Methods and systems for negotiable-instrument fraud prevention

• US 20040167860A1
• Filed: 02/20/2003
• Published: 08/26/2004
• Est. Priority Date: 02/20/2003
• Status: Active Grant

• Current Assignee: Integrated Payment Systems Incorporated (Fiserv Incorporated)
• Original Assignee: First Data Corporation (Fiserv Incorporated)
• Inventors: Ciaccia, John Charles, Baxter, Craig A., Esch, Rodney J.
• Granted Patent: US 7,072,868 B2
• Time in Patent Office: Days
• US Class Current: 705/64
• CPC Class Codes: G06Q 20/0855 involving a third party
• CPC Class Codes: G06Q 20/367 involving electronic purses or money safes
• CPC Class Codes: G06Q 20/3674 involving authentication
• CPC Class Codes: G06Q 20/382 insuring higher security of transaction
• CPC Class Codes: G06Q 20/401 Transaction verification
• CPC Class Codes: G07D 7/004 using digital security elements, e.g. information coded on a magnetic thread or strip

Abstract

An authentication value is provided in a magnetic-ink field of a negotiable instrument. The authentication value is derived from application of an encryption algorithm defined by a secure key. The authentication value may be used to authenticate the instrument through reapplication of the encryption algorithm and comparing the result with the authentication value. The instrument is authenticated if there is a match between the two.

Claims

1. A document for conducting a financial transaction, the document comprising:

information fields for providing written information to qualify the document as a negotiable instrument; and

a magnetic-ink field having characters printed on the document with ink that comprises a magnetic material, the magnetic-ink field including an authentication value derived through application of an encryption algorithm defined by a secure key to information also printed on the document.

2. The document recited in claim 1 wherein:

the encryption algorithm is one of a plurality of possible encryption algorithms, each of which is defined by a secure key; and

the magnetic-ink field further includes an encryption-marker value that defines which of the plurality of possible encryption algorithms corresponds to the encryption algorithm.

3. The document recited in claim 1 wherein the encryption algorithm comprises a stream cipher.

4. The document recited in claim 1 wherein the encryption algorithm comprises a block cipher.

5. The document recited in claim 1 wherein the authentication value is further derived through application of a cryptographic hashing.

6. The document recited in claim 5 wherein the cryptographic hashing is based on a cyclic redundancy code.

7. The document recited in claim 1 wherein the negotiable instrument comprises a draft.

8. The document recited in claim 7 wherein the negotiable instrument comprises a check.

9. The document recited in claim 1 wherein the negotiable instrument comprises a note.

10. A method for producing a document, the method comprising:

receiving preparation information for the document;

selecting portions of the preparation information;

encrypting the selected portions of the preparation information by applying an encryption algorithm defined by a secure key to derive an authentication value;

printing the document with information fields for providing written information to qualify the document as a negotiable instrument; and

printing a magnetic-ink field on the document with ink that comprises a magnetic material, the magnetic-ink field including the authentication value.

11. The method recited in claim 10 further comprising selecting the encryption algorithm from a plurality of possible encryption algorithms, each of which is defined by a secure key, according to an encryption-marker value defined by the preparation information, wherein the magnetic-ink field further includes the encryption-marker value.

12. The method recited in claim 10 wherein the encryption algorithm comprises a stream cipher.

13. The method recited in claim 10 wherein the encryption algorithm comprises a block cipher.

14. The method recited in claim 10 further comprising applying a cryptographic hashing to derive the authentication value.

15. The method recited in claim 14 wherein the cryptographic hashing is based on a cyclic redundancy code.

16. A method for authenticating a negotiable instrument, the method comprising:

receiving information read from the negotiable instrument, wherein the information includes an authentication value read from a magnetic-ink field printed on the negotiable instrument with ink that comprises a magnetic material; and

applying an encryption algorithm defined by a secure key to selected portions of the information read from the negotiable instrument to derive a result for comparison with the authentication value.

17. The method recited in claim 16 wherein the information further includes an encryption-marker value, the method further comprising selecting the encryption algorithm from a plurality of possible encryption algorithms, each of which is defined by a secure key, according to the encryption-marker value.

18. The method recited in claim 16 wherein the encryption algorithm comprises a stream cipher.

19. The method recited in claim 16 wherein the encryption algorithm comprises a block cipher.

20. The method recited in claim 16 further comprising applying a cryptographic hashing to derive the result.

21. The method recited in claim 20 wherein the cryptographic hashing is based on a cyclic redundancy code.

22. A computer-readable storage medium having a computer-readable program embodied therein for directing operation of a computer system including an input device, a printer, and a processor, wherein the computer-readable program includes instructions for operating the computer system to process a financial transaction in accordance with the following:

receiving preparation information for the document from the input device;

selecting portions of the preparation information with the processor;

encrypting the selected portions of the preparation information by applying an encryption algorithm defined by a secure key with the processor to derive an authentication value;

printing the document with the printer with information fields for providing written information to qualify the document as a negotiable instrument; and

printing a magnetic-ink field with the printer on the document with ink that comprises a magnetic material, the magnetic-ink field including the authentication value.

23. The computer-readable storage medium recited in claim 22 wherein the computer-readable program further includes instructions for selecting the encryption algorithm from a plurality of possible encryption algorithms, each of which is defined by a secure key, according to an encryption-marker value defined by the preparation information, wherein the magnetic-ink field further includes the encryption-marker value.

24. The computer-readable storage medium recited in claim 22 wherein the computer-readable program further includes instructions for applying a cryptographic hashing to derive the authentication value.

25. A computer-readable storage medium having a computer-readable program embodied therein for directing operation of a computer system including a communications device and a processor, wherein the computer-readable program includes instructions for operating the computer system to process a financial transaction in accordance with the following:

receiving with the communications device information read from the negotiable instrument, wherein the information includes an authentication value read from a magnetic-ink field printed on the negotiable instrument with ink that comprises a magnetic material; and

applying an encryption algorithm defined by a secure key with the processor to selected portions of the information read from the negotiable instrument to derive a result for comparison with the authentication value.

26. The computer-readable storage medium recited in claim 25 wherein the information further includes an encryption-marker value, the computer-readable program further including instructions for selecting the encryption algorithm with the processor from a plurality of possible secure-key encryption algorithms, each of which is defined by a secure key, according to the encryption-marker value.

27. The computer-readable storage medium recited in claim 25 wherein the computer-readable program further includes instructions for applying a cryptographic hashing to derive the result.

28. A method for processing a negotiable instrument, the method comprising:

receiving an electronic package from a presenter, wherein the electronic package defines information read from the negotiable instrument, wherein the information includes an authentication value read from a magnetic-ink field printed on the negotiable instrument with ink that comprises a magnetic material;

applying an encryption algorithm defined by a secure key to selected portions of the information read from the negotiable instrument to derive a result; and

crediting the presenter for funds in accordance with the information if the result is consistent with the authentication value.

29. The method recited in claim 28 wherein the information further includes an image of the negotiable instrument.

30. The method recited in claim 28 further comprising transmitting the electronic package with a request for recovery of the funds.

31. The method recited in claim 28 wherein the encryption algorithm comprises a stream cipher.

32. The method recited in claim 28 wherein the encryption algorithm comprises a block cipher.

33. The method recited in claim 28 further comprising applying a cryptographic hashing to derive the result.