U.S. patent number RE40,220 [Application Number 10/889,639] was granted by the patent office on 2008-04-08 for check writing point of sale system.
This patent grant is currently assigned to LML Patent Corp.. Invention is credited to Robert R. Hills, Henry R. Nichols.
United States Patent |
RE40,220 |
Nichols , et al. |
April 8, 2008 |
**Please see images for:
( Certificate of Correction ) ( Reexamination Certificate
) ** |
Check writing point of sale system
Abstract
A point of sale system designed to read information from a
consumer's check, credit card, or manual input with a subsequent
debiting of a consumer's account and crediting merchant's account
for the goods or services provided. Point of sale terminals are
designed to accept a form of credit card with a consumer's bank
account information encoded thereon or in the alternative to read
the MICR number from a consumer's check in order to verify that a
consumer has an appropriate balance to conduct the transaction with
a given merchant. Thereafter the transaction of that information is
transmitted to a central computer system which verifies the
consumer's credit worthiness and stores the transaction event
information for subsequent bank reconciliation via the ACH or other
competing network. The invention eliminates the need for paper
checks with all bank reconciliation being accomplished
electronically. The present invention also includes fraud
protection provisions such as velocity controls, social security
checks, and scans. The present invention has the further
flexibility to differentiate between "first time" consumer usage
and those limits otherwise assigned to "known" consumer accounts.
Additionally, there is not need for the present system to retain
the consumer's check after verification.
Inventors: |
Nichols; Henry R. (McLean,
VA), Hills; Robert R. (Sugarloaf Key, FL) |
Assignee: |
LML Patent Corp. (Vancouver,
B.C., CA)
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Family
ID: |
27072909 |
Appl.
No.: |
10/889,639 |
Filed: |
July 12, 2004 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
Issue Date |
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09851609 |
May 9, 2001 |
6354491 |
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09562303 |
May 1, 2000 |
6283366 |
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08775400 |
Dec 31, 1996 |
6164528 |
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Reissue of: |
10096019 |
Mar 11, 2002 |
06547129 |
Apr 15, 2003 |
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Current U.S.
Class: |
235/379;
235/380 |
Current CPC
Class: |
G06Q
20/04 (20130101); G06Q 20/042 (20130101); G06Q
20/26 (20130101); G07G 1/12 (20130101) |
Current International
Class: |
G07F
19/00 (20060101) |
Field of
Search: |
;235/379,380 |
References Cited
[Referenced By]
U.S. Patent Documents
Foreign Patent Documents
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1602509 |
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Jan 1971 |
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FR |
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2133914 |
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Dec 1972 |
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FR |
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2366648 |
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Apr 1978 |
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FR |
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2377510 |
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Aug 1978 |
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FR |
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2441222 |
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Jun 1980 |
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FR |
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54-119859 |
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Sep 1979 |
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JP |
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Primary Examiner: Frech; Karl D.
Attorney, Agent or Firm: Roberts, Mardula & Wertheim,
LLC
Parent Case Text
RELATED PATENTS
This application is a continuation of application Ser. No.
09/851,609 filed on May 9, 2001, now U.S. Pat. No. 6,354,491, which
is a divisional of application Ser. No. 09/562,303, filed on May 1,
2000 now U.S. Pat. No. 6,283,366, which is a continuation of
application Ser. No. 08/775,400, filed on Dec. 31, 1996, now U.S.
Pat. No. 6,164,528.
Claims
What is claimed is:
.[.1. A checkwriting system comprising: (a) a terminal adapted to
receive consumer bank account information from any bank check; (b)
the terminal further adapted to receive consumer bank account
information from a consumer communicating with the terminal over
the Internet; (c) a central computer system; (d) first
communications means for electronic communications between said
terminal and the central computer system; (e) second communication
means for receiving information from a plurality of said terminals;
and (f) the central computer system second communication means
enabling said central computer system to communicate with external
databases for performing a consumer bank account status search and
further enabling automated clearing house communication for
transferring funds without using the bank check as a negotiable
instrument..].
.[.2. The checkwriting system of claim 1 wherein the terminal is
further adapted to print activity reports of transaction events
occurring at the terminal..].
.[.3. The checkwriting system of claim 1 further comprising means
for biometrically verifying the identify of the consumer..].
.[.4. A checkwriting process comprising: (a) providing checking
account information to a merchant or service provider; (b) storing
the checking account information obtained; (c) providing
transaction event information; and (d) transmitting the transaction
event information for subsequent automated clearing house
operations; wherein the checking account is debited for the
transaction without using a check as a negotiable
instrument..].
.Iadd.5. A method for electronic processing of consumer payment for
goods or services comprising: receiving account information from a
bank check; receiving a transaction amount; receiving authorization
for an electronic funds transfer, the authorization being for the
transaction amount; transmitting the account information and the
transaction amount; annotating the bank check; and submitting the
account information and the transaction amount for electronic
settlement..Iaddend.
.Iadd.6. The method of claim 5, further comprising originating the
electronic funds transfer after the bank check has been
annotated..Iaddend.
.Iadd.7. The method of claim 6, wherein the electronic funds
transfer is an ACH debit as payment for goods or services, the ACH
debit replacing a transaction that uses a written bank check
retained by a merchant for subsequent negotiation..Iaddend.
.Iadd.8. The method of claim 6, wherein originating the electronic
funds transfer is the last step of the method..Iaddend.
.Iadd.9. The method of claim 5 wherein the authorization for an
electronic funds transfer is received in written form..Iaddend.
.Iadd.10. The method of claim 9, wherein receiving written
authorization comprises receiving a bank check bearing a consumer's
signature and printing an electronic funds transfer notice on the
bank check..Iaddend.
.Iadd.11. The method of claim 5 further comprising settlement of
the consumer payment for goods or services through electronic funds
transfer..Iaddend.
.Iadd.12. The method of claim 5 wherein receiving the account
information is done by reading magnetic ink characters from the
bank check..Iaddend.
.Iadd.13. The method of claim 5 wherein receiving the account
information is done by imaging the bank check..Iaddend.
.Iadd.14. The method of claim 5 wherein receiving the account
information and the transaction amount comprises imaging the bank
check..Iaddend.
.Iadd.15. The method of claim 5 wherein transmitting the account
information is done by transmitting an image of the bank
check..Iaddend.
.Iadd.16. The method of claim 5 wherein receiving the account
information is done by imaging the bank check and wherein
transmitting the account information is done by transmitting an
image of the bank check..Iaddend.
.Iadd.17. The method of claim 5 wherein annotating the bank check
comprises marking it "void"..Iaddend.
.Iadd.18. The method of claim 5, further comprising storing the
account information and the transaction information..Iaddend.
.Iadd.19. The method of claim 5, wherein receiving authorization
comprises receiving the consumer's signature for electronic funds
transfer..Iaddend.
.Iadd.20. The method of claim 19, further comprising: a. comparing
at least part of the account information with data in at least one
database; and b. making a transaction authorization decision based
on the comparison..Iaddend.
.Iadd.21. The method of claim 19, further comprising receiving
merchant data from any one of multiple, unrelated
merchants..Iaddend.
.Iadd.22. The method of claim 21, wherein the merchant data is
compared to data in a merchant database comprising information
regarding multiple, unrelated merchants that are authorized to use
the method..Iaddend.
.Iadd.23. The method of claim 22, wherein the electronic funds
transfer is an offline ACH debit, the offline ACH debit replacing a
transaction that uses a written check retained by a merchant for
subsequent negotiation and being initiated without human
intervention..Iaddend.
.Iadd.24. The method of claim 23, wherein the merchant data is
compared to data in a merchant database comprising information
regarding multiple, unrelated merchants that are authorized to use
the method..Iaddend.
.Iadd.25. The method of claim 24, wherein the electronic funds
transfer is an offline ACH debit, the offline ACH debit replacing a
transaction that uses a written.Iaddend.
.Iadd.26. The method of claim 5, wherein receiving authorization
comprises receiving a bank check bearing a consumer's signature and
printing an electronic funds transfer notice on the bank
check..Iaddend.
.Iadd.27. The method of claim 26, further comprising: a. comparing
at least part of the account information with data in at least one
database; and b. making a transaction authorization decision based
on the comparison..Iaddend.
.Iadd.28. The method of claim 27, wherein the at least one database
comprises a checkwriter database..Iaddend.
.Iadd.29. The method of claim 28, further comprising receiving
merchant data from any one of multiple, unrelated
merchants..Iaddend.
.Iadd.30. The method of claim 29, wherein the electronic funds
transfer is an offline ACH debit, the offline ACH debit replacing a
transaction that uses a written check retained by a merchant for
subsequent negotiation and the offline ACH debit being initiated
without human intervention..Iaddend.
.Iadd.31. The method of claim 26, further comprising receiving
merchant data from any one of multiple, unrelated
merchants..Iaddend.
.Iadd.32. The method of claim 31, wherein the merchant data is
compared to data in a merchant database comprising information
regarding multiple, unrelated merchants that are authorized to use
the method..Iaddend.
.Iadd.33. The method of claim 32, wherein the electronic funds
transfer is an offline ACH debit, the offline ACH debit replacing a
transaction that uses a written check retained by a merchant for
subsequent negotiation..Iaddend.
.Iadd.34. The method of claim 33, wherein the merchant data is
compared to data in a merchant database comprising information
regarding multiple, unrelated merchants that are authorized to use
the method..Iaddend.
.Iadd.35. The method of claim 34, wherein the steps of submitting
the account information and the transaction amount for electronic
settlement are done without human intervention..Iaddend.
.Iadd.36. A method for electronic processing and settlement of
consumer payment for goods or services: reading preprinted account
information from a bank check drawn on an account, the preprinted
account information comprising a routing number, an account number,
and a bank check serial number; receiving a transaction amount;
transmitting the account information and the transaction amount;
receiving written authorization for electronic funds transfer debit
in the transaction amount through an electronic settlement network
selected from the group comprising national authorization networks
and regional authorization networks; receiving an approval for the
debit based on the status of an account on which the bank check is
drawn; annotating the bank check by printing "void"; returning the
annotated bank check to a consumer; printing a receipt for the
debit; and originating the debit for the purchase of goods or
services, the debit replacing a transaction that relies on
presentment of a written bank check..Iaddend.
.Iadd.37. The method of claim 36 wherein the written authorization
for electronic funds transfer comprises a signed authorization by
the consumer..Iaddend.
.Iadd.38. A method for a transfer of funds from a consumer account
that eliminates presentment of a bank check for payment, the
transfer based on electronic fund transfer authorization, the
method comprising: receiving, at a central computer, account
information from a bank check after account information is derived
from the bank check at a system subscriber's terminal; receiving,
at the central computer, a transaction amount after the transaction
amount is entered into the system subscriber's terminal; and
transmitting an authorization message to the system subscriber's
terminal, the authorization message causes the printing of the
electronic fund transfer authorization at the system subscriber's
terminal, and an annotation on the bank check..Iaddend.
.Iadd.39. The method of claim 38 wherein the transfer of funds is
processed through an electronic settlement network selected from
the group comprising national authorization networks, regional
authorization networks, and ACH network..Iaddend.
.Iadd.40. The method of claim 38, further comprising: a. comparing
at least part of the transaction information with data in at least
one database; and b. making a transaction authorization decision
based on the comparison..Iaddend.
.Iadd.41. The method of claim 40, wherein at least one database
comprises a checkwriter database..Iaddend.
.Iadd.42. The method of claim 41, further comprising updating the
checkwriter database with at least part of the transaction
information..Iaddend.
.Iadd.43. The method of claim 40, wherein the at least one database
comprises a merchant database comprising information regarding
multiple, unrelated merchants that are authorized to use the
method..Iaddend.
.Iadd.44. The method of claim 40, further comprising updating a
transaction database with transaction records for ACH
processing..Iaddend.
.Iadd.45. The method of claim 38 wherein receiving account
information comprises reading magnetic ink characters from the bank
check..Iaddend.
.Iadd.46. The method of claim 45 wherein the account information
comprises a routing number, an account number, and a bank check
serial number..Iaddend.
.Iadd.47. The method of claim 38 wherein receiving the account
information comprises imaging the bank check..Iaddend.
.Iadd.48. The method of claim 38 comprising transmitting an image
of the bank check for processing through an electronic settlement
network..Iaddend.
.Iadd.49. The method of claim 38 wherein receiving the account
information is done by imaging the bank check and comprising
transmitting an image of the bank check for processing through an
electronic settlement network..Iaddend.
.Iadd.50. The method of claim 38 wherein the electronic fund
transfer authorization is in written form comprising signature of
the consumer..Iaddend.
.Iadd.51. The method of claim 38, further comprising receiving
merchant data from any one of multiple, unrelated
merchants..Iaddend.
.Iadd.52. The method of claim 51, wherein the merchant data is
compared to data in a merchant database comprising information
regarding multiple, unrelated merchants that are authorized to use
the method..Iaddend.
.Iadd.53. The method of claim 52, wherein the electronic funds
transfer is an offline ACH transaction..Iaddend.
.Iadd.54. A method for authorizing the debit of funds from a
consumer account, the authorization based on a signed electronic
fund transfer authorization agreement, the method comprising:
receiving, at a central computer, account information from abank
check after account information is derived from the bank check at a
system subscriber's terminal, the account information comprising a
routing number, an account number, and a bank check serial number;
receiving, at the central computer, a transaction amount after the
transaction amount is entered into the system subscriber's
terminal; receiving transaction information from a checkwriter
database; making a transaction authorization decision based on the
transaction information; transmitting an approval message to the
system subscriber's terminal, the approval message resulting in the
printing of the electronic fund transfer authorization agreement at
the system subscriber's terminal, and an annotation on the bank
check; and updating a transaction database with transaction records
for processing through an electronic settlement
network..Iaddend.
.Iadd.55. The method of claim 54 wherein the electronic settlement
network is selected from the group comprising national
authorization networks, regional authorization networks, and ACH
network..Iaddend.
.Iadd.56. The method of claim 54 wherein the signed electronic fund
transfer authorization agreement comprises a signed bank check with
an electronic funds transfer authorization printed on the bank
check..Iaddend.
.Iadd.57. The method of claim 54 wherein the signed electronic fund
transfer authorization comprises imaging a signed bank
check..Iaddend.
.Iadd.58. The method of claim 54 wherein the annotation comprises
marking the bank check as "VOID"..Iaddend.
.Iadd.59. A system for electronic processing and settlement of
consumer payment for goods or services comprising: a. a central
computer system that includes: a first communication interface that
is communicably connectable to at least one communication network
for communicating with at least one terminal; and at least one
database; and b. at least one terminal that includes: a reader for
reading preprinted account information from a bank check; a keypad
for receiving transaction amount entries; at least one printer
capable of printing an authorization agreement, transaction
receipts, and annotation of a bank check; and a communication
interface that is connectable to at least one communication network
for communication with the central computer system..Iaddend.
.Iadd.60. A system for electronic processing and settlement of
consumer payment for goods or services comprising: a. a central
computer system that includes: a first communication interface that
is communicably connectable to at least one communication network
for communicating with at least one terminal; and at least one
database; and b. at least one terminal that includes: an imaging
apparatus for imaging a bank check; a keypad for receiving
transaction amount entries; at least one printer capable of
printing an authorization agreement, transaction receipts, and
annotation of a bank check; and a communication interface that is
connectable to at least one communication network for communication
with the central computer system..Iaddend.
.Iadd.61. A central computer system for enabling the conversion of
a bank check into an electronic funds transfer, the electronic
funds transfer eliminates presentment of the bank check for
payment, the central computer system comprising: a first
communication interface for receiving transaction information and
account information from a plurality of point of sale terminals,
the account information being read from a bank check; a memory for
storing transaction information and account information; a second
communication interface for communicating with at least one
database that includes consumer and merchant information; and logic
to determine whether transactions should be authorized or declined
based on information in at least one database..Iaddend.
.Iadd.62. The system of claim 61 wherein the account information is
read from preprinted magnetic ink characters..Iaddend.
.Iadd.63. The system of claim 61 wherein the account information
comprises a routing number, an account number, and a bank check
serial number..Iaddend.
.Iadd.64. The system of claim 61 wherein the at least one database
comprises a checkwriter database..Iaddend.
.Iadd.65. The system of claim 61, wherein the merchant information
includes information regarding multiple, unrelated merchants that
are authorized to use the system..Iaddend.
.Iadd.66. The system of claim 65, wherein the electronic funds
transfer is an offline ACH transaction..Iaddend.
.Iadd.67. A method of processing consumer payment from a checking
account comprising: receiving account information via a
communication network, the account information relating to a
checking account; storing the account information; verifying the
account information; receiving transaction event information;
storing the transaction event information; and transmitting the
account information and the transaction event information to a
financial institution to initiate an electronic funds
transfer..Iaddend.
.Iadd.68. The method of claim 67 wherein the account information
comprises a routing number, an account number, and a bank check
serial number..Iaddend.
.Iadd.69. The method of claim 68 wherein the electronic funds
transfer is an ACH transaction..Iaddend.
.Iadd.70. The method of claim 67 wherein the electronic funds
transfer comprises settlement through an electronic settlement
network selected from the group comprising national authorization
networks, regional authorization networks, and ACH
network..Iaddend.
.Iadd.71. The method of claim 67 further comprising means for
biometrically identifying a consumer..Iaddend.
.Iadd.72. The method of claim 67 wherein the electronic funds
transfer comprises debiting a consumer account and crediting a
merchant account..Iaddend.
.Iadd.73. The method of claim 67 wherein verifying the account
information comprises cross-searching one or more databases to
determine whether a transaction should be approved..Iaddend.
.Iadd.74. The method of claim 67 wherein the communication network
comprises the Internet..Iaddend.
.Iadd.75. A method for eliminating the physical presentment of a
bank check for payment of goods or services, comprising: receiving
account information from a signed bank check that was received via
mail or at a lock box location; verifying the accuracy of the
account information; receiving a transaction amount as entered on
the bank check; storing the account information and the transaction
amount; transmitting the account information and the transaction
amount to a financial institution to initiate an electronic funds
transfer..Iaddend.
.Iadd.76. The method of claim 75 further comprising receiving
authorization to convert the bank check process to an electronic
funds transfer process..Iaddend.
.Iadd.77. The method of claim 75, wherein the account information
comprises a routing number, and account number and a bank check
serial number..Iaddend.
.Iadd.78. The method of claim 77 wherein the signed bank check is a
source document..Iaddend.
.Iadd.79. The method of claim 77, further comprising receiving
merchant data from any one of multiple, unrelated
merchants..Iaddend.
.Iadd.80. The method of claim 79, wherein the merchant data is
compared to data in a merchant database comprising information
regarding multiple, unrelated merchants that are authorized to use
the method..Iaddend.
.Iadd.81. The method of claim 80, wherein the electronic funds
transfer is an offline ACH transaction..Iaddend.
.Iadd.82. The method of claim 75 wherein the electronic funds
transfer comprises settlement through an electronic settlement
network selected from the group comprising national authorization
networks, regional authorization networks, and ACH
network..Iaddend.
.Iadd.83. A method for eliminating the physical presentment of a
bank check for payment of goods or services, comprising: receiving
a signed bank check including authorization to convert the bank
check process to an electronic funds transfer process via mail or
at a lock box location; reading, with an optical or magnetic
reader, preprinted account information from the signed bank check;
verifying the accuracy of the account information; receiving a
transaction amount as entered on the bank check; transmitting the
account information and the transaction amount to a central
computer; storing the account information and the transaction
amount; transmitting the account information and the transaction
amount to a financial institution to initiate an electronic funds
transfer..Iaddend.
.Iadd.84. The method of claim 83 wherein the signed bank check is a
source document..Iaddend.
.Iadd.85. The method of claim 44, further comprising receiving
merchant data from any one of multiple, unrelated
merchants..Iaddend.
.Iadd.86. The method of claim 85, wherein the merchant data is
compared to data in a merchant database comprising information
regarding multiple, unrelated merchants that are authorized to use
the method..Iaddend.
.Iadd.87. The method of claim 86, wherein the electronic funds
transfer is an offline ACH transaction initiated by the central
computer without human intervention..Iaddend.
.Iadd.88. A method of eliminating the presentment of a consumer
bank check for payment of goods or services, the method comprising:
receiving account information from a consumer bank check; receiving
a transaction amount; transmitting the account information and the
transaction amount; annotating the bank check; and originating an
electronic funds transfer after the bank check has been annotated,
wherein originating the electronic funds transfer is the last step
of the method..Iaddend.
.Iadd.89. The method of claim 88 wherein in the electronic funds
transfer is an ACH debit for the purchase of goods or
services..Iaddend.
.Iadd.90. The method of claim 88 wherein receiving the account
information is done by reading magnetic ink characters from the
bank check..Iaddend.
.Iadd.91. The method of claim 88 wherein annotating the bank check
comprises marking it as "void"..Iaddend.
.Iadd.92. The method of claim 88 further comprising storing the
account information and the transaction information..Iaddend.
.Iadd.93. A system for electronic processing and settlement of
consumer payment for goods or services comprising: at least one
terminal adapted to receive consumer bank account information from
a consumer communicating with the terminal over the Internet; a
central computer system; at least one central computer system
communication interface for electronic communication between at
least one terminal and the central computer system; and at least
one database for performing a consumer bank account status search,
and further enabling electronic funds transfer communication for
transferring funds without presentment of a bank check to an
issuing financial institution..Iaddend.
.Iadd.94. The system of claim 93 wherein the terminal is further
adapted to print activity reports of transaction events occurring
at the terminal..Iaddend.
.Iadd.95. The system of claim 93 further comprising means for
biometrically verifying identity of a consumer..Iaddend.
.Iadd.96. The system of claim 93 further comprising at least one
consumer identification element selected from the group comprising
voice pattern recognition, fingerprint identification, retina scan,
geometrics, biometrics, smart chips, consumer imaging broadcasting,
check imaging broadcasting and signature broadcasting..Iaddend.
.Iadd.97. The system of claim 93 comprising at least one biometric
reader..Iaddend.
.Iadd.98. The system of claim 93 further comprising at least one
fraud identification element selected from the group comprising,
fingerprint capture and analysis, signature capture and
verification, imaging technology, retina scan, and
biometrics..Iaddend.
.Iadd.99. A method for electronic processing and settlement of
consumer payment for goods or services comprising: receiving from a
bank check, at a point of sale, checking account information,
including bank identification information; storing the checking
account information obtained; providing transaction event
information; annotating the bank check; and transmitting the
transaction event information for subsequent electronic funds
transfer operations; wherein a checking account identified by the
checking account information is debited for a transaction
identified by the transaction event information without presenting
the check to a bank..Iaddend.
.Iadd.100. A method for electronic processing of consumer payment
for goods or services comprising: receiving account information
from a bank check; receiving a transaction amount; receiving
authorization for an electronic funds transfer, the authorization
being for the transaction amount; submitting the account
information and the transaction amount for electronic settlement;
and annotating the bank check..Iaddend.
.Iadd.101. The method of claim 20, wherein the at least one
database comprises a checkwriter database..Iaddend.
.Iadd.102. The method of claim 101, further comprising receiving
merchant data from any one of multiple, unrelated
merchants..Iaddend.
.Iadd.103. The method of claim 102, wherein the electronic funds
transfer is an offline ACH debit, the offline ACH debit replacing a
transaction that uses a written check retained by a merchant for
subsequent negotiation..Iaddend.
.Iadd.104. A method for electronic processing and settlement of
consumer payment for goods or services comprising: reading
preprinted account information from a bank check drawn on an
account, the preprinted account information comprising a routing
number, an account number, and a bank check serial number;
receiving a transaction amount; transmitting the account
information and the transaction amount; receiving written
authorization for an ACH debit in the transaction amount; receiving
an approval for the ACH debit based on the status of an account on
which the bank check is drawn; annotating the bank check by
printing "void"; returning the annotated bank check to a consumer;
printing a receipt for the ACH debit; and executing a set of
computer instructions to originate, without human intervention, the
ACH debit for the purchase of goods or services, the ACH debit
replacing a transaction that relies on presentment of a written
bank check..Iaddend.
Description
FIELD OF THE INVENTION
This invention relates to the field of Point-of-Sale systems and
more particularly to the integration and processing of purchases
whereby a check or encoded card is used as the basic source of
identification of the individual and of the individual's bank and
whereby the bank account is debited electronically.
BACKGROUND ART
Numerous devices exist for processing checks. For example, U.S.
Pat. No. 4,933,536 to Lindemann, et al., describes a check
processing device which is used together with a Point-of-Sale
terminal. This particular device involves copying and taking a
picture of an individual whereby a dishonored check could then be
traced to the person who has offered it.
U.S. Pat. No. 4,810,866 to Lloyd, Jr., describes a check validation
system again located together with a Point-of-Sale system for
imprinting and otherwise physically dealing with a check.
Other systems also deal with an apparatus for handling checks at a
point of sale. For example, U.S. Pat. No. 4,743,743 to Fukatsu
describes one such transaction apparatus where a check is examined
by a reader. U.S. Pat. No. 4,672,377 to Murphy, et al. describes a
check authorization system wherein a check is imprinted with a bar
code and information concerning customers which are stored in a
database. U.S. Pat. No. 3,845,470 to Schuller discloses a vending
system using a modified form of a check which is imprinted with
identification codes, when someone attempts to use the check in
purchasing goods and services, a vending operation will not place
the order if information associated with the check is not valid in
a particular database.
Other check-based financial systems have also been the subject of
invention. U.S. Pat. No. 4,617,457 addresses an ATM or automatic
teller machine form of cashing checks. Such systems create a
picture of the check involved and also involves checking against a
specialized database to insure that the check is a "valid" one (see
also U.S. Pat. No. 4,580,040 to Granzow et al.).
Another generic category of financial systems deals with methods of
handling the financial transactions apart from the physical
handling of the check itself. For example, U.S. Pat. No. 3,824,544
to Simijian describes a merchant issued "check" which can be used
in the purchase of goods and services and upon purchase, a
specialized code is evaluated to determine if the check is being
validly utilized.
U.S. Pat. No. 4,404,649 to Nunley et al. describes a document
processing system which generally discloses a method of reading
checks for processing a wide variety of financial documents.
U.S. Pat. No. 4,523,330 to Caine also describes a method for
processing financial documents which systems also includes a
Point-of-Sale terminal for generating image data from checks as
they are being processed. This patent is drawn principally to the
actual terminal itself.
U.S. Pat. No. 4,673,802 to Ohmae et al. describes a central
processing system having stored data relating to the counts of
users. Users are approved or disapproved at the Point-of-Sale based
upon information in the database.
U.S. Pat. No. 4,270,042 to Case discloses a point of sale system
that requires a consumer to prepay a sum of money into a special
account that is accessed only by the system. This amount is
inscribed on the card, and when a transaction made using the
system, the amount of the transaction is punched out of a
designated area on the card. This amount along with a signature and
other information, is supplied on a draft negotiable instrument,
which is given to the merchant at the time of the transaction.
Thus, the Case system does away with the use of bank checks in
effecting the transaction, but requires the use of specialized
prepaid draft negotiable instruments that must be surrendered to
the merchant.
U.S. Patent No. 4,823,264 to Deming discloses a home banking system
that can be used to transfer funds to different payees in
satisfaction of debts incurred through previous purchases, use of
utilities, etc. The system is consumer driven; that is, it is
contemplated for use by the payor on a home personal computer.
While the Deming system does away with the use of bank checks,
account and other information must be keyed into the system. The
Deming system cannot be used to read account and other information
directly from an ordinary bank check and has no use for bank checks
as instruments other than negotiable paper. Further, the Deming
system cannot be used to transfer finds at the time of purchase and
is not workable at the point of sale; the system can only be used
to pay debts that have been incurred in the past and have
accumulated.
Finally, U.S. Pat. No. 4,678,896 to Carlson et al. describes a
Point-of-Sale system whereby an apparatus is provided to secure the
processing and imprinting of checks.
All of these above patents deal with the specific problem of how to
accept a check from a customer for the purchase of goods and
services. They do not in any way address the subsequent processing
of checks nor do they address the process by which checks are
cleared through the normal automatic check handling clearinghouse
operations that exist in the financial world. Thus, the interaction
of these systems with the automated clearing house ("ACH") process
is not addressed in any way. This is particularly important since
if any Point-of-Sale check handling system is to interact with the
ACH mechanism it must adhere to that processing scheme and must
lend itself to use with a processing scheme.
Further, some of the currently used systems described above require
the use of a bank check as a negotiable instrument which must be
surrendered to a merchant. Some of the systems do away with the use
of a bank checks altogether, but require a debit card or a
specialized draft instrument to be used only with the particular
system. None of these systems completely does away with the need
and use for a negotiable draft instrument while using the
consumer's bank check for identification and verification only.
That is, current technologies such as check truncation, electronic
check presentment and representment all require a consumer's
initial issuance of a "paper" check. It is therefore an objective
of the present invention to provide such a system.
It is an objective of the present invention to be adaptable for use
with the ACH system and to be smoothly incorporated into it. In
this fashion, the present invention will immediately be useful for
a much wider range of financial transactions above and beyond those
contemplated and disclosed in the background references discussed
above.
SUMMARY OF THE INVENTION
The present invention comprises a process and apparatus which may
be employed for the purpose of effecting payments for point-of-sale
purchases of goods and services paid from consumer funds secured in
bank checking or depository accounts. Each sale of "Transaction
Event" would be an electronic and "paperless" event thereby
eliminating reliance on accepting and processing commercial bank
drafts (personal or corporate checks) and the physical handling of
those bank drafts thus replacing commercial bank drafts at the
point-of-sale.
In contrast to known systems, the present invention is a merchant
driven system that can be used to process a transaction at the
point of sale and at the time of purchase. The system is intended
to be made available to subscribing merchants, businesses, and
individuals herein referred to as "system subscribers" wishing to
employ the method and apparatus of the present invention for the
electronic processing and settlement of consumer purchases.
Further, operational parameters of the present invention allow
freedom from customary state or other geographically limiting
criteria typical when accepting and processing "paper" checks. The
system is designed to act with the national authorization networks
and the electronic settlement network known as the ACH system as
regulated by the National Automated Clearing House Association
("NACHA") or other comparable systems including but not limited to
ECCHO, the Cactus Switch, First Tennessee Bank, regional networks,
the VISA network, and others. The present invention contemplates
Transaction Events processed in a manner hereinafter referred to as
"Electronic Checks" or "Electronic Checking."
The system is designed to perform in a fully automated manner
enabling each Transaction Event to be processed by a system
subscriber as a point-of-sale transaction in the presence of the
consumer. Subsequent to a Transaction Event's being "Approved",
funds are debited from an authorized consumer account for credit to
the system subscriber, and electronic settlement by ACH deposit of
the transaction amount to the subscriber's designated depository
account. Authorized access to consumer accounts and credits to
system subscriber depository accounts are performed as "Off-Line"
transactions by means of Electronic Funds Transfer ("EFT") through
the ACH Network or through the Federal Reserve System. "On-Line"
transactions are also contemplated by the present invention once
national networking and other present and proposed support
mechanisms have become functional.
The present invention comprises a point-of-sale processing system
having electronic data processing equipment which supports various
individual service selections or transactions types each of which
provide automated, electronic processing from consumer bank
checking or depository accounts in payment of goods or services
incurred at a system subscriber's point-of-sale. It is the
objective of the present invention to automate the point-of-sale
environment for processing consumer purchases of goods and services
would customarily necessitate the more traditional acceptance and
processing of commercial bank drafts (personal and/or corporate
checks). Individual Transaction Events are administered under the
system of the present invention by initiating a terminal
authorization inquiry and continuing through the electronic
settlement of funds representing the Transaction Event. As a result
of the above procedure, approved consumer banking accounts are
debited and system subscriber's designated depository accounts are
credited.
It is a further objective of the present invention to eliminate the
need for "paper" checks as an accepted means of consumer payment.
In the place of personal and business checks, consumers would be
provided greater access to funds secured in bank accounts to effect
purchases initiated from the point-of-sale. System subscribers
electronically communicate with the data center of the present
invention for individual Transaction Event authorizations which,
upon reconciliation of a day's activity, result in an EFT processed
by means of the Automated Clearing House accommodating an
"Off-Line" or "On-Line" debiting of preauthorized consumer
Transaction Events from approved accounts. Thereafter, each system
subscriber is credited with the total of all such daily authorized
Transaction Events to its designated ignated bank depository
account. The present invention also accommodates paper transactions
as requested by the subscribing merchant or consumer. By way of
example, transactions can be supported where the consumer prepared
a "paper" check. The transaction would proceed in a fully
electronic manner with the consumer retaining the "paper" check as
an additional receipt.
The present invention comprises logic which allows the following
services each of which, when individually performed or are combined
with other services, establish a wholly unique processing medium
enabling preauthorized access to consumers' checking account or
bank depository reserves in payment of and settlement for purchases
conducted from a system subscriber's point-of-sale.
Authorization--This service supports electronic communication from
point-of-sale to the system's central computer. The data center
stores positive and negative files concerning consumer accounts
thereby providing accurate inquiry responses regarding the current
posting status of a consumer's banking account and signaling the
system subscriber that said account may be reasonably relied upon
for consummating a Transaction Event (i.e., an "Approval") or, here
listed as delinquent, indicating that the account may not be so
relied upon (i.e., a "Denial"). The system also contemplates
"On-Line" services that would also permit Fund Verification.
Check Replacement--This capability operates as an extension of
Authorization enabling the system subscriber the capability of
completing a Transaction Event by electronically logging the sale
whereupon a Transaction Event slip will be printed or manually
prepared for consumer execution at the point-of-sale. By execution
of the Transaction Event Slip, the consumer authorizes the
electronic processing of finds secured in his/her authorized
banking count in lieu of the more traditional method of issuing
personal and business checks. Funding settlement to the system
subscriber would be effectuated by means of Electronic Funds
Transfer via ACH, the Federal Reserve system or other competing
facility as opposed to physically processing and transferring
checks among banks. If preferred or requested by the subscribing
merchant, the present invention would further allow for a
consumer's check to be written and thereafter voided, canceled, and
returned to the consumer, or, in the alternate, submitted to lock
box or similar storage facilities.
Bank Transaction Card--As part of this invention an "Off-Line"
Debit Card is established on which is stored the information
relating to the banking account from which funds representing the
Transaction Event would be debited for payment to the system
subscriber. This information may be stored on the card itself in
encrypted or unencrypted form or may be stored in the central
computer where access to such information is gained via special
control characters or access codes stored on the card. Electronic
authorization for withdrawal of funds from the cardholder's account
and subsequent electronic settlement procedures remain essentially
identical to processing under the Check Replacement service
described above. Information relating to the consumer-cardholder
and the appropriate banking account to be debited for a Transaction
Event will be encoded upon the Magnetic stripe portion of the
plastic, and terminal-readable, card. The present invention is also
compatible with SMART card technology.
Thus, the overall objective of the present invention is to provide
and support an alternate means for consumer payments for goods and
services that operates to replace commercial bank drafts in the
point-of-sale environment. Simultaneously, the present invention
assures consumers greater access to and use of funds in personal or
corporate banking accounts. Further, the system provides system
subscribers a significantly improved prospect of collecting the
underlying monies for Transaction Events, reduced time for
collecting the cash receipts from Transaction Events, and a
pronounced lowering of the present cost of cumbersome procedures
otherwise mandated by the existing mechanisms for accepting and
processing commercial bank drafts.
A further objective of the present invention is to significantly
reduce the use of checks as negotiable instruments in effecting the
purchases of goods or services and to provide the system's
Electronic Checking Service as an equitable alternative for the
consumers reliance on credit cards or cash.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT
The method of the present invention begins with the electronic
capturing of consumer information at a system subscriber's location
using a point-of-sale terminal and related equipment. This
information is obtained in the presence of the consumer and occurs
prior to any "Approval" for the Transaction Event or for the
ultimate crediting of the System subscriber's designated depository
account.
A Transaction Event involves a series of events initiating with a
system subscriber's intent to sell goods or services, the payment
for which would be funds secured in a consumer's banking account.
The consumer's banking account status would first be verified by
accessing the central computer files of the present invention.
Verification is performed by use of an encoded, magnetic stripe
card, where presented by the consumer or by input of account
numbers from a consumer's specimen check. The present invention
also contemplates compatibility with "SMART card" technology,
whereby a consumers "ChequeMark Card" information might co-exists
with other consumer data or payment options for alternate
verification purposes. In addition to verifying a consumer's
account, a more traditional identification of the consumer could
also occur including visual examination of driver's license or
similar and acceptable picture "ID", however, this is not
considered part of the present invention.
For improved identification, security, and fraud purposes, the
system is further capable of receiving input of a consumer's Social
Security Number and retaining the same for use in the approval and
settlement processes. The present invention is also capable of
validating a Social Security Number, screening out those numbers
issued to individuals reported as deceased, and cross-searching the
"known" ("Positive") checkwriter database to verify the status of
all banking accounts. Cross-searching is seeking a match of the
Social Security Number with any over account on which there is a
return, including the account which is the subject of the current
inquiry. If preferred or requested by either a subscribing merchant
or the affected consumer, the consumer's check could be written
and, subsequent to processing through the system of the present
invention, marked as "Voided" or "Electronically Settled" and
returned to the consumer. In the alternative, the consumer's check
may be submitted to a lock box or other storage facility.
As an integral portion of each Transaction Event, the system
subscriber's location, date and time, and requested sale amount is
automatically logged into the system when a system subscriber first
accesses the invention. Finally, a Transaction Event Slip ("Sales
Slip") will be produced by a printer integral to the point-of-sale
terminal and will be executed by the consumer in the amount of the
stated purchase with inscribed language defining the Transaction
Event and specifically providing consumer authorization for
electronic access to his/her banking account. The consumer's
specimen check is returned unused or, where written, is returned to
the consumer as a receipt. Thereafter, the consumer account will be
debited and the proceeds credited to the system subscriber's
designated depository account along with all other similar
Transaction Events representing the total of the system
subscriber's daily activity. Debiting of consumer accounts and
settlement deposits to each system subscriber is performed by means
of Off-Line electronic funds transfer through an by the ACH or
Federal Reserve System. Other competing facilities such as, but not
limited to, ECCHO, Cactus Switch, First Tennessee Bank, regional
networks, or the VISA network, could also utilized by the present
system. The system has the further ability to convert settlement
processing to an "On-Line" format which would involve services such
as "Funds Verification" (Authorization) or "Reserving of Available
Funds" or a combination of both.
Equipment Configuration--The present invention can operate with
nearly every conceivable point-of-sale equipment system. The
central computer system accepts data transmitted from the system
subscriber's existing point-of-sale equipment or that which is
added to augment service performance. The point of sale terminal of
the present invention is implemented in a number of ways, most
preferred, however, being activated under a fully automated format.
Such a fully automated system generally comprises a dual-port
terminal with magnetic stripe reading capabilities interfaced with
a logging printer capable of providing individual Transaction Event
Slips for consumer execution, and a MICR check reader, optical
character recognition ("OCR") equipment, or other device. It is
contemplated that services may also in the future be administered
using the present invention with a singular point-of-sale hardware
device which, as a function of its design, would incorporate all or
most of the service capabilities of an integrated terminal, logging
printer, and MICR Check Reading device. The present invention also
anticipates supporting existing point-of-sale equipment primarily
dedicated to bankcard ("credit card") processing and other
equipment. Therefore, service subscriber activations may be
supported under numerous means of access from the point-of-sale.
For example, personal computers and electronic cash registers in
addition to variations of the more traditional stand alone
transaction processing equipment including alternate POS terminal
processing equipment such as International Veri-FACT and Hypercom,
among others, are contemplated for use by the present invention.
Additionally, the present invention can be interfaced with network
computers, commonly referred to as "NC's". NC's are lower end
computers for the limited use of Internet access which are easily
adapted for POS Electronic Checking and other money transfers
anticipated by the present invention.
Communications links from point-of-sale terminals to the central
computer of the present invention will typically be in the form of
telephonic network communications over a public switched telephone
network ("PSTN") or over other approved networks. Internet access
is also supported by the present system where access is deployed at
a merchant POS for consumer payments. Internet access may also be
utilized to process Electronic Checking inquiries from points other
than the POS to conduct Transaction Events under the present
invention between the merchant and the consumer as a
merchant-initiated payment option. As the use of personal computers
become more prevalent at the POS, utilization of the Internet to
interconnect for approvals and capture for settlement of Electronic
Checking events between a system subscriber and an affected
consumer will become more routine. Transaction Event verification
will occur as a result of point-of-sale terminal access to the
Central computer's positive and/or negative data files. "Approved"
or "Declined" notifications are returned to the "Point-of-Sale"
device over the PSTN. All data files will be centrally located and
maintained on the invention's central computer databases. Portions
of the database include, but are not limited to, third party data
files such as the Shared Check Authorization Network ("SCAN")
(trademark) database.
Individual transactions or groupings of transactions are first
approved by soliciting an "Authorization" prior to capturing a
Transaction Event for electronic funds transfer. To maintain an
accurate status of file information for authorization to
subscribing merchants, businesses, and/or individuals, the system
is comprised of three separate but interactive databases, including
a "Merchant," "Checkwriter," and "Transaction" database, which are
continuously maintained. The "Merchant" database stores records of
all service subscribers authorized to initiate Electronic Checking
requests. These records include amongst others, authorization and
initiation codes, as well as the system subscriber's name and
address. The "Checkwriter" database is a database of "Known" users.
This database stores information that includes, amongst others, a
status field indicating whether the Checkwriter would be "Approved"
or "Declined." Previously unseen Checkwriter MICR strings, when
"Approved," are also added to the "Checkwriter" database for future
inquiries to the system. The "Transaction" database processes
inquiries as well as stores the transaction records of "Approved"
responses for formatting and electronic settlement through the ACH
or similar facility. Current card holder or checkwriting records
are updated daily and instantly available for point-of-sale inquiry
for Transaction Event authorization.
System subscribers point-of-sale equipment is interfaced to the
central computer of the present invention by means of a telephonic
network which is able to support communication from a plurality of
point-of-sale terminals. Programming of the point-of-sale terminal
causes an automatic "Dial-Up" to the central computer and provides
an automatic query and response sequence affirming or denying the
Transaction Event. Each Transaction Event which is "Approved" is
captured for electronic settlement within the transaction database
log of the present system. The addition of local entry hubs may be
installed to better facilitate the speed of economics of
communications with the data files. Alternatively, the use of
satellite or cellular communications or enhanced radio
transmissions instead of telephonic networks may also be used.
Similarly, the system's data files and associated Check Replacement
Service are contemplated to be responsive to emerging point-of-sale
devices intended to seek authorizations and/or improved consumer
identification and security by the alternate means of voice pattern
recognition, POS fingerprint identification, retina scan,
geometrics, biometrics, "smart" chips, consumer or check imaging
and/or signature broadcasting. The present system further
contemplates use of imaging technology as an enhancement to
facilitate POS consumer identification and electronic settlement
for "Approved" Transaction Events. Imaging technology comprises
capturing an impression of a consumer's check or a "signature
capture" followed by electronic settlement of the consumer's
account.
The present system further comprises extensive system approval and
fraud prevention capabilities. The system processes Transaction
Events under a variety of different service types, each defined at
the discretion of the system subscriber. The resulting flexibility
enables the merchant to respond to his/her relative "comfort level"
with a particular Transaction Event or consumer. Typical service
types include (i) "Access Only" wherein the inquiry bypasses the
present system's approval criteria but the Transaction Event,
including all consumer account information, is automatically
captured and logged within the transaction database for an
electronic settlement attempt; (ii) "Check Replacement" which seeks
the systems transaction "approval" and, where "Approved", captures
the Transaction Event for electronic settlement; (iii) "Card
Acceptance" which operates in a manner virtually identical to
"Check Replacement" as mentioned above, but the Transactions Event
is activated through the use of an encoded card (versus a specimen
check); or (iv) "Authorization Only" which seeks the system's
approval providing a system subscriber information regarding the
reliability of a subject consumers account, but does not capture
the Transaction Event for electronic settlement. In the "Access
Only" service type, "Access Only" events bypass the database
records and al other approval and search criteria such as those
explained below, e.g., velocity controls, social security checks,
and scans. It is contemplated that these "Access Only" events
always be "Approved" and passed immediately to a settlement log for
an attempted consumer debit and service subscriber credit.
The present invention has the additional capability to use a
consumer's Social Security Number to perform a variety of
identification and fraud preventative applications prior to issuing
an "Approved" message for the Transaction Event. These include
searches employing Social Security Number first to validate the
consumer's Social Security Number as a genuinely issued number.
Second, the system cross searches the system's "Dead File" to
screen out Social Security Numbers which, while validly issued,
were issued to individuals now reported as deceased. To a greater
extent, verification and "Dead File" searches deter access by
consumers attempting to use false identification. Lastly, the
present system utilizes Social Security Numbers to cross search all
"Known" checkwriter banking account records for negative
information before issuing an "Approved" message for the subject
Transaction Event. This capability more fully insulates the system
and its system subscribers from abuse and susceptibility to repeat
abusers who would commonly seek to process Transaction Events from
a multiplicity of banking accounts.
Entry of a consumer's Social Security Number is performed by input
of the number from the keypad of a POS terminal used to process
Transaction Events. Alternately, the system also supports the use
of a pinpad or similar device, interfaced with the POS terminal,
for consumer entry of a Social Security Number. This capability
supports a consumer's preference for complete privacy as to the
entry of pertinent information. Consumers accessing the system by
means of a previously issued encoded card will have already logged
their Social Security Numbers onto the system's database, and,
therefore, would not be required to re-enter their Social Security
Numbers or other pertinent information.
The present invention is also equipped with velocity controls which
regulate approvals within prescribed purchase limits imposed upon
either the system subscriber or a consumer. The present invention
has the further flexibility to differentiate between "first time"
consumer usage and those limits otherwise assigned to "known"
consumer accounts. Merchant variations in velocity limits can also
be imposed depending upon the type, nature, and consumer purchasing
statistics for a particular merchant category or location.
Inquiries seeking an "Approval" response for a Transaction Event
which meets all other criteria of the system's approval process,
including velocity controls, and when involving previously unknown
banking accounts but carrying verified Social Security Numbers
which have revealed no negative information following a cross
search of the database and where the numbers are also not entries
in the "Dead File", are "Approved". Consequently, each consumer's
banking account and Social Security Number, along with other
information, is automatically logged into the "Known" checkwriter
database of the present invention at the time the "Approved"
response is transmitted to the inquiring POS terminal. In addition
to other identification and fraud preventative measures, the
system's access to Social Security Numbers significantly improves
settlement features relating to matters of proper authority when
"Approved" and captured Transaction Events are transmitted to the
consumer's financial institution for settlement in the form of
electronic debit and credit notations.
The system further contemplates other fraud and enhanced
identification capabilities. These include, but are not limited to,
reliance upon such evolving technologies as fingerprint capture and
analysis, signature capture and verification, imaging technology,
retina scan, biometrics, and other forms of manners of improved
identification practices as such either currently exist or as such
may, upon further development, be readily integrated in to the
system of the present invention.
BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1--System overview of the present invention
FIG. 2--The point-of-sale equipment
FIG. 3--The Central Computer System
FIGS. 4-7--The process Data Flow
FIG. 8--transaction Event Sales Slip
FIG. 9--manual Transaction Event Sales Slip
DEFINITIONS
For purposes of the description and claims relative to the system
of the present invention, the following terms shall have the
meanings set forth below. The following definitions are applied
throughout this application.
Card Acceptance: A service sponsored by the present invention which
enables an encoded card to be utilized to access the central
computer and thereby denote the subject consumer banking account to
be electronically debited in a point-of-sale Transaction Event.
Authorization Only: A service made available under the present
invention as a convenience to its service subscribers where the
subscriber can verify the current status of the subject consumer's
account. In the preferred embodiment, these events are not captured
for electronic settlement.
Check Replacement Service: This is a service sponsored by the
present invention which enables a consumer's specimen ("paper")
check to be utilized to access the central computer of the present
system thereby denoting the consumer banking account to be
electronically captured and settled by presenting a debit notation
through the facilities of the ACH, or other competing service, for
a purchase conducted from a system subscriber's point-of-sale.
Access Only: This is a service sponsored by the present invention
which enables a consumer's specimen ("paper") check to be utilized
to access the central computer of the system thereby denoting the
consumer banking account to be electronically captured and settled
by presenting a debit notation through the facilities of the ACH,
or other competing service, for a purchase conducted from a system
subscriber's point-of-sale.
Electronic Checking: This is a service sponsored by the present
invention which collectively enables a system subscriber to
electronically debit funds from the consumer's bank account and
credit to those funds to the system subscriber's account utilizing
various transaction methods and banking rules as envisioned
above.
DESCRIPTION OF THE PRESENT INVENTION
Referring to FIG. 1 an overall schematic of the present invention
is described. Point-of-sale terminals 300 communicate over normal
PSTN telephone lines with a central computer system 302 which in
turn communicates with a Banking institution 304 for purposes of
debiting consumer accounts and crediting system subscriber
accounts. The banking institution performs its function via normal
automated clearing house ("ACH") transactions 306 or other
competing facility as mentioned above. Alternatively, the system
can automatically generate preauthorized drafts to debit consumer
checking accounts where more expeditious in settling a particular
Transaction_Event. This manner of settlement particularly addresses
the "first-time" consumer whose account might otherwise require
prenotification preceding the processing of a "live" debit event.
Pre-notification is to become volitional in 1996 which, when
effective, will minimize the present system's reliance upon or use
of drafts as a mechanism for settling consumer payment
requests.
Referring to FIG. 2 the point-of-sale equipment is described. The
point-of-sale terminal comprises several different entry means. A
key board 310 can be used to input consumer information manually,
including both bank routing and consumer account information. The
key board 310 allows the system subscriber to input information
such as (i) electronic checking requests, (ii) a void procedure for
incorrect, returned, or canceled events, (iii) a preauthorization
inquiry for the status of consumer accounts, and (iv) accessing
system subscriber's daily activity reports. Alternatively a card
reader 312 can be used whereby the magnetic strip on the card is
ready by the point-of-sale terminal to obtain account information
and finally a check reader 314 may alternately be included to read
the MICR encoded bank and account numbers which appear on a
consumer's specimen check as a substitute for either a specific
card or key board input. These various input means provide
information to a microprocessor 316 which comprises logic means
318, memory means 320, and communication means 322. The logic means
318 comprises logic which allows the information received from the
various input means to be processed and stored in the memory 320.
The logic means further drives a display 324 which provides a
visual output of the bank and account numbers of the consumer for
verification. The communication means 322 allows the subscriber
terminal to communicate with the central computer 302 for purposes
of processing the consumer's purchase. The communications means 322
is compatible with ECR and PC systems.
Referring to FIG. 3 the central computer system 329 is described.
The central computer system receives input from a plurality of
point-of-sale terminals which provide transaction information from
a system subscriber and a consumer desiring to purchase goods or
services. The central computer system comprises a system subscriber
330 file which is a file of those merchants who have elected to use
the present invention for processing purchases. The system
subscriber 330 comprises the "Merchant" database which, as
previously stated, stores records of all service subscribers
authorized to initiate Electronic Checking requests, including
authorization and initiation codes, and the system subscriber's
name and address. The central system also comprises known consumer
file 332 which stores the account information and names of those
consumers who have already been approved for purchases to take
place through various input means. The consumer file 332 comprises
"Checkwriter" database. Additional databases are relied upon by the
system which assist in approving consumer. Transaction Events
including, but not limited to, the SCAN (Trademark) database,
MOD-10 verification, Social Security Number database, and other
proprietary screening criteria which serve to approve, decline, or
reject, the latter serving to cancel those inquiries which are
inaccurate, incomplete, or contain fraudulent data received by the
central computer. The "Transaction" database is another such
database provided by the system.
The system of the present invention further comprises a third
database defined as a transaction database which stores all
activity that is conducted between the plurality of terminals and
the central terminals. Those inquiries captured for a settlement
attempt are converted by the system for ACH file for preparation
and settlement. Inquiries either "DECLINED" or for various reasons
rejected are similarly retained by the transaction database. The
"DECLINED" or other rejected inquiries are withheld from transfer
for settlement.
The computer system also comprises a communications means 334. The
communication means is capable of communicating with other
external, third party databases to allow the system access to
review additional negative records regarding the consumers' banking
account prior to issuing an "Approved" response. Once an "Approved"
response is given for a Transaction Event involving a consumer
banking account previously unknown to the system, the newly
"Approved" consumer record is automatically added to the system's
checkwriter database. This new record allows for the entry of the
consumer's new address and phone number information.
As presently configured the central computer 329 already houses the
third party database known as the SCAN (trademark) database 333
resident on the central computer. Thus credit worthiness can be
checked using all current database criteria searches, and further
benefit by immediate access to the records from the SCAN
(trademark) database. All databases, including proprietary
databases and SCAN (trademark) databases, are updated daily.
The communication means 334 also transmits ACH files which are
created by the system and communicated with a banking institution
338, including instructions for the bank to debit the account of
the consumer and credit the account of the system subscriber
(merchant), with the amount of the purchase. These transactions are
then settled via the "Off-Line" ACH transaction process. The system
of the present invention also contemplates the use of "On-Line"
settlements.
Referring to FIG. 4 the process begins by a consumer presenting an
encoded card or a specimen or "blank" check complete with MICR
number to the system subscriber (the merchant) 100. The subscriber
begins the process by first pressing the appropriate key on a
terminal to select a particular service prior to accessing the host
computer 108. Thereafter the point of sale terminal prompts the
system subscriber to enter the appropriate MICR number 110. The
system subscriber then enters the appropriate MICR number either
manually or by passing the card through a magnetic stripe reader on
the terminal or the specimen check through a check reader which
determines the consumer's bank and account numbers 112.
Referring to FIG. 6 the subscriber would verify that the numbers
appearing on the terminal's display screen match the numbers on the
encoded card or the MICR numbers on a consumer's check 114. If the
numbers do not compare with that of the terminal the system
subscriber clears the terminal and begins the transaction process
again 118. If the process is to be reinitiated, the subscriber
enters the MICR or card number(s) into the point of sale terminal
130. Thereafter the system subscriber compares the numbers as
before 132. If the numbers compare to the system display 134 the
process proceeds. If the numbers do not compare 136 the check or
card is returned to the consumer and the process terminates
137.
Upon a successful reading of a consumer's specimen check, the check
is number embedded thereon id also captured and, once communicated
to the System Central Computer, retained for future reference
purposes or security matters, such as consumer inquiries or
verification of proper authority. Access to the check number proves
critical when performing a sequence review to resolve such
matters.
Referring to FIG. 5, if the verification process proceeds, the
terminal next prompts the system subscriber to enter the amount of
the sale 122 and other security or identification information
required. The subscriber enters the amount of the sale along with
requested information 124 and the terminal thereafter transmits an
inquiry to the host database for verification 126.
The check or card approval process next takes place 128. If the
inquiry is not approved by the central computer the terminal
displays a message declining or rejecting the transaction 140.
Thereafter, printer record of the declined or rejected transaction
is made for purposes of the system subscriber 142 to comply with
the Fair Credit Reporting Act and Regulation of the Board of
Governors of the Federal Reserve System.
If the card or check is approved, the terminal displays a message
noting the approval 138 and the specimen card or check is returned
to the consumer. The printer further makes may alternately be
included to read the MICR encoded bank and account numbers which
appear on a consumer's specimen check as a substitute for either a
specific card or key board input. These various input means provide
information to a microprocessor 316 which comprises logic means
318, memory means 320, and communication means 322. The logic means
318 comprises logic which allows the information received from the
various input means to be processed and stored in the memory 320.
The logic means further drives a display 324 which provides a
visual output of the bank and account numbers of the consumer for
verification. The communication means 322 allows the subscriber
terminal to communicate with the central computer 302 for purposes
of processing the consumer's purchase. The communications means 322
is compatible with ECR and PC systems.
Referring to FIG. 3 the central computer system 329 is described.
The central computer system receives input from a plurality of
point-of-sale terminals which provide transaction information from
a system subscriber and a consumer desiring to purchase goods or
services. The central computer system comprises a system subscriber
330 file which is a file of those merchants who have elected to use
the present invention for processing purchases. The system
subscriber 330 comprises the "Merchant" database which, as
previously stated, stores records of all service subscribers
authorized to initiate Electronic Checking requests, including
authorization and initiation codes, and the system subscriber's
name and address. The central system also comprises known consumer
file 332 which stores the account information and names of those
consumers who have already been approved for purchases to take
place through various input means. The consumer file 332 comprises
"Checkwriter" database. Additional databases are relied upon by the
system which assist in approving consumer Transaction Events
including, but not limited to, the SCAN (Trademark) database,
MOD-10 verification, Social Security Number database, and other
proprietary screening criteria which serve to approve, decline, or
reject, the latter serving to cancel those inquiries which are
inaccurate, incomplete, or contain fraudulent data received by the
central computer. The "Transaction" database is another such
database provided by the system.
The system of the present invention further comprises a third
database defined as a transaction database which stores all
activity that is conducted between the plurality of terminals and
the central terminals. Those inquiries captured for a settlement
attempt are converted by the system for ACH file for preparation
and settlement. Inquiries either "DECLINED" or for various reasons
rejected are similarly retained by the transaction database. The
"DECLINED" or other rejected inquiries are withheld from transfer
for settlement.
The computer system also comprises a communications means 334. The
communication means is capable of communicating with other
external, third party databases to allow the system access to
review additional negative records regarding the consumers' banking
account prior to issuing an "Approved" response. Once an "Approved"
response is given for a Transaction Event involving a consumer
banking account previously unknown to the system, the newly
"Approved" consumer record is automatically added to the system's
checkwriter database. This new record allows for the entry of the
consumer's new address and phone number information.
As presently configured the central computer 329 already houses the
third party database known as the SCAN (trademark) database 333
resident on the central computer. Thus credit worthiness can be
checked using all current database criteria searches, and further
benefit by immediate access to the records from the SCAN
(trademark) database. All databases, including proprietary
databases and SCAN (trademarks) databases, are updated daily.
The communication means 334 also transmits ACH files which are
created by the system and communicated with a banking institution
338, including instructions for the bank to debit the account of
the consumer and credit the account of the system subscriber
(merchant), with the amount of the purchase. These transactions are
then settled via the "Off-Line" ACH transaction process. The system
of the present invention also contemplates the use of "On-Line"
settlements.
Referring to FIG. 4 the process begins by a consumer presenting an
encoded card or a specimen or "blank" check complete with MICR
number to the system subscriber (the merchant) 100. The subscriber
begins the process by first pressing the appropriate key on a
terminal to select a particular service prior to accessing the host
computer 108. Thereafter the point of sale terminal prompts the
system subscriber to enter the appropriate MICR number 110. The
system subscriber then enters the appropriate MICR number either
manually or by passing the card through a magnetic stripe reader on
the terminal or the specimen check through a check reader which
determines the consumer's bank and account numbers 112.
Referring to FIG. 6 the subscriber would verify that the numbers
appearing on the terminal's display screen match the numbers on the
encoded card or the MICR numbers on a consumer's check 114. If the
numbers do not compare with that of the terminal the system
subscriber clears the terminal and begins the transaction process
again 118. If the process is to be reinitiated, the subscriber
enters the MICR or card number(s) into the point of sale terminal
130. Thereafter the system subscriber compares the numbers as
before 132. If the numbers compare to the system display 134 the
process proceeds. If the numbers do not compare 136 the check or
card is returned to the consumer and the process terminates
137.
Upon a successful reading of a consumer's specimen check, the check
is number embedded thereon id also captured and, once communicated
to the System Central Computer, retained for future reference
purposes or security matters, such as consumer inquiries or
verification of proper authority. Access to the check number proves
critical when performing a sequence review to resolve such
matters.
Referring to FIG. 5, if the verification process proceeds, the
terminal next prompts the system subscriber to enter the amount of
the sale 122 and other security or identification information
required. The subscriber enters the amount of the sale along with
requested information 124 and the terminal thereafter transmits an
inquiry to the host database for verification 126.
The check or card approval process next takes place 128. If the
inquiry is not approved by the central computer the terminal
displays a message declining or rejecting the transaction 140.
Thereafter, printer record of the declined or rejected transaction
is made for purposes of the system subscriber 142 to comply with
the Fair Credit Reporting Act and Regulation of the Board of
Governors of the Federal Reserve System.
If the card or check is approved, the terminal displays a message
noting the approval 138 and the specimen card or check is returned
to the consumer. The printer further makes a paper record of the
transaction 142 and the consumer places any required information on
the paper receipt and signs the receipt expressly authorizing the
transaction 144. At the election of the system subscriber, or at
the request of the consumer, the consumer may write the check which
would then be stamped "Void" or "Electronically Settled" and
thereafter returned to the consumer or submitted to lock box or
other storage facilities. This procedure is used for security
measures or where fraud and/or database searches (which rely on the
cancellation of a specimen check) are contemplated.
Referring to FIG. 7, the process description continues. Once the
transaction is "Approved", the central computer makes a record of
the MICR information and other data captured at the point-of-sale,
including the sale amount, permanently storing all the information
146. Upon closeout of a terminal's batch of daily Transaction
Events by a system subscriber, the system's central computer
reformats the captured activity within its transaction database to
ACH format and thereafter, at regular intervals, transmits all of
the daily batch activity for every system subscriber into the ACH
network as debit and credit notations. The central computer
subsequently generates a batch message regarding all Transaction
Events for the prior period and transmits all the Transaction Event
information for the day into the ACH network 148.
During the ACH process each Checkwriter's account is debited for
the exact purchase amount 150. Thereafter, collected funds
representing the total of a day's activity, being the aggregate of
all Transaction Events processed for consumers by the system
subscriber, are deposited into a subscriber's designated account
152. The transaction is then complete 154.
How to Use
The present invention will require the establishment and
maintenance of three interconnected but separate data files for the
purpose of performing access searches. The system embodied by the
present invention, and the interactive databases comprising the
system, are accessible by dial-up communication procedures from
point-of-sale ("POS") terminal devices, electronic cash registers,
and/or personal computers similar to the equipment utilized in the
processing of automated bankcard ("credit card") receipts. The
terminal prompts an operator/user to process one of four optional
inquiry types. Any one or all of four primary functions are capable
of being performed at a single point-of-sale terminal within the
control of the system subscriber.
The inquiry types and database responses for "Approved" Transaction
Events are as follows:
Card Acceptance--Having depressed the assigned key and thereafter
being prompted, the system subscriber "slides" an encoded magnetic
stripped transaction card through the point-of-sale terminal and
enters the "Sale Amount" requested for authorization. Thereupon,
the terminal's dial-up capabilities direct the inquiry to the
central computer for authorization against "KNOWN" (Positive and
Negative" file of current cardholders). Inquiries where a
"POSITIVE" "Match" are found and where the cardholders' status
fields are listed in "good standing" cause an "Approved" return
message from the data file to the inquiring POS terminal. In order
to accomplish this the present invention's database captures each
new MICR string for future reference. Embedded within the data
record is a notation identifying the "Status" for that account. In
this manner, if a certain signal is generated, for instance a "Y",
then the account would be "Approved" for future access to the
system. Conversely, a "No-Match" to inquiry or a "Match" where the
cardholder's status field were listed in "bad standing" would
result in a "Declined" notice to the POS terminal. Daily input to
the system for the present invention causes automatic updating of
status fields for all cardholder files including the activation of
new cardholder accounts, the placement of corrective status entries
("Positive" or "Negative") into the status of existing cardholder
files, deletion of terminated accounts or to change other file
status in existing accounts. In the case of a "No-Match" the system
of the present invention would generate a different signal such as
a "No" and the "Account would be "Declined" upon an attempt to
access the system.
Authorization Only--Having depressed the assigned key and
thereafter being prompted, the system, subscriber manually enters
account numbers from a personal or business check or, where fully
automated, enters a specimen check through a MICR Check Reader
device interfaced with the terminal, whereupon the terminal's
screen would display the check's bank and account numbers for
verification. Thereafter, the operator would enter the "Sale
Amount" and other security or identification information requested
for authorization. The terminal's dial-up capabilities then direct
the inquiry to the computer data file center for authorization
first against the "Known" file of checkwriting records whereupon
the current status field is verified. A successful "Match" to an
inquiry, where the current status field lists the checkwriter
record as in "good standing", would result in an "Approved" notice
from the central computer to the inquiring terminal. Conversely, a
successful "Match" to an inquiry, where the current status field
lists the checkwriter record as not in "good standing", would
result in a "Declined" notice from the central computer ti the
inquiring POS terminal. Each inquiry preliminarily resulting in a
"No-Match" (first time user) when processed against the system's
"Known" checkwriter's database would then be passed through any and
all available third party databases which reside on or are
available to the system by external link preceding any return
notice to the inquiring terminal. This third file is anticipated to
be the Shared Check Authorization Network ("SCAN") a negative
database currently maintained in the system computer data file
center or other databases.
Check Replacement Service--Inquiries initiated as Checked
Replacement inquiries are first processed through the system's
"Known" checkwriter database and, as necessary, thereafter proceed
to the SCAN database, or other database files, prior to the
issuance of an "Approved", "Declined", or a rejection message to
the inquiring POS terminal. A "Match" in the system's checkwriter
database records indicates a consumer account which is "Known" to
the system. If a "Match" is found and where the checkwriter's
status field within the database is listed in "good standing", an
"Approved" response results. Conversely, a "Match" where the
checkwriter's status field were listed in "bad standing" would
result in a "Declined" notice. Reliance upon account information
available from SCAN or any other positive or negative databases
minimizes the risk associated with the system's approval of
Transaction Events involving consumer accounts which are previously
"Unknown" to the invention's proprietary "Known" checkwriter
database. A Match" in the SCAN "NEGATIVE" file would result in a
"Declined" response to the inquiring terminal. Where a "No Match"
should occur, and subject to the receipt of no other negative
information received from the system criteria searches or from
alternate databases, the event would be "Approved" as a
"first-time" consumer user. Negative information received from SCAN
or the rejection of the Transaction Event for other reasons would
result in a "Declined" or one of various reject responses to the
POS terminal. Daily input to the system of the present invention
causes automatic updating of all checkwriter records and the
placement of corrective entries ("Positive" or "Negative") into the
status fields of existing checkwriter files. Each newly captured,
but previously "Unknown" accounts, would, subsequent to an
"Approved" notice, be automatically entered into the system's
"Known" checkwriter file. Check Replacement Transaction Events are
captured by the system and logged within its transaction database.
The total of daily, "Approved" Transaction Events are "paperless"
sales whereby the service subscribing merchant has submitted
requests for electronic debit via the ACH network, or other
competing facilities for each such authorized consumer purchase.
Commercial bank drafts ("paper" checks) are not accepted or
processed by the service subscriber. For each "Approved"
Transaction Event, a "Sales Receipt" is manually prepared or is
automatically printed at the point-of-sale. The consumer provides
express authorization for an electronic debit by signing individual
sales receipts.
Access Only--Access Only Transaction Events are processed in
essentially the same manner as Check Replacement events with one
significant variance. Access Only events bypass the authorization
criteria within the system's central computers established for
approving Check Replacement events and are automatically captured
within the system's transaction database for a settlement attempt.
All other functionality aspects of an Access Only and a Check
Replacement Transaction Event remain identical.
All terminal programming and all prompts strings for MICR Check
Reader interfacing are stored in the POS terminal and the computer
center of the present invention controls interactions between the
plurality of terminals and the central system. The following
modules are present.
Programming for POS Equipment Interface--system subscriber
locations to be activated with the present invention must possess
or acquire a Tranz (trademark) 330 or higher grade terminal or
alternate terminals, personal computers, or approved electronic
cash registers supporting interface capabilities with a MICR check
reader.
The MICR check reader interface results in the reading and
transmitting to a terminal, in accepted format, of the consumer's
entire ABA/Transit, checking account, and specific check number
information which when combined with other data keyed directly into
the terminal results in a query to the system's central computers.
Subsequent to a terminals receipt of the banking account numbers,
the terminal's will display the numbers on its screen allowing the
operator to verify the accuracy of the captured "read" prior to
proceeding. If the consumer's account numbers are correct, the
Transaction Event may proceed, or, where incorrect, the operator
can "clear" the event and resubmit the consumer's specimen check
through the check reader. Alternately, the consumer's bank and
account numbers and other requested information may be manually
entered directly into the terminal with all other financial and
operational advantages of the present invention remaining in
effect.
The computer data file center receives and processes Transaction
Event authorization requests utilizing the entire MICR string for
accurate, error-free identification of both the consumer bank and a
specific checking or depository account to participate in a sale.
ACH settlement criteria mandate exact recall for the bank and
checking account numbers to properly complete any debit request.
This invention conforms to each and every requirement of the ACH
transaction regulations including all pending guidelines and/or
proposals and rules changes regarding processing requirements or
new classification or submittal types.
The present invention assigns a unique identifier(s) for purposes
of accurately identifying individual MICR accounts and Transaction
Events. To this end, each new event captured on the "Checkwriter"
database is consecutively assigned a unique 15 character account
number, checkwriter. This unique same checkwriter identifier is
thereafter printed on future receipts for subsequent transactions
processed.
Additionally, upon entry of media information from one receipt, an
additional code, such as a sixteenth character, is automatically
assigned by the present invention. The sixteenth character
indicates that the subject MICR account is "known" and "registered"
on the system, thereby alleviating the need to supply a
Checkwriter's name, address, and phone number on subsequent
transaction receipts.
A second unique identifier is assigned to distinguish an individual
Transaction Event approved by the system. For purposes of
settlement, or other inquiries, this numerical identifier may be
employed to recover all salient information pertaining to the
Transaction Event, Checkwriter, and the service subscriber. It is
also contemplated that under certain circumstances, the check
number can be used in lieu of a unique identifier to effect
settlement and credit of the Transaction Event. Both identifiers
(i.e., Checkwriter and event) are retained by the system and
printed on the customer's transaction receipt. Moreover, the unique
identifier's satisfy the requirements for the preparation and
submittal of electronic debit and credit notations through the ACH
in conformance with Federal regulations.
Each Transaction Event is completed with the logging printer
generation of a Transaction Event ("Sales") Slip for each
"Approved" authorization inquiry processed (FIG. 8). Alternatively,
a manually created Transaction Event slip can also be prepared
(FIG. 9). Each such Transaction Event Slip must be exacting in its
retention of account numbers and the sale amount enabling both the
consumer and system subscriber to be provided "hard copy" receipts
of the event. Also included would be a clear printing of the
transaction type; "Card Acceptance," "Authorization Only" (as
appropriate), "Check Replacement," or "Access Only". Authorization
language is printed immediately preceding the consumer's signature
line specifically authorizing electronic access in payment of the
requested transaction sale amount.
Instances will arise where previously "Approved" Transaction Events
will require the operational equivalent of a "Void" or "Credit"
procedure. The system of the present invention enables
communication by a service subscriber with the central computers to
effect such corrective adjustments to prior events. By way of
example, a "Void" may be initiated by depressing the assigned key
on a service subscriber's POS terminal and, once complying with
security prompts, the POS terminal will thereafter communicate with
the system's central computers and make such requested corrections.
In the event of a "Voided" Transaction Event, a separate "Voided"
slip will be a automatically printed as a permanent record.
In addition to the primary functions for POS equipment programing,
each POS terminal/MICR interface processing location is capable of
generating printed activity reports. Activity reports can be
printed in either summary or detail formats identifying all
"Approved" Transaction Events by service type, approval number, and
amount. Reports further provide the total number of events
"Approved" and the total captured amount of consumer payments
contained within the activity report. Events which were previously
recorded on the system's central computers as "Approved" but which
have been subsequently "Voided" are also identified, including
detail of the originally "Approved" events, with the amount of such
"Voided" events deleted from the activity report's total for the
captured amount for all Transaction Events.
SUMMARY
A flexible, transaction processing system is described which
permits point-of-sale electronic checking events to be conducted in
a "paperless" manner thereby eliminating the necessity of a service
subscriber accepting or processing commercial bank drafts ("paper"
checks) otherwise presented by consumer's in payment for goods or
services. Individual Transaction Events are submitted to the
system's database for approval in an automated manner and, where
"Approved", captured for electronic settlement. Thus, consumer
payments initiated from a service subscriber's point-of-sale are
electronically debited against the banking account of the consumer
and credited to the designated depository account of the service
subscriber. Among the numerous advantages of the current invention,
consumers are provided access to their banking account funds, but
service subscribers are no longer required to accept or process
commercial bank drafts ("paper" checks). Transaction Events
captured by the system are settled electronically by the submission
of credit and debit notations through the facilities of the ACH
network or any competing network. Departures from the proposed
system, especially with respect to modifications to the system's
service types or the point-of-sale equipment employed, will be
apparent to those skilled in the art without departing from the
spirit of the invention as described. For example, variances in
service type such as "ECK," "RCK," "Check Truncations," and
"Electronic Check Presentment" which enables Electronic Checking
events to be processed from a merchant's point-of-sale system are
also contemplated by the present invention.
* * * * *