Computer-Implemented Method and System for Dynamic Consumer Rating in a Transaction

• US 20080195528A1
• Filed: 01/25/2005
• Published: 08/14/2008
• Est. Priority Date: 01/25/2005
• Status: Active Grant

• Current Assignee: PayPal, Inc. (PayPal Holdings, Inc.)
• Original Assignee: I4 Commerce, Inc. (PayPal Holdings, Inc.)
• Inventors: Keithley, Thomas H.
• Granted Patent: US 8,001,040 B2
• Time in Patent Office: Days
• US Class Current: 705/38
• CPC Class Codes: G06Q 30/00 Commerce
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof

Abstract

Disclosed is a computer-implemented method (100) of rating a consumer in connection with a transaction initiated by the consumer and requesting credit from a credit issuer (28). The method (100) includes the steps of: providing a merchant-based consumer/transaction data set (16) to a central credit issuer database (20); providing a third party credit history data set (24) to the central credit issuer database (20); providing a credit issuer credit history data set (30) to the central credit issuer database (20); determining a consumer rating index variable (12) based upon a scoring formula (34) utilizing at least one data field from the provided data sets; and presenting the consumer rating index variable (12) to the credit issuer (28). A system (10) and apparatus (50) for rating the consumer in connection with this transaction is also disclosed.

Claims

1. A computer-implemented method of rating a consumer in connection with a transaction initiated by the consumer and requesting credit from a credit issuer, comprising the steps of:

(a) providing a merchant-based consumer/transaction data set including a plurality of data fields to a central credit issuer database;

(b) providing a third party credit history data set including a plurality of data fields to a central credit issuer database;

(c) providing a credit, issuer credit history data set including a plurality of data fields to a central credit issuer database;

(d) determining a consumer rating index variable based upon a scoring formula utilizing at least one data field value from at least one of the provided merchant-based consumer/transaction data set, the third party credit history data set and the credit issuer credit history data set; and

(e) presenting the consumer rating index variable to the credit issuer;

wherein the method is initiated substantially at the time the credit transaction is initiated.

2. The method of claim 1, wherein at least one of steps (a)-(e) is performed by a computing device.

3. The method of claim 2, wherein the computing device is at least one of a personal computer, a networked device, a laptop, a palmtop, a personal digital assistant and a server.

4. The method of claim 1, wherein the consumer/transaction data set includes at least one field populated with data reflecting at least one of a consumer'"'"'s name, an account number, an address, a city, a state, a zip code, a country, a telephone number, an e-mail address, a social security number, a date of birth, the merchant'"'"'s name, an identification, an order number, an authorization number, an authorization time, an authorization amount, a ship-to address, a bill-to address, a transaction amount, a consumer purchase demographic, a transaction date, a transaction type, a product identification, a service identification, shipping costs, delivery type and customer type.

5. The method of claim 1, wherein the third party credit history data set includes at least one field populated with data reflecting a consumer'"'"'s name, an account number, an address, a city, a state, a zip code, a country, a telephone number, an e-mail address, a social security number, a date of birth, the merchant'"'"'s name, an identification, an order number, an authorization number, an authorization time, an authorization amount, a ship-to address, a bill-to address, a transaction amount, a consumer purchase demographic, a transaction date, a transaction type, a product identification, a service identification, shipping costs, delivery type, customer type, a company identity, a merchant identity, a third party risk score, a general credit risk score, a credit bureau risk score, a prior approval, prior report data, previous transaction data, a geographical risk factor, credit account data, bankcard balance data, delinquency data, credit segment data, time between transactions data, previous transaction amount, previous transaction approval status, previous transaction time stamp data, a response code, active trades in database, public record data, trade line data, transaction medium and credit segment data.

6. The method of claim 1, wherein the credit issuer credit history data set includes at least one field populated with data reflecting a consumer'"'"'s name, an account number, an address, a city, a state, a zip code, a country, a telephone number, an e-mail address, a social security number, a date of birth, the merchant'"'"'s name, an identification, an order number, an authorization number, an authorization time, an authorization amount, a ship-to address, a bill-to address, a transaction amount, a consumer purchase demographic, a transaction date, a transaction type, a product identification, a service identification, shipping costs, delivery type, customer type, a company identity, a merchant identity, a third party risk score, a general credit risk score, a credit bureau risk score, a prior approval, prior report data, previous transaction data, a geographical risk factor, credit account data, bankcard balance data, delinquency data, credit segment data, time between transactions data, previous transaction amount, previous transaction approval status, previous transaction time stamp data, a response code, active trades in database, public record data, trade line data, transaction medium, credit segment data, consumer payment type, consumer payment method, consumer payment history, consumer account history, consumer credit account balance and merchant history.

7. The method of claim 1, wherein the central credit issuer database includes at least one sub-database containing at least one field therein.

8. The method of claim 7, wherein the central credit issuer database includes at least one of:

(i) a transaction database including at least one field populated by data reflecting at least one of transaction data and consumer data;

(ii) a verification database including at least one field populated by data reflecting at least one of verification data and third party credit history data; and

(iii) a credit issuer database including at least one field populated by data reflecting at least one of credit issuer data and credit issuer credit history data.

9. The method of claim 1, wherein the consumer/transaction data set is provided to the central credit issuer database from a merchant.

10. The method of claim 1, wherein the third party credit history data set is provided to the central credit issuer database from a third party credit bureau.

11. The method of claim 1, wherein the credit issuer credit history data set is provided to the central credit issuer database from a credit issuer.

12. The method of claim 1, further comprising the step of providing an indicator to at least one of a user and a credit issuer, the indicator based upon the determined consumer rating index variable.

13. The method of claim 12, wherein the indicator is at least one of:

(i) a visual indicator that is at least one of a letter, a symbol, a term, a word, a phrase, a number, a color, a picture and a visual representation; and

(ii) an audio indicator that is at least one of a sound, an alarm, an audio file, a digital sound and an analog sound.

14. The method of claim 1, wherein step (d) further includes the steps of:

(i) selecting the appropriate development population;

(ii) building a variable data set with data from at least one of the provided merchant-based consumer/transaction data set, the third party credit history data set and the credit issuer credit history data set;

(iii) performing segmentation analysis to identify homogeneous segments;

(iv) building a score card using regression analysis; and

(v) validating the score card against a validation sample.

15. The method of claim 14, wherein data that meets specified and predetermined criteria are included in the selected population.

16. The method of claim 14, wherein the variable data set includes data reflecting at least one of amount of a first transaction, amount of a second transaction, merchant identity, time between transactions, bill-to address, addressee, authorization response, approval status, declination status, internal billing code and delinquency indicator.

17. The method of claim 14, wherein homogeneous segments are identified by analyzing data reflecting at least one of number of active trades, FICO score and defined credit segment.

18. The method of claim 14, wherein the regression analysis is a Forward Step Regression Analysis.

19. The method of claim 14, wherein the regression analysis is performed for each segment, wherein:

logit=fⁿ(number_active_bc, num_pub, num_tr1, num_tr3, webmoto, fic, amt.2, timedif, amtratio)

Where;

Number_active_bc is number of active bankcards from the credit bureau;

Num_pub is the number of public records found in the credit bureau;

Num_tr1 is the number of trade in the credit bureau;

Num_tr13 is the number of 90+Days Past Due trade in the credit bureau;

Webmoto is an indicator of whether the sale was made on the web or by telephone;

Fic is the FICO score;

Amt.2 is the second transaction amount;

Timedif is the elapsed time between first and second authorizations; and

Amtratio is the ratio of the first second authorization amount to the first authorization amount.

20. The method of claim 19, wherein a raw score is calculated using the

following formula:

Raw Score (predicted probability)=1/(1+exp(−

log-odds)).

21. The method of claim 20, wherein a normalized score is calculated using the following formula:

Normalized Score=MAX(800−

(Max((Raw Score−

0.008,

     0)/0.008)*40,200).

22. The method of claim 14, wherein the consumer rating index variable is a normalized score in the range of 200 to 800.

23. The method of claim 14, wherein the validation analysis includes the step of calculating deciles with a 30% randomly selected validation sample from an original population selection.

24. The method of claim 1, wherein the consumer rating index variable is a normalized score in the range of 200 to 800.

37. The apparatus of claim 1, wherein the processor mechanism is further configured to provide an indicator to at least one of a user and a credit issuer, the indicator based upon the determined consumer rating index variable.

38. The apparatus of claim 37, wherein the indicator is at least one of:

(i) a visual indicator that is at least one of a letter, a symbol, a term, a word, a phrase, a number, a color, a picture and a visual representation; and

(ii) an audio indicator that is at least one of a sound, an alarm, an audio file, a digital sound and an analog sound.

25. An apparatus for rating a consumer in connection with a transaction initiated by the consumer and requesting credit from a credit issuer, the apparatus comprising:

a storage mechanism including a central credit issuer database;

an input mechanism for transmitting a merchant-based consumer/transaction data set including a plurality of data fields, a third party credit history data set including a plurality of data fields and a credit issuer credit history data set including a plurality of data fields to the central credit issuer database; and

a processor mechanism configured to determine a consumer rating index variable based upon a scoring formula utilizing at least one data field value from at least one of the provided merchant-based consumer/transaction data set, the third party credit history data set and the credit issuer credit history data set;

wherein the transmission of the merchant-based consumer/transaction data set, the third party credit history data set and the credit issuer credit history data set is initiated substantially at the time the credit transaction is initiated.

26. The apparatus of claim 25, wherein the processor mechanism is a computing device.

27. The apparatus of claim 26, wherein the computing device is at least one of a personal computer, a networked device, a laptop, a palmtop, a personal digital assistant and a server.

28. The apparatus of claim 25, wherein the input mechanism is at least one of a direct-input device, a keyboard, a transmission device, a modem, a network and the Internet.

29. The apparatus of claim 25, wherein the consumer/transaction data set includes at least one field populated with data reflecting at least one of a consumer'"'"'s name, an account number, an address, a city, a state, a zip code, a country, a telephone number, an e-mail address, a social security number, a date of birth, the merchant'"'"'s name, an identification, an order number, an authorization number, an authorization time, an authorization amount, a ship-to address, a bill-to address, a transaction amount, a consumer purchase demographic, a transaction date, a transaction type, a product identification, a service identification, shipping costs, delivery type and customer type.

30. The apparatus of claim 25, wherein the third party credit history data set includes at least one field populated with data reflecting a consumer'"'"'s name, an account number, an address, a city, a state, a zip code, a country, a telephone number, an e-mail address, a social security number, a date of birth, the merchant'"'"'s name, an identification, an order number, an authorization number, an authorization time, an authorization amount, a ship-to address, a bill-to address, a transaction amount, a consumer purchase demographic, a transaction date, a transaction type, a product identification, a service identification, shipping costs, delivery type, customer type, a company identity, a merchant identity, a third party risk score, a general credit risk score, a credit bureau risk score, a prior approval, prior report data, previous transaction data, a geographical risk factor, credit account data, bankcard balance data, delinquency data, credit segment data, time between transactions data, previous transaction amount, previous transaction approval status, previous transaction time stamp data, a response code, active trades in database, public record data, trade line data, transaction medium and credit segment data.

31. The apparatus of claim 25, wherein the credit issuer credit history data set includes at least one field populated with data reflecting a consumer'"'"'s name, an account number, an address, a city, a state, a zip code, a country, a telephone number, an e-mail address, a social security number, a date of birth, the merchant'"'"'s name, an identification, an order number, an authorization number, an authorization time, an authorization amount, a ship-to address, a bill-to address, a transaction amount, a consumer purchase demographic, a transaction date, a transaction type, a product identification, a service identification, shipping costs, delivery type, customer type, a company identity, a merchant identity, a third party risk score, a general credit risk score, a credit bureau risk score, a prior approval, prior report data, previous transaction data, a geographical risk factor, credit account data, bankcard balance data, delinquency data, credit segment data, time between transactions data, previous transaction amount, previous transaction approval status, previous transaction time stamp data, a response code, active trades in database, public record data, trade line data, transaction medium, credit segment data, consumer payment type, consumer payment apparatus, consumer payment history, consumer account history, consumer credit account balance and merchant history.

32. The apparatus of claim 25, wherein the central credit issuer database includes at least one sub-database containing at least one field therein.

33. The apparatus of claim 32, wherein the central credit issuer database includes at least one of:

(i) a transaction database including at least one field populated by data reflecting at least one of transaction data and consumer data;

(ii) a verification database including at least one field populated by data reflecting at least one of verification data and third party credit history data; and

(iii) a credit issuer database including at least one field populated by data reflecting at least one of credit issuer data and credit issuer credit history data.

34. The apparatus of claim 25, wherein the consumer/transaction data set is provided to the central credit issuer database from a merchant.

35. The apparatus of claim 25, wherein the third party credit history data set is provided to the central credit issuer database from a third party credit bureau.

36. The apparatus of claim 25, wherein the credit issuer credit history data set is provided to the central credit issuer database from a credit issuer.

39. The apparatus of claim 25, wherein the processor mechanism is further configured to:

(i) select the appropriate development population;

(ii) build a variable data set with data from at least one of the provided merchant-based consumer/transaction data set, the third party credit history data set and the credit issuer credit history data set;

(iii) perform segmentation analysis to identify homogeneous segments;

(iv) build a score card using regression analysis; and

(v) validate the score card against a validation sample.

40. The apparatus of claim 39, wherein data that meets specified and predetermined criteria are included in the selected population.

41. The apparatus of claim 39, wherein the variable data set includes data reflecting at least one of amount of a first transaction, amount of a second transaction, merchant identity, time between transactions, bill-to address, addressee, authorization response, approval status, declination status, internal billing code and delinquency indicator.

42. The apparatus of claim 39, wherein homogeneous segments are identified by analyzing data reflecting at least one of number of active trades, FICO score and defined credit segment.

43. The apparatus of claim 39, wherein the regression analysis is a Forward Step Regression Analysis.

44. The apparatus of claim 39, wherein the regression analysis is performed for each segment, wherein:

logit=fⁿ(number_active_bc, num_pub, num_tr1, num_tr3, webmoto, fic, amt.2, timedif, amtratio)

Where;

Number_active_bc is number of active bankcards from the credit bureau;

Num_pub is the number of public records found in the credit bureau;

Num_tr1 is the number of trade in the credit bureau;

Num_tr13 is the number of 90+Days Past Due trade in the credit bureau;

Webmoto is an indicator of whether the sale was made on the web or by telephone;

Fic is the FICO score;

Amt.2 is the second transaction amount;

Timedif is the elapsed time between first and second authorizations; and

Amtratio is the ratio of the first second authorization amount to the first authorization amount.

45. The apparatus of claim 44, wherein a raw score is calculated using the following formula:

Raw Score (predicted probability)=1/(1+exp(−

log-odds)).

46. The apparatus of claim 45, wherein a normalized score is calculated using the following formula:

Normalized Score=MAX(800−

(Max((Raw Score−

0.008,

     0)/0.008)*40,200).

47. The apparatus of claim 39, wherein the consumer rating index variable is a normalized score in the range of 200 to 800.

48. The apparatus of claim 39, wherein the validation analysis includes the step of calculating deciles with a 30% randomly selected validation sample from an original population selection.

49. The apparatus of claim 25, wherein the consumer rating index variable is a normalized score in the range of 200 to 800.

50. An apparatus for rating a consumer in connection with a transaction initiated by the consumer and requesting credit from a credit issuer, the apparatus comprising:

means for providing a merchant-based consumer/transaction data set including a plurality of data fields to a central credit issuer database;

means for providing a third party credit history data set including a plurality of data fields to a central credit issuer database;

means for providing a credit issuer credit history data set including a plurality of data fields to a central credit issuer database;

means for determining a consumer rating index variable based upon a scoring formula utilizing at least one data field value from at least one of the provided merchant-based consumer/transaction data set, the third party credit history data set and the credit issuer credit history data set; and

means for presenting the consumer rating index variable to the credit issuer;

wherein the provision of the merchant-based consumer/transaction data set, the third party credit history data set and the credit issuer credit history data set occurs substantially at the time the credit transaction is initiated.