchant, or merchants, who use the transaction system 1 to
make sales to a consumer or another merchant acting as a consumer.
A merchant may also make purchases and any reference to a consumer
includes merchants when making a purchase. For transactions such as
person-to-person or Western Union type transfers, both users may be
consumers, with one user acting as a `merchant` in so much as they
receive a payment. As an optional feature, the transaction system 1
may act as a directory or database of merchants offering services
or products through which consumers may browse to locate a suitable
supplier with whom they can transact in a safe and secure fashion.
At the end of the registration procedure, each consumer is given a
consumer identity code and each merchant is given a merchant
identity code.
[0093] Once registered, a consumer wishing to make a transaction
with a merchant must first access the transaction system 1 and
authenticate 148 their identity to prove that they are who they
claim to be and that they are registered on the transaction system
1. After the consumer has been authenticated 148, they request
validation 150 of the identity of the merchant with whom they wish
to transact by sending to the transaction server a merchant
identity code. This would be supplied to them by the merchant by
normal commercial means, e.g. via a website or advert. The
authentication server 44 is then operable to compare the supplied
merchant identity code with those stored on the transaction system
1. A positive match allows the consumer to have confidence that the
merchant has passed the transaction system registration checks and
is operating within its operational parameters. The consumer then
transmits an expected order 152 to the transaction system 1. The
transaction system 1 stores the expected order for comparison with
the order placed on the transaction system 1 by the merchant to
ensure that the details of the actual order matches the expected
order details. This procedure is consumer driven and so is ideal
for mail order 8, transactions over the Internet 12, and telephone
shopping 10.
[0094] The merchant accesses the transaction system 1 and goes
through authentication 154. This ensures that they are an
authorized user and the intended party to the transaction. The
merchant may seek to validate 156 the identity of the consumer by
supplying the consumer's identity code to the transaction system 1.
The authentication server 44 of the transaction system 1 is
operable to compare the user identification code with those stored
by the transaction system 1. This can be used to check that the
identity provided by the consumer is correct and that the consumer
has passed the registration conditions of the system 1 and is
operating within their operational parameters. The merchant may
also access the transaction system 1 to validate 158 that the
consumer's selected payment means 22-32 are valid for use and not
showing as stolen or suspended. The transaction system 1 can
process these requests by checking for appropriate status flags
stored in the consumer's record and by using the payment server 46
to communicate with the issuing institutions 2a-c of the consumer's
payment means to carry out funds available and other standard
security checks, as would be known in the art.
[0095] The transaction system 1 notifies the consumer of the
transaction details recorded on the system by the merchant and
gives the consumer an option to reject the transaction or flag up
any fraudulent transactions 160. The transaction system 1 also
makes referral checks 162 to ensure that the consumer's payment
means 22-32 is valid and within the limits set by the consumer's
issuer 2a-c and that both consumer and also the merchant are within
their operating parameters. Only once the goods or services are
ready for dispatch 164 to the consumer is any consumer personal
address information 54 released to the merchant by the transaction
system 1. After dispatch 164 of the goods or services, the
transaction system 1 processes 166 the payment for the goods or
services from the consumer's payment issuer 2a-c to the merchant
through the merchant's acquiring bank 4. The details of the
consumer's payment means 22-32 is never revealed to the merchant,
thus ensuring a separation of authentication and payment. The
transaction system 1 also provides facilities for control of post
sales transactions such as chargebacks 168 and credits 170
utilizing its advantageous authentication facilities.
[0096] FIG. 8 shows the registration process 146 in detail. This
requires potential users to provide their identities (including
name, address and certain payment and banking information) and
verify those identities using reliable, independent source
documents, data or information. Where the potential user is a
business or corporate body, the beneficial owner must be identified
and steps taken to verify the identity of the beneficial owner.
Details are also required on the purpose and intended nature of the
business relationship with the potential user. These may be used to
determine the risks associated with each user and to conduct
ongoing due diligence on the business relationship and scrutiny of
transactions undertaken throughout the course of that relationship
to ensure that the transactions being conducted are consistent with
the activities of the user, their business and risk profile,
including, where necessary, the source of funds. To this end, the
transaction system 1 may distinguish between merchants and
consumers at all times to help determine the expected activities
and incorporate these into risk analysis by determining whether
actual usage matches this expected profile.
[0097] The preferred method of ensuring the details supplied in the
user validation are correct is to obtain a reference 172 from a
bank or other sponsoring institution. A potential user may request
registration by completing an application form (which may be
electronic, such as an Internet form). If the potential user has an
existing relationship and is referred by a bank or other
institution (retail or otherwise) that requires to follow the same
regulatory requirements as the transaction system 1 operator, the
prospective user may provide details of the bank as a referee to
confirm that the prospective user has undergone the required
regulatory checks by that bank or institution. The prospective user
must also provide appropriate permission for the transaction system
1 operator to contact the prospective user's clearing bank and to
give the bank or institution authorization to release the
information required. The bank or sponsoring institution is then
contacted 174 to confirm that the prospective user has undergone a
consumer validation process that meets regulatory requirements and
to confirm that the details supplied by the prospective user are
correct. This approach may be enhanced by credit reference agency
checks as appropriate.
[0098] Where the reference is positive, full application details
for the prospective user are assessed 176 to determine whether a
service agreement should be granted. Assessment 176 is preferably
carried out using underwriting analyses/scorecards as is known in
the art. If the reference or subsequent risk analysis is negative,
account-opening procedures are not initiated 178 and the outcome is
referred back to the prospective user and the sponsoring
institution as appropriate. A record of this event is also sent to
audit trail logs. If the potential user does not elect to provide a
bank reference, then optionally other checks 180 may be employed
that depend on local regulatory requirements and system operator
policy as would be known in the art. If the other checks are
unsuccessful, the audit logs are updated and the account is not
opened 182. Where the checks (either via a bank reference or other
procedure) are successful 184, the prospective user is notified of
the successful application, and a user record is set up 186 as
either a consumer record 54 or a merchant record 56. Users are
issued with a service agreement setting out their conditions of
operating and agreeing initial operating parameters for their
account.
[0099] Once accepted, the new user provides user and preference
details. This can be achieved by: (a) secure access to the system
via an Extranet; (b) communication with the service centre staff;
(c) via an IVR system; or (d) via written documentation provided
through registered postal means. The user and preference details to
be provided will vary depending on whether the user is a consumer
or a merchant. If the user is a consumer, the details required 188
are: (a) name, address, employment and identity details; (b)
details of further consumers who may use the account (e.g. in the
case of a household or group account); (c) the method of
communication based on specific notifications; and (d)
multi-currency transaction base currency. In addition, the consumer
has to indicate preferred consumer communication methods, for
example, telephone, mobile phone, text message, email address;
specific criteria for each communication method preferred, based
upon predefined criteria, i.e. which communication formats to use
to communicate which events (e.g. account or transaction queries);
details of the payment means 22-32 to be used, including card and
non-card payment means; unique consumer preferences and operating
parameter 60 checks for: specific identity authentication and
transaction payment combinations; for each identity/payment
combination, preferences for the payment channel 22-32, with
identification of default accounts for each channel for faster
processing; transaction and gross values over specified periods;
payment velocities; and merchant type exclusions or limitations.
The system imposes transaction volume, value and velocity limits
based on each consumer's application details.
[0100] The consumer also has to indicate any preference for
trusting transactions if the transaction value in transaction or
base currency matches an order that has been pre-loaded by the
consumer. Even where this option is selected, the consumer will
still be notified of any payment transaction using the consumer's
account. The user also has to provide the address details 54 for
goods delivery and invoice dispatch to which address codes 76 will
be assigned. In addition, the user has to select alphanumeric
passwords 78 for Extranet, authentication device 38 and IVR use.
Multiple passwords may be selected for different users of an
account. An answerback PIN for SMS messages and alphanumeric
answerback password for email notifications may also be selected at
registration. Where appropriate, an initial password to facilitate
authentication device 38 registration of consumer biometric
identity means (e.g. fingerprint) will also be registered or
generated automatically during registration. Preference over the
time delay after which an order is deemed to be an "aged order" and
requires to be revalidated and accepted by the consumer may be set
and optionally may depend on the payment channel.
[0101] At registration, the consumer may also select the level of
service. This is principally a choice between an authentication
device 38 and identity card 34, which allows triple authentication,
or an identity card only 34, which allows dual authentication. For
those selecting an authentication device 38, its use can be limited
to purchasing items only or for both purchase and sale of items.
This feature is advantageous for example for PayPal power sellers
or small traders trading under a trusted network. In addition, the
user may specify whether or not they wish to transact cash
withdrawals in a virtual ATM arrangement. For accounts where more
than one user is authorized to use an authentication device 38,
each authorized user will select his/her own password, and register
his/her unique payment methods, and have his/her own identity card
34. A maximum number of users and identity cards 34 per
authentication device 38 is imposed, with payment cards being
uniquely linked to specific authentication devices for consumer
identity verification and security purposes.
[0102] Where an authentication device 38 is selected, the user can
select preferred components, e.g. one or more of: GPRS/mobile
communications 138; Bluetooth communications 126; 802.11a/b/g Wi-Fi
communications 136; USB communications 132; Firewire communications
134; Contactless (RFiD) or NFC communications 130; Wallet
capability for contactless payments (where the contactless close
proximity channel is selected by the principal consumer); PayPal or
small merchant seller functionality. Person-person money transfer
capability will be set automatically in accordance with the
principal consumer payment type preferences.
[0103] At registration, default fulfillment choices should be made
regarding the period over which the consumer is prepared to wait
during delays in goods dispatch from the merchant, either overall
or by transaction channel and merchant type. Mail order will be
extended by a default number of days to facilitate postal order
timescales but not facsimile or email orders. This will be
defaulted to a preset limit based on service arrangements with
merchant users. This facilitates notifications from the transaction
system 1 to remind the consumer that the default delay period is
close to being met. Where no delay is selected, the system will
automatically prompt the consumer to acknowledge that goods have
been received before allowing transactions to complete.
[0104] For registration of a merchant, the details required 190 are
name, address, merchant classification and identity details;
details of all merchant staff who are to be issued with identity
cards 36 (identity cards 36 will be capable of being reallocated to
new members of staff as changes occur); and member(s) of merchant
staff to be granted authority to change or reset the PIN on
identity cards 36. Where more than one member of staff is to use an
authentication device 40, the merchant can select the functions to
which each member of staff will have access. In this way the
merchant can ensure segregation of duties between different parts
of the payment process, for example, order input and fulfillment. A
maximum number of merchant staff and therefore identity cards 36
per authentication device 40 will be imposed. Preferred merchant
communication methods have to be chosen, for example telephone,
mobile phone, text message, email address, as do rules for each
communication method, based upon predefined criteria (e.g. to use a
certain communications route for account notifications or a
different communications route for transaction queries or to select
which events are to result in notifications).
[0105] Details of which payment acceptance methods are to be used,
such as card and non-card payment, also have to be defined. Unique
merchant preferences can be selected for: payment types, e.g.
credit and debit card, accepted across each payment channel, for
example face-to-face 6, Internet 12, mail order 8. For each payment
channel selected, the merchant can define the estimated values for
the numbers of transactions; the gross value of transactions over
specified periods; the volume of transactions over specified
periods; and exclusions or limitations on specific payment types.
The system 1 will impose operational parameters such as transaction
volume, value and velocity limits based on each merchant's
application details, and will limit specific transaction levels
based upon levels of credits, complaints, referrals and other
service characteristics. Where delays in dispatch of goods are
typical in the merchant's business, the time periods that are
typical before dispatch of goods takes place can be specified.
These delays will be built into the service agreement with
merchants, and monitored by the system.
[0106] Other preferences that have to be defined include the method
of communication to the merchant in response to specified
notification triggers; multi-currency transaction base currency and
acceptance of specific currencies elected by consumers using the
system. This may be part of a dynamic currency conversion
(DCC)/consumer preferred currency (CPC) service provided by the
system, as do any preferences for trusting transactions if the
transaction value or base currency matches an order that has been
pre-loaded by a consumer. Where this option is selected, the
merchant will still be notified of payment transactions impacting
the merchant account. Alphanumeric passwords for use with Extranet,
authentication devices and interactive voice response (IVR) may
also be defined, and multiple passwords may be selected for
different merchant members of staff. In addition, an answerback PIN
for SMS notifications, and an alphanumeric answerback password for
email notifications, may be selected. Where appropriate, an initial
password to facilitate registration of merchant biometric identity
means, e.g. fingerprint, for use with an authentication device 40
is also be registered or generated automatically.
[0107] As for the consumer, the merchant can also select the level
of service by choosing between authentication using an
authentication device 40 and identity card or identity card 36
only. A limited number of identity cards will be provided to
merchants, which may or may not be linked to specific
authentication devices. For those selecting the authentication
device 40, the merchant may elect to use it only for selling items
or for both sale of items and providing consumers with cash
withdrawal facilities. Also, where an authentication device 40 is
selected, the merchant has to indicate whether a Bluetooth enabled
base station is required for connection to a fixed telephone line
or mobile telecommunications device for communication between the
authentication device 40 and the system 1. Authentication device 40
component preferences also have to be included for example:
GPRS/mobile communications; Bluetooth communications; 802.11a/b/g
Wi-Fi communications; USB communications; Firewire communications,
and Contactless (RFiD) or NFC communications (receiver).
[0108] The transaction system 1 will determine chargeback reserves
according to methods known in the art and provide details of
chargeback reserves to be applied as part of the merchant
application process.
[0109] Once the user's details and preferences are entered, the
transaction system 1 determines operational parameters, e.g.
according to value, quantity or velocity for each user and records
these in the user's record 54, 56. Then authentication devices 38,
40 and/or identity validation cards 34, 26 are issued where
applicable by secure delivery. At this state, an identity tag,
unique to the authentication device 38,40, is stored either in or
in association with the user's record, so that the device is
uniquely linked with that user or a designated group of users.
Authentication devices 38, 40 and identity cards 34, 36 are only
enabled after the user provides a combination of pre-registered
personal details and passwords, which have all already been
registered, to validate their identity. Where a user only has
identity cards 34, 36, contact with the transaction system 1 must
be by telephone, IVR or Extranet. Once the user account is enabled,
the user is then free to use the transaction system 1 within the
terms of their service agreement.
[0110] The registration details and operational parameters may be
modified using account maintenance as shown in FIG. 9. Each user's
record can be accessed 200 for maintenance purposes via any of the
communications methods supported by the system such as using an
authentication device 38, 40, via telephone to an operator, IVR,
Internet/Extranet, e-mail, mobile phone access, e.g. via WAP,
i-mode or 3G, text message or RFID link. The user provides their
user identity code and the system determines from this whether or
not the user is a consumer or a merchant 202. The user then has to
be authenticated 204, 206. Access to the account maintenance system
is by triple authentication if the user is using an authentication
device 38, 40 or double authentication if not using an
authentication device as described below. Once the user has been
authenticated, they may modify 208 the user's details and those
operational parameters 35 that the system 1 allows the user to
alter.
[0111] The system maintains a transaction activity logs for
recording all transactions made by a user and an audit log for
recording any instances where a transaction, registration or access
attempt fails or is rejected, orders are rejected by a consumer
along with an appropriate reason code, or payment is declined or
referred. An expected user behavioral pattern based on information
gathered at registration is created. This behavioral pattern is
used to determine operational parameters that are agreed with the
user. As each user account is used, the transaction data is
recorded in the transaction log and audit trail as appropriate in
addition to other data as supplied by the issuers 2a-c of payment
cards or other payment means to monitor the behavior of the users.
The user's credit and fraud risk is calculated periodically and/or
upon transactions being made by methods known in the art to provide
a constant assessment of risk to the transaction system 1 operator.
As shown in FIG. 10, a notification system is provided with trigger
events set to provide user information or communication, or provide
a warning when operational parameters are breached or the system
determines that the credit or fraud risk is too high.
[0112] The form of notification may be specified by the user at
registration or during account maintenance. It may be any
notification type known in the art, but is preferably an SMS
message, a message sent to and displayed on an authentication
device 38, 40, an e-mail or a telephone call from an operator. When
an event triggers a notification, a message is sent to the user
210. To ensure that the user receives the notification and not a
third party, the user will be required either (a) to respond to an
SMS message with a predefined password set at registration before
the notification is sent; or (b) will be referred to a link by
email which will transfer the consumer to a secure Extranet
facility which will require validation by password or
authentication device 140 set at registration 212. Once the user
has been verified, the notification is accessed 214.
[0113] Each user account is assigned notification triggers in
response to operational parameter breaches that are used to control
risk and to flag up any operations that are out with the service
agreed during the registration, maintenance or review processes.
Grace limits above transaction limits are set to create shadow
limits, which act as a buffer against any minor breach of the
transaction limits. Consumer accounts are reviewed periodically
and/or when a transaction is made. If a consumer is: (a) in breach
of its transaction limits (over and above any shadow limit); or (b)
where the system has detected an unusual or suspicious transaction,
the system will lock the user account by recording a "hold" flag on
the user's account such that the user will be unable to use the
system for any purpose, including validation of the consumer
identity to third parties, until it has undertaken a service
review, as shown in FIG. 11.
[0114] A service review involves a user contacting an operator to
discuss the problem 216. Before discussing the problem, the user
supplies their identity code from which it can be determined if the
user is a consumer or merchant 218. The user then validates their
identity 220, 222 using triple authentication if using an
authentication device 38, 40 or double authentication if not using
an authentication device 38, 40 as described below. If the
authentication is successful, a service review is commenced 224.
The operator may agree a change in the user's service agreement or
operational parameters 35. Where satisfactory arrangements are
agreed between the operator and the consumer 226, for example an
increase in transaction limits if appropriate, the user's account
is updated accordingly and the "hold" flag is removed from the
user's account such that the user may use the system again. Where
appropriate arrangements are not reached 228 with an operator, the
operator may, according to predefined criteria, keep the "hold"
flag on the consumer's account until settlement and satisfaction of
the service agreement; or permanently disable the consumer's
account. Details of the limit breach and subsequent interaction are
recorded in the audit logs 230.
[0115] The authentication procedure depends on whether the user is
using an authentication device or not and whether or not the user
is a consumer or a merchant. If an authentication device is used,
then the user must triple authenticate their identity. If
authentication is carried out without an authentication device,
then the user must double authenticate their identity. Alternately,
the method for authentication without use of an authentication
device can be used as a backup only when the authentication
device(s) are unavailable or incapacitated. Regardless of the
authentication method used, personal details of the consumer, such
as payment details, are not communicated to the merchant, thereby
significantly reducing the possibility of identity theft, theft of
payment details and/or payment fraud. Only after both parties are
authenticated as being recognized and trusted users can payment
processing proceed.
[0116] As shown in FIG. 12, the first step is to identify whether
the user is a consumer 232, and if yes, whether an authentication
device is to be used 234. If the user is a consumer and
authentication is to be carried out using an authentication device,
the consumer firstly validates his/her permission to use the
authentication device 236. This primary validation takes place
locally (offline), between the consumer and the authentication
device, representing the first authentication of a multi-stage
authentication approach to validating the right of the consumer to
use the authentication device in their possession. For those
markets or regulatory environments that require online
verification, the service will connect the relevant issuing
institution through the system 1 to the authentication device. The
primary validation is by entry of a relevant multi-digit PIN and/or
alphanumeric security code and/or biometric authentication,
employing a combination of encryption/authentication standards,
biometric recognition and 128-bit encryption methods, such as
secure socket layers (SSL). Where a PIN is used, the PIN is
mutually exclusive to any PIN associated with the consumer's
credit, debit, charge or prepaid cards, or other payment means. The
consumer may change the PIN, alphanumeric security code, or
biometric authentication method at any time through use of the
maintenance process described above with reference to FIG. 9, which
is accessed via the authentication device or through secure access
to the consumer's account maintenance facilities via an Extranet.
Both offline and online security codes and, where utilized,
biometrics can be maintained using this facility.
[0117] If the consumer fails 238 to validate his/her permission to
use the authentication device after three successive entry failures
of a PIN, alphanumeric entry code or biometric parameter, the
authentication device will be automatically disabled for entry of
further details. The consumer will be required to contact a system
operator to have his/her authentication device unlocked and reset,
and may be required to reregister his/her security details on the
authentication device and with the system operator or system 1,
via, e.g. Extranet or IVR. Where the consumer wishes to use the
system 1 before his/her authentication device is unlocked and
reset, the consumer will "fallback" to using the authentication
system 1 without an authentication device as described below.
[0118] Secondary authentication 240 is performed either on-line by
using the authentication device to connect with the authentication
server 10 or off-line. For authentication in response to Internet
or on-line transactions, links to this step of the validation may
be provided within a merchant's web page. On-line authentication is
the preferred approach, as this provides the most secure approach
by allowing access to the most recently available data. On-line
authentication can be achieved by firstly using the authentication
device to connect to the authentication server 10 by Internet
Protocol (IP) using one of (a) USB; (b) Firewire; (c) 802.11a/b/g
wireless ("Wi-Fi"); or (d) Bluetooth connectivity, and employing
secure encryption techniques such as key encryption or secure
socket layers (SSL). Alternatively, connection can be achieved by
using mobile telephony services such as GPRS and 3G to communicate
securely with the authentication server 10. These approaches combat
anti-phishing and anti-fraud screen capture measures, providing
increased security. The authentication device can also be
dynamically set to require regular on-line authentication, which
further enhances identity and payment security. The mobile
telephony service can also be used contemporaneously with Internet
access, providing a further security benefit.
[0119] The secondary authentication 240 of the consumer involves
verifying consumer identity or payment card(s) employing chip and
PIN and compliant with the Europay MasterCard Visa (EMV) validation
standards using the EMV compliant chip reader 124 within the
authentication device 38. Any card used must be registered with the
system 1 during registration of the account or using the account
maintenance procedure. The card details are then compared with the
details held within the consumer's user record 54. User identity
cards may be any card satisfying EMV chip and PIN standards such as
specific user identity cards issued by the transaction system 1
operator or debit, credit, charge or prepaid cards. Where a card is
not used to verify a consumer identity, the consumer may elect to
use a secondary on-line PIN and/or alphanumeric security code
and/or password and/or biometric, which will be encrypted and
matched against a PIN and/or alphanumeric security code and/or
password and/or biometric identity which is pre-registered during
registration or account maintenance. If the user fails the
secondary authentication, contact with the service operator is
required 242.
[0120] In the event that the secondary authentication step is
successful, the third and final authentication step is commenced
244. This is facilitated by matching the authentication device
identity tag, unique to the authentication device, with the cards,
security codes, password and/or biometric combination linked
specifically to named consumers and held securely online on the
central transaction system 1. The users allowed to use an
authentication device are specified during registration or account
maintenance. Individual consumers are validated against a unique
authentication device tag if the authentication device is assigned
to a sole user. If multi-user accounts are operated using one or
more authentication devices, validation is achieved by checking for
a matching authentication device tag/account holder user identity
card combination as well as the multi-user
identification/authentication device tag combinations.
[0121] Where the consumer details are matched to the correct
authentication device 246, a check is done to see whether the
consumer is in breach of any operating parameters 248. If yes, the
transaction is halted and the audit files up-dated 250. If no, the
consumer is fully authenticated and the transaction continues 252.
In contrast, where failure to match the consumer's details occurs
256, for example, due to incorrect entry or non-match of password,
code, chip and PIN card details, biometric or authentication device
identity tag, the consumer is halted from further transacting using
the authentication device. The consumer will then have to use the
account maintenance service or contact an operator to restore use
of the authentication device, or to transact by using the
non-authentication device procedure described below. In all cases,
the transaction history of the user associated with the
authentication device is updated with details of invalid consumer
transactions.
[0122] Optionally, for face-to-face transactions, the consumer may
be authenticated using a merchant's authentication device. This
process involves the merchant triple authenticating themselves as
described below. Once the merchant has successfully authenticated
its identity, the merchant will pass the authentication device to
the consumer for the consumer to authenticate their identity
online. The consumer will be prompted to enter their identification
code and PIN code and/or security code and/or biometric identifier.
If these are valid, this will be confirmed by an acknowledgement
message being sent to the authentication device from the
authentication server 10, facilitating the next step in the
transaction process. If the consumer fails this first step in
authenticating their identity by three successive entry failures of
a PIN, alphanumeric entry code or biometric, processing of further
order details will be halted. The consumer will be required to
contact the operator, and may be required to reregister their
security details. The invalid user identity code is transferred to
the audit trail logs by the authentication server 10, and the
transaction history of the merchant account associated with the
authentication device is updated with details of invalid consumer
transactions.
[0123] Where the first authentication step is concluded
successfully, the consumer dual authenticates their identity using
a registered EMV certified card (whether credit, debit, charge,
prepaid or user identification card) and PIN. In addition, the
authentication server 10 sends an on line challenge for third stage
authentication by the consumer, based either on a further EMV
certified payment card if one is registered to the consumer's
account (e.g. where a user identification card was first used) or
on the basis of pre-registered personal details or transaction
histories. In this way, the consumer needs at least to dual
authenticate himself using the merchant's authentication device
before proceeding with a transaction. Where a consumer fails
identity validation after three failed attempts at dual or tertiary
identification, the authentication server 10 sends an appropriate
referral message to the authentication device, requesting the
consumer either to use another registered EMV card/PIN combination
or to contact an operator. Where the consumer has no further
registered cards or after a failure of three attempted EMV card/PIN
combination entries, processing will be halted as a security
measure. No further activity will be allowed for that consumer
using the card/PIN combinations used against that authentication
device. Transaction processing will be halted, and the appropriate
merchant and consumer event and anti-fraud audit logs will be
updated.
[0124] Where an authentication device is not used, a dual
authentication procedure 258 can be used by (a) interacting with an
operator by telephone after security validation is attained; (b)
logging into the Extranet which will require at least dual
authentication secure access, and validation and navigation
capabilities as generally used for financial web sites, employing
secure encryption techniques for transaction processing; or (c)
interacting with the IVR service. Primary authentication is
achieved by providing a user specific password and/or security
details and/or PIN. Where there are multiple users of a consumer
account, the password and/or security details and/or PIN is
specific to the member of staff or individual user to enable
accountability. Secondary authentication is carried out using
various authentication checks. These may include questions based on
registration details or transaction histories. The authentication
checks used are dynamically varied, for example, according to an
analytical algorithm to achieve best selection of questions to
provide maximum security. If the consumer fails authentication,
re-validation of their identity is required through interaction
with an operator 260. The consumer cannot then process transactions
until their registered identity details have been re-validated by
the operator. The consumer account and audit logs are updated with
the details of the failed authentication attempt. Where a consumer
passes identity validation, the process proceeds as before
248-256.
[0125] Where the user is a merchant, the merchant registers staff
members as authorized users and assigns EMV compliant user identity
cards, user accounts and user PINS, passwords and/or biometric
identifiers to the members of staff. The permissions on each member
of staff's user account may be selected upon registration or
maintenance such that each staff member has access rights and
ability to use only the features of the system necessary to do
their job. In this way, the merchant can control and segregate
duties between staff members and control exposure to erroneous
transactions, mistakes, staff acting out with their authorized area
and fraud. The merchant may also specify that authentication is
carried out with an authentication device using triple
authentication or without an authentication device requiring double
authentication.
[0126] FIG. 13 shows the process for authenticating a merchant 262.
If the merchant staff member is authenticating using an
authentication device 264, the staff member firstly authenticates
their identity offline by entry into the device 266 of a relevant
multi-digit PIN, alphanumeric security code or biometric
authentication, employing a combination of EMV authentication
technology (e.g. chip and PIN), biometric recognition and 128-bit
encryption methods as generally available. Where a PIN is used, the
PIN is mutually exclusive to any PIN associated with any merchant's
or staff member's identity or merchant personal EMV compliant
cards. One or more authentication devices may be uniquely linked to
one or more authorized members of merchant staff.
[0127] The list of staff members authorized to use an
authentication device may be updated using the account maintenance
facilities. Updated user lists are communicated to the
authentication device 40 from the authentication server 44 via an
appropriate communications channel such as an Extranet, GPRS,
Wi-Fi, 3G mobile communications, etc. Authentication is achieved by
comparing the identity as indicated by the identity card and
associated PIN, security code, etc. with the list of valid users
stored on the authentication device. The merchant may change the
PIN, alphanumeric security code, or biometric authentication method
at any time through use of the maintenance facility using the
authentication device directly or through secure access to the
merchant account maintenance facilities via the Extranet. Both
offline and online security codes and, where utilized, biometrics
can be maintained using this facility. Validation of the merchant
identity with the authentication device is a prerequisite to
transacting using the authentication device.
[0128] If the merchant member of staff fails to validate their
identity 268 after three successive entry failures of a PIN,
alphanumeric entry code or biometric, the authentication device
will be automatically disabled for entry of further details as a
security measure. The merchant will be required to call an operator
to have its authentication device unlocked and reset, and may be
required to reregister its security details on the authentication
device and on the authentication server 44. No further transactions
can be processed using the authentication device 40 until it is
unlocked, and potentially re-registration has taken place. Similar
restrictions apply whether or not a merchant has a single or
multiple users of an authentication device 40. Where the merchant
wishes to use the service in the event that an authentication
device is locked, the merchant may fallback to using the
authentication service without an authentication device 40 as
described below.
[0129] If the merchant member of staff successfully completes the
first authentication step, the staff member must then carry out two
more stages 270, 272 to authenticate their identity. The staff
member does this by firstly 270 using the authentication device to
connect with the authentication server 10. This can be achieved by
connecting by Internet Protocol (IP) as a transport for
transactions generated by the authentication device using one of
(a) USB; (b) Firewire; (c) 802.11a/b/g wireless; or (d) Bluetooth
connectivity, as generally available, and employing secure
encryption techniques such as key encryption and SSL.
Alternatively, connection can be achieved using mobile telephony
services (e.g. GPRS, 3G) as generally available, to communicate
securely with the authentication server 44. Both approaches include
anti-phishing and anti-fraud screen capture measures as are known
in the art. The mobile telephony service can also be used
contemporaneously for Internet (IP) access, providing a further
security benefit for merchants in countering identity theft and
payment fraud.
[0130] Secondary authentication 270 of the merchant staff member is
thereafter facilitated by verifying merchant staff member identity
card(s) employing EMV compliant chip and PIN validation techniques
against the EMV compliant chip reader within the authentication
device. Any identity cards used must be registered and match
details held within the merchant's account. Other cards that
satisfy EMV chip and PIN standards and common criteria could be
used (e.g. specific to merchant) but would require to be registered
and validated to maintain security levels. In the event that the
merchant fails this stage, they are required to contact the service
operator 273. In the event that the merchant passes this stage,
they move onto to third authentication stage, 272. This is
facilitated by matching the identity tag unique to the
authentication device with the cards, security codes, password
and/or biometric combination used by the merchant member of staff
and held securely online on the transaction system 1. This is a
further unique security aspect, requiring merchant PINs, security
codes, passwords, card identity details, and authentication devices
identity tags to be linked specifically to named merchants and
pre-registered staff held and registered on the transaction system
1. As before, if the merchant fails this stage, they are required
to contact the service operator 273. Otherwise, they move onto the
next stage 274. This involves a check of whether the merchant is in
breach of its operating parameters and/or agreed service limits. If
yes, the transaction is halted and the transaction and audit files
up-dated 276. If no, then the transaction proceeds 278.
[0131] In an optional embodiment, for face-to-face transactions the
merchant or merchant staff member may be authenticated using a
consumer's authentication device. All parties must be registered
users of the service. In this process, the consumer is firstly
authenticated as described above. Once successfully authenticated,
the consumer is instructed via instructions displayed on the
authentication device to pass the device to the merchant member of
staff. The merchant member of staff then inserts their identity
card into the consumer's authentication device. Primary
authentication is achieved utilizing EMV authentication standards
such as chip and pin. Secondary authentication is via the input of
a pass code or 2nd PIN and optionally answering of appropriate
dynamically selected challenge questions selected according to an
analytical algorithm. Authentication is carried out online, thereby
increasing the security of the authentication process. Individual
merchant staff are separately identified by specific identity cards
and pass codes or PINs that are unique to the member of staff.
[0132] If a merchant fails authentication during secondary or
tertiary authentication (e.g. invalid identity, invalid pass code
or security details), merchant re-registration will be required,
through merchant interaction with an operator. The merchant member
of staff involved cannot process transactions until their
registered identity details have been revalidated. In instances
where validation fails, requiring re-registration, two further
merchant staff with appropriate access capabilities may attempt
validation, in which case the process is repeated with a different
merchant member of staff using a different identity card and pass
code. If other members of staff do not have appropriate access
permissions, processing will halt, and the audit logs will be
updated with the details of the transaction. Communication of the
authentication failure to the consumer is the responsibility of the
merchant, as the operator will not be aware of the consumer's order
being received by the merchant. If consumers contact the operator
with details of the merchant, the operator can investigate the
rejection.
[0133] Where an authentication device is not used, a dual
authentication procedure is used 280 by (a) interacting with an
operator by telephone after security validation is attained; (b)
logging into the Extranet which will require at least dual
authentication secure access, and validation and navigation
capabilities as generally used for financial web sites, employing
secure encryption techniques for transaction processing; or (c)
interacting with the IVR service. Primary authentication is
achieved by providing a user specific password and/or security
details and/or PIN. Where the user is a merchant staff member or
where there are multiple users of a consumer account, the password
and/or security details and/or PIN is specific to the member of
staff or individual user to enable accountability. Secondary
authentication is carried out using various authentication checks.
These may include questions based on registration details or
transaction histories. The authentication checks used are
dynamically varied, for example, according to an analytical
algorithm to achieve best selection of questions to provide maximum
security. If the merchant fails authentication 282 (e.g. invalid
user identity, invalid password or security details), they are
required to re-validate their identity through interaction with an
operator. The staff member cannot then process transactions until
their registered identity details have been re-validated by the
operator. The merchant account and audit logs are updated with the
details of the failed authentication attempt. If the merchant
passes authentication, then the procedure is as before 274-278.
[0134] FIG. 14 shows a process for pre-order validation of a
merchant's identity. This allows the consumer to establish if a
merchant is a valid, trusted user that is currently transacting
within its authorized service agreement. This affords the consumer
a significantly increased level of confidence and security in
transacting with merchants of whom the consumer has previously had
no experience. In some transaction types, for example face-to-face
purchases, it is less likely that the user will want to
pre-validate the merchant's identity, as purchases are generally
made on impulse. However, this feature may still be useful when
purchasing high value items such as jewelry, high value electrical
goods, cars or furniture, or the goods are purchased face-to-face
but delivered later.
[0135] To facilitate validation of a merchant's identity 284, the
merchant supplies the consumer with the merchant's identity code
286, which may be displayed on, for example, the merchant's web
page, in a shop, in a catalogue, promotional literature or
communicated by sales staff over a phone line or face-to-face. To
pre-validate the merchant, the consumer transmits the merchant's
identity code to the authentication server 10. The merchant
identity code is then checked against valid, active merchant user
records held on the transaction system 288. Where the merchant
identity is found to be invalid or suspended, the consumer will be
informed/alerted 290. The consumer and, where appropriate, merchant
accounts will be updated accordingly, as will the appropriate audit
trail log files. Until a valid merchant identity is authenticated
and acknowledged, the consumer takes no further action. Interaction
between the consumer and an operator may take place to investigate
the invalid merchant details. Where the merchant identity is found
to be valid, the consumer will be informed/alerted 292 and the
transaction can proceed.
[0136] Once the merchant has been validated as genuine and
operating within its service agreement, the order may be logged
with the transaction system 1. Logging details of an expected order
with the transaction system 1 before placing the order with the
merchant allows the expected order to be crosschecked against the
order the merchant actually processes. The consumer firstly selects
which payment means they wish to use in the transaction. Once the
transaction server 1 matches the transactions supplied by the
consumer and the merchant, the payment server of the transaction
system 1 uses the specified payment means to effect payment to the
merchant. No details of the payment means are ever communicated to
the merchant. Thus, not only is the method of payment distinct and
mutually exclusive from the method of achieving identity
verification but unlike existing payment methods, no source payment
account details are ultimately available to the merchant, enhancing
identity and payment security for consumers. As an extra security
feature, each payment account can be stipulated for use only with
certain transaction types, e.g. mail, telephone, face to face or
Internet order and for other transaction parameters such as use
only with certain merchants and/or transactions up to a certain
limit and/or for certain types of goods, etc.
[0137] During registration certain accounts may be selected as
default accounts for certain transactions. For example, the
consumer may specify that a particular credit card be used for all
Internet based transactions, and a particular debit card be used
for all person-to-person transactions. Alternatively, a single
account may be specified for all transactions. In any case, default
accounts, where registered, may be confirmed or overridden only
with other previously registered accounts, providing further
security. Where the consumer wishes to override pre-selected
default accounts, a secondary password/security code is required if
an authentication device is not used, such as when using telephone,
IVR or Extranet. Where an authentication device is used,
non-default over-ride accounts, whether card or non-card, can only
be selected after online verification of an override PIN,
alphanumeric code or biometric. The authorization server will
prompt for confirmation of selected non-default over-ride accounts.
Only previously registered accounts may be selected in favor of
default accounts. Where an over-ride account selection fails
verification, the consumer is notified in accordance with their
preferences, and the system falls back to the default account
choices previously registered.
[0138] Where no default accounts have been previously registered,
the consumer may register a new account through the maintenance
facilities, which will result in processing of the order being
halted until this is done. Where a valid, pre-registered default or
over-ride account is selected and confirmed, the transaction value,
an address code selected from those updated during consumer
registration or maintenance, and an optional narrative description
of the goods are supplied to complete the order pre-validation. At
this point, both consumer and merchant accounts are updated for the
order, within an "awaiting order" status.
[0139] The order data stored against a consumer record is compared
to any subsequent order lodged by the merchant upon order
fulfillment. Unless any subsequent order logged by a merchant
matches the order details provided by the consumer, the transaction
will be placed on hold and both consumer and merchant notified. It
is then up to the consumer and merchant to rectify the discrepancy
as appropriate. The transaction will remain on hold until released
by the consumer. This provides extra confidence to the consumer
that any orders match the requirements of the consumer before any
payment is made and lowers the cost of returns and minimizes
complaints rates for merchants. This procedure may be waived in
certain retail situations such as face-to-face purchases where the
goods are generally provided instantly to the consumer. However,
even in these cases, this procedure may still be used in
appropriate situations, for example, if the goods are ordered
face-to-face but delivered or supplied later.
[0140] As noted previously, the placement of orders by consumers
can be made using a range of transaction types, e.g. mail order,
telephone order, face-to-face or Internet order. Regardless of the
transaction type, the consumer generally orders goods by validating
the merchant's identity, and authenticating themselves as described
above. Then details of an expected order are logged and the order
is placed. Communication with the transaction system 10 may be via
any of the communications routes described previously, for example
by using an authentication device, Extranet, via telephone to an
operator or IVR, mobile communications such as WAP, 3G or i-mode or
by Wi-Fi. However, regardless of the transaction type or
communication channel used, because of the basic principle of
separation of authentication and payment, the same security levels
can be applied across all payment channels.
[0141] Once the merchant receives the consumer's order, the
merchant may process the order by accessing the transaction system
1 using one of the communications methods such as using an
authentication device, Extranet, by telephone to an operator or IVR
or mobile communications. Thereafter, the merchant is required to
authenticate their identity using triple authentication if an
authentication device is being used or by double authentication
otherwise, as described above. After the merchant identity is
authenticated, to access the system, the merchant must then
validate the consumer's identity and address codes, as shown in
FIG. 15. This feature serves to reduce the levels of consumer
identity theft and gives the merchant an increased level of
confidence in transacting with consumers of whom the merchant has
no previous experience. The merchant carries out consumer identity
and address validation by interacting with (a) the operator by
telephone; (b) the Extranet secure processing service (utilizing
SSL 128-bit security encryption or better as generally available);
(c) the IVR (Integrated Voice Response) service, to provide details
by voice or by using the telephone keypad; or (d) a valid
authentication device 40 to enter details. Merchants using the
Extranet system will require to use a selection of mouse selection,
alphanumeric character recognition and different web pages to
improve security. The merchant may use the authentication device 40
as an input device to send encrypted data using generally available
mobile telephony services to the transaction system 1 and gain
acknowledgement in return.
[0142] FIG. 15 shows part of the order process, which serves to
validate the consumer 294. The merchant obtains an identity code
and an address code from the consumer. The merchant communicates
the consumer identity code to the authentication server 296. The
authentication server checks the consumer identity code against the
user records on the storage media and returns an indication of
whether or not the consumer identity is valid. If the consumer
identity code entered by the merchant is invalid and fails a
pre-specified number of repeated attempts at entry validation, the
order entry transaction halts and the merchant is referred back to
the consumer with the option of receiving further details by
contacting an operator 298. The transaction logs of both the
consumer and merchant are updated along with the consumer and
merchant audit logs 299. Progress to the next stage of input of the
address code is dependent upon successful validation of the
consumer identity code.
[0143] Where the consumer identity is valid, the address code can
then be communicated to the authentication server 300. The
authentication server checks that the supplied address code matches
an address code stored in the consumer's user record. If the
address code is invalid (i.e. does not match a stored address code)
and remains invalid after failing a pre-specified number of
repeated attempts at entry validation, the authentication server
will refer the transaction back to the merchant and additionally
alerts the consumer using the preferred notification route recorded
on the consumer's user record 302. If either the consumer identity
code or the address code is invalid, the invalid consumer details
are transferred to the anti-fraud audit trail logs 303. The
merchant account transaction history is updated with details of the
invalid consumer transactions with appropriate status codes. The
consumer account transaction history is also updated. If the
merchant is processing multiple consumer orders, processing will
flow to the next consumer identity transaction.
[0144] Optionally, in some circumstances, the consumer can upload
their order details onto the transaction system 1. If the consumer
does this, the transaction system 1 matches the consumer identity
code, address code and merchant identity code to those supplied in
the preloaded details in order to further validate the order and
merchant identity during initial order processing. The matching of
consumer and merchant transactions is an improved counter-fraud
security validation check. Where the matches are valid, processing
moves to the validation of the consumer payment details.
[0145] FIG. 16 shows a process for validating consumer payments.
This allows the merchant to pre-check the consumer's ability to pay
and is transacting normally. Validation of consumer payments prior
to dispatch or handing over of goods minimizes the risk of
non-payment to the merchant and provides an increased level of
confidence in transacting with new customers. Checks performed by
issuers of payment cards for availability of funds do not, where
identity is breached, provide further identity security. The
validation process described herein provides, in addition to its
triple authentication approach, additional checks against
pre-registered payment preferences for consumer-preferred channels,
types or values of payment, as well as volume and transaction
velocity checks. These checks differ from the authentication means
used, providing separation of authentication and payment.
[0146] To validate consumer payments, the merchant provides the
transaction system 1 with further details of the consumer
order/transaction 306. The system 1 matches the transaction details
with those uploaded by the consumer and determines which consumer
payment means 47 is to be used. If the consumer did not elect to
upload order details (including specifying which payment means to
use) prior to contacting the merchant, the payment account selected
will default to the payment means nominated by the consumer during
registration/maintenance. Once the payment means is identified,
checks can be performed by liaising with the consumer
account/service providers 2 a-c during transaction entry, for
example to establish funds availability and status of the consumer
payment account to be used 308. The transaction system 1 may
facilitate these services by acting as a third party trusted
processor, merchant aggregator, reseller or independent sales
organization (ISO) as appropriate, in line with the appropriate
payment association classifications. If the consumer issuer payment
validation is successful, then a service payment validation is
carried out 310.
[0147] Transactions that fail any specific issuer validation check
will be notified to the consumer and a referral/service review
initiated 312. Processing is halted on the consumer transaction. If
the merchant is bulk processing multiple consumer orders,
processing will flow to the next consumer identity transaction.
Where transactions are not referred by payment issuers, additional
checks are made by the transaction system 1 to compare and validate
the payment against the consumer's operational parameters such as
for payment type, value, transaction frequency/velocity and bulk
spend in a consumer-predefined period that are stored against the
consumer's account during registration or account maintenance. The
transaction system 1 may compare the transaction details, along
with transactions from the consumer transaction log where
appropriate, with the preferences and limits stored on the
consumer's account. If a transaction would result in a breach of
operational parameters, the transaction is referred back to the
consumer using the referred transactions procedure 314. This may
include a review of the consumer's status and activity. Processing
is halted on the consumer transaction. If the merchant is
bulk-processing orders for multiple consumers, processing will flow
to the next consumer identity transaction.
[0148] For valid transactions that are not stopped by issuer or
consumer referrals, additional merchant validation checks 316 are
applied by the transaction system 1, irrespective of the method
utilized by the merchant for communicating with the transaction
system 1. These merchant validation checks are necessary to ensure
that the merchant keeps within its operational parameters, such as
value, transaction volume, frequency/velocity and level of
complaints, agreed and authorized during the merchant registration
or subsequent merchant account review or account maintenance. Where
breaches of merchant operational parameters occur, the transaction
system 1 may either restrict merchant transactions or allow the
merchant to fulfill the transactions processed with appropriate
retention of settlement for payments until the merchant's
transaction activity is brought back within the operational
parameters or new operational parameters are agreed and authorized.
The merchant will be referred to an operator to review 318 its
service agreement, for example to negotiate different agreement
limits, regardless of whether transactions are allowed or halted.
Whether a transaction is halted or allowed will depend upon,
respectively, whether or not shadow limits have been breached.
[0149] Where merchant processing is halted, the merchant is
notified and further transacting with the merchant suspended until
the merchant rectifies the reason for the breach of operational
parameters, or agrees a change to, its service agreement terms
and/or operational parameters 320. The merchant is then responsible
for communicating the delay in processing to the relevant consumer,
as the rationale for restricting transactions is linked to the
merchant commercial terms with the service operator. The
transaction system 1 will additionally send a notification to the
consumer that transactions are halted, in accordance with consumer
notification preferences. Updates to the merchant and consumer
transaction logs are made, together with updates to the audit trail
logs, tagged with appropriate status codes, which indicate the
status of the transaction, for example "transaction halted:
merchant limit breach". Every transaction has a status code until
it is completed. No further activity on the consumer transaction
causing the merchant breach takes place. A new transaction will
require to be processed where the merchant breach of operational
parameters is not rectified.
[0150] If the merchant validation checks are satisfactorily
completed, acknowledgement is provided in real-time by the
transaction system 1 to the merchant as appropriate 322. A unique
transaction identifier is assigned to the validated transaction.
Additional acknowledgement can be provided in the form of automated
SMS text message, either per transaction or at end of day for
consolidated transaction details. The merchant will be required to
respond to an SMS message with a predefined password set at
registration before the acknowledgement is transmitted. Historic
merchant acknowledgements are stored on the merchant's transaction
log and can be reviewed by the merchant by interaction with the
transaction system 1. The consumer is also notified of the
completed merchant transaction using the notification
procedure.
[0151] Finally, merchant and consumer transaction histories, and
relevant audit trail logs are updated. Subsequent transactions are
processed until all consumer orders are processed. If the merchant
is processing bulk orders for multiple consumers, processing will
flow to the next consumer identity transaction. Processing of valid
merchant transactions is next directed to the consumer
acceptance/rejection process, which allows the consumer to confirm
that they did place the original order and that they accept the
dispatch of goods/services from, and payment to, the merchant. This
extra check at this advanced stage in the order process provides
increased end-to-end security against payment fraud and consumer
and merchant identity theft. In order for fraud to occur, multiple
security breaches and checks would require to be compromised.
[0152] Within the notice of the completed merchant transaction, the
consumer is prompted to respond to accept or reject the merchant
processed transaction by providing details of the order via the
notification system, and then to confirm their choice, to ensure
single-attempt transaction entry errors are minimized 324. The
consumer may, alternatively, elect to trust validated order
transactions, in which case a transaction acknowledgement will be
sent. Specification of which transactions to trust is set during
consumer registration or account maintenance. In the event of
discrepancies, the consumer may contact an operator to obtain more
details of the transaction.
[0153] Where the consumer elects to reject a merchant order
transaction, the specific order transaction concerned will be
halted and the transaction status will be changed to "consumer
rejected". No further activity is taken to settle the transaction
between consumer and merchant. Where the consumer accepts the
payment transaction, the transaction status will be set to
"awaiting fulfillment". Relevant merchant and consumer transaction
and value limits will be updated for "awaiting fulfillment"
transactions, to ensure that early warning is registered of
potential breaches. The merchant is then notified by the
transaction system 1 to proceed with order fulfillment. Thus,
before the merchant can dispatch goods/services to a consumer the
following security steps must be completed: Successful
authentication of the merchant identity; successful authentication
of the consumer identity; successful validation checks that the
merchant and consumer are operating within their service
preferences and limits; validation of the consumer payment means;
and confirmation from the consumer that they accept the transaction
as valid and wish to proceed. This combination of security measures
provides a safeguard for both the merchant and consumer beyond
levels provided by prior art payment systems, and can
advantageously be applied over multiple transaction channels.
[0154] Once the merchant has goods ready to ship to the consumer,
the shipping process can be engaged. This may occur
contemporaneously with order processing and validation, or take
place some time after, depending on the availability of goods and
with predefined segregation of duties of merchant staff for added
security. Validated order transactions will be held on the
transaction system 1 with "awaiting fulfillment" status codes.
Before starting the order fulfillment process, the merchant or
staff member must authenticate their identity using the triple
authentication process if an authentication device is used or the
double authentication process without an authentication device.
During account registration, merchants can elect to segregate each
merchant staff member's ability to process and fulfill the same
orders. This can be done by individual registration of merchant
staff users, their authentication devices if applicable, their user
identity cards and the functions to which they have access.
[0155] As shown in FIG. 17, once both merchant and/or relevant
merchant staff are authenticated (notwithstanding they may already
be on line and not subject to predefined segregation of duties for
added security), the merchant (or merchant staff) may access those
order transactions flagged with a status of "awaiting fulfillment",
from the transaction system 1. The merchant identifies the
transaction(s) to be processed for payment by their account details
and order transaction reference(s), which additionally identifies
the channel of origin, for example mail, Internet, telephone. Only
transactions with an "awaiting fulfillment" status are made
available to the merchant by the transaction system 1. Referred
transactions will be held in an appropriate queue tagged with a
"referred transaction" status.
[0156] The merchant will be prompted by IVR, operator, Extranet or
authentication device prompt, to acknowledge the merchant is ready
to dispatch the goods concerned. This facilitates card scheme
requirements to take payment only on dispatch of goods, providing
an additional compliance check. The merchant then accesses the
orders that are awaiting fulfillment 330 and determines whether the
orders can be wholly or partially fulfilled 332. Where goods are
partially available for dispatch, the merchant contacts the
consumer to determine whether the consumer wishes to accept
delivery of the partial order or whether they would prefer to wait
334. The request is made via the notification system. The consumer
can then respond accordingly via the transaction system 1. The
consumer may also default to await fulfillment of complete orders
or accept partial fulfillment at registration or through account
maintenance. Where (i) the merchant does not have the goods to
fulfill the order; or (ii) the consumer declines partial
fulfillment, or (iii) the consumer accepts partial fulfillment, for
those goods that cannot be fulfilled, the transaction status of the
order remains at "awaiting fulfillment" 336 and no further action
is taken on that order until the goods are ready for dispatch to
fulfill the consumer order. Where the merchant has one or more
further transactions to process, the system 1 will direct the
merchant to the next order with transaction status "awaiting
fulfillment".
[0157] Once the merchant has acknowledged readiness to dispatch
goods (whether full or partial orders), and the consumer order is
wholly fulfilled, or partially fulfilled with consumer acceptance,
a check is performed to assess whether the initial processing of
the order is over a specified number of days old, defaulted to five
days at registration (and specified further in the merchant service
agreement) 338. Where the order has been unfulfilled for at least
this period, the transaction system 1 re-validates the consumer
identity 340 and payment details to ensure the payment can proceed
before goods are dispatched 342. This security check ensures that
merchants are not overtly exposed to fraud that may have occurred
during the delay between the payment transaction and completion.
The transaction system 1 firstly re-validates the consumer's
identity and address code as described above, to ensure it remains
active and does not have a "lost/stolen" or other security status
recorded. If the consumer identity and address code are
revalidated, the transaction system 1 next revalidates the relevant
payment means for funds availability and notification statuses.
[0158] The consumer can select to automatically trust transactions
in their operating parameters. If transactions are automatically
trusted then the aged transaction status is then updated to
"awaiting address confirmation" and the merchant is notified. Where
a consumer has not previously elected to automatically trust a
transaction, the transaction system 1 reconfirms that they want the
order to be fulfilled or rejected 344. Once this is done, the
merchant dispatches the goods and the order is fulfilled 346. The
merchant cannot fulfill orders prior to acceptance by the consumer,
as the consumer address has not been passed by the transaction
system 1 to the merchant. In this way, additional security
protection is provided to both consumer and merchant.
[0159] FIG. 18 shows the steps for accepting and/or rejecting an
aged payment in more detail. Firstly it is determined whether the
consumer has elected to trust the transaction without validation
350. Where the consumer has not previously elected to trust
transactions and accept fulfillment of orders processed without
further validation at the order fulfillment stage, the consumer is
prompted to respond to a notification requesting the user to accept
or reject the delayed transaction and then to confirm his/her
choice, to ensure single-attempt transaction entry errors are
minimized 352. Where the consumer does not trust transactions and
subsequently rejects the order 354, the merchant will receive a
"consumer rejection" transaction notification from an operator,
IVR, authentication device or Extranet communication. The
transaction will halt and the merchant and consumer account
transaction logs will be updated. No further transaction processing
will take place on the rejected transaction. Audit-trail and
rejected transaction records, and the merchant transaction volume
and value limits will be updated. Where the consumer accepts the
revalidated order, the merchant will receive acknowledgement 356 by
service agent, IVR, authentication device or Extranet communication
that the transaction has been successfully completed. The
transaction status will be updated to "awaiting address
confirmation". The transaction system 1 updates the consumer and
merchant accounts for the status of the transaction (whether
completed successfully or rejected) and tracks transaction stages
and transaction status accordingly 358. Transactions will have a
"awaiting address confirmation" or "consumer rejected" status.
[0160] Once all checks are successfully completed, the merchant can
fulfill the order 360, as shown in FIG. 19. For those transactions
with a status of "awaiting address confirmation" only, the
consumer's delivery address details are passed to the merchant for
order fulfillment 362. Thus, the consumer address is withheld from
the merchant until the order is on the point of dispatch and all
authentication steps have been completed. In addition, the delivery
address may be different from the billing address. This is
beneficial in reducing the accessibility of consumer details and
thereby reducing the risk of identity theft. The consumer is
notified of the dispatch of goods by a notification message 364. In
this way, the consumer has a final notification of the transaction
before dispatch of the goods, which allows the consumer a further
chance to report any unexpected orders and thereby reducing fraud.
The transaction system 1 updates the consumer and merchant accounts
to "completed" transaction status. Relevant merchant transaction
and value limits will be updated for completed transactions, to
ensure that early warning is registered of potential breaches
366.
[0161] The transaction system 1 communicates with the issuer of the
consumer payment means selected for that transaction and
facilitates the transfer of funds to the merchant directly into its
predefined bank account 368. In an alternate embodiment, the
transaction system 1 can arrange for the transaction funds to be
obtained and held in escrow by the system 1 before the goods are
dispatched by the merchant. Once the funds are in escrow by the
system 1, the system notifies the merchant. The merchant may then
dispatch the goods, with the funds being transferred by the system
1 to the merchant's predefined bank account when the goods are
received by the consumer. This gives the retailer a guarantee of
payment and the consumer a guarantee that they will receive the
goods before payment is received by the retailer. Any chargeback
reserve or retention fund assessed prudent by the system operator
or in accordance with the merchant service agreement will be
withheld until the merchant meets specific contractual terms.
[0162] FIG. 20 shows the process for handling referred consumer
transactions. Each user account has certain operational parameters
within which the account must be operated. The operational
parameters are either set by the service operator when issuing
accounts or during a user review, based on an assessment of the
risk of the user in order to minimize exposure of the service
operator to fraud and bad debts, and/or selected by the user
themselves on registration or account maintenance to limit their
own exposure to fraudulent use or to help control their own
transaction patterns. As shown in FIG. 18, referred transactions
are transactions that fail to meet these operational parameters or
are referred by a user's payment issuer is response to a breach of
limits set by the issuer. Since changing of the operational
parameters is via account maintenance, which requires the user to
dual or triple authenticate themselves, it is considerably more
difficult for fraudsters to alter user account settings and thereby
reduce the possibility that fraudulent transactions can be
approved. The greater the use of these criteria, the more effective
the referral processes will be. Consumer security and convenience
are therefore emphasized.
[0163] Consumer transactions may be referred either by the
transaction system or by the institution providing the consumer
with a card or account for a number of reasons. When a referral is
made, it is firstly determined whether it was by the system 1 or
the issuer 372. Where it is the issuer, referral can be for a
number of reasons, e.g. insufficient funds, temporary hold on
account, lost or stolen card, type of merchant, value of
transaction. Payment card and non-card payment means transaction
validation checks are performed during transaction entry, in line
with existing payment provider checks, to establish funds
availability and status of the registered consumer payment account
being used. The transaction system 1 may facilitate these
validation checks directly or through access to payment provider
services by acting as a third party trusted processor, merchant
aggregator, reseller or independent sales organization (ISO) as
appropriate, in line with Cards and non-Cards payment association
classifications. When a card or non-card payment account breaches a
predefined referral check, a formal card, or non-card issuer
referral is activated, in line with card scheme or non-card payment
means provider regulations. In addition, consumer operational
parameters may be breached that trigger a referral by the
transaction system 1 that halts or delays a consumer's ability to
pursue a transaction further. The operational parameters include,
for example, checking for breach of limits on payment type, value,
transaction frequency/velocity and bulk spend in a
consumer-predefined period.
[0164] Where a consumer's payment means issuer (e.g. Visa,
MasterCard) refers 374 a transaction to the transaction system 1,
the transaction system 1 will notify the merchant automatically
376. The merchant will be notified of the referral status of
transactions by the interaction route being used to process the
consumer payment transactions, e.g. by IVR, service agent by
telephone, Extranet or authentication device. The merchant will
notify transaction referral to the consumer during the ordinary
course of the transactions, as referrals necessarily hold up
payment completion progress 378. For consumer order transactions,
notification is also made using the notification system. This
approach should ensure appropriate notification to the consumer is
effected, alerting the consumer to any transaction issues of which
they should be aware. Where a referral has occurred due to the
consumer breaching one or more predefined operating parameters, the
consumer is requested to contact an operator for a service review.
Assessment of the referred transaction against shadow limits will
determine whether a transaction can be processed to conclusion.
Shadow limits will be set at registration and will be applied by
the transaction system 1 to allow orderly management of consumer
use of the service. This enables the consumer to have control over
the value and velocity of their transactions.
[0165] Where a transaction is allowed within the shadow limits, the
referred transaction is processed to conclusion. The relevant user
is notified by a notification and the consumer may be requested to
seek a service review. Where the transaction system 1 does not
allow a transaction to proceed to conclusion, for example, where a
shadow limit is breached or an issuer referral has occurred, both
the merchant involved and the consumer are notified by the
notification system. The payment transaction will be halted, and
its status set to "halted" 380. The transaction system 1 will take
no further action on the transaction until the merchant and
consumer have placed a further transaction that is not referred.
Additionally, the merchant and consumer transaction records will be
updated to reflect the transaction status. The audit trail logs are
updated with details of the transaction.
[0166] As shown in FIG. 21, in particular instances, a consumer may
reject a transaction 384. This may take place where the consumer is
unaware the transaction has been made, for example fraud or misuse,
but the existing card or bank account systems used by the consumer
have not been alerted to the activity. It may also be due to
"cooling off" legislation, which allows consumers to repudiate
transactions in particular circumstances and hand back goods. Where
the consumer rejects the transaction, and selects an appropriate
reason code for transmission, the transaction will be halted 386.
The consumer may also reject a pending transaction that has yet to
be fulfilled, due to merchant delay, before the merchant
acknowledges readiness to dispatch the order. The consumer will do
this by processing a rejection transaction through a valid, secure
authentication device, Extranet or by direct telephone call. SMS or
email will not be valid formats for processing consumer initiated
rejection transactions as since these transactions are consumer
initiated, the options to provide authentication using these
channels are limited. No further activity on the transaction will
take place. No goods will at this stage have passed from the
merchant to the consumer, and the status of the transaction should
remain at "awaiting fulfillment". The consumer may reject the
transaction even after acceptance during initial transaction
validation if a valid reason code is entered. On receipt of a valid
consumer rejection transaction, the merchant concerned will be
notified by the notification system 388. The merchant and consumer
transaction logs will be updated accordingly 390 and the audit
trail logs will be updated 392. System operators can then
investigate the transaction and engage transaction monitoring
systems to identify whether fraudulent or abnormal activity is
taking place with the consumer and merchant concerned.
[0167] In view of the unique additional security aspects offered by
the transaction system 1, the probability of chargebacks due to
fraudulent transactions will be significantly reduced, enhancing
convenience and security for consumers, and reducing fraud risk,
costs and administration for merchants. Nevertheless, provisions
are made for doing this as shown in FIG. 22. Chargeback
transactions originate from issuers of credit and charge card
products who have been legitimately instructed by consumers who
wish, for varying reasons, to reverse a payment transaction
previously made, generally due to dispute. The transaction system 1
will process chargebacks 394 against registered merchants in line
with credit card association rules for credit cards, for example,
where a consumer claims goods purchased were not received or where
the item purchased is "not as described" by the merchant. Other
payment provider chargeback rules will also be honored. The
authentication, notification service and other security aspects
result in reduced probability of chargebacks due to fraudulent
transactions, enhancing convenience and security for consumers, and
reducing fraud risk, costs and administration for merchants.
[0168] A consumer requiring a chargeback to be made sends a
chargeback request to the transaction system 1 directly for service
transactions, or through the consumer's issuing institution for
other transactions, where the system acts as a merchant aggregator
or ISO. The system is checked to see whether the chargeback is
recorded 396. Details of the transaction to be charged back are
matched against the consumer and merchant transaction records and
validated against legitimate chargeback reason codes 398. This
prevents consumers mistakenly or fraudulently obtaining chargebacks
on transactions that have not actually occurred or for invalid
reasons. Where the chargeback request is unsupported, no further
action is taken, and the consumer and merchant transaction logs and
audit and chargeback logs are updated accordingly 400. The system 1
will transfer the relevant transaction details onto the audit logs
to filter against future chargeback attempts involving the same
consumer or merchant.
[0169] Where a chargeback request is valid, both the merchant and
consumer accounts are updated with the chargeback details and
reason codes in accordance with general industry practice 402. The
chargeback log will also be updated. The transaction concerned will
be charged back against the merchant's account or chargeback
reserve as necessary whilst chargeback dispute resolution takes
place. The transaction system 1 will pass details to the merchant's
bank or payment institution concerned, and thereafter liaise 404
with the merchant's bank/institution and the consumer's
bank/institution as necessary. For non-card transactions, the
operator liaises with the banks/institutions representing the
consumer and the merchant as necessary.
[0170] In instances in which resolution to a chargeback dispute is
required, merchant and consumer service terms and conditions will
dictate which party bears the liability for the value in dispute
406. This will be facilitated through service agreement reviews.
This review may result in suspension of particular merchants or
consumers from use of the service due to excessive chargeback
histories, velocities or value parameters being breached. During
"suspended" periods, merchants or consumers may only access
registration and maintenance facilities. No payment transactions
can be processed. Chargeback dispute resolution may result in
merchant funds being withheld whilst a chargeback dispute is
investigated to conclusion. Dispute resolution may result in a
refund to the consumer from the merchant, or validation of the
disputed transaction in favor of the merchant 408. The relevant
consumer and merchant accounts will be updated on completion of the
chargeback dispute. Dispute resolution will be communicated to the
users concerned via the notification system 410.
[0171] In some instances, for example, where an error is made and
accepted by a merchant, e.g. processing error, or goods are
legitimately returned or exchanged, a credit transaction may be
required to reimburse, in full or in part, the consumer. In such
cases, the merchant can process a credit using the transaction
system 1. FIG. 23 shows the steps for processing credits. Credits
may be issued to consumers mistakenly or fraudulently by members of
the merchant's staff. In order to minimize this, the service
matches credits to underlying transactions and if they are not
matched, presents additional security levels to validate the
credits. In addition, merchant check criteria may be set and
permissions only given to certain members of merchant staff, for
example to authorize large value credits, as defined on
registration or account maintenance, or credits that do not match
underlying transactions.
[0172] Where a credit transaction is initiated 414, the merchant
may only process the credit against a completed transaction. In
order to process a credit the merchant and merchant member of staff
must undergo the double or triple authentication process. As
described previously, merchants can elect to improve security over
potential fraud by segregating the ability to process order
transactions and subsequent credit transactions against those
orders amongst different merchant staff by registering different
merchant staff as users, their authentication devices if applicable
and their identity cards and assigning their access only to certain
transaction system 1 functions. Once the merchant staff member
identity details are validated 416, details of the transaction to
be credited back are matched against the consumer and merchant
account records 418.
[0173] Where the credit cannot be matched partially or fully
against a previously completed transaction, no further action is
taken unless the merchant further authorizes the credit 420. This
further authorization may be done where merchants possess two or
more identity cards, the merchant will be required to have a
secondary authorization for processing of credits in excess of a
value set up on merchant registration or where matching does not
occur. This uniquely provides security against fraudulent
processing of credits by individual members of merchant staff
colluding with third party consumers (who may be themselves).
Parameters such as specific value and velocity and volume of credit
transactions are specified in the merchant's operating parameters
upon registration or account maintenance and will be monitored
against both merchant and consumer accounts, and the audit trail
and anti-fraud logs updated, providing a unique monitoring check
against multiple merchant-consumer combinations 422.
[0174] Where a merchant has two or more identity cards, the
merchant may elect during registration or account maintenance to
have a secondary authorization for processing of credits where a
predefined credit limit is breached (for single or multiple
transactions across specific and general time periods). Where a
particular merchant and/or consumer has breached its operating
parameters across particular timescales of credit transactions, the
user service agreement terms may restrict further processing of
credits. Where a credit transaction breaches the operating
parameters, the transaction is halted, the merchant and consumer
accounts are updated, and relevant audit trail logs are updated
424. A service review is then instigated to investigate matters
further.
[0175] Where a credit transaction is matched, or is further
authorized and does not breach any operating parameters, the credit
processing proceeds 426. Merchant settlement proceeds may be
withheld to set-off/cover credit transactions for a specified
period thereby providing protection against increasing, undetected
fraud by otherwise authorized members of merchant staff. Once
processed, the consumer and merchant transaction accounts are
updated accordingly 428 and a notification sent to the consumer by
the notification process. Funds are settled back to the consumer
from the merchant account in accordance with the user service
agreement. Consumer and merchant accounts will be updated, and
credit transaction and audit log files updated 430. The status of
the credit transaction is set to "completed." The credit
transaction log is monitored for velocity, volume and value checks
against merchant and consumer accounts, to facilitate anti-fraud
checks.
[0176] As noted previously the present invention can be used for
many different transaction types. The same basic principles apply
to all of these. However, as will be appreciated, the specifics
will vary. For example, for face-to-face transactions where the
consumer will take the goods away with them, once both parties are
authenticated, the transaction can be concluded as normal, although
without the consumer's financial details being made available to
the merchant. Hence, for face-to-face transactions there is
generally no need to check whether the goods have been dispatched
etc. In contrast, these considerations are clearly important for
all orders for which the consumer will be unable to access or take
goods physically away at the time of transaction, for example for
Internet or telephone or mail order transactions. In this case, the
consumer's identity code and address code are needed to help
identify where goods are to be sent when dispatched. Only where
prior order lodgement and merchant validation has been recorded
will details of the order be stored within the consumer's and/or
merchant's user accounts on the transaction system 1.
[0177] A skilled person will appreciate that variations of the
disclosed arrangements are possible without departing from the
invention. For example, although the transaction server,
authentication server, payment server and any server required by
the communications system are shown as physically separate, or one
or more of the transaction system 1 server functions may be
incorporated within the same physical server. In addition, whilst
the description refers generally to the use of servers, it will be
appreciated that any computer processor or computer based system
could be used. Accordingly the above description of the specific
embodiment is made by way of example only and not for the purposes
of limitation. It is clear that minor modifications may be made
without significant changes to the operation described.
* * * * *