Card-based system and method for issuing negotiable instruments

• US 7,720,755 B1
• Filed: 11/16/2000
• Issued: 05/18/2010
• Est. Priority Date: 11/16/2000
• Status: Active Grant

• Current Assignee: First Data Corporation (Fiserv Incorporated), Western Union
• Original Assignee: First Data Corporation (Fiserv Incorporated), Western Union
• Inventors: Coyle, Adam
• Primary Examiner(s): CAMPEN, KELLY SCAGGS
• Application Number:
  US09/713,770
• Time in Patent Office: 3,470 Days
• Field of Search: 705/39, 705/51, 705/74, 705/65, 705/26, 705/14, 705/42, 705/38, 705/36, 705/27, 705/44, 705/41, 705/40, 705/36.R, 705/36.T, 705/4
• US Class Current: 705/39
• 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 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03

Abstract

A card-based system for a non-bank entity to indirectly provide direct deposit capabilities for funds representing pre-payments for negotiable instruments. When a direct deposit of funds into a first account associated with the individual and maintained by a first entity is detected, the total amount of the funds is transferred into a second account associated with the individual and maintained by a second entity. The first entity is a bank or other financial institution subject to federal banking regulations, while the second entity is not subject to federal banking regulations. The individual may withdraw the funds from the second account by using a card at an ATM or POS terminal requesting the issuance of negotiable instruments. Negotiable instruments may be issued in any dollar amount not exceeding the balance of the second account. A properly enrolled customer may make subsequent deposits into the second account. Security is provided by requiring the presentation of identify verification when the negotiable instruments are endorsed and cashed.

Claims

1. A system for issuing prepaid negotiable instruments to an account holder, comprising:

a database for storing, in relation to a prepaid account of the account holder, an account identifier and a balance associated with the prepaid account, wherein the balance represents funds deposited to the prepaid account as advance payment for negotiable instruments, wherein withdrawals against the prepaid account are made only by issuance of negotiable instruments, and wherein the prepaid account is maintained by a non-banking institution and the prepaid account is thus not an FDIC insured account;

a transaction terminal for issuing negotiable instruments, the terminal including a card reader for reading a card having data thereon representing the account identifier, an input device for entering the amount of the negotiable instrument, and a printer for printing the amount on the negotiable instrument;

a server system in communication with the database and the transaction terminal, the server system receiving the account identifier in response to the card being read at the transaction terminal, accessing the database to determine the balance within the prepaid account associated with the account identifier, authorizing a negotiable instrument to be issued at the terminal if there is a sufficient balance within the account to cover the amount of the instrument, and debiting the prepaid account by the amount of the issued negotiable instrument; and

a communication link connecting the server system for receiving data from a banking institution, the data relating to a bank account maintained by the banking institution for the benefit of the account holder, for receiving deposits for the account holder and immediately and automatically crediting those deposits to the prepaid account for the benefit of the account holder;

wherein the account holder is a cash-based consumer not having a relationship with a banking institution, wherein funds are deposited for the benefit of the account holder into the bank account, wherein those funds are then immediately swept into the prepaid account, and wherein the funds are accessed by the account holder only through the issuance of prepared negotiable instruments.

2. The system of claim 1, wherein the deposits received at the bank account are direct deposits through an automated clearinghouse (ACH) system.

3. The system of claim 1, wherein a personal identification number (PIN) is associated with the card, wherein the card is presented by the account holder at the transaction terminal, and the PIN is entered at the input device of the terminal in order for the account holder to request issuance of a negotiable instrument.

4. The system of claim 3, wherein the account is an anonymous prepaid account, wherein the database stores no identifying personal information concerning the account holder, and wherein the server system authorizes issuance of a negotiable instrument without requiring identifying information concerning the account holder other than the account identifier and the PIN.

5. The system of claim 3, wherein the account is an anonymous prepaid account, wherein the database stores no identifying personal information concerning the account holder other than the account holder name to appear as payee on the negotiable instrument, and wherein the server system authorizes issuance of a negotiable instrument without requiring identifying information concerning the account holder other than the account identifier and the PIN.

6. The system of claim 5, wherein the negotiable instrument is issued in the name of the account holder, and wherein the negotiable instrument is preprinted with a restrictive legend requiring identification for cashing the negotiable instrument.

7. The system of claim 6, wherein the negotiable instrument is further preprinted with a restrictive legend setting an upper limit for its face value.

8. The system of claim 1, wherein the transaction terminal is an automated teller machine (ATM).

9. The system of claim 1, wherein the transaction terminal is a point of sale (POS) terminal.

10. The system of claim 1, wherein the non-banking institution is a Licensed Money Transmitter (LMT), wherein the LMT requires a transaction fee for issuing the negotiable instrument, and wherein the transaction fee is deducted from the account when the negotiable instrument is issued.

11. The system of claim 10, wherein the server system authorizes a negotiable instrument to be issued at the terminal if there is a sufficient balance within the account to cover the amount of the transaction fee in addition to the amount of the negotiable instrument.

12. The system of claim 1, wherein the printer prints the name of the account holder on the negotiable instrument so that the negotiable instrument is payable to the account holder.

13. The system of claim 12, wherein the balance associated with the account and stored in the database is limited to a predetermined maximum value.

14. A method for issuing prepaid negotiable instruments to an account holder, comprising:

storing in a database and in relation to an account of the account holder, an account identifier and a balance associated with the account, wherein the balance represents funds deposited to the account as advance payment for negotiable instruments, wherein withdrawals against the account are made only by issuance of negotiable instruments, and wherein the account is a prepaid account maintained by a non-banking institution;

issuing a prepaid negotiable instrument at a transaction terminal, the terminal including a card reader for reading a card having data thereon associated with the account identifier, an input device for entering the amount of the negotiable instrument, and a printer for printing the amount on the negotiable instrument;

providing a server system in communication with the database and the transaction terminal, the server system receiving an account identifier in response to a card being read at the transaction terminal, accessing the database to determine the balance within the account associated with the account identifier, authorizing a negotiable instrument to be issued at the terminal if there is a sufficient balance within the account to cover the amount of the instrument, and debiting the account by the amount of the negotiable instrument so that the negotiable instrument issued at the transaction terminal is prepaid;

maintaining a bank account at a banking institution for the benefit of the account holder and for receiving direct deposits for the account holder; and

upon any such deposit, immediately and automatically debiting the bank account by the amount of the deposit and crediting such deposit to the balance stored in the database for the prepaid account for the benefit of the account holder;

wherein the account holder is a cash-based consumer not having a relationship with a banking institution, wherein funds are deposited for the benefit of the account holder into the bank account, wherein those funds are then immediately and automatically swept into the prepaid account, and wherein the funds are accessed by the account holder only through the issuance of prepaid negotiable instruments.

15. The method of claim 14, further comprising printing the name of the account holder on the negotiable instrument as the payee and printing a restrictive legend requiring identification in order to cash the negotiable instrument.