SYSTEMS AND METHODS USING PAPERLESS CHECK 21 ITEMS

• US 20090094148A1
• Filed: 01/24/2008
• Published: 04/09/2009
• Est. Priority Date: 10/10/2006
• Status: Active Grant

• Current Assignee: Global Standard Financial Incorporated
• Original Assignee: Global Standard Financial Incorporated
• Inventors: Gilder, Clark S., Lalonde, Michael G.
• Granted Patent: US 7,620,603 B2
• Time in Patent Office: Days
• US Class Current: 705/35
• 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 20/0425 the cheque being electronic only
• 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 20/108 Remote banking, e.g. home banking
• 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

Abstract

The disclosure describes a digitally originated check (DOC) through an electronic payment system (EPS) which captures payor metadata instructions regarding the intended payment to a payee. The metadata is stored in a database or the like for further processing instead of printing a paper check. The DOC can be cleared either electronically or through a paper substitute check through Check 21 clearing methods.

Claims

1. A paperless check method, comprising:

(a) receiving an acceptance from a payor of a set of warranties and indemnities applicable to banks of first deposit and clearing banks, wherein the set of warranties and indemnities enable a check to be created, exchanged, and cleared electronically between the payor and a payee and through the banks of first deposit and clearing banks;

(b) receiving a payment instruction from the payor to the payee, wherein the payment instruction is subject to the set of warranties and indemnities;

(c) capturing metadata associated with the digitally originated check, wherein the metadata comprises the payment instruction, a globally unique identifier, tracking information, and security information; and

(d) performing one or more of immediately notifying the payee of the digitally originated check and notifying the payee of the digitally originated check at a later time;

wherein an output from the metadata is interoperable with both paper and electronic clearing methods associated with electronic check clearing systems;

wherein the digitally originated check is a check backed by the warranties and indemnities created by the payor without an original paper check when the payee accepts the warranties and indemnities thereby enabling electronic presentment from the payor to the payee; and

wherein the steps (a) through (d) are executed by a computer system connected to a network.

2. The paperless check method of claim 1, further comprising:

(e) authenticating the payee;

(f) receiving an acceptance from the payee of the set of warranties and indemnities; and

(g) performing one of electronically forwarding the metadata to a bank of first deposit as an electronic Cash Letter File and printing a substitute check from the metadata.

3. The paperless check method of claim 2, wherein the security information is operable to prevent tampering with the payment instructions, the digitally originated check, the metadata, and the substitute check.

4. The paperless check method of claim 2, further comprising (h) electronically endorsing the digitally originated check, wherein the endorsement is stored in the metadata, and wherein the substitute check is printed with the endorsement to avoid overlapping images.

5. The paperless check method of claim 1, wherein the payment instructions comprise any of conditions, limitations, restrictions, and conditional acknowledgements comprising business rules governing payment terms.

6. The paperless check method of claim 1, wherein the tracking information is operable to provide an audit history of the digitally originated check.

7. The paperless check method of claim 1, wherein the security information comprises a personal identification number defined by the payor for secure retrieval by the payee.

10. The paperless check method of claim 1, further comprising verifying the digitally originated check using one of the globally unique identifier and the security information prior to depositing or cashing the digitally originated check.

11. The paperless check method of claim 10, wherein the verifying step comprises public key cryptography.

12. The paperless check method of claim 1, further comprising:

performing one of printing a substitute check from the metadata and creating an image cash letter file from the metadata, wherein the substitute check is printed and the image cash letter file is created with zero degrees of skew and with substantially no stray noise.

13. The paperless check method of claim 1, further comprising:

canceling the digitally originated check through the computer system, wherein the cancelation is performed prior to acceptance of the warranties and indemnities by the payee.

14. The paperless check method of claim 1, further comprising:

utilizing a positive pay database to determine whether the digitally originated check is valid prior to payment.

15. The paperless check method of claim 1, wherein the warranties and indemnities extend the Check 21 Act (October 2004) between the payor and the payee.

16. The paperless check method of claim 15, wherein the output from the metadata is interoperable with a settlement process defined by X9.37 (2003), X9.180 (2005), and X9.140 (2006).

17. The paperless check method of claim 1, further comprising:

(e) authenticating the payee; and

(f) converting the metadata into an Automatic Clearing House item

8. A paperless check system, comprising:

(a) data storage comprising a metadata file, wherein the metadata file is associated with a digitally originated check, wherein the metadata file comprises a payment instruction, a globally unique identifier, tracking information, and security information;

(b) a network interface connected to the data storage;

(c) a processor connected to the network interface and the data storage, wherein the processor is configured to;

(i) receive acceptance of a set of warranties and indemnities from the payor;

(ii) receive payment instructions from the payor;

(iii) create the metadata file with the payment instruction from the payor;

(iv) generate and assign the globally unique identifier to the metadata file;

(v) notify a payee of the metadata file associated with the digitally originated check;

(vi) track the digitally originated check and update the metadata file with an audit history of the digitally originated check; and

(vii) authenticate the digitally originated check;

wherein the set of warranties and indemnities enable a check to be created, exchanged, and cleared electronically between the payor and the payee and through associated banks of first deposit and clearing banks;

wherein the digitally originated check is a check backed by the warranties and indemnities created by the payor without an original paper check when the payee accepts the warranties and indemnities thereby enabling electronic presentment from the payor to the payee; and

wherein an output the metadata file is interoperable with both paper and electronic clearing methods associated with electronic check clearing systems.

9. The paperless check system of claim 8, wherein the processor is further configured to:

(viii) authenticate the payee associated with the metadata file;

(ix) receive acceptance of the set of warranties and indemnities from the payee; and

(x) perform one of electronically forwarding the metadata file to a bank of first deposit as an electronic Cash Letter File and printing a substitute check from the metadata file.