U.S. patent application number 13/858669 was filed with the patent office on 2013-10-31 for universal payment processing.
The applicant listed for this patent is Nancy Birenbaum, Nancy Birenbaum. Invention is credited to Arnold N. Birenbaum, Michael Milan Radlovic.
Application Number | 20130290120 13/858669 |
Document ID | / |
Family ID | 48445421 |
Filed Date | 2013-10-31 |
United States Patent
Application |
20130290120 |
Kind Code |
A1 |
Birenbaum; Arnold N. ; et
al. |
October 31, 2013 |
UNIVERSAL PAYMENT PROCESSING
Abstract
A computerized universal payment method to allow merchants with
differing risk tolerance, transaction fee tolerance, and payment
time tolerance to optimize customer payment transactions that have
different risks, transaction fees, and transaction times. Here
customer payments are converted to a synthetic financial account (a
universal payment account) that acts somewhat like a financial
marketplace between a plurality of merchants and customers. The
method adjusts for the risks, transaction fee, and payment times
associated with a customer's particular mode of payment, as well as
adjusting for the merchant's tolerance for risks, transaction fees,
and payment times, as well as optionally the merchant's knowledge
about the customer. Thus, given permission, a customer paying by a
high commission credit card, may upon merchant election have this
payment converted to a low commission electronic check, and vice
versa. Various electronic transaction headers, point-of-service,
electronic market, and customer permission factors are also
discussed.
Inventors: |
Birenbaum; Arnold N.;
(Baltimore, MD) ; Radlovic; Michael Milan;
(Claremont, CA) |
|
Applicant: |
Name |
City |
State |
Country |
Type |
Birenbaum; Nancy
Birenbaum; Nancy |
Baltimore |
MD |
US
US |
|
|
Family ID: |
48445421 |
Appl. No.: |
13/858669 |
Filed: |
April 8, 2013 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
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13225437 |
Sep 3, 2011 |
8452708 |
|
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13858669 |
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Current U.S.
Class: |
705/16 ;
705/39 |
Current CPC
Class: |
G06Q 30/06 20130101;
G06Q 20/227 20130101; G06Q 20/027 20130101; G06Q 40/00
20130101 |
Class at
Publication: |
705/16 ;
705/39 |
International
Class: |
G06Q 20/22 20120101
G06Q020/22 |
Claims
1. A computerized universal payment method to allow merchants with
differing risk tolerance, transaction fee tolerance, and payment
time tolerance to optimize customer payment transactions that have
different associated risks, associated transaction fees, and
associated transaction times, said method comprising; adjusting at
least one customer payment by a first customer adjustment function
of customer permission, payment method, risk, transaction fee, and
payment time, producing at least one universal payment; adjusting
said at least one universal payment by a second merchant adjustment
function of merchant risk tolerance, transaction fee tolerance, and
payment tolerance, producing a merchant adjusted universal payment;
said adjustment being performed by at least one computer processor
and computer memory; and transmitting said merchant adjusted
universal payment to at least one merchant or financial
representative of said at least one merchant.
2. The method of claim 1, wherein said payment types comprise one
or more payment types selected from the group consisting of Credit
Cards, Checks, EBT, Drafts, Promise-to-pay, Script, Debit Card,
Gift Card, Payroll Card, ACH, ATM Card, PayPal, Mobile phone, FOB
or NFC device, coupons, discounts, cash, ePay or Bill pay, echeck,
cross border transfers, wire transfer, Giro, and Money Order.
3. The method of claim 1, wherein said at least one customer
payment is entered from a point of sale device.
4. The method of claim 3, wherein said point-of-sale device
comprises one or more point-of sale devices selected from the group
consisting of Standalone, Multi-lane store based, Multi-lane
corporate based, Via PC, Included in Retail System, Included in
Restaurant System, Potable standalone, Mobile phone, offline,
Internet (PayPal), Mail order, or Telephone order.
5. The method of claim 1, wherein when said at least one customer
payment is transmitted over a network connection, the data
representing said at least one customer payment also comprises a
data header that at least partially ranks the merchant's
preferences in terms of associated risks, associated transaction
fees, and associated transaction times of payment.
6. The method of claim 5, wherein the parameters of the desired
merchant payment method specifies which merchant preference: lowest
associated risk, lowest associated transaction fees, or lowest
associated transaction times of payment is most important.
7. The method of claim 5, wherein the merchant further uses
information about the customer to determine said merchant
preference.
8. The method of claim 5, wherein the parameters of the desired
merchant payment method specify at least one of a maximum
associated risk, maximum associated transaction fee, or maximum
associated transaction times of payment.
9. The method of claim 8, wherein the merchant further uses
information about the customer to determine said merchant
preference.
10. The method of claim 1, wherein the first customer adjustment
function of customer permission, payment method, risk, transaction
fee, and payment time, and the second merchant adjustment function
of merchant risk tolerance, transaction fee tolerance, and payment
tolerance is done by an electronic marketplace between a plurality
of merchants and/or other financial entities.
11. A computerized universal payment method to allow merchants with
differing risk tolerance, transaction fee tolerance, and payment
time tolerance to optimize customer payment transactions that have
different associated risks, associated transaction fees, and
associated transaction times, said method comprising; Obtaining
formation pertaining to at least one customer payment from at least
one point-of-sale computerized device, and transmitting said
information over an electronic or wireless network to a universal
payment computer; adjusting at least one customer payment by a
first customer adjustment function of customer permission, payment
method, risk, transaction fee, and payment time, producing at least
one universal payment; adjusting said at least one universal
payment by a second merchant adjustment function of merchant risk
tolerance, transaction fee tolerance, and payment tolerance,
producing a merchant adjusted universal payment; said adjustment
being performed by at least one computer processor and computer
memory and wherein the instructions to implement said method reside
in computer software; and using an electronic or wireless network
to transmit said merchant adjusted universal payment to at least
one merchant or financial representative of said at least one
merchant.
12. The method of claim 11, wherein the data representing said at
least one customer payment also comprises a data header that at
least partially ranks the merchant's preferences in terms of
associated risks, associated transaction fees, and associated
transaction times of payment.
13. The method of claim 12, wherein the parameters of the desired
merchant payment method specifies which merchant preference: lowest
associated risk, lowest associated transaction fees, or lowest
associated transaction times of payment is most important.
14. The method of claim 12, wherein the merchant further uses
information about the customer to determine said merchant
preference.
15. The method of claim 12, wherein the parameters of the desired
merchant payment method specify at least one of a maximum
associated risk, maximum associated transaction fee, or maximum
associated transaction times of payment.
16. The method of claim 15, wherein the merchant further uses
information about the customer to determine said merchant
preference.
17. The method of claim 11, wherein the first customer adjustment
function of customer permission, payment method, risk, transaction
fee, and payment time, and the second merchant adjustment function
of merchant risk tolerance, transaction fee tolerance, and payment
tolerance is done by an electronic marketplace between a plurality
of merchants and/or other financial entities.
18. A computerized universal payment method to allow merchants with
differing risk tolerance, transaction fee tolerance, and payment
time tolerance to optimize customer payment transactions that have
different associated risks, associated transaction fees, and
associated transaction times, said method comprising; Obtaining
formation pertaining to at least one customer payment from at least
one point-of-sale computerized device, and transmitting said
information over an electronic or wireless network to a universal
payment computer; adjusting at least one customer payment by a
first customer adjustment function of customer permission, payment
method, risk, transaction fee, and payment time, producing at least
one universal payment; adjusting said at least one universal
payment by a second merchant adjustment function of merchant risk
tolerance, transaction fee tolerance, and payment tolerance,
producing a merchant adjusted universal payment; wherein said data
representing said at least one customer payment also comprises a
data header that at least partially ranks the merchant's
preferences in terms of associated risks, associated transaction
fees, and associated transaction times of payment; wherein the
first customer adjustment function of customer permission, payment
method, risk, transaction fee, and payment time, and the second
merchant adjustment function of merchant risk tolerance,
transaction fee tolerance, and payment tolerance is done by an
electronic marketplace between a plurality of merchants and/or
other financial entities; said adjustment being performed by at
least one computer processor and computer memory and wherein the
instructions to implement said method reside in computer software;
and using an electronic or wireless network to transmit said
merchant adjusted universal payment to at least one merchant or
financial representative of said at least one merchant.
19. The method of claim 18, wherein the parameters of the desired
merchant payment method specifies which merchant preference: lowest
associated risk, lowest associated transaction fees, or lowest
associated transaction times of payment is most important; and
wherein the parameters of the desired merchant payment method also
specify at least one of a maximum associated risk, maximum
associated transaction fee, or maximum associated transaction times
of payment.
20. The method of claim 18, wherein the merchant further uses
information about the customer to determine said merchant
preference.
Description
CROSS REFERENCE TO RELATED APPLICATIONS
[0001] This invention is a continuation of application Ser. No.
13/225,437, "UNIVERSAL PAYMENT PROCESSING", inventors Arnold N
Birenbaum (now deceased) and Michael Milan Radlovic, filed Sep. 3,
2011; the contents of which are incorporated herein by
reference.
BACKGROUND OF THE INVENTION
[0002] 1. Field of the Invention
[0003] This invention is in the general field of electronic payment
methods, and more specifically as related to point-of-sale
transactions between customers, merchants, and merchant banks
[0004] 2. Description of the Related Art
[0005] Electronic payment methods, in which consumers can
conveniently pay by credit cards, debit cards, electronic checks,
and other payment methods, have become popular in recent years.
Generally, these methods are implemented by various computerized
devices, including various point-of-sale terminals, communication
networks (e.g. everything from analog telephone lines to high speed
dedicated computer networks, including the Internet), computer
servers, databases, and the like.
[0006] Electronic payment methods facilitate commerce because
customers can more easily make quick decisions to purchase items
and services without the burden of having to carry cash, or having
to pay using slow and laborious methods such as mailing cash or
checks. Merchants also appreciate these various electronic payment
methods because they stimulate business. In particular the practice
of extending at least short-term credit card credit to customers
stimulates commerce because customers to not have to save up for
long periods of time before purchasing items and services, and thus
are more open to new expenditures.
[0007] Unfortunately, some customers do not always pay their bills
on time, and some customers do not pay at all. Thus, as for any
type of non-cash payment there is always some element of risk
involved in electronic payment methods.
[0008] Many merchants dislike this risk, and as a result, various
electronic payment intermediary services, most famously Visa and
MasterCard, have emerged to help merchants manage risk. Credit card
services such as Visa and MasterCard agree that provided that the
merchant complies with their rules, Visa and MasterCard will assume
at least some of the risk of customer non-payment.
[0009] These services charge both participating merchants and
customers for this risk management function. Customers are charged
varying interest rates on the balances in their credit accounts
according to various formulas, such as FICO scores. Merchants are
also charged as well, typically on the order of a 3% transaction
fee per transaction.
[0010] By contrast, other forms of electronic payment are often
lower risk. Debit or ATM cards, for example, which draw upon
consumer money that is presumed to be already on deposit in a bank
or other financial institution, are considered to be less risky.
Thus, in contrast to the 3% rates charged to merchants for credit
card purchase, electronic debit cards may charge the merchant only
about 60 cents per transaction.
[0011] However there is still some element of risk even with debt
cards, because due to the high speed of the electronic
transactions, there is always a chance that the debit card limit
information may be out of date, if only by a few minutes or
seconds, and thus there is some remaining chance of payment
problems.
[0012] By contrast, electronic checks, which often take several
days to clear, give the lowest level of risk. Due to the high
efficiency of modern computerized communication and database
methods, absent risk, the actual transaction costs are quite low,
and thus the merchant may only be charged a few cents (e.g. around
five cents) per transaction, and the consumer will often be charged
nothing.
BRIEF SUMMARY OF THE INVENTION
[0013] The invention is based, in part, on the insight that the
present electronic payment system, although forming the basis for
most of the modern economy, is in some respects inefficient,
particularly from the standpoint of the merchant, and that an
alternative method of electronic payment would be desirable.
[0014] For example, depending on customer choice of payment method,
the merchant return from the same customer of the same $100 item
from a merchant may range from as much as $100 (cash on the spot)
to $99.95 (electronic check) to $99.40 (debit card) to $97.00
(credit card). The various payment times can range from instant
payment (cash or credit card) to up to several days (electronic
check). Many merchants operate on thin margins, and in aggregate,
these differences over many transactions can have a huge impact on
merchant profitability.
[0015] Unfortunately merchants are somewhat limited in their
ability to suggest more efficient methods of payment to their
customers. The message, "please don't pay by credit card because we
don't really trust you, and we also really need the money" just
does not go over well. The alternative message, "please pay by
check because we are really cheap and need all the money we can
get" lacks charm as well, and the message "we're about ready to go
under, so please pay by cash or some other way that we can get
money today, we'll accept the higher payment fees" is perhaps less
than optimal as well. Thus in general, merchants are often
compelled, at least by business and social considerations, to
provide various methods of payment, to charge the same price for
their items and services, regardless of customer method of payment,
and to grit their teeth and smile at whatever the customer
chooses.
[0016] The invention is also based, in part, on the insight that
the present methods of managing consumer risk do not adequately
take differences between merchants into account. In particular, the
present invention is based upon the insight that an improved
electronic payment method that took into account differences in
between individual merchant's tolerance for risk, need for rapid
payment, and need for low payment fees might offer some compelling
advantages for electronic commerce. In some embodiments, the system
might also utilize the merchant's knowledge about the customer
making the transaction to achieve higher efficiency as well.
[0017] The invention is also based, in part on the insight that
such an improved method should ideally allow merchant's to reset a
method of customer payment, at least with customer approval, to an
alternative method of payment that best meets the merchant's
particular tolerance for risk, need for rapid payment, need for
fast payment, and optionally also knowledge about the customer.
[0018] According to the invention, in at least one embodiment,
merchants accepting payment by one modality may form an electronic
marketplace with other merchants accepting payment by a different
modality, and with appropriate exchanges of information (e.g. user
identities) to satisfy various anti-money laundering statutes, as
well as other statutes such as the patriot act, form an electronic
payment exchange.
[0019] In alternative embodiments, if for example a customer pays
by credit card, but the merchant is confident in the customer,
and/or has sufficient financial resources so that the merchant is
willing to self-insure against customer risk, or is willing to put
up with a longer payment cycle, then the invention might also allow
the merchant to automatically redirect this payment to an
alternative payment method, such as debit card or check. Conversely
a merchant who has a cash flow issue, and who wants to accelerate
an echeck payment, might elect to pay the higher charges to speed
up the transaction, with or without assumption of risk according to
merchant preference.
[0020] The invention is also based, in part, upon the insight that
in order to facilitate such an improved method, what is needed is a
new type of universal payment account, computerized method, and
system with associated account information, permissions,
privileges, exchange algorithms, and payment exchange methods that
allows merchants to make these conversions as desired.
[0021] Thus in some embodiments, the invention may be a
computerized universal payment method to allow merchants with
differing risk tolerance, transaction fee tolerance, and payment
time tolerance to optimize customer payment transactions that have
different risks, transaction fees, and transaction times. In some
embodiments, the method may operate by converting customer payments
are to a synthetic financial account (a universal payment account)
that acts somewhat like a financial marketplace between a plurality
of merchants and customers. The method adjusts for the risks,
transaction fee, and payment times associated with a customer's
particular mode of payment, as well as adjusting for the merchant's
tolerance for risks, transaction fees, and payment times, and
optionally the merchant's knowledge about the customer. Thus, with
proper permissions, a customer paying by, for example, a high
commission credit card, may upon merchant election have this
payment converted to a low commission electronic check.
Alternatively a customer paying by electronic check might have this
payment converted to a credit card payment if the merchant has a
rapid need of funds, or optionally does not fully trust the
customer.
BRIEF DESCRIPTION OF THE DRAWINGS
[0022] FIG. 1A shows the prior art method of payments, where each
customer payment is directed to the merchant without any change in
payment form.
[0023] FIG. 1B shows the universal payment invention where an
electronic market helps match the characteristics of a particular
customer's payments (in terms of risk, payment costs, and payment
times) with the individual needs of each merchant, and where a
payment initially made in one form can be converted to a payment
made by a different form.
[0024] FIG. 2 gives an overview of how the universal payment method
can help allow merchants, with varying tolerance for payment risks,
payment speed, and payment transaction costs can use the universal
payment system to handle different customers with different means
of payment, each payment having different risks and payment
speeds.
[0025] FIG. 3 shows an example of the universal payment method can
be used to take a point-of-sale transaction (in this example a
credit or debit card swipe), and if missing permissions or
eligibility is absent, either process the transaction by prior art
methods, or alternatively handle the transaction according to the
invention's universal payment methods.
[0026] FIG. 4 shows a further example of how the invention's
universal payment method can act to first convert the payment data
to the universal payment account, and then in turn transfer the
payment information from the universal payment account to the
merchant account.
[0027] FIG. 5 shows how a merchant bank can use the universal
payment method to handle transactions from different point-of-sale
methods and different payment sources, and provide the merchant end
user with a comprehensive payment system optimized for that
particular merchant's needs.
[0028] FIG. 6 shows how an aggregator, often used by larger
corporations, can take transactions from multiple point of sale
devices, multiple payment sources, and multiple merchant banks, and
ultimately supply a larger merchant with a comprehensive payment
system optimized for that particular merchant's needs.
DETAILED DESCRIPTION
[0029] It has been decades since the original electronic financial
transaction standards and data formats were created for the payment
card and check processing industries. Since this time, many new
electronic payment standards, such as Internet specific formats
(SET) and gateways, standards for digital check images, and the
like have added new electronic data formats that are specific to
their respective functions.
[0030] Some of the various financial transaction standards and
regulations presently in effect for financial transactions include
the Association for Retail Technology Standard (ARTS) standards,
unified Point of Sale (POS) standards (e.g. UnifiedPOS). In
addition to these standards, there are many laws and regulations as
well, including various Federal regulations such as the various
Federal Reserve System regulations (e.g. 12 CFR 201-233, 12 CFR
250, 12 CFR 208 and 225) the Patriot Act, various anti-money
laundering statutes, and so on.
[0031] Over the last few decades, there have also been major
advances in the computer system hardware, software, and networking
capability used to conduct these electronic financial transactions.
The trend now, in contrast to the more isolated data world of just
a few years ago, is to move to a world where data is more freely
shared; allowing formerly separate functions to now become more
highly integrated and automated.
[0032] Many of these financial transaction standards and data
format were originally optimized in an environment where
communication networks were expensive. By contrast in today's
world, advances in electronic networks are such that communications
are now the smallest part of the financial transaction cost
structure. Instead, the financial cost structures now largely
revolve around risk management. This risk management is also a
function of available data, in particular data regarding the
customer.
[0033] As previously discussed, at present, merchants are required
by various legacy electronic transaction systems to process their
various payment transactions in the same manner in which the
payment transaction was originally presented. As a result,
merchants often end up in situations where they are paying higher
transaction costs than the merchant would like (i.e. paying credit
card risk management fees when the merchant is either able to
self-insure, or alternatively where the merchant knows that the
customer is trustworthy), or where the merchant is waiting longer
for payment than optimal (i.e. customer has paid by check, but the
merchant is low on cash and would have been willing to pay extra
for faster access to cash).
[0034] By contrast, the present invention utilizes a new payment
processing system and method, here called a universal payment
system, universal processing method, or occasionally in the
alternative universal payment account or universal payment
marketplace intended to help minimize these problems.
[0035] As previously discussed, in one embodiment, the invention
may be a computerized universal payment method to allow merchants
with differing risk tolerance, transaction fee tolerance, and
payment time tolerance to optimize customer payment transactions
that have different associated risks, associated transaction fees,
and associated transaction times. The method will generally involve
first converting an initial customer payment, which may have been
made using a method that at least initially specified a first
customer payment method, risk, transaction fee, and payment time,
into a universal payment account.
[0036] To show the method and system of the present invention,
first consider prior art payment methods, as shown in FIG. 1A. Here
a first customer (100) may have paid a first merchant (102) by a
slow but low payment cost method, such as electronic check.
Although this particular merchant (102) may have a severe cash flow
problem, and really would prefer a quicker payment, the merchant
has no choice but to accept a slow electronic check. Similarly a
second customer (104) may have paid a second merchant (106) by
credit card. This second merchant may know that the first customer
is trustworthy, and may have no immediate need for funds, and thus
would find it more ideal to be paid by electronic check. However
this merchant also is stuck with the method of payment as presented
by the customer.
[0037] The universal payment system, method, or account may be
implemented in a variety of ways.
[0038] In one embodiment, the various conversion factors required
to transfer funds from the initial customer payment to the
universal payment account, and then back to the various payment
modalities requested by the merchant, may be computed based on
various factors, such as a first discount factor that takes into
account the risk, assuming the original customer method of payment,
that the customer may default on the payment, a second discount
factor such as the commissions associated with the original
customer method of payment, and a third discount factor that may be
based on the time value of money--i.e. the speed of payment
associated with the original customer method of payment.
[0039] As an example, assume here that the ideal universal payment
account (that is form that has the lowest discount from cash) would
a zero transaction electronic check (that is money drawn from an
account known to have sufficient funds) that would clear instantly.
In this hypothetical ideal, a first $100 customer payment to a
first merchant would translate into the same $100 in the universal
payment account.
[0040] However in real life, if the first customer's electronic
check costs $0.05 in transaction costs, then the $100 customer
payment, if it would clear instantly translates into only $99.95 in
the universal payment account for the first customer.
[0041] In fact, assuming that the typical electronic check would
take 3 days to clear, then the value of the first customer's
payment in the universal payment account would be further
discounted by the 3-day time value of money.
[0042] By contrast, consider the ideal universal payment amount for
a second customer that has just paid a $100 fee by to a second
merchant by credit card. Assuming a nominal credit card fee of 3%
would translate into $97.00 in the universal payment account, but
here since credit cards normally clear almost instantly, the time
value of money discount would be almost zero.
[0043] In this example, the second merchant may know (e.g. from its
own internal records) that the second customer is trustworthy, and
further the second merchant may have sufficient funds so that the
time value of money for that particular second merchant for a three
day period (i.e. the time for an electronic check to clear) is low.
The second merchant would much rather have the $100 or at least
$99.95 without the credit card commission, and the second merchant
in this example would be willing wait the three days for an
equivalent type electronic check to clear.
[0044] Here, according to the invention, the second merchant would
inform the computerized system that it would much rather take
$99.95 in the form of an electronic check.
[0045] In the above examples, the universal payment system was
shown being implemented by relatively static exchange rates that
were based on typical transaction fees. However alternative
mechanisms for implementing the system are also possible, and in
some cases perhaps even preferable.
[0046] Consider the question of the true 3-day time value of money
from the perspective of various merchants. For some merchants, this
value may be as little as the prime interest rate computed over
three days. However for other merchants, such as merchants in
distress, this true value might be much harder, perhaps more
comparable to what the first merchant would pay to sell its
receivables in a factor financing type financial transaction. This
type of situation can be used to create an electronic exchange or
marketplace where a merchant more in need of rapid cash can bid for
access to rapid cash, and receive access to such rapid cash from a
merchant or other financial institution with a lower need for rapid
cash, and so on.
[0047] Thus in some embodiments of the invention, the time value of
money used to derive the various exchange rates or conversion
factors for the universal payment account may be set by a
competitive market among the various merchants or other financial
entities participating in the system. Competitive bidding could
also be used to encourage participating merchants to lend funds to
the system as well. Alternatively this time value of money rate and
other universal payment rates may be set by system policy,
financial regulatory agency, or other mechanism.
[0048] In this embodiment, the invention's universal payment system
and method may be implemented by creating a new type of electronic
transaction system that acts as an exchange between many customers,
many different customer payment methods, and many different
merchants. This embodiment, in at least some respects, acts
somewhat like a cross between a very short term financial money
market, and a method of adjusting or normalizing payment amounts in
a manner that adjusts for payment risks, fees, and times versus
merchant financial needs in a manner that is quite superior to
prior art methods.
[0049] An example of the electronic exchange embodiment of the
invention is shown in FIG. 1B.
[0050] Here the invention's universal payment method acts somewhat
as a matchmaker or electronic marketplace, allowing an instant "mix
and match" between various forms of payment, but again with proper
tracing and auditing functions to be in compliance with all due
financial laws and regulations.
[0051] In this example, the first customer (110) has paid by a slow
electronic check, but the first merchant (112) would really rather
pay extra to get the money quickly. By contrast the second customer
has paid by credit card (114), but the second merchant (116) who is
not in a rush, trusts the customer and would really rather not pay
the 3% commission. According to the invention, the universal
payment account (118) acts somewhat like an electronic marketplace
between the various customers and merchants, and allows (with
proper electronic documentation and tracing to satisfy any
anti-money laundering statutes, and other statutes such as the
patriot act) participating merchants and customers to sort their
various financial transaction in a way that promotes higher
transaction efficiency.
[0052] As a net result, in our example, the first customer's
payment by electronic check (110) would be diverted to the second
merchant (116) who doesn't want to pay a high transaction fee,
while the second customer's payment by credit card (114) would be
diverted to the first merchant (112) who really needs the money
quickly, and who is willing to pay a higher transaction fee to get
it. Here this matching and diversion process will typically be done
by a computer, or often a bank of computer servers, which will
often store the various types of conversion and transaction data
need to perform this "mix and match" process.
[0053] Although the computer servers that implement this "mix and
match" process, and/or create the marketplace or other mechanism
needed to provide the proper exchange rates to implement the
universal payment system, could in principle be located anywhere,
due to the sensitive nature of the various financial transactions,
it is anticipated that regulators will likely require the system to
be closely supervised and regulated. Thus at least this portion of
the system may likely be performed under the supervision of a bank
or other regulated financial institution, and will frequently be
described in this application as occurring in a merchant bank,
although of course other possibilities are both contemplated and
claimed.
[0054] The invention's method is intended to be implemented in the
form of various types of financial transaction software, running on
various types of computerized devices, including various
point-of-sale computerized devices, networks, computer servers,
banks of servers (e.g. cloud computing), and mainframe servers
[0055] Thus in practice, the various conversion factors required to
convert to and from the universal payment account may be done by
various methods, including system policy, fixed exchange rates, or
standard financial market rates. However in at least some
embodiments of the invention, these conversion factors may be
settled by competitive electronic market bidding between the
various merchants, and or other entities (e.g. banks, financial
institutions, and the like) participating in the program. Again in
these embodiments, the invention creates an electronic money market
to that exists for approximately the duration of the float period
required for a long duration payment method, such as an electronic
check, to clear.
[0056] For purposes of this discussion going forward, assume that
the various merchants and other financial entities have established
the various conversion factors needed to implement the universal
payment method as per the current market conditions at the time of
the transaction.
[0057] Prior art financial transactions are often accompanied with
various types of header information or data, such as information
pertaining to the identity of the customer (required in the US
under the patriot act), identify of the original point of sale
device, ultimate beneficiary of the transaction, and other types of
information as well. This information accompanies the financial
transaction as it makes its way through the system.
[0058] The invention's method operates, in part, by attaching
additional data, in the form of a universal payment trait and
optimization header, to these various payment transactions, such as
point-of-sale transactions. This additional data can either be
added as an extension to prior art financial transaction headers,
or alternatively can be added as its own separate header, as
desired.
[0059] The additional payment header data required by the invention
may include data that defines what payment outcome the merchant
wants (e.g. fastest clearing time, least expensive clearing time,
or least risk). This data will generally be accompanied by a record
that has generic data--i.e. a normalized data model of all payment
types) to produce any payment type.
[0060] This transaction will be initiated by the customer (either
by a personal trait card, mobile application, terminal entry, and
so on) and then be sent to a new type of bank processor.
[0061] The bank will also have automated records of the stored
contracts with the merchant's customers allowing the conversion of
the payment instrument to another payment type (e.g., a loyalty
card into an electronic check). The bank processor will accept the
header and payment record and process the header by searching the
available options to determine the "best" payment option. It will
then convert the generic record to the appropriate payment format
and process through the appropriate payment system for
authorization and/or clearing. A receipt for the customer will be
returned.
[0062] In some embodiments, a retailer using this invention and
format could request a fee for providing compliance/risk
information. This can be done by submitting an option to give
credit for additional information that is provided.
[0063] In some embodiments, with the invention a credit card could
be swiped and the merchant processor would use the universal
payment system and methods to change this payment to an electronic
check. This may, of course, require present or prior consumer
approval, as well as settlement reconciliation between the
different systems, and a reconciliation of the rules between the
different systems.
[0064] In some embodiments of the system, merchants who have
information pertaining to the risks involved with a particular
customer can use this risk information to further enhance payment
efficiency. Here this risk information may be derived, at least in
part, from non-public information, such as the merchant's record of
customer purchases, payment history, and general loyalty to the
merchant over time. For example, a customer who has routinely
purchased from a merchant for years without problems might be
automatically assigned to a lower risk category, and so on.
[0065] FIG. 2 gives an alternate perspective of how the universal
payment method can help allow merchants, with varying tolerance for
payment risks, payment speed, and payment transaction costs can use
the universal payment system to handle different customers with
different means of payment, each payment having different risks and
payment speeds. Here the perspective is from the standpoint of a
single merchant, and the complexities of the system in terms of
operating a financial market place over a plurality of different
merchants, as previously shown in FIG. 1B, are ignored in FIG.
2.
[0066] In FIG. 2, the merchant may be a larger merchant with
multiple sites, and this merchant may be accepting payment from a
plurality of customers, using a plurality of different payment
methods, and using a plurality of different point of sale
terminals. Further in this example, assume also that the merchant
is keeping track of its customers, and can identify frequent, long
term, or good customers (low risk customers) from new customers,
that the merchant has not done business with before, and thus who
may have unknown risk.
[0067] In this example, the merchant's point of sale terminals can
be devices such as standalone, multi-lane store based, multi-lane
corporate based, Personal Computer terminals (e.g. Via PC),
terminals included in retail system, terminals included in the
restaurant system, potable standalone terminals, mobile phone
terminals, offline terminals, internet (e.g. PayPal) terminals,
mail order terminals, telephone order terminals, or other point of
sale mechanism.
[0068] Thus in FIG. 2, customers 1-6 (200, 202, 204, 206, 208, and
210) may be paying from different point-of sale terminals and/or
using different payment methods. In (200), customer 1, that the
merchant, perhaps because that customer has used the merchant for
years, knows is low risk is paying by credit card, which is also
low risk and delivers payment rapidly, but which also has high
fees. In (202) customer 2, that the merchant cannot identify as a
previous customer, and who thus has an unknown risk, also is paying
by credit card. In (204), customer 3, known by the merchant to be
low risk is paying by debit card, which is low risk but slow. In
(206) customer 4, not known by the merchant, is also paying by
debit card. In (208) customer 5, known by the merchant to be low
risk, is paying by check. In (210), customer 6, not known by the
merchant, is also paying by check.
[0069] Under the invention, all forms of payment are sent, along
with appropriate informational headers, from the various
point-of-sale computerized devices over a network to the computers,
computer servers, and the like that host the universal payment
system (212).
[0070] Depending on the universal payment system rules and policies
(normally implemented by software on the computers, computer
servers, and the like, that host the universal payment system
(212), the merchant will be able to factor the merchant's overall
financial needs (214) (e.g. need for fast payment, need for minimum
service fees, need for minimum risk), as well as, in some
embodiments, information about the risks associated with the
customers (e.g. customer 1-6) who are making the various
transactions.
[0071] In some embodiments of the invention, the merchant (216)
will be able to use information (218) about the risk profile of
each individual customer to direct the universal payment system to
transfer payments from one modality (e.g. credit card) to another
modality (e.g. echeck) according to merchant direction for each
individual customer. In this embodiment, for example, merchant
(216) might direct the universal payment system (212) to change
customer 1 (200) payment from credit card to e-check (224) because
the merchant trusts the customer, and thus wants to minimize
transaction costs. Similarly the merchant might direct the
universal payment system (212) to change customer 6 (210) who is
writing a check, but who is unknown to the merchant into a safer
but more expensive payment method such as a credit card style
etransfer method (220). The merchant might also elect to keep the
payment from customer 3 (204), known to the merchant, and known as
being low risk, in its original payment format (222).
[0072] Allowing merchants to direct payments at the individual
customer level has clear advantages at the individual merchant
level, but potential disadvantages at the system level, because a
merchant with great customer knowledge could potentially "game the
system", to the disadvantage of other merchants using the universal
payment system. Thus in some embodiments, system policies may be
set up to restrict this level of granularity, and for example may
restrict or outright prevent merchants from using information about
the risk properties of the individual customers at the individual
transaction level. Here these policies are easily implemented in
the form of various software permissions at the universal payment
system level, and these policies may be adjusted, based on use
data, regulatory directives, or other method, to optimal
settings.
[0073] The merchant's customers in principle can be using many
different forms of payment. These various forms of payment can
include Credit Cards, Checks, EBT, Drafts, Promise-to-pay, Script,
Debit Card, Gift Card, Payroll Card, ACH, ATM Card, Paypal, Mobile
phone, FOB or NFC device, coupons, discounts, cash, ePay or Bill
pay, echeck, cross border transfers, wire transfer, Giro (payer
instigated payment transfer from one bank account to another bank
account, e.g. Automated Clearing House for direct deposit
payments), Money Order or other form of payment.
[0074] FIG. 3 shows an example of how the universal payment method
can be used to take a point-of-sale transaction (in this example a
credit or debit card swipe), and if permissions or eligibility are
present or absent, either process the transaction by prior art
methods, or alternatively handle the transaction according to the
invention's universal payment methods.
[0075] FIG. 4 shows a further example of how the invention's
universal payment method can act to first convert the payment data
to the universal payment account, and then in turn transfer the
payment information from the universal payment account to the
merchant account.
[0076] FIG. 5 shows how a merchant bank can use the universal
payment method to handle transactions from different point-of-sale
methods and different payment sources, and provide the merchant end
user with a comprehensive payment system optimized for that
particular merchant's needs.
[0077] In some embodiments, the invention may include the following
operations. Here assume that a merchant bank has modified its
system to use the invention's universal payment processing
methods.
[0078] First, a customer signs up for universal payment process and
primary payment vehicle. They then send to the merchant's merchant
bank processor. second, this customer uses a payment vehicle at a
merchant's point of sale. Third, the merchant's point-of-sale
computerized device or other equipment encrypts the sale data and
universal payment format data (e.g. header data), and sends it to a
merchant bank processor. Fourth, the merchant bank processor
decrypts the universal payment format and, using the header,
searches for the best payment method to employ as per the
merchant's specified preferred payment methods. Fifth, the merchant
bank processor transforms the incoming universal payment format
into the appropriate payment method, and sends the transaction to
the appropriate payment system. Sixth, the merchant bank processor
receives the response from the payment system, and sends back a
universal receipt to the original point-of-sale device. Seventh,
the merchant bank processor then keeps track of the different
payment methods used for the specific clearing period, and provides
settlement reporting, fees and shared fees, risks, auditing
information, and exceptions.
[0079] FIG. 6 shows how an aggregator, often used by larger
corporations, can take transactions from multiple point of sale
devices, multiple payment sources, and multiple merchant banks, and
ultimately supply a larger merchant with a comprehensive payment
system optimized for that particular merchant's needs.
[0080] In some embodiments, it may be useful to make the software
compliant with the Dodd-Frank Wall Street Reform and Consumer
Protection Act ((Pub.L. 111-203, H.R. 4173). In particular, it may
be important to maintain detailed traceability records of all funds
so that financial regulators can, as needed, inspect and verify
that all applicable regulations are being complied with.
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