U.S. patent application number 14/448361 was filed with the patent office on 2014-11-20 for system and method for linked account having sweep feature.
The applicant listed for this patent is JPMorgan Chase Bank, N.A.. Invention is credited to Steven Fox, Jeffrey Hirka.
Application Number | 20140344158 14/448361 |
Document ID | / |
Family ID | 24630790 |
Filed Date | 2014-11-20 |
United States Patent
Application |
20140344158 |
Kind Code |
A1 |
Hirka; Jeffrey ; et
al. |
November 20, 2014 |
SYSTEM AND METHOD FOR LINKED ACCOUNT HAVING SWEEP FEATURE
Abstract
A computer-implemented method for facilitating electronic funds
transactions is disclosed. According to one embodiment, the method
may comprise the steps of: issuing a transaction card to a
cardholder by associating the transaction card with a demand
deposit account from which the cardholder is authorized to
electronically disburse funds; receiving an authorization request
for an attempted transaction between a merchant and the cardholder,
the authorization request containing information associated with
the transaction card and the attempted transaction; processing the
authorization request based on one or more predetermined business
rules; authorizing the transaction without immediately settling the
transaction against the demand deposit account of the cardholder;
and settling the transaction, at a time subsequent to the execution
of the transaction, through automated clearing house (ACH) from
funds retained within the demand deposit account of the
cardholder.
Inventors: |
Hirka; Jeffrey; (Wilmington,
DE) ; Fox; Steven; (Newark, DE) |
|
Applicant: |
Name |
City |
State |
Country |
Type |
JPMorgan Chase Bank, N.A. |
New York |
NY |
US |
|
|
Family ID: |
24630790 |
Appl. No.: |
14/448361 |
Filed: |
July 31, 2014 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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13851322 |
Mar 27, 2013 |
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14448361 |
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12984201 |
Jan 4, 2011 |
8682730 |
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13851322 |
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11697440 |
Apr 6, 2007 |
8326766 |
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12984201 |
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09655886 |
Sep 6, 2000 |
8015084 |
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11697440 |
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Current U.S.
Class: |
705/44 |
Current CPC
Class: |
G06Q 20/40 20130101;
G07G 1/12 20130101; G06Q 40/02 20130101; G06Q 20/04 20130101; G06Q
30/02 20130101; G06Q 30/06 20130101; G06Q 20/102 20130101; G06Q
20/10 20130101; G06Q 20/20 20130101; G06Q 20/403 20130101; G06Q
20/207 20130101; G06Q 40/00 20130101; G06Q 20/204 20130101 |
Class at
Publication: |
705/44 |
International
Class: |
G06Q 20/40 20060101
G06Q020/40 |
Claims
1. A computer-implemented method for processing and settling
payment transactions, the method comprising: issuing a linked
account instrument to a cardholder, the linked account instrument
being associated with a cash account and a credit account providing
overdraft protection to the cash account; receiving, at an
authorization server and via a payment network, an authorization
request from a merchant system for a transaction initiated with the
linked account instrument, the merchant system comprising a
point-of-sale (POS) terminal or an Internet site; processing, by
the authorization server, the authorization request based on at
least one business rule and/or financial rule; providing, via the
payment network, an instantaneous authorization decision to the
merchant system to approve or deny the authorization request based
on the step of processing; settling a payment amount of the
authorization request, if it is approved, with the merchant or the
merchant's sponsoring bank; sweeping, at the end of a predetermined
period of time, the cash account via an automated clearing house to
determine whether adequate funds exist to cover the payment amount;
and if the cash account has adequate funds, withdrawing at least
part of the payment amount from the cash account, or if the cash
account has insufficient funds, drawing from available credit on
the credit account to cover some or all of the payment amount.
2. The computer-implemented method of claim 1, further comprising:
scheduling at least one subsequent sweep of the cash account if the
cash account has insufficient funds.
3. The computer-implemented method of claim 1, further comprising:
suspending or limiting usage of the linked account instrument if
the cash account has insufficient funds and conducting at least one
subsequent sweep of the cash account.
4. The computer-implemented method of claim 3, wherein the usage of
the linked account instrument is suspended or limited until the at
least one subsequent sweep of the cash account collects sufficient
funds to cover the payment amount.
5. The computer-implemented method of claim 1, further comprising:
performing a series of automatic sweeps of the cash account in
search of adequate funds.
6. The computer-implemented method of claim 5, wherein each of the
series of automatic sweeps is at the end of the predetermined
period of time.
7. The computer-implemented method of claim 1, wherein the
predetermined period of time is a day.
8. The computer-implemented method of claim 1, wherein the cash
account is held at a financial institution that issues the linked
account instrument.
9. The computer-implemented method of claim 1, wherein the cash
account is held at a financial institution different from the one
that issues the linked account instrument.
10. The computer-implemented method of claim 1, wherein the credit
account is held at a financial institution that issues the linked
account instrument.
11. The computer-implemented method of claim 1, wherein the credit
account is held at a financial institution different from the one
that issues the linked account instrument.
12. The computer-implemented method of claim 1, wherein the cash
account is held at a financial institution where the credit account
is held.
13. The computer-implemented method of claim 1, wherein the cash
account is held at a financial institution different from the one
where the credit account is held.
14. The computer-implemented method of claim 1, wherein the at
least one business rule and/or financial rule causes the
authorization request to be processed against an available balance
of the cash account or a spending limit.
15. A computer-implemented method for processing and settling
payment transactions, the method comprising: issuing a linked
account instrument to a cardholder, the linked account instrument
being associated with a cash account and a credit account providing
overdraft protection to the cash account; receiving, via a payment
network, an authorization request from a merchant system for a
transaction initiated with the linked account instrument, the
merchant system comprising a point-of-sale (POS) terminal or an
Internet site; processing, by at least one computer processor, the
authorization request based on at least one business rule and/or
financial rule, the processing further comprising: if the cash
account contains adequate funds to cover a payment amount of the
authorization request, approving the authorization request and
withdrawing the payment amount from the cash account, if the cash
account contains funds to cover a portion of the payment amount and
the credit account has available credit to cover an overdraft
amount, approving the authorization request, withdrawing said
portion of the payment amount from the cash account, and charging
the overdraft amount to the credit account, and otherwise denying
the authorization request; and performing, at a time subsequent an
approval of the authorization request, one or more automatic sweeps
of the cash account in search of additional funds to cover the
overdraft amount, if any, charged to the credit account.
16. A computer-implemented system for processing and settling
payment transactions, the system comprising: at least one database
for storing electronic records of linked account instruments issued
to cardholders, each of the linked account instruments being
associated with at least one cash account and at least one a credit
account providing overdraft protection to the at least one cash
account; an authorization server coupled to the least one database
via at least one communication interface, the at least one
authorization server being configured to perform at least the
following: receiving an authorization request from a merchant
system for a transaction initiated with a linked account instrument
which is associated with a cash account and a credit account
providing overdraft protection to the cash account, the merchant
system comprising a point-of-sale (POS) terminal or an Internet
site; processing the authorization request based on at least one
business rule and/or financial rule; providing an instantaneous
authorization decision to the merchant system to approve or deny
the authorization request based on the step of processing; settling
a payment amount of the authorization request, if it is approved,
with the merchant or the merchant's sponsoring bank; sweeping, at
the end of a predetermined period of time, the cash account via an
automated clearing house to determine whether adequate funds exist
to cover the payment amount; and if the cash account has adequate
funds, withdrawing at least part of the payment amount from the
cash account, or if the cash account has insufficient funds,
drawing from available credit on the credit account to cover some
or all of the payment amount.
17. A computer-implemented system for processing and settling
payment transactions, the system comprising: at least one storage
medium for storing electronic records of linked account instruments
issued to cardholders, each of the linked account instruments being
associated with at least one cash account and at least one credit
account providing overdraft protection to the at least one cash
account; at least one computer processor coupled to the least one
storage medium via at least one communication interface, the at
least one computer processor being configured to perform at least
the following: receiving an authorization request from a merchant
system for a transaction initiated with a linked account instrument
which is associated with a cash account and a credit account
providing overdraft protection to the cash account, the merchant
system comprising a point-of-sale (POS) terminal or an Internet
site; processing the authorization request based on at least one
business rule and/or financial rule, the processing further
comprising: if the cash account contains adequate funds to cover a
payment amount of the authorization request, approving the
authorization request and withdrawing the payment amount from the
cash account, if the cash account contains funds to cover a portion
of the payment amount and the credit account has available credit
to cover an overdraft amount, approving the authorization request,
withdrawing said portion of the payment amount from the cash
account, and charging the overdraft amount to the credit account,
and otherwise denying the authorization request; and performing, at
a time subsequent an approval of the authorization request, one or
more automatic sweeps of the cash account in search of additional
funds to cover the overdraft amount, if any, charged to the credit
account.
Description
CROSS-REFERENCE TO RELATED APPLICATIONS
[0001] This application is a continuation of, and claims priority
to, U.S. patent application Ser. No. 13/851,322, filed on Mar. 27,
2013, which is a continuation application of U.S. patent
application Ser. No. 12/984,201, filed on Jan. 4, 2011, now U.S.
Pat. No. 8,682,730, which is a continuation application of U.S.
patent application Ser. No. 11/697,440, filed Apr. 6, 2007, now
U.S. Pat. No. 8,326,766, which is a continuation application of
U.S. patent application Ser. No. 09/655,886, filed on Sep. 6, 2000,
now U.S. Pat. No. 8,015,084. Each of the above-referenced patent
applications is incorporated herein by reference in its
entirety.
FIELD OF THE INVENTION
[0002] The invention relates generally to electronic commerce, and
more particularly to a linked account that allows cardholders to
apply funds in a cash demand deposit account or other account to
transactions with a credit card, in a manner which allows these
transactions to be automatically reconciled against the cash
account on a daily or other basis.
BACKGROUND OF THE INVENTION
[0003] The consumer credit industry has played a significant role
in electronic and other commerce. Millions of Americans use
traditional bank-sponsored credit cards, private merchant sponsored
cards, debit cards, stored value cards, combinations of those
instruments and other accounts for retail, Internet and other
purposes. Credit cards in particular offer conveniences and
advantages, successfully attracting consumers who wish to simplify
their shopping experience by leaving their cash and checkbooks
behind. Rewards programs also enhance credit card usage.
[0004] Despite the convenience of credit cards, many individuals
may prefer to avoid using them. For example, some individuals may
be reluctant to use credit cards because they are averse to
outstanding account balances, and wish to avoid interest charges on
their purchases. Other consumers may prefer to avoid the temptation
of purchasing power in excess of their immediate ability to pay.
Yet other consumers may desire credit access, but are denied that
access due to past credit history.
[0005] For these and other reasons, cash accounts such as bank
debit cards have emerged to service consumer needs. A debit card is
a card that may be linked to a consumer's cash account, such as a
demand deposit account (DDA), typically a checking account. When
the consumer wishes to make a purchase from a merchant, the debit
card is swiped at the point of sale as a credit card would be,
except the funds used to pay the merchant are deducted from the
cardholders checking account rather than paid from a third party
credit network. The need to carry a checkbook is eliminated, while
concerns regarding credit cards are avoided.
[0006] There are, however, disadvantages to debit cards as a
payment instrument. First, not all banks offer debit cards. This
forces potential debit card users to open accounts elsewhere if
their banks do not offer this service. Second, a consumer may not
have time to keep track of precise balances on their cash account,
so that the cash balance on the debit card or other instrument may
be used up unknowingly.
[0007] Thus, some debit cards offer overdraft protection in the
form of a secondary line of credit. A checking account accessible
with a debit card, for example, may be backed by a credit line for
use in the event that there are insufficient funds in the checking
account to cover a purchase.
[0008] Once a person has exceeded their available cash balance and
invoked the credit line, they can continue to make purchases until
they have maxed out this secondary credit line. This may occur
without the consumer becoming aware of that status until the limit
is reached, when repayment may be more difficult.
[0009] Further, in some instances, debit card users may not be
offered the same type of rewards that credit card users are
eligible for.
[0010] A need therefore exists for a versatile financial instrument
that permits consumers to make purchases with the funds being drawn
from a desired demand deposit account held at any financial
institution.
[0011] Additionally, a need exists for consumers to have a more
controlled access to an overdraft credit line.
[0012] A need also exists for an instrument that will attract
reluctant consumers by offering them the ability to make purchases
by drawing funds from a demand deposit account, while earning
points or credits toward various rewards. Other problems exist.
SUMMARY OF THE INVENTION
[0013] The invention solving these and other problems relates to a
system and method for a linked account having a sweep feature,
enabling individuals to purchase goods and services from a merchant
using a cash account backed by a credit account, but with
overdrafts being reconciled automatically on a daily or other
basis.
[0014] According to one embodiment of the invention, a user may
receive a linked account instrument that is linked to a cash
account, such as a demand deposit account (DDA) already held by the
user. The consumer may be assigned a predetermined cumulative limit
or maximum daily "open to buy" amount that limits the dollar amount
of goods and services that may be purchased against that account,
which limit may be independent of the actual cash balance in the
account. Purchases can be made by swiping the instrument (for
example, an encoded card) at a merchant point of sale (P.O.S.)
terminal or other site. The merchant may receive an instantaneous
authorization decision from an authorization server via a
processing network.
[0015] At a predetermined time each day, transactions made using
the linked account card may first be processed against the user's
designated cash account. The cash account may be examined to
determine whether there are sufficient funds to satisfy the charges
incurred by the cardholder that day.
[0016] If sufficient funds are found in the cash account, the
aggregate transaction amount may be withdrawn from that account and
deducted against the sweep card's daily "open to buy" amount.
[0017] If the cash account does not have sufficient funds to cover
the aggregate transaction amount, the cardholder's ability to make
additional purchases may be suspended. In this case, any
transactions causing the aggregate transaction amount to exceed the
cash account balance may be processed as a credit charge against a
linked credit account, in overdraft fashion.
[0018] After the placing of the overdraft on the credit account, a
check or sweep may be automatically made against the cash account
at 12:01 a.m. the next day or other later time to check for
sufficient funds to cover the extended overdraft credit. If
sufficient cash account funds are present at the time of a
subsequent sweep, the funds may be withdrawn from the cash account
and the charge on the credit account may be cleared. The cardholder
may be charged a fee for the use of the credit account.
[0019] If the first sweep of the cash account does not find
sufficient funds to satisfy the outstanding overdraft amount on the
credit account, the linked account card privileges may remain
suspended and interest charges may accrue on the outstanding credit
card balance until satisfaction is made.
[0020] One advantage of the invention is the ability of a
cardholder to set up a cash account of their choice to make
purchases, and have the funds withdrawn from one or more of demand
deposit or other accounts, regardless of the institution holding
the account. This allows consumers to benefit from card purchases
even if their bank does not offer traditional debit-card
services.
[0021] Another advantage of the invention is the flexibility of the
collateral credit account. The consumer may use an existing credit
account, open a credit account with the institution issuing the
linked account card, or set up another type of account to supply
the overdraft protection.
[0022] Yet another advantage of the invention is the ability to
perform a series of automatic sweeps of the cash account in search
of adequate funds. If adequate funds become available during one of
the subsequent sweeps, they may be withdrawn from the cash account
and the credit account may be cleared at the earliest possible
opportunity. This provides advantages over a traditional debit card
account, where a cardholder may have to pay off the overdraft by
visiting the bank or mailing a check to the bank.
[0023] Conversely, regardless of the constituent accounts, the
institution issuing the linked account card is presented with
several options for handling necessary overdrafts. Based on past
credit history, for example, a cardholder may be given the
privilege of continuing to draw from the available line of credit
without having the card privileges suspended. If a cardholder's
credit history does not indicate such a feature, or if the consumer
declines such a feature, the issuing institution may constrain the
cardholder by suspending card privileges if a predetermined number
of sweeps do not find adequate funds in the cash account.
[0024] Additional features and advantages of the invention will be
apparent from the description that follows, or may be learned by
practice of the invention.
BRIEF DESCRIPTION OF THE DRAWINGS
[0025] The invention will be described with respect to the
accompanying drawings, in which like elements are referenced with
like numbers.
[0026] FIG. 1 is a schematic diagram of a system supporting a
linked account card according to an embodiment of the
invention.
[0027] FIG. 2 is a flowchart which illustrates the establishment of
a linked account card account according to an embodiment of the
invention.
[0028] FIG. 3 is a flowchart which illustrates a process of
authorizing transactions made with a linked account card according
to an embodiment of the invention.
[0029] FIG. 4a is a flowchart illustrating the settlement of
transactions initiated through use of a linked account card,
according to an embodiment of the invention.
[0030] FIG. 4b is a graphical representation of one example of the
settlement of transactions initiated through use of a linked
account card, according to an embodiment of the invention.
[0031] FIG. 4c is a graphical representation of one example of the
settlement of transactions initiated through use of a linked
account card, according to an embodiment of the invention.
[0032] FIG. 5 is a flowchart illustrating overall processing
according to the invention, in another regard.
DETAILED DESCRIPTION OF PREFERRED EMBODIMENTS
[0033] FIG. 1 illustrates a schematic overview of various
components of a transaction architecture supporting the use of a
linked account according to the invention. A linked account
instrument (not shown, for instance a magnetically encoded plastic
card similar to a credit card or ATM card) may be provided to
consumers to access funds in an existing cash account 160 such as a
DDA held at a financial institution, such as a bank or savings and
loan, or other institution.
[0034] Transactions may be initiated by swiping the linked account
card at a point of sale (P.O.S.) terminal 110 when purchasing goods
and/or services from merchants, or via other mechanisms such as
telephone or Internet remote authorizations against the linked
account card.
[0035] The merchant seeks authorization for each transaction from
an authorization server 130 through a processing network 120, such
as through the VISA.TM., MASTERCARD.TM. or other network which may
adapted for transaction processing against a debit card or other
cash account.
[0036] The authorization server 130 may be maintained by the
institution that issues the linked account card and may include an
account information database, an account balance database, and/or a
transaction history database and other components. The
authorization server 130 may be provided with a first interface 136
to the cash account 160, and a second interface 138 to the credit
account 140. Transactions made using the linked account card may be
first processed against the cash account 160 designated by the
cardholder, via an automated clearing house (ACH) 150. If the cash
account 160 does not contain adequate funds and the authorization
is rejected, the authorization server may temporarily suspend use
of the card and process the transactions as a credit charge against
a credit account 140. This credit account may also be designated by
the cardholder, and act as an overdraft account protecting the cash
account 160.
[0037] One or more sweeps against the cash account may be
automatically performed at a later time to check for sufficient
funds to satisfy the overdraft amount charged to the credit account
140. If sufficient funds are present in the cash account 160 at the
time of a subsequent sweep, the funds may be withdrawn and applied
to the credit account 140 to clear that account. The consumer may
incur a fee for the use of the credit account 140. If subsequent
sweeps of the cash account do not find sufficient funds, the linked
account card privileges may remain suspended and the cardholder
faces accumulating interest charges on the outstanding credit card
balance.
[0038] The account transaction system according to the invention in
one regard will be described in additional detail below.
[0039] Setting Up the Account
[0040] FIG. 2 illustrates steps that may be followed when
establishing a linked account card account according to one
embodiment of the invention. Potential linked account cardholders
may be identified through known marketing solicitation techniques,
illustrated at step 210. These potential cardholders, or
applicants, may be required to complete an application in step 220
requesting information pertaining to their financial history.
[0041] In step 230, the potential cardholder's application may then
processed by the institution that issues the linked account card.
This results in a determination of the applicant's eligibility to
receive a linked account card. Credit decisioning may be handled
through known services, such as the Magnum.TM. engine or the like.
If a negative decision is made, in step 240 the applicant may be
denied a linked account card. If the applicant is approved, at
least two additional pieces of information may be required.
[0042] First, as illustrated in step 250, a potential cardholder
may be asked to designate a demand deposit account (DDA) or other
backing account that will provide the cash funds for purchases made
with the linked account card. The designated cash account may be a
checking account, a savings account or other account held at a bank
or other institution. In an alternative embodiment discussed below,
more than one cash account may be selected to provide the cash or
cash equivalent for transaction processing.
[0043] A second item that a potential cardholder may be required to
provide in step 250 is a designated credit or other account to
handle overdrafts. This may be an existing credit card or other
account. If the linked account cardholder does not already have an
existing credit account, one may be established through the
institution that is issuing the linked account card. Once these
accounts have been identified, they may be verified before the
linked account card account is established in step 260.
[0044] Finally, in step 270 the linked account card itself may be
mailed to the new cardholder along with the materials explaining
the nature of the account. Upon receiving these materials, the
cardholder may call a voice response unit (VRU) or other facility
to activate the card, as illustrated in step 280.
[0045] The linked account card provided to the cardholder may bear
a VISA.TM. MASTERCARD.TM. or other acceptance mark. The linked
account card may have a daily spending limit, which may be referred
to as an "open to buy" amount. This means that, on any given day,
the cardholder will only be able to purchase goods and services up
to that dollar amount, regardless of the cardholder's cash
balance.
[0046] This daily spending limit or "open to buy" amount may be
determined by the credit history information received during
processing of the cardholder's application or otherwise. The daily
spending limit may also be monitored on a daily basis by the
authorization server 130 maintained by the card-issuing
institution.
[0047] Authorizing Transactions
[0048] FIG. 3 illustrates a process of authorizing purchases that
the cardholder wishes to make using the linked account card
according to an embodiment of the invention.
[0049] In step 310, the cardholder may present the linked account
card to the merchant. In step 316, the merchant may request
authorization from an authorization server through a processing
network, such as the VISA.TM. MASTERCARD.TM., or other network. The
authorization server 130 determines in step 340 whether the
transaction may be authorized. This determination may depend in
part on whether the cardholder's daily cumulative spending limit or
"open to buy" amount has been reached.
[0050] If it has, the authorization server 130 may not authorize
the transaction. If the daily spending limit has not been reached,
the authorization server 130 may authorize the transaction. The
authorization server 130 may also process authorizations against
this "open to buy" amount using business rules established by the
institution issuing the linked account card, along with other
financial rules.
[0051] If the transaction is not authorized, in step 380 the
merchant may be notified and the cardholder may abandon the
purchase or select another form of payment, as illustrated in step
390.
[0052] If the transaction is authorized, in step 350 the
authorization server 130 may keep a record of what amount of the
daily spending limit has been used by the purchase. In step 360,
the merchant may be notified that the transaction has been
authorized, allowing the cardholder to receive the goods or
services purchased in step 370.
[0053] If the cardholder wishes to make another purchase using the
linked account card, the process may be re-entered at step 310.
Otherwise, the process flow illustrated in FIG. 3 may end at step
376.
[0054] Settling Transactions
[0055] Subsequent to the completion of an authorized transaction,
the merchant may issue a settlement request, as illustrated by step
402 in FIG. 4a. Such a request may be sent to the merchant's
sponsoring bank or financial institution, through a processing
network 404, such as the VISA.TM., MASTERCARD.TM., or other network
which may be adapted for transaction processing against a debit
card or other cash account. At step 406, the merchant's sponsoring
bank or financial institution may pay the merchant, while
simultaneously sending a request for payment to the institution 408
that issued the linked account card. As illustrated in step 410,
the card-issuing institution 408 may then settle with the
merchant's sponsoring bank or financial institution through an
automated clearing house (ACH), as appreciated by persons skilled
in the art.
[0056] Aside from settlement with the merchant's sponsoring bank,
the card-issuing institution 408 has to settle with the cardholder.
For each transaction initiated with the linked account card,
individual automated clearing house debits may be generated which
contain the unique merchant identification in the descriptor field
such that the merchant identification appears on the cardholder's
cash account statement.
[0057] At a predetermined time, such as at, near or just after the
end of each day, the cardholder's designated cash account may be
swept via an automated clearing house to determine whether adequate
funds exist to cover all of the day's charges accumulated through
use of the linked account card. This is illustrated in step 412. At
step 414, an inquiry may be made to determine whether the
designated cash account has sufficient funds to cover all of the
individual debits that were generated by the authorization server
130 in response to the charges accumulated using the linked account
card.
[0058] If adequate funds are present in the cardholder's designated
cash account 160 at the time of reconciliation, the funds may be
withdrawn from the cash account 160 in step 418 and the
authorization server 130 may reset the daily spending limit to its
full amount in step 422 for the following day.
[0059] If the designated cash account 160 does not have sufficient
funds to cover the purchases at the time of the sweep, the
authorization server 130 may draw the funds from the available
credit on the credit account 140 that was designated by the
cardholder as illustrated in step 426.
[0060] At this point, the authorization server 130 may be
configured to temporarily suspend the cardholder's ability to make
further purchases with the linked account card, in step 430. Step
430 will occur regardless of whether the daily spending limit or
"open to buy" amount has been reached.
[0061] It may be noted that there are different variations possible
when determining how the accumulated daily transactions will be
added up and applied against the designated cash account 160.
[0062] In one embodiment, a FIFO (first-in, first-out) system may
be used, wherein the daily charges will be applied against the cash
account 160 in the order in which they were made. As soon as a
debit is found that cannot be drawn from the cash account 160 due
to insufficient funds, the credit account 140 may be applied to
cover that particular charge, as well as any remaining charges up
to a credit limit of that account.
[0063] Additionally, in another embodiment the sequence of daily
charges may be applied against the cash account 160 based on the
relative size of the transaction amount. For example, all of the
smaller charges may be drawn against the cash account 160 first,
leaving only the remaining larger charges that cannot be satisfied
to be covered via the credit account 140. Conversely, the larger
purchases may be drawn against the cash account 160 first, leaving
only the smaller charges to be covered by the credit account 140
when funds in the cash account 160 become insufficient.
[0064] Another embodiment may be employed when the cash account 160
can only handle a percentage of a particular charge. For example,
assume that charges are being applied against the cash account 160
during a sweep. If the cash account 160 reaches a point at which it
can only cover a certain percentage of a charge being applied
against it, the system may be configured to have the cash account
160 cover whatever percentage of the charge it can, only sending
the shortfall to the credit account 140. Or, the system may be
configured to have the entire charge be covered by the credit
account 140.
[0065] According to the invention, and as seen in step 434, the
cash account 160 may be swept again at a later time, such as 12:01
am on the next day, to determine whether or not the cash account
160 now contains sufficient funds as reflected in updated ACH
activity.
[0066] This sweep may be performed in order to catch deposits that
may have been made to the cash account 160 during the same day as
the transaction activity, but not credited to the cash account 160
until the following business day. For example, the cardholder may
have realized that a purchase was made with the card that could not
be covered by the funds in the cash account 160. The cardholder may
have rushed to deposit funds into the cash account 160 in order to
ensure that the purchase would be covered, only to have the
deposited funds be credited to the cash account 160 after the
initial authorization attempt.
[0067] At step 438, another inquiry may be made to determine
whether the cash account 160 contains adequate funds.
[0068] If there are now adequate funds in the cash account 160, the
funds will be drawn from the cash account 160 in step 442, and the
overdraft amount that was initially drawn against the credit
account 140 may be cleared from the credit account 140 in step 446.
The cardholder may incur a fee for the temporary use of the credit
account in step 450, and the linked account card may be reactivated
with the daily spending limit be replenished in step 422.
[0069] In the event that there are still inadequate funds in the
cash account 160 when the second sweep is performed, the linked
account card account may remain suspended in step 454 until such
time as the overdraft amount charged to the credit account 140 is
paid off and there is a positive balance. The cardholder may then
be subject to a fee, as well as any accumulating interest charges
on the credit account. Again, this is unlike a typical debit card,
where once a cardholder is forced to use the overdraft credit line,
they may continue to do so until their line of overdraft credit is
maxed out. In other words, conventional debit cards do not have the
added safety feature of suspending the account and disallowing the
user to accumulate more debt.
[0070] According to the invention, the cardholder may have access
to their transaction history and daily spending limit information,
via an interactive voice response (IVR) unit. This information may
also be accessible through a web-site hosted by the card-issuing
institution. Again, charges processed against the cardholder's cash
account 160 may appear on the cardholder's monthly cash account
statement as well.
[0071] In an alternative embodiment of the invention, two or more
sweeps of the cash account may occur before requiring payment of
the credit advanced in order to restore card privileges. In other
words, the number of subsequent sweeps of the cash account 160 can
be varied by the institution issuing the card.
[0072] FIGS. 4b and 4c illustrate settlement transactions initiated
through use of a linked account card, according to an embodiment of
the invention. FIG. 4b illustrates an instance in which the linked
account card 460 has been used to purchase goods and services which
total a dollar amount 462 that is less than the card's "open to
buy" amount 490. When the predetermined time (which may be near the
end of the day) arrives for the sweep of the designated cash
account 470, it is seen that the cash account 470 has an adequate
balance 472 to cover the cost of the day's purchases. Accordingly,
the funds can be withdrawn from the cash account 470, and no
overdraft action against the credit account 480 is needed.
[0073] FIG. 4c illustrates an example in which a cardholder has
maxed out the "open to buy" amount 490 of the linked account card
460, by purchasing goods and services in a graphically illustrated
dollar amount 464 that exceeds the "open to buy" amount 490. In
this example, when the predetermined time arrives for the sweep of
the designated cash account 470, it is discovered that the balance
474 of the cash account is inadequate to cover the aggregate of the
day's purchases. At this point, the funds 482 that cannot be drawn
from the designated cash account (the overdraft amount) may be
drawn from the credit account 480. Additionally, the authorization
server may temporarily suspend the cardholder's ability to make
further purchases with the linked account card.
[0074] It may be noted that there may be an instance in which the
cardholder, on one day, reaches the maximum "open to buy" amount of
the card, while having a zero balance in the designated cash
account to cover the purchases. For this reason, the credit account
may preferably have a credit line equivalent to the "open to buy"
amount of the linked account card.
[0075] In an alternative embodiment of the invention, the
institution issuing the linked account card may choose to allow a
cardholder to continue to use the linked account card once the cash
account 160 is found to have insufficient funds. The cardholder may
be given the option of continuing to draw from the remaining credit
line available on the collateral card. This may be a desirable
option for individuals who desire a traditional debit card, however
are unable to have one because their bank does not offer the
service.
[0076] In another alternative embodiment of the invention, the
linked account card may be linked to multiple cash accounts
designated by the cardholder in order to allow each to be swept in
search of sufficient funds before the credit account 140 is
needed.
[0077] FIG. 5 illustrates overall processing according to the
invention, in another regard.
[0078] In step 502, marketing solicitation is performed in order to
identify potential linked account cardholders. Interested
applicants may be required to complete an application detailing
certain information pertaining to their financial history.
Processing the application, as illustrated in step 506, may
comprise the steps of identifying account options most suited for
each particular applicant (step 510), and making a decision
regarding the applicant's ability to satisfy the particular
requirements of these options (step 514). If it is determined that
the applicant is approved, they will be required to specify a
demand deposit account or other backing account that will provide
the funds for purchases made with the linked account card. In step
518, the designated cash account may be verified and the
cardholder's linked account card account may be created.
[0079] Upon furnishing the linked account card and the account
materials to the new cardholder (step 522), the cardholder may
activate the card by calling a voice response unit (VRU), as seen
in steps 526 and 530.
[0080] Each purchase or transaction that the cardholder wishes to
make with the linked account card may be subject to authorization
(step 534). When a cardholder desires to make a purchase, and
presents the card to a merchant, the merchant may request
authorization from an authorization server through a payment
network. This is illustrated in steps 538, 542, and 546,
respectively. In step 550, the authorization server may check to
see whether or not the daily "open to buy" amount of the linked
account card has been reached. The results of this check, coupled
with the adherence to pertinent financial rules, can result in the
determination of whether or not authorization for the transaction
will be approved or denied (step 554).
[0081] Subsequent to the completion of an authorized transaction,
settlement with the merchant occurs, as is illustrated in step 562.
The merchant may make a settlement request which is sent to the
merchant's sponsoring bank or financial institution, through a
processing network. The merchant's sponsoring bank or financial
institution may pay the merchant, while simultaneously sending a
request for payment to the institution that issued the linked
account card. Settlement between the card-issuing institution and
the merchant's sponsoring bank or financial institution may occur
through an automated clearing house.
[0082] Aside from settlement with the merchant's sponsoring bank,
the card-issuing institution has to settle with the cardholder. In
step 566, the cardholder's designated cash account may be swept to
determine whether adequate funds are present to cover all of the
day's charges accumulated through use of the linked account card.
Note that the cash account may be swept at any pre-determinable
time, which may typically be near the end of the day. If there are
adequate funds available in the designated cash account (step 570),
the funds may be withdrawn from the cash account and the
authorization server 130 may reset the daily "open to buy" amount
to its full amount in step 572 for the following day.
[0083] If the designated cash account does not have sufficient
funds (step 574) to cover the charges at the time of the sweep, the
status of the account may be evaluated at step 576, and the
cardholder's ability to make further purchases with the linked
account card may be temporarily suspended. Additionally, the
authorization server 130 may draw the necessary funds from the
available credit account, as illustrated in step 580. The
cardholder may be charged a fee for the use of this credit account
(step 582). Finally, one or more subsequent sweeps of the
designated cash account may occur, as illustrated by step 584. If
adequate funds are present, they will be withdrawn from the cash
account, and the credit account will be cleared. Otherwise, the
daily purchasing abilities afforded the cardholder through use of
the linked account card may continue to be suspended until the
credit account is settled.
[0084] Communication with the cardholder (step 588) may take one or
more forms. Statements of linked account card activity will be sent
on a regular basis to the cardholder detailing each card
transaction (step 590). Additionally, the cardholder may have
access to their transaction history and daily spending limit
information, via additional services (step 592) such as an
interactive voice response (IVR) unit. This information may also be
accessible through a web-site hosted by the card-issuing
institution.
[0085] Other embodiments, uses and advantages of the invention will
be apparent to those skilled in the art from consideration of the
specification and practice of the invention disclosed herein. The
specification should be considered exemplary only, and the scope of
the invention is accordingly intended to be limited only to the
following claims.
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