Anti-fraud POS transaction system

• US 20040138955A1
• Filed: 08/21/2003
• Published: 07/15/2004
• Est. Priority Date: 01/09/2003
• Status: Abandoned Application

• Current Assignee: Alexander Song, Catherine Lew, Victoria Song, Yuh-Shen Song
• Original Assignee: Alexander Song, Catherine Lew, Victoria Song, Yuh-Shen Song
• Inventors: Song, Victoria, Song, Alexander, Lew, Catherine, Song, Yuh-Shen
• Application Number:
  US10/647,158
• Publication Number:
  US 20040138955A1
• Time in Patent Office: Days
• US Class Current: 705/17
• CPC Class Codes: G06Q 20/04 Payment circuits
• CPC Class Codes: G06Q 20/042 characterized in that the payment protocol involves at least one cheque
• CPC Class Codes: G06Q 20/20 Point-of-sale [POS] network systems
• CPC Class Codes: G06Q 20/204 comprising interface for record bearing medium or carrier for electronic funds transfer or payment credit
• CPC Class Codes: G06Q 20/403 Solvency checks

Abstract

Anti-fraud measures are provided for a point-of-sale transaction using various consumer-oriented financial instruments such as credit cards, debit cards, and checks. Through a network, the payer is authenticated by a machine-readable official identification document and the availability of funds is verified by the payer'"'"'s financial institution before the transaction is completed and the funds are immediately secured during the transaction. The entire transaction is securely verified and maintained in such a way that no party has a chance to alter any part of the transaction.

Claims

1. A method for verification and processing of a point of sale (“

POS”

) financial transaction involving a payer'"'"'s account at a financial institution, comprising;

identifying the financial institution and the specific account at that institution based on the financial instrument used in the transaction,

reading embedded identification information by the POS device from a machine-readable identification card in the possession of the purported payer;

sending the payer'"'"'s identification information, the specified financial institution and account information, and the transaction details read by the POS device to a Validation and Processing Center (“

VPC”

) system through networks;

accessing by the VPC system through networks to a remote database maintained by the financial institution containing account available balance information and account holder information for said specific account;

verifying that the embedded identification information read by the POS device matches the account holder information for the identified account stored in the remote database;

verifying that the identified account has sufficient funds to cover a transaction amount specified by the payer; and

if the verification of both the identity of the payer and the amount of the transaction is successful, causing the specified amount to be electronically transferred from the specified payer'"'"'s account to a designated payee.

2. The method of claim 1 further comprising:

prompting the payer to input into the POS device an additional item of personal information not embedded in the identification card but stored in the remote database of the financial institution, and

verifying that the additional personal information input by the payer matches the personal information stored in the remote database.

3. The method of claim 2, wherein the personal information input by the payer includes at least part of a social security number.

4. The method of claim 2, wherein the personal information input by the payer includes at least biometric information.

5. The method of claim 4, wherein the biometric information input by the payer includes at least a fingerprint.

6. The method of claim 1 further comprising:

prompting the payer to input into the POS device an additional item of personal information embedded in the identification card but not stored in the remote database of the financial institution, and

verifying that the additional personal information input by the payer matches the personal information embedded in the identification card.

7. The method of claim 6, wherein the additional personal information input by the payer includes at least a personal identification number.

8. The method of claim 6, wherein the additional personal information input by the payer includes at least biometric information.

9. The method of claim 8, wherein the biometric information input by the payer includes at least a fingerprint.

10. The method of claim 1 wherein the transaction details sent to the VPC system include the transaction amount, and the payee'"'"'s financial account information.

11. The method of claim 1 wherein the completion of the funds transfer from the specified payer'"'"'s account to a designated payee further comprises:

transferring the specified payment amount from the payer'"'"'s account to the VPC'"'"'s bank system; and

transferring the payment amount from the VPC'"'"'s bank system to the payee'"'"'s financial account.

12. The method of claim 1 wherein the VPC system secures the funds for the transaction against the potential payer fraud.

13. The method of claim 1 wherein:

the transaction is based on a financial instrument in the form of a check drawn on the specified financial institution; and

the account and financial institution information is obtained by reading encoded information imprinted on the check.

14. The method of claim 13, wherein the financial instrument is marked as non-negotiable after the specified payment amount has been transferred from the specified payer'"'"'s account.

15. The method of claim 13, wherein a magnetic ink character recognition device is incorporated into the POS device to read the account and financial institution information imprinted on the check.

16. The method of claim 1 wherein:

the transaction is based on a regular credit card and/or debit card issued by a specified financial institution; and

the account and financial institution information is embedded in the card in a machine readable format.

17. The method of claim 1 wherein

a card reader is used to read the account and financial institution information contained in the card, and

said information is embedded in the card in a machine readable format.

18. The method of claim 17, wherein a magnetic card reader is used to read the account and financial institution information contained in a magnetic strip of the card.

19. The method of claim 1, wherein:

the POS device is incorporated into a self-service checkout stand whereby customers may check out the goods and/or services by themselves.

20. The method of claim 1, wherein:

the VPC system is established exclusively for one financial institution to provide services to the customers of the financial institution.

21. The method of claim 1, wherein:

a wireless data transmission device is incorporated into the identification card; and

a wireless data receiver is incorporated into the POS device to read the machine-readable identification information of the identification card.