Electronic check presentment system having a return item notification system incorporated therein

• US 5,412,190 A
• Filed: 02/26/1993
• Issued: 05/02/1995
• Est. Priority Date: 07/17/1991
• Status: Expired due to Term

• Current Assignee: Carreker Corp. (Fiserv Incorporated)
• Original Assignee: JD Carreker and Associates Incorporated
• Inventors: Josephson, Stanley M., Stephens, Thomas S., Thompson, Mitchell D., Royal, P. Darrell, Kopesec, Michael F.
• Primary Examiner(s): SHEPPERD, JOHN W
• Application Number:
  US08/023,364
• Time in Patent Office: 795 Days
• Field of Search: 235/379, 364/401, 364/406, 364/408
• US Class Current: 705/45
• CPC Class Codes: G06Q 20/02 involving a neutral party, e.g. certification authority, notary or trusted third party [TTP]
• CPC Class Codes: G06Q 20/04 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 20/108 Remote banking, e.g. home banking
• CPC Class Codes: G06Q 20/14 specially adapted for billing systems
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/12 Accounting
• CPC Class Codes: G07F 7/0866 by active credit-cards adapted therefor G07F7/1008 takes precedence
• CPC Class Codes: H04L 69/329 in the application layer [OSI layer 7]
• CPC Class Codes: H04L 9/40 Network security protocols

Abstract

An Improved Electronic Check Presentment System Having a Return Item Notification System Incorporated Therein provides banks with a fully automated capability to receive early notification of checks that it previously presented to a payor bank and that have subsequently been identified by the payor bank as return checks or unpaid items. Moreover, the Improved Electronic Check Presentment System allows those banks utilizing it to transmit return notifications to downstream correspondent banks and customers. Additionally, the Improved Electronic Check Presentment System Having a Return Item Notification System Incorporated Therein provides presenting banks with the capability to automatically instruct the payor banks'"'"' systems as to the method of handling particular return checks, in advance of any return or pay/no pay decision by a payor bank, through the capability to append a selected disposition code to the electronic information associated with the check, at the time the check is initially processed by the presenting bank. As a by-product, the Improved Electronic Check Presentment System provides presenting banks with the capability to correlate item sequence numbers assigned to checks by other banks with different item sequence numbers originally assigned to these checks by the presenting bank. It also provides the capability to reconcile paper checks to electronic check records, even in the event that the paper checks are not in the same order as the electronic check records.

Claims

1. For use by a presenting bank and a payor bank having check presentment systems between which check-related data may be electronically transmitted, an accelerated method of clearing checks drawn on the payor bank and received by the presenting bank for payment, said method comprising the steps of:

electronically transmitting, from the presenting bank to the payor bank, predetermined presentment information relating to the checks and permitting a determination by the payor bank as to which of the checks are properly payable by the payor bank;

determining at the payor bank, from the electronic presentment information received thereby, which of the checks are properly payable; and

electronically transmitting, from the payor bank to the presenting bank, a return notification listing of at least potentially returnable ones of the checks.

2. The method of claim 1 further comprising the step of appending to the electronically transmitted presentment information a return notification eligibility flag to indicate whether a particular check, information about which forms a part of the presentment information, is eligible for a return notification, said appending step being carried out prior to said transmitting step.

3. The method of claim 2 wherein he eligibility flag comprises an indication that a particular check is not eligible for a return notification.

4. The method of claim 2 wherein the eligibility flag comprises an indication that a particular check requires at least one preliminary return notification and a final return notification.

5. The method of claim 2 wherein the eligibility flag comprises an indication that a particular check requires only a final return notification.

6. The method of claim 1 wherein said return notification comprises both a preliminary return notification and a final return notification.

7. The method of claim 1 wherein said return notification comprises only a final return notification that is transmitted by the payor bank to the presenting bank after a final pay/no pay decision has been made by the payor bank.

8. A system for use by a payor bank for generating and transmitting to a presenting bank a return notification relating to a potential return item previously presented, by a presenting bank, to the payor bank for payment, said system comprising:

means for receiving an electronic cash letter from the presenting bank, said cash letter including information regarding checks being presented for payment by the payor bank and usable by the payor bank to detect potential return items from said information;

means for processing said electronic cash letter and detecting therefrom checks that may potentially be return items; and

means, responsive to the detection of potential return items, for electronically transmitting to the presenting bank a return notification.

9. The system of claim 8 wherein said electronic return notification comprises a preliminary notification of a potential return item that was generated following a DDA process performed by the payor bank but before a final pay/no pay decision by the payor bank.

10. The system of claim 8 wherein said electronic return notification comprises a final return notification generated by the payor bank following the payor bank making a pay/no pay decision.

11. The system of claim 8 wherein the electronic return notification comprises a confirmation notice that a particular check has been paid.

12. The system of claim 8 further comprising:

means for electronically returning a final return notification to the presenting bank, responsive to a final pay/no pay decision by a payor bank officer, said decision being made subsequent to said detection of checks that may be potential return items and subsequent to an examination of said potential return items by the bank officer.

13. For use by a presenting bank receiving, for payment, checks drawn on a payor bank, an accelerated, paperless method of providing check clearance information to the payor bank, said method comprising the steps of:

detecting, collecting and storing MICR information from received paper checks;

preparing an electronic cash letter, using selected portions of the stored MICR information in addition to non-MICR information relating to the received checks, adapted to enable the payor bank to determine which of the paper checks received by the presenting bank are properly payable by the payor bank; and

transmitting said electronic cash letter to the payor bank prior to delivery thereto of the paper checks.

14. The method of claim 13 further comprising the step of:

storing and maintaining electronic records relating to the transmission to and receipt by the payor bank of said electronic cash letter.

15. The method of claim 14 further comprising the step of:

reconciling the transmitted electronic cash letter against a captured paper cash letter, wherein the reconciling is accomplished by comparing the electronic cash letter against the captured paper cash letter to determine discrepancies between the electronic cash letter and the paper cash letter, and thereafter responsively generating a discrepancy listing.

16. For use by a presenting bank and a plurality of payor banks, an electronic check presentment system facilitating rapid check processing communication between the presenting bank and the payor banks regarding payment of checks drawn on the payor banks and received by the presenting bank for payment, said system comprising:

means, usable by the presenting bank, for capturing processing information from paper checks received by the presenting bank for payment and drawn on the payor banks;

means for selectively extracting portions of the captured processing information grouped by payor bank;

means for incorporating the extracted processing information portions into electronic cash letters transmittable to the associated payor banks, each electronic cash letter containing check information usable by the receiving payor bank to permit it to make payment decisions relative to the checks associated with the electronic cash letter;

means for electronically transmitting said cash letters from the presenting bank to the payor banks; and

means, usable by the payor banks, for receiving the electronic cash letters and, in response to receipt thereof, electronically transmitting to the presenting bank at least preliminary check payment decisions based on the electronic information received from the presenting bank.

17. The electronic check presentment system of claim 16 further comprising:

means for storing and maintaining electronic records relating to the transmission to and receipt by the payor bank of said electronic cash letters.

18. The electronic check presentment system of claim 17 further comprising:

means for reconciling transmitted electronic cash letters with complementary paper cash letters, wherein said reconciling is accomplished by the payor bank by comparing the electronic cash letters with the corresponding paper cash letters.

19. The electronic check presentment system of claim 18 wherein said means for reconciling transmitted electronic cash letters with complementary paper cash letters includes means for handling out-of-sequence checks during reconciliation.

20. The electronic check presentment system of claim 19, said system further comprising:

means for electronically generating and storing discrepancies between said electronic cash letters and said complementary paper cash letters identified by the payor bank in response to said reconciliation means.

21. For use by a presenting bank and a plurality of payor banks, an improved electronic check presentment system facilitating accelerated, paperless check processing between the presenting bank and the payor banks with regard to payment of checks drawn on the payor banks and received by the presenting bank for payment, said system comprising:

means, usable by a presenting bank, for receiving a series of paper checks;

means, usable by a presenting bank, for extracting selected check information from said paper checks;

means for electronically transmitting the extracted check information from the presenting bank to the payor bank on which the checks corresponding to the extracted information are drawn;

means, usable by the payor banks, for receiving the transmitted extracted check information and, in response thereto, electronically transmitting to the presenting bank a return notification comprising further electronic check information as to those checks identified by the payor bank as exceptions; and

means, usable by the presenting bank, for receiving the further electronic check information transmitted by the payor bank and utilizing it to correlate the further electronic check information with the paper checks to which the further check information pertains.

22. For use by a presenting bank and a payor bank, an electronic check presentment system facilitating rapid processing of checks drawn on the payor bank and received by the presenting bank for payment, said system comprising:

means, usable by the presenting bank, for capturing information from paper checks presented for payment to the presenting bank and storing the captured information;

means for appending to the captured check information at least one disposition code providing, for use by the payor bank, instructions for handling checks identified by the payor bank as potential return items;

means for electronically transmitting the encoded check information from the presenting bank to the payor bank; and

means, usable by the payor bank, for receiving the encoded check information and, in response to receipt thereof, electronically transmitting to the presenting bank a return notification in conformance with the disposition code instructions.

23. The system of claim 22 wherein said disposition code comprises an instruction to the payor bank that no return notification is to be generated by the payor bank.

24. The system of claim 22 wherein said disposition code comprises an instruction to the payor bank that a return notification is to be generated by the payor bank only for checks having amounts greater than a predetermined amount.

25. The system of claim 22 wherein said disposition code comprises an instruction to the payor bank that a return notification is to be generated by the payor bank for all checks identified by the payor bank as not payable.

26. The system of claim 22 wherein said disposition code comprises an instruction to the payor bank to reclear checks identified as not payable by the payor bank if the check amount is less than a predetermined amount.

27. The system of claim 22 wherein said disposition code comprises an instruction to the payor bank to reclear all checks identified as not payable by the payor bank.

28. The system of claim 22 wherein said disposition code comprises an instruction to the payor bank to provide a return notification for all checks paid by the payor bank.

29. The system of claim 22 wherein said disposition code comprises an instruction to the payor bank to provide multiple preliminary notifications to the presenting bank.

30. For use by a presenting bank and a payor bank, an electronic check presentment system facilitating rapid processing of checks drawn on the payor bank and received by the presenting bank for payment and facilitating the rapid transmission of disposition information to the payor bank, said system comprising:

means, usable by the presenting bank, for capturing information from paper checks presented to the presenting bank by a payor bank for collection and storing the captured check information;

means for electronically transmitting the captured check information from the presenting bank to the payor bank;

means, usable by the payor bank, for receiving the check information and, in response to receipt thereof, electronically transmitting to the presenting bank a return notification; and

means, usable by the presenting bank, for receiving the electronically transmitted return notification and responsively thereto further transmitting the return notification to the payor bank that previously presented to the presenting bank the check in relation to which the return notification was transmitted by the payor bank.

31. For use by a presenting bank and a payor bank, an electronic check presentment system for accelerated clearing of checks drawn on the payor bank and received by the presenting bank for payment, and for providing to the presenting bank a return notification comprising check disposition information for checks processed by the payor bank, said system comprising:

means, usable by the presenting bank, for capturing information from paper checks presented for payment to the presenting bank and storing the captured information;

means for appending to the captured check information an eligibility code providing, for use by the payor bank, instructions for preparing return notifications for transmission to the presenting bank with regard to the check information processed by the payor bank;

means for electronically transmitting the encoded check information from the presenting bank to the payor bank; and

means, usable by the payor bank, for receiving the encoded check information and, in response to receipt thereof, selectively electronically transmitting to the presenting bank a return notification in conformance with the eligibility code instructions.