Systems and methods for processing credit card transactions that exceed a credit limit

• US 20030004866A1
• Filed: 06/29/2001
• Published: 01/02/2003
• Est. Priority Date: 06/29/2001
• Status: Active Grant

• Current Assignee: Capital One Services LLC (Capital One Financial Corporation)
• Original Assignee: Capital One Financial Corporation
• Inventors: Li, Haicheng, Solomon, Marc, Poteralski, Martin, Marshall, Jeffrey, Huennekens, Kevin
• Granted Patent: US 7,383,224 B2
• Time in Patent Office: Days
• US Class Current: 705/38
• CPC Class Codes: G06Q 20/042 characterized in that the payment protocol involves at least one cheque
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 20/105 involving programming of a portable memory device, e.g. IC cards, "electronic purses"
• CPC Class Codes: G06Q 20/108 Remote banking, e.g. home banking
• CPC Class Codes: G06Q 20/1085 involving automatic teller machines [ATMs]
• CPC Class Codes: G06Q 20/40 Authorisation, e.g. identification of payer or payee, verification of customer or shop credentials; Review and approval of payers, e.g. check credit lines or negative lists
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A method, system, and computer are disclosed for managing a financial transaction associated with a financial account, wherein the transaction would cause an outstanding balance of the financial account to exceed a credit limit. The method comprises determining a merchant type for a merchant which is a party to the transaction. A merchant credit risk associated with the determined merchant type is determined. The merchant credit risk is compared to a threshold value defining an acceptable credit risk. The transaction is approved based on the comparison of the merchant credit risk with the threshold value.

Claims

1. A method for managing a financial transaction associated with a financial account, wherein the transaction would cause an outstanding balance of the financial account to exceed a credit limit, the method comprising:

determining a merchant type for a merchant which is a party to the transaction;

determining a merchant credit risk associated with the determined merchant type;

comparing the merchant credit risk to a threshold value defining an acceptable credit risk; and

approving the transaction based on the comparison of the merchant credit risk with the threshold value.

2. The method of claim 1, further comprising the step of:

determining whether to contact a party to the transaction to obtain information concerning the transaction for use in determining a credit risk associated with the transaction.

3. The method of claim 2, wherein the step of determining whether to contact a party to the transaction further comprises:

determining whether the potential transaction is an emergency transaction; and

approving the potential transaction when the contacted party indicates that the transaction is an emergency transaction.

4. The method of claim 1, further comprising:

approving the potential transaction based on a determination that declining the potential transaction would cause inconvenience to a holder of the financial account.

5. The method of claim 2, wherein the step of determining whether to contact a party to the transaction further comprises:

allowing a credit analyst to determine whether to approve the potential transaction when the credit analyst is available.

6. The method of claim 1, further comprising:

determining a type of product associated with the transaction;

determining a credit risk associated with the transaction based on the determined type of product associated with the transaction;

comparing the product credit risk associated with the threshold value; and

approving the transaction based the comparison of the determined product credit risk with the threshold value.

7. The method of claim 6, wherein determining the credit risk associated with the transaction further comprises:

determining whether the product is associated with at least one of a consumer emergency and a consumer necessity; and

allocating a low credit risk to the product when the product is determined to be associated with at least one of a consumer emergency and a consumer necessity.

8. The method of claim 1, wherein the step of determining a merchant credit risk further comprises:

determining a low merchant credit risk for merchant types corresponding to at least one of a restaurant, a grocery store, and a fuel dispenser.

9. The method of claim 1, wherein the step of determining a merchant credit risk further comprises:

determining a low merchant credit risk for merchant types corresponding to merchants associated with a historically low occurrence of fraud.

10. The method of claim 1, wherein the step of determining a merchant credit risk further comprises:

determining a low merchant credit risk for merchant types corresponding to merchants offering products deemed to be of an essential nature to a consumer.

11. The method of claim 1, wherein the step of determining a merchant credit risk further comprises:

determining a high merchant credit risk for merchant types corresponding to at merchants.

12. The method of claim 1, wherein the step of determining a merchant credit risk further comprises:

determining a high merchant credit risk for merchant types corresponding to merchants associated with a historically high occurrence of fraud.

13. The method of claim 1, wherein the step of approving the potential transaction further comprises:

increasing the credit limit by an amount equal to at least a value associated with the transaction.

14. The method of claim 1, wherein the credit limit is known to the holder of the financial account.

15. The method of claim 1, wherein the credit limit is unknown to the holder of the financial account.

16. The method of claim 1, wherein the financial account is a credit card account.

17. The method of claim 1, further comprising:

declining the potential transaction if the potential transaction plus the outstanding balance exceeds the credit limit by a predetermined amount.

18. The method of claim 1, further comprising:

adjusting the merchant credit risk based on a time of day the transaction is requested.

19. The method of claim 1, further comprising:

adjusting the merchant credit risk based on the medium in which the customer is making the transaction.

20. The method of claim 1, further comprising:

adjusting the merchant credit risk based on an account history of the customer making the transaction.

21. A computer for managing a financial transaction associated with a financial account, wherein the transaction would cause an outstanding balance of the financial account to exceed a credit limit, the computer comprising:

a memory having programming instructions; and

a processor, responsive to the programming instructions, configured to;

determine a merchant type for a merchant which is a party to the transaction;

determine a merchant credit risk associated with the determined merchant type;

compare the merchant credit risk to a threshold value defining an acceptable credit risk; and

approve the transaction based on the comparison of the merchant credit risk with the threshold value.

22. The computer of claim 21, wherein the processor is further configured to:

determine whether to contact a party to the transaction to obtain information concerning the transaction for use in determining a credit risk associated with the transaction.

23. The computer of claim 22, wherein determining whether to contact a party to the transaction further includes:

determining whether the potential transaction is an emergency transaction; and

approving the potential transaction when the contacted party indicates that the transaction is an emergency transaction.

24. The computer of claim 21, wherein the processor is further configured to:

approve the potential transaction based on a determination that declining the potential transaction would cause inconvenience to a holder of the financial account.

25. The computer of claim 22, wherein determining whether to contact a party to the transaction further includes:

allowing a credit analyst to determine whether to approve the potential transaction when the credit analyst is available.

26. The computer of claim 21, wherein the processor is further configured to:

determine a type of product associated with the transaction;

determine a credit risk associated with the transaction based on the determined type of product associated with the transaction;

compare the product credit risk associated with the threshold value; and

approve the transaction based the comparison of the determined product credit risk with the threshold value.

27. The computer of claim 26, wherein determining the credit risk associated with the transaction further includes:

determining whether the product is associated with at least one of a consumer emergency and a consumer necessity; and

allocating a low credit risk to the product when the product is determined to be associated with at least one of a consumer emergency and a consumer necessity.

28. The computer of claim 21, wherein determining a merchant credit risk further includes:

determining a low merchant credit risk for merchant types corresponding to at least one of a restaurant, a grocery store, and a fuel dispenser.

29. The computer of claim 21, wherein determining a merchant credit risk further includes:

determining a low merchant credit risk for merchant types corresponding to merchants associated with a historically low occurrence of fraud.

30. The computer of claim 21, wherein determining a merchant credit risk further includes:

determining a low merchant credit risk for merchant types corresponding to merchants offering products deemed to be of an essential nature to a consumer.

31. The computer of claim 21, wherein determining a merchant credit risk further includes:

determining a high merchant credit risk for merchant types corresponding to at least one of mail order merchants, telephone order merchants, and Internet order merchants.

32. The computer of claim 21, wherein determining a merchant credit risk further includes:

determining a high merchant credit risk for merchant types corresponding to merchants associated with a historically high occurrence of fraud.

33. The computer of claim 21, wherein approving the potential transaction further includes:

increasing the credit limit by an amount equal to at least a value associated with the transaction.

34. The computer of claim 21, wherein the credit limit is known to the holder of the financial account.

35. The computer of claim 21, wherein the credit limit is unknown to the holder of the financial account.

36. The computer of claim 21, wherein the financial account is a credit card account.

37. The computer of claim 21, wherein the processor is further configured to:

decline the potential transaction if the potential transaction plus the outstanding balance exceeds the credit limit by a predetermined amount.

38. The computer of claim 21, wherein the processor is further configured to:

adjust the merchant credit risk based on a time of day the transaction is requested.

39. The computer of claim 21, wherein the processor is further configured to:

adjust the merchant credit risk based on the medium in which the customer is making the transaction.

40. The computer of claim 21, wherein the processor is further configured to adjust the merchant credit risk based on an account history of the customer making the transaction.

41. An system for managing a financial transaction associated with a financial account, wherein the transaction would cause an outstanding balance of the financial account to exceed a credit limit, the system comprising:

means for determining a merchant type for a merchant which is a party to the transaction;

means for determining a merchant credit risk associated with the determined merchant type;

means for comparing the merchant credit risk to a threshold value defining an acceptable credit risk; and

means for approving the transaction based on the comparison of the merchant credit risk with the threshold value.

42. The system of claim 41, further comprising:

means for determining whether to contact a party to the transaction to obtain information concerning the transaction for use in determining a credit risk associated with the transaction.

43. The system of claim 42, wherein the means for determining whether to contact a party to the transaction further comprises:

means for determining whether the potential transaction is an emergency transaction; and

means for approving the potential transaction when the contacted party indicates that the transaction is an emergency transaction.

44. The system of claim 42, further comprising:

means for approving the potential transaction based on a determination that declining the potential transaction would cause inconvenience to a holder of the financial account.

45. The system of claim 42, wherein the means for determining whether to contact a party to the transaction further comprises:

means for allowing a credit analyst to determine whether to approve the potential transaction when the credit analyst is available.

46. The system of claim 41, further comprising:

means for determining a type of product associated with the transaction;

means for determining a credit risk associated with the transaction based on the determined type of product associated with the transaction;

means for comparing the product credit risk associated with the threshold value; and

means for approving the transaction based the comparison of the determined product credit risk with the threshold value.

47. The system of claim 46, wherein the means for determining the credit risk associated with the transaction further comprises:

means for determining whether the product is associated with at least one of a consumer emergency and a consumer necessity; and

means for allocating a low credit risk to the product when the product is determined to be associated with at least one of a consumer emergency and a consumer necessity.

48. The system of claim 41, wherein the means for determining a merchant credit risk further comprises:

means for determining a low merchant credit risk for merchant types corresponding to at least one of a restaurant, a grocery store, and a fuel dispenser.

49. The system of claim 41, wherein the means for determining a merchant credit risk further comprises:

means for determining a low merchant credit risk for merchant types corresponding to merchants associated with a historically low occurrence of fraud.

50. The system of claim 41, wherein the means for determining a merchant credit risk further comprises:

means for determining a low merchant credit risk for merchant types corresponding to merchants offering products deemed to be of an essential nature to a consumer.

51. The system of claim 41, wherein the means for determining a merchant credit risk further comprises:

means for determining a high merchant credit risk for merchant types corresponding to at least one of mail order merchants, telephone order merchants, and Internet order merchants.

52. The system of claim 41, wherein the means for determining a merchant credit risk further comprises:

means for determining a high merchant credit risk for merchant types corresponding to merchants associated with a historically high occurrence of fraud.

53. The system of claim 41, wherein the means for approving the potential transaction further comprises:

means for increasing the credit limit by an amount equal to at least a value associated with the transaction.

54. The system of claim 41, wherein the credit limit is known to the holder of the financial account.

55. The system of claim 41, wherein the credit limit is unknown to the holder of the financial account.

56. The system of claim 41, wherein the financial account is a credit card account.

57. The system of claim 41, further comprising:

means for declining the potential transaction if the potential transaction plus the outstanding balance exceeds the credit limit by a predetermined amount.

58. The system of claim 41, further comprising:

means for adjusting the merchant credit risk based on a time of day the transaction is requested.

59. The system of claim 41, further comprising:

means for adjusting the merchant credit risk based on the medium in which the customer is making the transaction.

60. The system of claim 41, further comprising:

means for adjusting the merchant credit risk based on an account history of the customer making the transaction.

61. A method for managing a financial transaction associated with a financial account, wherein the transaction would cause an outstanding balance of the financial account to exceed a credit limit, the method comprising:

determining a type of product associated with the transaction;

determining a credit risk associated with the transaction based on the determined type of product associated with the transaction;

comparing the product credit risk associated with the threshold value; and

approving the transaction based the comparison of the determined product credit risk with the threshold value.

62. The method of claim 61, wherein determining the credit risk associated with the transaction further comprises:

determining whether the product is associated with at least one of a consumer emergency and a consumer necessity; and

allocating a low credit risk to the product when the product is determined to be associated with at least one of a consumer emergency and a consumer necessity.

63. A computer for managing a financial transaction associated with a financial account, wherein the transaction would cause an outstanding balance of the financial account to exceed a credit limit, the computer comprising:

a memory having programming instructions; and

a processor, responsive to the programming instructions, configured to;

determine a type of product associated with the transaction;

determine a credit risk associated with the transaction based on the determined type of product associated with the transaction;

compare the product credit risk associated with the threshold value; and

approve the transaction based the comparison of the determined product credit risk with the threshold value.

64. The computer of claim 63, wherein determining the credit risk associated with the transaction further includes:

determining whether the product is associated with at least one of a consumer emergency and a consumer necessity; and

allocating a low credit risk to the product when the product is determined to be associated with at least one of a consumer emergency and a consumer necessity.

65. An system for managing a financial transaction associated with a financial account, wherein the transaction would cause an outstanding balance of the financial account to exceed a credit limit, the system comprising:

means for determining a type of product associated with the transaction;

means for determining a credit risk associated with the transaction based on the determined type of product associated with the transaction;

means for comparing the product credit risk associated with the threshold value; and

means for approving the transaction based the comparison of the determined product credit risk with the threshold value,

66. The system of claim 65, wherein the means for determining the credit risk associated with the transaction further comprises:

means for determining whether the product is associated with at least one of a consumer emergency and a consumer necessity; and

means for allocating a low credit risk to the product when the product is determined to be associated with at least one of a consumer emergency and a consumer necessity.