Hybrid Credit Card Transaction System

• US 20100211444A1
• Filed: 04/30/2010
• Published: 08/19/2010
• Est. Priority Date: 03/20/2001
• Status: Active Grant

• Current Assignee: United Parcel Service Of America Incorporated (United Parcel Service Incorporated)
• Original Assignee: United Parcel Service Of America Incorporated (United Parcel Service Incorporated)
• Inventors: Spear, Kevin W.
• Granted Patent: US 8,650,121 B2
• Time in Patent Office: Days
• US Class Current: 705/14.150
• CPC Class Codes: G06Q 10/0875 Itemisation or classification of parts, supplies or services, e.g. bill of materials
• CPC Class Codes: G06Q 20/02 involving a neutral party, e.g. certification authority, notary or trusted third party [TTP]
• CPC Class Codes: G06Q 20/023 the neutral party being a clearing house
• CPC Class Codes: G06Q 20/04 Payment circuits
• CPC Class Codes: G06Q 20/105 involving programming of a portable memory device, e.g. IC cards, "electronic purses"
• 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 20/3572 Multiple accounts on card
• CPC Class Codes: G06Q 30/0213 Consumer transaction fees

Abstract

A hybrid credit card transaction system that processes transactions as either virtual standard transactions directed through a clearinghouse or as virtual closed loop transactions bypassing the clearinghouse, is disclosed. The system includes a logic enabled merchant that detects virtual closed loop transactions and directs them to an affiliated acquiring entity which acquires the virtual closed loop transactions and routes them directly to an affiliated card issuing entity so as to bypass the clearinghouse. The affiliated card issuing entity debits virtual standard transactions to a credit card account and virtual closed loop transactions to a private label account. The logic enabled merchant, associated acquiring entity and the associated card entity may be affiliated by participation in an Internet site that promotes transactions between small businesses and merchants selling wholesale goods. A reduction in processing fees accrued when bypassing the clearinghouse promotes issuance and use of the hybrid credit cards.

Claims

1. A hybrid credit card transaction system for processing a transaction, initiated by a cardholder using a hybrid credit card, as either one of a group of virtual standard transactions routed through a clearinghouse or as one of a group of virtual closed loop transactions bypassing the clearinghouse, said transaction system comprising:

a hybrid credit card;

a merchant having a point-of-sale terminal configured to identify the hybrid credit card and to label the transaction using the hybrid credit card as being one of the virtual closed loop transactions;

an affiliated acquiring entity configured to acquire and direct the virtual standard transactions to the clearinghouse and configured to acquire and direct the virtual closed loop transactions so as to bypass the clearinghouse; and

an affiliated card issuing entity configured to accept the virtual standard transactions from the clearinghouse and to debit a credit card account and to accept the virtual closed loop transactions and to debit a private label account;

wherein the acquiring entity and card issuing entities are separate entities affiliated by an agreement to bypass the clearinghouse.

2. The hybrid credit card transaction system of claim 1, further comprising a processing element having an incentive fee structure that is configured to return an incentive to the cardholder for conducting virtual closed loop transactions with the hybrid credit card.

3. The hybrid credit card transaction system of claim 2, wherein said incentive is in proportion to a fee avoided when bypassing the clearinghouse.

4. The hybrid credit card transaction system of claim 1, further comprising a processing element having an incentive fee structure that is configured to return an incentive to the merchant for conducting virtual closed loop transactions with the hybrid credit card.

5. The hybrid credit card transaction system of claim 4, wherein said incentive is in proportion to a fee avoided when bypassing the clearinghouse.

6. The hybrid credit card transaction system of claim 1, wherein said hybrid credit card comprises a card identifier having a first string identifying the virtual closed loop transactions and a second string identifying the virtual standard transactions, said card identifier detectable by the point-of-sale terminal.

7. The hybrid credit card transactions system of claim 6, wherein said first string comprises a merchant category code modified to identify the virtual closed loop transactions.

8. The hybrid credit card transaction system of claim 1, wherein the merchant is one of a group of affiliated merchants participating in sales on an internet site.

9. The hybrid credit card transaction system of claim 8, wherein the cardholder is a small business and the internet site is a marketplace for business-to-business transactions.

10. The hybrid credit card transaction system of claim 1, wherein the credit card account comprises a revolving credit line.

11. The hybrid credit card transaction system of claim 1, wherein the private label line of credit is an unsecured credit line that must be periodically paid in full.

12. The hybrid credit card transaction system of claim 1, wherein the affiliated card issuing entity issues separate periodic statements of transaction activity on the private label line of credit and the credit account to the cardholder.

13. The hybrid credit card transaction system of claim 1, wherein the affiliate agreement is further agreed upon by the merchant, said affiliate agreement further defining a fee structure for crediting and debiting fees resulting from the virtual closed loop transaction amongst the merchant, the affiliated acquiring entity and the affiliated card issuing entity.