Waterfall prioritized payment processing

• US 7,792,717 B1
• Filed: 10/08/2004
• Issued: 09/07/2010
• Est. Priority Date: 10/31/2003
• Status: Active Grant

• Current Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co), US Bank National Association (US Bancorp)
• Original Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Inventors: Hankins, Matthew, Mann, William III, Dickelman, Mark
• Primary Examiner(s): Kalinowski; Alexander
• Assistant Examiner(s): Ebersman; Bruce I
• Application Number:
  US10/960,012
• Time in Patent Office: 2,160 Days
• Field of Search: 705/35, 705/36.R, 705/37, 705/38, 705/39
• US Class Current: 705/35
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 30/04 Billing or invoicing
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes

Abstract

The invention comprises a system and method for “waterfall” type payment processing using multiple alternative payment sources. A payor provides account information for multiple payment sources, such as a bank checking account, savings account, first credit card account, second credit card account, and so forth. The multiple payment sources are prioritized so that one is a primary payment source, another is a secondary payment source, another is a tertiary payment source, and so forth. After setting up the waterfall payment arrangement, when a bill becomes due a payee or third party payment administrator submits transactions against the payment sources in their order of priority until the payment is satisfied. Other variations and enhancements are disclosed.

Claims

1. A computer-implemented method of prioritized processing of payments for recurring bills, the prioritized processing accomplished using at least one computer processor, the method comprising:

establishing a plurality of payment source options, the payment source options including multiple types of source accounts including at least two of a credit card account, a checking account, a debit card account, a stored value account, a savings account, a home equity line of credit, and a margin account;

establishing priority rules for prioritizing the payment source options, wherein each of said types of source accounts is selectable as a primary payment source having a first priority and a secondary payment source having a second priority to be usable for future payments from the payor;

selecting charge distribution rules through the at least one computer processor, the charge distribution rules for distributing a payment on a percentage basis across at least two of the prioritized payment source options according to the priority rules, wherein the charge distribution rules limit a first charge to a highest priority payment source account to a first pre-determined percentage of the payment and limit a second charge to a next highest priority payment source account to a second pre-determined percentage of the payment;

allowing the payor to establish payor payment rules that govern the submission of transactions against the prioritized payment sources beyond the order of priority, the payor payment rules comprising date restrictions for restricting withdrawal from at least one specified payment source on selected dates;

storing the established priority rules and selected charge distribution rules in a database;

identifying a payment due for a payee;

submitting, by a payee or payment administrator, a transaction against the prioritized plurality of payment sources to the at least one computer processor;

processing the transaction, using the at least one computer processor, against the prioritized plurality of payment sources in the order of their priority, as set forth by priority rules and the charge distribution rules stored in the database, and in accordance with the payor payment rules, until one of said payment source options satisfies the payment due, wherein the transition from one payment source to another is automatically executed by the at least one computer processor accessing the database and executing payment in accordance with the priority rules and charge distribution rules;

thereby providing a waterfall payment process enabling a payment due from a payor to be satisfied for a payee using the prioritized plurality of payment sources.

2. The method of claim 1, wherein the plurality of payment source options is three, including the primary payment source, the secondary payment source, and a tertiary payment source.

3. The method of claim 1, wherein the plurality of payment source options is greater than three.

4. The method of claim 1, wherein the payor provides specific account information for each of the plurality of payment source options, and wherein the priority of said payment source options is set by the payee or by a payment administrator.

5. The method of claim 1, wherein the payor provides specific account information for each of the plurality of payment source options, and the payor selects the priority of said payment source options, thereby enabling the payor to set both the accounts that are to be used as well as the priority of usage of said accounts.

6. The method of claim 1, wherein submitting a transaction against the prioritized plurality of payment sources in the order of their priority includes submitting a first transaction for a portion of the balance due against a first payment source, and submitting a second transaction for a remaining portion of the balance due against a second payment source, thereby enabling distribution of the charge for the payment due across multiple payment sources in their order of priority.

7. The method of claim 1, wherein the payor payment rules provide (a) a lock-out date or window on which no transaction can be submitted against the at least one specified payment source, or (b) a minimum payment date or window on which a transaction exceeding a calculated amount that depletes funds in the at least one specified payment source beyond a predetermined balance is not to be submitted against the at least one specified payment.

8. The method of claim 1, wherein the payor payment rules provide that payment from at least one specified payment source should be attempted more than once before transitioning to the next priority payment source.

9. The method of claim 1, further comprising conducting at least one of a balance check and a limit check for a specified payment source prior to submitting a transaction for a transaction amount against the specific payment source, thereby enabling the avoidance of submitting transactions against payment sources which are unable to satisfy the transaction amount.

10. The method of claim 1, wherein identifying a payment due for a payee further comprises presenting information of the payment due to the payor prior to submitting a transaction.

11. The method of claim 10, further comprising receiving an approval from the payor prior to submitting a transaction.