Method and system for facilitating electronic funds transactions

• US 20070045407A1
• Filed: 08/21/2006
• Published: 03/01/2007
• Est. Priority Date: 04/23/2001
• Status: Active Grant

• Current Assignee: Kioba Processing, LLC (IP Investments Group LLC)
• Original Assignee: Relocall Group BV LLC (Intellectual Ventures LLC)
• Inventors: Paul, David, Hatfield, R.
• Granted Patent: US 7,775,426 B2
• Time in Patent Office: Days
• US Class Current: 235/380
• CPC Class Codes: G06Q 20/12 specially adapted for electronic shopping systems
• CPC Class Codes: G06Q 20/14 specially adapted for billing systems
• CPC Class Codes: G06Q 20/26 Debit schemes, e.g. "pay now"
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes

Abstract

A method and system for executing electronic funds transactions using a merchant-issued payment (MIP) card in a merchant-centric system having benefits which include reduced fees to acquiring merchants and optionally remitting a portion of the collected fees, or other incentive, to issuing merchants. The system also preferably provides information sharing on consumer transactions with merchants to facilitate consumer based incentive programs and the like. The system operates over conventional card processing infrastructure and utilizes the ACH network, or equivalent, to settle the transaction from a consumer checking account, or a merchant account in the case of a prepaid MIP card. Using the system, merchants may elect to qualify customers based on their own criterion. Embodiments are described for prepaid, fixed value, programmable, and refillable, forms of merchant-issued payment cards.

Claims

1. A system for facilitating electronic funds transactions using interoperable payment cards between a cardholder and a merchant, comprising:

a payment card containing point-of-sale readable account information, as part of a plurality of said payment cards issued to consumers within a merchant-issued card program;

said payment card beginning with a unique International Standards Organization (ISO) identification number assigned for the given merchant-issued card network to which transactions are routed for processing;

said payment card is issued by a merchant, participating in said merchant-issued card program as an issuing merchant, to a consumer which becomes a cardholder with a privilege to execute purchase transactions interoperably at any participating acquiring merchant;

said acquiring merchants can interoperably receive said payment card as a form of payment without interconnecting their respective proprietary transaction execution systems as is required for in-house credit cards;

a network enabled computer having an associated payment card data base within a merchant-issued card network and adapted for communicating through non-proprietary card processing services with point-of-sale transaction terminals;

said payment card data base is loaded with information for accessing a valid demand deposit account (DDA) before said payment card will be accepted for payment; and

programming associated with said computer for,

receiving transaction information from point-of-sale transaction terminals in response to an attempted purchase transaction by said cardholder using said payment card,

executing said payment transaction utilizing an automated clearing house (ACH) network in response to said demand deposit account (DDA) information retained for said payment card if the card and transaction are deemed valid,

settling the transaction at a time subsequent to the execution of said transaction through a card processing service from funds retained within an associated demand deposit account,

charging the acquiring merchant a fee for executing said transaction, and

providing an incentive to the issuing merchant of said payment card in response to said transaction settlement.

2. A system as recited in claim 1, wherein said incentive provided to the issuing merchant comprises a cash or non-cash incentive.

3. A system as recited in claim 1:

wherein said payment cards are branded by a given said merchant, one or more parties associated with said merchant, or a combination of merchant and associated parties; and

wherein said branding comprises an indicia and trade dress to advertise and enhance recognition of said merchant, and/or parties, in the marketplace.

4. A system as recited in claim 1, wherein said issuing merchants perform qualification of said consumers and assume at least a portion of the responsibility for said transactions of said consumer.

5. A system as recited in claim 1:

wherein said payment card is co-issued by said issuing merchant and a guarantor entity;

wherein said guarantor entity provides a guarantee to acquiring merchants as to the payment of executed transactions; and

wherein said guarantee is made to said issuing merchant by said guarantor in exchange for monetary considerations thereof.

6. A system as recited in claim 1, wherein said programming is further configured for validating the payment card in response to receipt of a personal identification number (PIN) prior to executing said payment transaction.

7. A system as recited in claim 1, wherein said participating issuing merchant controls issuance of payment cards from which transactions can be executed at merchants that have signed up in the merchant-issued card program as acquiring merchants.

8. A system as recited in claim 1:

wherein said programming is further configured for sharing transaction information with said issuing merchants and/or said acquiring merchants; and

wherein said issuing merchant qualifies to receive higher levels of transaction information access as a form of incentive issuing merchant incentive.

9. A system as recited in claim 1, wherein said programming is further configured for evaluating the requested transaction in relation to predetermined account limitations prior to executing said transaction.

10. A system as recited in claim 9, wherein said account limitations on usage comprise transaction limits, rate of use limitations, or a combination thereof.

11. A system as recited in claim 9, wherein said account limitations on usage comprise a variable velocity feature which evaluates valid card use according to one or more time sensitive usage values.

12. A system as recited in claim 1, wherein said conventional card processing services are performed by a third party processor or by a merchant which provides its own card processing services and is linked directly to the network enabled computer of the merchant-issued card program.

13. A system as recited in claim 1, wherein said merchant-issued card network maintains a host data center, including databases for providing account screening for card issuance, card database management, payment processing including authorization, financial settlement and reconciliation, returns management and collection.

14. A system as recited in claim 1, wherein said demand deposit account is that of the cardholder, issuing merchant, or a third-party associated with the issuing merchant.

15. A system as recited in claim 1:

wherein said demand deposit account comprises the checking account of a consumer; and

wherein said consumer provides personal identification in addition to DDA information including checking account number and routing number to become qualified for utilizing said payment card.

16. A system for facilitating electronic funds transactions using interoperable payment cards between a cardholder and a merchant, comprising:

a payment card containing point-of-sale readable account information, as part of a plurality of said payment cards issued to consumers within a merchant-issued card program;

said payment card beginning with a unique International Standards Organization (ISO) identification number assigned for the given merchant-issued card network to which transactions are routed for processing;

said payment card is issued by a merchant, participating in said merchant-issued card program as an issuing merchant, to a consumer which becomes a cardholder with a privilege to execute purchase transactions interoperably at any participating acquiring merchant;

said acquiring merchants can interoperably receive said payment card as a form of payment without interconnecting their respective proprietary transaction execution systems as is required for in-house credit cards;

a network enabled computer having an associated payment card data base within a merchant-issued card network and adapted for communicating through non-proprietary card processing services with point-of-sale transaction terminals;

said payment card data base is loaded with information for accessing a valid demand deposit account (DDA) before said payment card will be accepted for payment; and

programming associated with said computer for,

receiving transaction information from point-of-sale transaction terminals in response to an attempted purchase transaction by said cardholder using said payment card,

executing said payment transaction utilizing an automated clearing house (ACH) network in response to said demand deposit account (DDA) information retained for said payment card if the card and transaction are deemed valid,

settling the transaction at a time subsequent to the execution of said transaction through a card processing service from funds retained within an associated demand deposit account, and

charging the acquiring merchant a fee for executing said transaction.

17. A system as recited in claim 16, wherein said programming is further configured for sharing transaction information with qualifying merchants participating in said merchant-issued card program as issuing merchants, and/or acquiring merchants.

18. A system as recited in claim 17, wherein said programming is further configured for sharing a higher level of transaction information access than acquiring merchants.

19. A system as recited in claim 16, wherein said programming is further configured for sharing transaction information with qualifying issuing merchants participating in said merchant-issued card program.

20. A system as recited in claim 16, wherein said payment cards are branded by a given said merchant, or third party, with an indicia and trade dress to advertise and enhance recognition of said merchant in the marketplace.

21. A system as recited in claim 16, wherein said issuing merchants perform qualification of said consumers and assume at least a portion of the responsibility for said transactions of said consumers.

22. A system as recited in claim 16:

wherein said merchant based payment card is co-issued by said issuing merchant and a guarantor entity;

wherein said guarantor entity provides a guarantee to acquiring merchants as to the payment of executed transactions; and

wherein said guarantee is made to said issuing merchant by said guarantor in exchange for monetary considerations thereof.

23. A system as recited in claim 16, wherein said programming is further configured for validating the payment card in response to receipt of a personal identification number (PIN) prior to executing said payment transaction.

24. A system as recited in claim 16, wherein said participating issuing merchant controls issuance of payment cards from which transactions can be executed at merchants that have signed up in the merchant-issued card program as acquiring merchants.

25. A system as recited in claim 16, wherein said programming is further configured for evaluating the requested transaction in relation to predetermined account limitations prior to executing said transaction.

26. A system as recited in claim 16, wherein said conventional card processing services are performed by a third party processor or by a merchant which provides its own card processing services and is linked directly to the network enabled computer of the merchant-issued card program.

27. A system as recited in claim 16, wherein said merchant-issued card network maintains a host data center, including databases for providing account screening for card issuance, card database management, payment processing including authorization, financial settlement and reconciliation, returns management and collection.

28. A system as recited in claim 16, wherein said demand deposit account is that of the cardholder, issuing merchant, or a third-party associated with the issuing merchant.

29. A system as recited in claim 16:

wherein said demand deposit account comprises the checking account of a consumer; and

wherein said consumer provides personal identification in addition to DDA information including checking account number and routing number to become qualified for utilizing said payment card.

30. A system for facilitating electronic funds transactions using interoperable payment cards between a cardholder and a merchant, comprising:

a payment card containing point-of-sale readable account information, as part of a plurality of said payment cards issued to consumers within a merchant-issued card program;

said payment card beginning with a unique International Standards Organization (ISO) identification number assigned for the given merchant-issued card network to which transactions are routed for processing;

said payment card is issued by a merchant, participating in said merchant-issued card program as an issuing merchant, to a consumer which becomes a cardholder having the privilege to execute purchase transactions interoperably at any participating acquiring merchant;

a network enabled computer having an associated payment card data base and adapted for communication through card processing services with point-of-sale transaction terminals to receive transaction information from point-of-sale transaction terminals, execute the transaction using the automated clearing house (ACH) network from demand deposit account (DDA) information previously loaded into said payment card data base, settle the transaction from funds within the associated DDA account, and charge the acquiring merchant a fee for executing said transaction.