Note: Descriptions are shown in the official language in which they were submitted.
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SYSTEM AND METHOD FOR PROCESSING FINANCIAL
TRANSACTIONS USING MULTI-PAYMENT PREFERENCES
Field of the Invention
[001] The invention relates generally to retail transactions and, more
particularly, to systems and methods for monitoring consumer behavior,
providing a secure electronic payment in exchange for goods and services, and
selecting a method of payment corresponding to the specific transaction and
customer preferences.
Descriution of the Related Art
[002] Retail store chains survive on high sales volumes and low profit
margins. Accordingly, retail professionals are constantly searching for cost-
effective mechanisms to encourage consumers to shop at their retail stores and
for efficient low-cost methods to process completed retail transactions. In
the
past, the most common approach utilized by retailers for motivating customers
to
shop in a particular establishment was to provide purchasing incentives to
their
customers, usually in the form of printed discount coupons. These coupons have
been distributed to customers either through mass mailings or in a more
focused
manner, based on a customer's previous purchasing habits. Coupons have also
been given to customers in retail stores, either from kiosks or at the check-
out
stand, in response to the customer's purchase of some preselected item or
items.
[003] Retailers have come to realize that the more efficient approach to
encouraging consumers to shop at their retail store is to identify loyal
customers
and to offer incentives to them in response to their continued loyalty.
Implementing systems that track customer purchasing trends for the purpose of
identifying loyal customers can be prohibitively expensive. Furthermore,
promoting retail store loyalty is a time-consuming process that necessitates
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determining consumer needs, which vary across demographic boundaries, and
then providing the goods that satisfy those needs. Unfortunately, the process
of
analyzing collected consumer data is also expensive, time-consuming, and of
limited use. Regional and national consumer demographics data available from
Nielson and other agencies regarding consumer product movement is predictably
too general to be useful to specific retailers. Additionally, these agencies
do not
address product movement demographics that would allow retailers to learn the
particular needs and buying habits of people purchasing specific products.
[004] An alternative to the traditional loyalty program that does not require
demographics data is one in which increased sales and customer loyalty is
obtained through a reward system. For example, the airline industry rewards
loyal customers using frequent flyer programs. Attempts have also been made to
develop "frequent shopper" marketing and sales promotion services in retail
sales. Other retailers have experimented with programs that reward frequent
shoppers by distributing cards to customers who regularly purchase name brand
goods manufactured by a particular vendor. Cards are used at participating
retail
stores to identify the customer and record purchases of particular brand goods
and to award points based on the number of brand good purchases. Points are
accumulated, and gifts are given to the card member based on a predetermined
criteria.
[005] Unfortunately, none of these services completely address or meet the
needs and interests of modern retailers. For example, many of these existing
programs encourage "brand loyalty" or "retail store loyalty," but do not
permit
the retailer to reward across brands (co-branding) or across retailers.
Specifically, none of these services allow a retail store owner to reward
purchase
of Coca ColaTM products with a discount on Frito LayTM snacks. Furthermore,
none of these services allow a Wendy'sTM franchise owner to reward the
purchase of a predetermined number of Wendy'sTM products with a
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complementary oil change at Jiffy LubeTM fox example. Moreover, none of
these services allow a retailer to associate particular consumer groups with
specific consumer needs. For example, in the grocery retail business in the
United States, double income families are pressed for time and show a trend
toward less time being spent shopping and preparing meals. Retail grocers are
challenged to provide incentives to encourage these kinds of shoppers into
their
stores. Retailers and consumers alike could benefit from systems that allow
retailers to identify health conscious consumers and to offer incentives that
appeal to the consumer's need for natural and/or healthy foods. Identifying
those shoppexs having special dietary needs, e.g., medical problems and then
marketing to those dietary needs may be particularly advantageous to
retailers.
Providing products that appeal to certain groups instead of offering generic
grocery items may also be profitable.
[006] Complicating the reality that modern-day loyalty programs do not meet
the needs of the modern retailer is the fact that an increasing number of
retail
store customers also own personal computers with many having access to
computer network services that provide connections to the Internet. Although
some computer sites connected to the World Wide Web have begun to offer
"online" shopping services, and some services have proposed to deliver
discount
coupons through a computer network, the full potential of online delivery of
incentives has not been realized.
[007] Aside from restricting the growth of loyalty programs, it is widely
suspected that the emergence of the World Wide Web has also created an avenue
for increased consumer exposure to fraudulent "online" transactions. Internet-
based payment solutions give unprecedented access to personal information by
uninvited eavesdroppers. Conducting these types of transactions over the
Internet consequently requires additional security measures that are not found
in
conventional transaction processing networks. This additional requirement is
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necessitated by the fact that Internet communication is performed over
publicly-
accessible, unsecured communication lines in stark contract to the private,
dedicated phone line service utilized between a traditional "brick and mortar"
merchant and a credit authorizing organization. As an example, Fig. 1 is a
diagrammatic representation of a conventional system 10 for processing retail
non-cash transactions. A customer enters a merchant store 12 and makes a
purchase using a credit card issued for example, by one of a plurality of
credit
card issuing agencies such as a bank or payment processing system 16.
Merchant store 12 may be one of a large number of similar stores, all owned or
managed by a common parent corporation or headquarters 14. A record of each
credit card transaction, regardless of which card was used, is transmitted by
a
dedicated communications channel 13 to merchant corporation headquarters 14
of the retail outlet 12. A processor at merchant corporation headquarters 14
analyzes the credit card transaction records received and then routes the
trans-
action, along a second dedicated communications channel 15, to an appropriate
payment processing system 16, according to the identification of the
particular
credit card used in the original transaction.
[008] Compare that to the situation that arises when an online consumer
purchases goods and services over the Internet. As shown in Fig. 2, when a
consumer 18 transmits credit card information to an online merchant 24, the
information passes through countless servers 21 and routers 22 on its way to
the
online merchant 24. Along the way, the information can easily be scanned and
scrutinized by numerous interlopers (not shown). Thus, it is critical that any
retail processing system utilizing the Internet or any other unsecured network
as
a communication medium, must employ some form of security or encryption.
[009] Further, an average consumer possesses numerous credit cards, debit
cards, bank accounts, and other payment methods. These different payment
methods may have advantages or disadvantages based upon the specific
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characteristics of a transaction. Also, a consumer may prefer to use different
payment methods for certain types of transactions and then to use another type
of payment methods for other types of transactions. However, managing this
assortment of methods of payment and determining which payment method is
appropriate for a given transaction can be difficult and confusing.
[010] In view of the shortcomings of currently available online transaction
processing systems and methods, it is desirable to provide a system and method
that increases customer convenience and security. It is also desirable to
provide
a system and method that allows merchants to easily compile demographics data
for use in designing customer loyalty and incentive programs. It is also
desirable
to provide a system and method that determines the best method of payment for
a given transaction based upon the characteristics of the specific transaction
and
customer preferences.
Summary of the Invention
[011] The present invention satisfies the above-described need by providing a
system and method for processing consumer transactions. In the systems of the
present invention, a consumer located in a retail establishment identifies
goods
or services to be purchased and then communicates payment information to the
merchant by transmitting an identification signal via a wireless customer
transceiver to a merchant transceiver coupled to a point of sale (POS) device.
Once the merchant transceiver captures the customer ID, it passes it to a POS
device that then combines the customer ID, merchant ID and transaction data
into an authorization request. The POS device then transmits the data to a
transaction processing system (host computer) where the customer's payment
method is identified. For payment methods requiring authorization, a request
for
authorization is transmitted to the appropriate payment processing center.
Once
the payment processing center authorizes the transaction, it transmits an
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authorization code back to the POS device via the transaction processing
system.
Since the system never transmits a customer's credit card or debit card number
across an unsecured link, it provides a heightened degree of security over
prior
art systems. Also, by communicating with the merchant via a wireless customer
transceiver, the system increases customer confidence that their credit card
number or other payment data will not be impermissibly accessed and
fraudulently utilized by nefarious retail store employees. The system also
provides a much greater degree of convenience to participating customers since
it allows them to preassign specific payment methods to specific retail
establish-
ments, and to have the preassigned payment methods automatically selected by
the transaction processing system whenever the customer utilizes his/her
wireless customer transceiver in the merchant's retail establishment.
[012] The system also provides unprecedented benefits to merchants. Most
importantly, the transaction processing system which is networked to the
merchant's in-store POS devices, and to the merchant's on-line shopping
network, allows merchants to quickly and efficiently process non-cash
transactions for in-store and on-line customers, using the same system. Also,
since a merchant can track the purchasing history of each customer who uses
the
transaction processing system to authorize payments, the merchant may provide
for targeted incentives to the customer based on his or her prior purchases,
regardless of their method of origination (in-store or on-line). Moreover, the
transaction processing system's association with a plurality of different
merchants allows a merchant associated with the system to couple its incentive
program with that of another participating merchant, thereby allowing customer
loyalty to be awarded across multiple merchants.
[013] In another aspect, the present invention provides a method for securely
processing financial transactions over the Internet or other unsecured
network.
The method includes utilizing a wireless customer transceiver to transmit a
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customer's ID to a transceiver coupled to the customer's computer. The
computer identifies the desired product from a merchant's online website and
transmits the customer ID and the product information to the transaction
processing system. As in the case of an embodiment, the transaction processing
system identifies the selected payment method and transmits the authorization
request to the appropriate payment processing center. Once the transaction
processor authorizes the transaction, it transmits an authorization code to
the
online merchant and the merchandise is then delivered to the customer's
address.
In addition to transmitting a transaction authorization, the transaction
processing
system also may transmit identification information and other data unique to
the
associated customer in the absence of a retail transaction. An additional
embodiment of a transaction processing system includes a system capable of
transmitting instructions to a vendor based on receipt of a customer ID (e.g.,
issue a ticket to the customer, provide access to the customer, etc.).
[014] In yet another aspect, the present invention provides a method for
associating a customer's preferences with his or her customer ID. For example,
a fast food restaurant chain may choose to collect and store a description of
a
customer's favorite meal so that when the customer transmits his ID to a
merchant transceiver located in the fast food restaurant, his favorite meal is
ordered and payment processing occurs, without the customer uttering a single
word.
[015] In yet another aspect, the present invention provides a method and
system for determining a method of payment according to a specific transaction
and customer preferences associated with his or her customer ID.
[016] To achieve these and other advantages, and in accordance with the
purpose of the invention as embodied and broadly described, the invention
provides a system for processing retail transactions. The system comprises a
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wireless customer transceiver preprogrammed with a unique customer/transmitter
ID number, and a merchant transceiver that captures the customer/transmitter
ID
and forwards it to an associated POS device. The POS device receives trans-
action data via an input device and combines the transaction data with the
received ID signal from the reader to form an authorization request. At least
a
portion of the authorization request may be encrypted to further enhance
security. The POS device transmits the authorization request over a communica-
tions channel to the transaction processing system that includes a processor
and a
customer information database. The customer information database includes a
plurality of customer entries with associated transaction processing
attributes.
The processor receives the authorization request, decrypts it (if necessary)
and
transmits it to the payment processing system in accordance with the
customer's
predetermined choice of payment method. The processor also stores data
derived from a transaction entry associated with the customer ID. In addition
to
processing transactions, the system facilitates the collection and analysis of
comprehensive demographics and purchasing data for managing consumer
loyalty programs and performing trend analysis of consumer purchasing trends.
[017] It is to be understood that both the foregoing general descriptions and
the following detailed description are exemplary and explanatory and are
intended to provide further explanation of the invention as claimed.
[018] Additional features and advantages of the invention will be set forth in
the description which follows, and in part will be apparent from the
description,
or may be learned by practice of the invention. The objectives and other
advantages of the invention will be realized and attained by the methods,
systems, and apparatus particularly pointed out in the written description and
claims hereof, as well as the accompanying drawings.
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Brief Description of the Drawings
[019] The accompanying drawings, which are incorporated in and constitute a
part of this specification, illustrate embodiments of the invention and,
together
with the description, serve to explain the objects, advantages, and principles
of
the invention.
[020] In the drawings:
Fig. 1 is a diagram illustrating a conventional retail credit card transaction
processing system;
Fig. 2 is a diagram illustrating a conventional online computer system for
purchasing goods and services over the Internet;
Fig. 3 is a diagram illustrating an improved system for processing
transactions, consistent with the present invention;
Fig. 4 is a diagrammatic representation of a point of sale device in
accordance with the present invention;
Fig. 5 is a diagrammatic representation of a payment processing terminal
in accordance with the present invention;
Fig. 6 is a diagrammatic representation of a transaction processing system
in accordance with the present invention;
Fig. 7 is a diagrammatic representation of an alternate embodiment of a
system for processing transactions in accordance with the present invention; ,
Fig. 8 is a diagrammatic representation of an online merchant computer in
accordance with the present invention;
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Fig. 9 is a diagrammatic representation of an online customer computer in
accordance with the present invention;
Fig. 10 is a diagrammatic representation of a customer transceiver in
accordance with the present invention;
Fig. 11 is a detailed flow diagram depicting the steps performed by the
preferred embodiment of a customer transceiver when brought in proximity of a
merchant transceiver;
Fig. 12 is a diagrammatic representation of a merchant transceiver in
accordance with the present invention;
Fig. 13 is a flow diagram illustrating the preferred method for processing
financial transactions in accordance with the present invention;
Fig. 14 is a detailed flow diagram depicting the steps performed to enroll
a customer in accordance with the present invention;
Fig. 14b is a detailed flow diagram depicting the steps performed to enroll
a customer in accordance with a further embodiment of the present invention;
Fig. 15 is a detailed flow diagram depicting the steps performed to
process a customer transaction in accordance with the present invention;
Fig. 16 is a detailed flow diagram depicting the steps performed to
perform an end of day closing in accordance with the present invention;
Fig. 17 is a detailed flow diagram depicting the steps performed to
manage a customer loyalty program in accordance with the present invention;
and
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Fig. 18 is a detailed flow diagram depicting the steps performed to
process a multi-payment method transaction in accordance with the present
invention.
Detailed Description of Preferred Embodiments
[021] In the following detailed description of preferred embodiments,
reference is made to the accompanying drawings that form a part thereof, and
in
which is shown by way of illustration a specific embodiment in which the
invention may be practiced. This embodiment is described in sufficient detail
to
enable those skilled in the art to practice the invention and it is to be
understood
that other embodiments may be utilized and that structural changes may be made
without departing from the scope of the present invention. The following
detailed description is, therefore, not to be taken in a limited sense.
[022] To achieve these and other advantages, and in accordance with the
purpose of the invention as embodied and broadly described, the invention
provides a system for processing retail transactions. The system comprises a
customer transceiver preprogrammed with a unique customer/transmitter ID
number, and a merchant transceiver that receives a customer identification
signal
from the customer transceiver and then forwards the received customer ID
signal
to an associated POS device. The POS device receives transaction data via an
input device and combines the transaction data with the customer ID signal to
form an authorization request, in those cases when the payment method requires
authorization. The POS device transmits the authorization request over a
communications channel to a transaction processing system that includes a
processor and a customer information database comprised of a plurality of
customer entries with associated transaction processing attributes. The
processor
receives the authorization request and transmits it to the payment processing
system dictated by the customer's payment choice for the transaction. The
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processor also stores data derived from a transaction entry associated with
the
customer ID. In addition to processing transactions, the system facilitates
the
collection and analysis of comprehensive demographics and purchasing data for
managing consumer loyalty programs and performing trend analysis of
consumer purchasing trends.
[023] Turning first to the nomenclature of the specification, the detailed
description which follows is represented largely in terms of processes and
symbolic representations of operations performed by conventional computer
components, including a central processing unit (CPU), memory storage devices
for the CPU, and connected pixel-oriented display devices. These operations
include the manipulation of data bits by the CPU and the maintenance of these
bits within data structures residing in one or more of the memory storage
devices. Such data structures impose a physical organization upon the
collection
of data bits stored within computer memory and represent specific electrical
or
magnetic elements. These symbolic representations are the means used by those
skilled in the art of computer programming and computer construction to most
effectively convey teachings and discoveries to others skilled in the art.
[024] For the purposes of this discussion, a process is generally conceived to
be a sequence of computer-executed steps leading to a desired result. These
steps generally require physical manipulations of physical quantities.
Usually,
though not necessarily, these quantities take the form of electrical,
magnetic, or
optical signals capable of being stored, transferred, combined, compared, or
otherwise manipulated. It is convention for those skilled in the art to refer
to
these signals as bits, values, elements, symbols, characters, terms, objects,
numbers, records, files or the like. It should be kept in mind, however, that
these
and similar terms should be associated with appropriate physical quantities
for
computer operations, and that these terms are merely conventional labels
applied
to physical quantities that exist within and during operation of the computer.
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[025] It should also be understood that manipulations within the computer are
often referred to in terms such as adding, comparing, moving, etc., which are
often associated with manual operations performed by a human operator. It
must be understood that no such involvement of a human operator is necessary
or even desirable in the present invention. The operations described herein
are
machine operations performed in conjunction with a human operator or user who
interacts with the computer. The machines used for performing the operation of
the present invention include general digital computers or other similar
process-
ing devices.
[026] In addition, it should be understood that the programs, processes,
methods, etc., described herein are not related or limited to any particular
computer or apparatus. Rather, various types of general purpose machines may
be used with programs constructed in accordance with the teachings described
herein. Similarly, it may prove advantageous to construct specialized
apparatus
to perform the method steps described herein by way of dedicated computer
systems with hard-wired logic or programs stored in nonvolatile memory, such
as read only memory.
[027] The operating environment in which the present invention is used
encompasses general distributed computing systems wherein general purpose
computers, workstations, or personal computers are connected via communica-
tion links of various types. In a client server arrangement, programs and
data,
many in the form of objects, are made available by various members of the
system.
[028] Referring now to the remaining figures, corresponding reference
characters refer to corresponding elements, wherever possible.
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[029] Fig. 3 is a diagrammatic representation of a system 30 for processing
retail non-cash transactions in accordance with an embodiment of the present
invention. In Fig. 3, system 30 is comprised of merchant store 12, payment
processing system 16 and transaction processing system 26. Located in
merchant store 12 is at least one POS device 34 for capturing transaction and
customer identification data. Payment processing system 16 utilizes at least
one
payment processing terminal 52 to process purchase transactions. POS device
34 communicates with transaction processing system 26 over communications
link 28 and payment processing terminal 52 communicates with transaction
processing system 26 over communications link 32. While this specification
describes a system wherein POS device 34 communicates directly with
transaction processing system 26, it is understood that POS device 34 may
actually communicate with one or more intermediate computers that then
communicate with transaction processing system 26, without departing from the
spirit and scope of this invention. Communication links 28 and 32 may be
secure, dedicated communications links (like links 13 and 15 in Fig. 1) or
publicly accessible and unsecured.
[030] A diagrammatic representation of POS device 34 is shown in Fig. 4.
POS device 34 is any device used by merchants at the point of sale to record
transactions between customers and merchants, including cash registers, point-
of-sale terminals, etc. As show, POS device 34 is comprised of a conventional
microprocessor 36, a random access memory (RAM) 38, an input device (e.g.,
keyboard, scanner, etc.) 40, a display or screen device 42, a mass storage 44
(e.g., hard or fixed disk, removable floppy disk, optical disk, magneto-
optical
disk, or flash memory), a network interface card, modem or controller 46
(e.g.,
Ethernet), and a merchant transceiver 48. As shown, the various components of
each POS device 34 communicate through a system bus 51 or similar
architecture. POS device 34 communicates with other POS devices (not shown)
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and with transaction processing system 26 via network interface card or modem
46. Alternatively, the POS device 34 may be connected via an ISDN adapter
and an ISDN line for communications with the transaction processing system 26.
Merchant transceiver 48 provides wireless communication with a customer
transceiver 50 (explained below) which may be carried by a customer on, for
example, his key chain. There may be other components as well, but these are
not shown to facilitate description of the unique aspects of this embodiment
of
the invention. The hardware arrangement of this computer, as well as the other
computers discussed in this specification is intentionally shown as general,
and
is meant to represent a broad variety of architectures, which depend on the
particular computer device used. For example, mass storage devices depicted
with each computer may be co-located with its associated computing device on
an internal storage device or it may be remotely located on an external
storage
device.
[031] A diagrammatic representation of payment processing terminal 52 is
shown in Fig. 5. Like POS device 34, payment processing terminal 52 is
comprised of a CPU 54, RAM 56, a mass storage device 62, and a network
interface card or modem 64 for communicating with transaction processing
system 26. Stored in mass storage device 62 is a payment database 66 for
authorizing payment in response to consumer transactions.
[032] A detailed diagram of transaction processing system 26 is shown in Fig.
6. As shown in Fig. 6, transaction processing system 26 is comprised of a CPU
86, RAM 88, an input device 90, a display or screen device 92, a mass storage
device 94, and a network interface card or modem 96 for communicating with
POS device 34 and payment processing terminal 52. Stored in mass storage
device 94 is a customer information database 100 for identifying a customer,
payment method, payment processor, and authorization data format when given
a customer/transmitter ID number. The organization of data inside customer
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information database 100 may take on a variety of physical structures,
dependent
upon evolving data management technology. Examples include, but are not
limited to flat files, relational tables, star tables, hierarchical files, and
objects.
The data will be organized so that storage and retrieval of customer data
facilitates effective navigation, association, and use of customer-related
data for
identification, transaction authorization, customer contact, identification of
customer preferences and other uses of the data consistent with the spirit and
scope of this invention. The database is structured to provide maximum
security
to protect the privacy of customer and merchant information. The ability to
relate groups of data such as customer data with specific customer transaction
data, for example, will be controlled via the structure of the data storage
design
as well as through controls of the database system to prevent unauthorized
access of detailed and aggregated data by both internal and external sources.
[033] As shown in Fig. 6, customer database 100 may be comprised of the
following categories of information: customer profile information 102,
merchant
information 104, fraud information 106, loyalty program information 108,
transaction information 110, customer payment method information 112, and
customer personal information 114. Customer profile information 102 identifies
and describes each customer. It includes, but is not limited to: customer
address
data, phone number, date of birth, Social Security number, spending limits
(e.g.,
amount per day, amount per month, etc.), photograph, password, occupation,
PIN, billing address, primary account holder name, authorized user name,
customer transceiver activation status and customer transceiver identification
number. Merchant information 104 identifies and describes each participating
merchant. It includes, but is not limited to: merchant name, accepted payment
methods with associated authorization procedures (if appropriate), merchant
location and merchant identifier. It is important to note that some payment
methods (e.g., check, credit and debit) require authorization procedures,
while
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others (e.g., cash, certified check, etc.) do not. Fraud information 106 is
used to
ensure that customer transceivers 50 are not used by unauthorized users. This
information includes, but is not limited to: transmission device identifier,
activation status, merchant identifier, merchant location, date of sale, time
of
sale and sale amount. Loyalty program information 108 defines specific
merchant loyalty programs. It includes, but is not limited to: program rules,
specific points or other benefits for each merchant loyalty program component.
Transaction information 110 includes a listing of the transactions previously
conducted by a customer using transaction processing system 26. The informa-
tion includes, but is not limited to: transaction type, item purchased,
merchant,
date purchased, price, total price amount, and loyalty program usage. Customer
payment method information 112 defines the payment method to be used by
each customer at each merchant. Examples include, but is not limited to:
default
payment method, credit card number, debit card number, bank account number,
creditldebit card type, crediddebit card expiration date, name and billing
address
for credit/debit card, checking account bank name, checking account number,
bank routing number, associations between each merchant and each payment
method. Customer personal information 114 comprises a plurality of individual
customer purchasing preferences and other customer-unique personal informa-
tion. For example, suppose the merchant is Burger KingTM. The purchasing
information could be the customer's favorite meal or menu item such that
whenever the customer initiates a transactions with the merchant, the
purchasing
preference will automatically be ordered for the customer. Other examples
include, but is not limited to: spending limits (e.g., dollar amount per day,
amount per year, etc.), whether the customer wishes to always use PIN or only
for transactions over a certain dollar amount, customer shoe size, suit size,
spouse's birthday, spouse's suit size, etc. Additional information may be
stored
in customer transaction database 100, and the data may be organized in a
different manner, without departing from the scope of the present invention.
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[034] A second embodiment of the present invention is directed to a method
and apparatus for securely processing financial transactions over the Internet
or
other unsecured network. Fig. 7 is a diagrammatic representation of a system
700 for processing retail, non-cash transactions in accordance with the second
embodiment. In addition to the elements shown in Fig. 3, system 700 in Fig. 7
further comprises an online consumer terminal 710 that communicates with
transaction processing system 26 over communications link 715. Online
merchant 12' replaces merchant store 12, online merchant computer 734
replaces POS device 34, and communication link 28' replaces communications
28 shown in Fig. 3. In this embodiment, communication links 28' and 715 are
typically unsecured, publicly accessible links. As in the case of an
embodiment,
communication links 28', 32 and 715 may be any combination of publicly
accessible or secure dedicated links.
[035] The difference between merchant store (Fig. 3) and online merchant 12'
is that merchant store 12 is a conventional "brick and mortar" store where
consumers can physically select and purchase merchandise, whereas online
merchant 12' is a website operated by a merchant that allows online consumers
to examine and purchase merchandise over a computer network. Online
merchant computer 734 is preferably operated by retail establishments (Macy's,
K-mart, Border's, etc.). Its main role is to collect merchandise orders from
online consumer terminals 710, and arrange for delivery of the merchandise
once
it receives authorization from a payment processing system 16.
[036] Fig. 8 is a diagrammatic representation of an online merchant computer
734 in accordance with the present invention. As shown in Fig. 8, online
merchant computer 734 is comprised of a main memory 800, a display device
810, input device 820, a mass storage device 840, a CPU 830 and a network
interface card or modem 850. As further shown in Fig. 8, the mass storage
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device 840 contains the merchant's product database 845. Product database 845
is comprised of information on various merchant products available online.
Once a user accesses a merchant's home page, he/she will be able to access all
of
the merchant's product pages that are associated with the home page.
Individual
pages may be sent in the form of Hyper-Text Markup Language (HTML) pages
across communication link 715 to a web browser 960 operating on a requesting
online consumer computer 710.
[037] As shown in Fig. 9, the online consumer computers 710 preferably
includes a main memory 900, display device 910, input device 920 such as a
keyboard and a pointing device (e.g., mouse, track ball, pen, slide pointer or
similar device), a mass storage device 940, a transceiver 970, a printer 990,
and a
CPU 930 for performing various functions related to retrieving and viewing
webpages stored on the Internet. These components communicate through a
system bus 980 or similar architecture. Additionally, the customer computer
710
is preferably connected to a network interface card or modem 950 for
communication with the transaction processing system 26. The mass storage
device 940 of the customer computer 710 maintains an Internet browser 960 for
directing the CPU.
[038] A second embodiment processes transactions very similarly to the first
embodiment. That is, an online consumer located at an online consumer
computer 710 selects merchandise, identifies it to the online merchant
computer
734 and inputs his or her customer/transmitter ID number using a customer
transceiver 50 into transceiver 970. The information is transmitted from
transceiver 970 via system bus 980 to CPU 930 where it is then transmitted to
the online merchant computer 734. Upon receiving the data, the online merchant
computer 734 creates an authorization request comprised of the customer ID, a
merchant ID and transaction data, and then transmits the data to transaction
processing system 26. Transaction processing system 26 then transmits the data
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to the appropriate payment processing system 16. As in the case of an
embodiment, payment processing system 16 authorizes the transaction and then
transmits an authorization back to the online merchant computer 734 and online
consumer computer 710 via the transaction processing system 26. Once the
online merchant computer 734 receives the authorization, merchant's online
sales associate prepares the merchandise identified by the customer, and then
ships it to the address indicated in the customer information database 100 or
any
other location specified by the customer. The transaction processing system 26
is capable of managing customer loyalty and consumer trend analysis in the
same manner as the first embodiment. In fact, since transaction processing
system 26 is capable of interacting with both in-store and on-line systems, it
provides participating merchants the ability to comprehensively monitor
customer loyalty and consumer purchasing trends for online consumers and
in-store consumers using a single system.
[039] A third embodiment of the present invention is directed to a method and
apparatus for processing retail non-cash transaction at a kiosk or other
similar
self-service station. A terminal located at the kiosk is similar to online
consumer
computer 710 except that a product database similar to that found in online
merchant computer 734 is stored in the mass storage device. In operation, the
customer in merchant store 12 approaches a kiosk in the store, indicates a
food,
merchandise or service selection, and provides a customer/transmitter ID using
input device 920, customer transceiver 50 or a combination of the two. In
doing
so, the customer has placed an order for the desired article of food,
merchandise
or service and simultaneously initiated payment processing. Once the
transaction is authorized, a receipt is printed on printer 990 and the
purchase is
delivered to the customer, either at the kiosk or at another predetermined
location. This embodiment provides a combination self service, automatic
payment processing system, with order preparation being the only delay.
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[040] In yet another embodiment, a customer may place an order by telephone
prior to arriving at merchant store 12, by interfacing with an automated
system
using DTMF tones through the telephone. That is, when an automated operator
at merchant store 12 answers the telephone call, the customer is prompted to
enter the customer/transmitter ID number and his/her purchasing preference via
the DTMF buttons. Upon arrival, the customer's food, merchandise or service is
ready at a drive-through window or inside a special line within merchant store
12. Payment has, at this time, already been processed. The customer uses
customer transceiver 50 to identify themselves prior to a sales associate
provid-
ing the merchandise to the customer. In this example, customer transceiver 50
is
simply used to identify that the customer receiving the food, merchandise or
services is the customer who corresponds to the customer/transmitter ID
previously communicated to the merchant through the DTMF system. Different
transactions may be conducted and different information may be exchanged
between the merchant and customer to confirm the customer's identification
without departing from the scope of the invention. For example, a customer may
conduct a transaction over the telephone using a payment method not recognized
by the transaction processing system 26, and then take delivery of the
merchandise/services after confirming his/her identification using customer
transceiver 50 and paying for the items. Customer transceiver 50 may also be
used to confirm an individual's identification even in the absence of an
underlying transaction. For example, a transceiver 48 may be located adjacent
to
an airplane loading gate or other restricted access point. A customer seeking
to
gain access to the restricted area simply provides his identification by
interfacing
customer transceiver 50 with merchant transceiver 48. This action initiates
the
security process which may also require an additional form of identification
(e.g., picture ID, boarding pass, etc.) to complete. Another embodiment of
customer transceiver 50 includes a customer transceiver that identifies a
class of
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persons (e.g., handicapped) such that when a person interfaces with the
transaction processing system 26, an attendant will be alerted as to any
special
customer needs. Yet another embodiment includes a customer transceiver 50
that identifies an individual to a service provider, permitting the service
providing to then access information about the customer for the purpose of
providing personal services to the customer. A further embodiment includes a
customer transceiver 50 that transmits automatic teller machine (ATM) card
information to an ATM. Once the ATM receives the information, the customer
is prompted to input his/her PIN and transaction information, allowing the
process to continue as usual.
[041] Various active and customer transceivers (48 and 50, respectively) may
be implemented in the course of practicing this invention. For example, the
TIRIS system commercially available from Texas Instruments Corporation is
representative of the technology. Further details of digital signature
transponder
(DST) and TIRIS technology are contained in U.S. Patent No. 5,541,604
assigned to Texas Instruments Deutsche Line GmBh, the disclosure of which is
hereby expressly incorporated by reference. A simplified diagram of a
preferred
embodiment of customer transceiver 50 is shown in Fig. 10. As shown,
customer transceiver 50 is comprised of keyboard 1110, CPU 1120, memory
1130, receiver 1140, transmitter 1150 and security pad 1160. As further shown
in Fig. 10, keyboard 1110 is comprised of a plurality of buttons 1110a -
11101,
labeled 0-9, "*", and "#". Each button may correspond to its labeled
number/character, or to a selectable user option. For example, button 1110a
may
correspond to the number "1" such that when a user presses it, the number "1"
is
communicated to CPU 1120. Button 1110a may alternatively correspond to a
user-specified item (e.g., primary credit card, a secondary credit card, or a
debit/bank account). In an embodiment, customer transceiver 50 has no
independent batter or other power source, such that operational energy is
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received from transceiver (48 or 970), indicated generally in Figs. 4 and 11,
respectively. Customer transceiver 50 stores identification information such
as a
customer ID, or customer/transmitter ID in programmable, read-only memory
(PROM) device 1130 for subsequent, repeated transmission to a transceiver (48
or 970). Memory device 1130 could optionally be an erasable PROM (EPROM)
or random access memory (RAM) device, thereby allowing ease in modifying
the contents of the memory device. As previously states, one important
characteristic of an embodiment of customer transceiver 50 and merchant
transceiver 48 is that operational energy for customer transceiver 50 is
transmitted from the transceiver (48 or 970). When customer transceiver 50 is
brought within close proximity to transceiver (48 or 970), a signal of a
desired
frequency passes through receiver 1140, causing it to generate a supply
voltage
for powering the other components of customer transceiver 50. The signal is
received by CPU 1120 which then sends a signal to memory device 1130 and
then to customer transceiver 1150 for transmission to an adjacent merchant
transceiver 48.
[042) Fig. 11 is a detailed flow diagram depicting the operation of customer
transceiver 50. The process begins at step 1200 when the user brings customer
transceiver 50 within close proximity to a transceiver (48 or 970). In step
1205,
an interrogation signal is transmitted from reader to customer transceiver 50.
CPU 1120 processes the interrogation signal with an algorithm which is fixedly
programmed into memory 1130 (step 1210). If the signal is valid, processing
flows to step 1215, otherwise processing terminated. In step 1215, the CPU
waits for user input via keyboard 1110. If the CPU does not receive input,
processing flows to step 1245, otherwise processing flows to step 1220, where
the CPU determines whether the first character entered is a "#", corresponding
to
button 11101. If the first character is a "#", the CPU transmits a purchasing
preference associated with the entered number (step 1240). As previously
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stated, the customer database 100 is capable of storing a plurality of
customer
purchasing preferences, corresponding to specific items offered by merchant.
Pressing "#" prior to pressing a numbered key specifies which order item the
customer is interested in selecting. For example, "#1" corresponds to the
first
purchasing preference, pressing "#2" corresponds to the second, and so on.
Processing then flows to step 1245. If the first character is not a "#", the
CPU
determines whether the first character is a "*", corresponding to button 11
lOj
(step 1225). If the first character is a "*", the CPU 1120 transmits a payment
choice selection associated with the entered number (step 1235). The customer
must have a valid payment method associated with the entered number, and it
must be accepted by the merchant. Otherwise, the process will terminate
without authorizing the transaction. After customer information has been
entered, processing flows to step 1245 where the CPU 1120 next transmits the
stored customer/transmitter ID. If the first character is not a "*",
processing
flows to step 1230 where the CPU 1120 simply transmits the entered numbers as
a customer ID number. That is, the user may actually override the pre-
programmed
customer ID number and manually input a customer ID number. Processing
then flows to step 1250 where the user it prompted to enter a PIN after which
processing terminates. When the user manually enters a customer ID number,
the system may also require additional authorizing information like a photo ID
and/or a signature, to further ensure that customer transceiver 50 is not used
in a
fraudulent manner. While this specification describes operation of customer
transceiver 50 as including the capability to specify a merchandise/service
selection, an alternate method of payment, a customer number or a PIN, it is
obvious that any data or combination of data may be transmitted by customer
transceiver 50 without departing from the spirit and scope of this disclosure.
[043] As shown in Fig. 10, customer transceiver 50 may optionally include a
security pad 1160 comprising a fingerprint reader or other biometric recording
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device. In operation, when a customer transceiver 50 is issued to the customer
and prior to its first use, the customer inputs a biometric (fingerprint, palm
print,
pore print, retinal configuration, etc.) into security pad 1160. For the
purposes
of this discussion, it is assumed that the biometric is a fingerprint. The
first time
that customer transceiver 50 is used, the customer fingerprint is read and
stored
in memory 1130 of customer transceiver 50. When customer transceiver 50 is
used for subsequent transactions, it will only activate if the same finger is
placed
upon security pad 1160, creating a match with fingerprint information stored
at
the first used of customer transceiver 50. Of course, any finger may be used
at
initial usage, however, the same finger must then be consistently used on all
subsequent transactions. As an alternative, a predetermined number of separate
fingerprints may be stored in customer transceiver 50, permitting its use by
friends or family members. Initial fingerprints will be read, for example, by
depressing one of four predetermined buttons prior to first use of customer
transceiver 50. A series of fingerprints is then placed upon the security pad
11f0
for storage within memory 1130 of customer transceiver 50. Customer
transceiver 50 would then permit subsequent purchases to be made when a
fingerprint on pad 82 matches any of the fingerprints prestored within
customer
transceiver 50. Fingerprint reading, storing and matching technology is
currently available from the plurality of sources including, for example,
Indicator Technology Corporation, Biometric Identification Inc., and
AuthenTec. Even though this specification describes the use of a fingerprint
reader, other biometric identification options such as palm prints, pore
prints,
retinal configurations, etc. may, of course, also be implemented using
customer
transceiver 50. It should be understood that while this specification
describes a
security pad associated with customer transceiver 50, the security pad may
actually be included in a computer display touch screen.
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[044] Another embodiment of customer transceiver 50 includes a customer
transceiver with read/write capability. That is, when customer transceiver 50
is
used to authorize a transaction, information is passed into memory 1130 from
the merchant transceiver 48. For example, a predetermined quantity of money
may be stored in memory 1130 such that whenever a transaction is carried out,
the amount of the transaction is deducted from the total stored in memory
1130.
When the total is exhausted, customer transceiver 50 will not activate until
an
amount is restored to memory 1130. In another embodiment, a predetermined
quantity of money may be stored in a host computer as a component of the
customer's user information. Customer transceiver 50 may also track the
customer's participation in loyalty programs by updating memory 1130 with
purchase data whenever a transaction is authorized. In another preferred
embodiment, a purchase transaction is not required to access loyalty program
information. Customer transceiver 50 may additionally support remote
reprogramming of memory 1130. In other words, a customer wishing to change
the customer/transmitter ID associated with customer transceiver 50 may do so
by interfacing customer transceiver 50 with merchant transceiver 48 and then
modifying the customer/transmitter ID by entering a special code sequence
using
keyboard 1110, for example. It is envisioned that whenever a
customer/transmitter
ID is updated by a customer, transaction processing system 26 will disable the
subject customer transceiver, pending confirmation of the change. Customer
transceiver 50 may alternatively accept customer/transmitter ID updates from
transaction processing system 26 via merchant transceiver 48 without user
input.
[045] Although the described embodiments employ a customer transceiver
carried as a separate item by the customer, customer transceiver 50 may be
integrated into another device. For example, customer transceiver 50 may be
embedded in a cellular phone, pager, remote control, car lock device, personal
digital assistant, watch, MP3 player or other miiuature electronic device.
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[046] While an embodiment of customer transceiver 50 envisions a device
that receives operational energy from a merchant transceiver 48 prior to trans-
mitting an RF signal, it is understood that any device capable of transmitting
a
signal across a wireless medium (e.g., cellular, microwave, infrared, etc.)
may be
utilized without departing from the scope of this disclosure.
[047] Fig. 12 shows a detailed diagram of merchant transceiver 48 as
previously discussed with reference to Figs. 4 and 10. As shown in Fig. 12,
merchant transceiver 48 is comprised of a CPU 1300, memory 1305, keyboard
1310, printer 1320, communication interface 1330, display 1340, transmitter
1350, and receiver 1360. Keyboard 1310, as further shown in Fig. 14, is
comprised of a plurality of buttons 1310a - 13101, labeled 0-9, "*", and "#".
Keyboard 1310 may be utilized for receiving manually entered data (e.g., PIN)
and transmitting the data to communication interface 1330. In operation,
transmitter 1350 transmits an interrogation signal stored in memory 1305 to
customer transceiver 50, causing the customer transceiver to generate a
sufficient supply voltage for powering the customer transceiver. Receiver 1360
receives a signal from customer transceiver 50 and then transmits the signal
to
communication interface 1330 for subsequent transmission to an associated POS
device 34, online customer computer 710, kiosk, etc. Communication interface
1330 may comprise a wireless or wireline interface, permitting merchant
transceiver 48 to communicate with external devices from widely separated
locations for the purpose of transmitting information received from a customer
transceiver 50 via receiver 1360. Communication interface 1330 further permits
merchant transceiver 48 to interface over the Public Switched Telephone
Network (PSTN) via an RS232 connection to an internal modem (not shown).
Customer transceiver 50 consequently may be capable of interfacing with a
central location (over CATV coaxial) cable such that a person wishing to watch
a pay-per-viewTM movie can communicate with the pay-per-view system and
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purchase the movie directly through the television. Printer 1320 may be used
to
print a receipt for a customer upon completion of a transaction, and display
1340
may be used to communicate information to a customer (e.g., when to input
his/her PIN).
[048] An alternate embodiment merchant transceiver includes a merchant
transceiver built into or attachable to a portable device (e.g., Palm PilotTM,
hand-held computer, etc.) that enables the capture and transmission of a
customer ID and other security information for authenticating payment for
goods
and services via the Internet, or authenticating and authorizing access to
digital
information (e.g., movies, music, online books, research) and applications
(e.g.,
voice/mail, personal calendar, "sports entertainment package", golf
handicapping program). A further embodiment includes a portable .merchant
transceiver that allows a vendor (pizza delivery person) to authorize
transactions
from any location. The merchant transceiver includes a CPU 1300 with
sufficient memory 1305 to capture and locally process a transaction. The
merchant transceiver may or may not have wireless connectivity to the
transaction processing system 26. yet a further embodiment includes a merchant
transceiver associated with a vending machine (snacks, cigarettes, stamps,
etc.),
pay phone, etc. for authorizing consumer transactions.
[049] As discussed above, the preferred embodiment of the merchant
transceiver 48 transmits power to, and receives an RF signal from a co-located
customer transceiver. However, any device capable of receiving a wireless
signal (cellular, microwave, infra-red, etc.) is capable of functioning in the
place
of the merchant transceiver without departing from the scope of this
invention.
[050] In a preferred embodiment, transaction processing system 26 is owned
and operated by a company separate from the entities that own merchant store
12
and payment processing system 16. In exchange for the service provided by
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transaction processing system 26, merchants are charged fees to process
transceiver-based transactions. First, a transaction fee is charged for each
transaction processed through transaction processing system 26. In addition,
an
advertising fee may be charged to cover brand communication. That is,
customer transceiver 50 is supplied under a brand name owned by the owner of
transactions processing system 26. This brand name is widely advertised to
entice customers to patronize merchant stores 12 having the ability to conduct
transactions using customer transceiver 50. Thus, the owner of transaction
processing system 26 charges an advertising fee to participating merchant
stores 12.
[051] Alternatively, the transaction processing system 26 may permit large
corporations owning multiple retail outlets to market customer transceiver 50
using their brand name. Thus, such merchant companies will "issue" customer
transceivers 50 and pay a fee to the transaction processing system. The
transaction processing system then offsets these costs to merchant stores 12
by
providing monthly rebates based on the dollar volume of transceiver-based
transactions conducted through its outlets.
[052] In another embodiment of the present invention, a system and method
are provided for interfacing an RF transponder reader carried by a customer,
with an RF transponder associated with a merchant's point-of-sale (POS)
terminal or a merchant's product. In operation, a customer seeking to purchase
retail items or services uses the transponder reader to read the transponder
associated with the merchant's POS terminal or the merchant's product. The
transponder reader is in communication with the central database. The
communication may be wireless. For example, the communication may occur
over a wireless telephone network or through a networking protocol such as
Bluetooth.
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[053] In an embodiment of the present invention, the transponder is associated
with a data entry method and/or apparatus. The data entry apparatus may be
inserted or built into the transponder unit. Alternatively, the data entry
method
may be attached to the same device to which the transponder is attached. For
example, if the transponder is attached to a keyring, the data entry method
may
also be attached to the same keyring.
[054] The data entry method of the present invention comprises entering data
to be read into a data reader. The data reader comprises means for scanning
the
data to be read, a power source and memory for storing the read data. The data
to be read comprises data associated with a product(s), service(s), or
merchant(s). The data to be read may be found in any medium capable of being
read by the data reader. For example, the data to be read may be contained in
an
advertisement. The advertisement may be for a product, service or merchant
advertisement. The advertisement may be in a newspaper, magazine, Internet
website, poster, or similar medium.
[055] The data reader may further comprise means for informing the customer
that the data has been successfully read and stored. For example, the data
reader
may comprise a light, vibration unit, display screen, audible tone(s), audible
signal(s), printed receipt, other feedback means, or a combination thereof,
that is
activated when data is successfully read and stored.
[056] In an embodiment of the present invention, the data to be read is
associated with a discount for a product or service. A customer utilizes the
data
entry method to read the data associated with the discount. The data is stored
in
association with the transponder. When the customer later purchases the
product
or service, the customer's transponder is read by the transponder reader
associated with the merchant's POS terminal. The data associated with the
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discount is transmitted to the merchant's POS terminal. The discount is then
applied to the customer's purchase transaction of the product.
[057] In another embodiment, when the data associated with the discount is
transmitted to the merchant's POS terminal, the data is then matched with
corresponding data in a central database or in the merchant's database. This
corresponding data informs merchant's clerk and/or the POS terminal to provide
the discount. The merchant's database may be an off site central database, an
on-site local database (including an updated database in the POS terminal), or
a
distributed database. In another embodiment, the data associated with the
discount is stored in the customer transceiver. This data is transmitted to
the
merchant's POS terminal and informs the merchant's clerk and/or the POS
terminal to provide the discount. For example, the Universal Product Code
(UPC) for a product could be stored in the customer transceiver or data reader
memory along with the discount amount associated with the product. The UPC
and corresponding discount amount could then be transmitted to merchant's POS
terminal.
[058] A discount or offer from a merchant may also be associated with a
customer's user profile in a central database or in a merchant's database. As
discussed, in an embodiment of the present invention, an authorization request
including transaction data is received from a POS terminal by a transaction
processing system comprising a customer's user profile or information. The
transaction processing system determines from the transaction data is the
product
or service is covered by the discount or offer associated with the customer's
user
profile. If the product or service involved in the transaction is covered, the
discount or offer is communicated to the POS terminal so that the discount or
offer can be applied to the transaction and communicated to the customer
and/or
merchant's clerk.
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[059] In a further embodiment of the present invention, multiple data may be
read by the data reader and stored in association with the transponder. For
example, data may be read for products from the same manufacturer or
distributor. Data may be read for multiple products offered by the same
merchant. In a further embodiment, the data to be read may be associated with
multiple products offered by a merchant or from a manufacturer. The data to be
read may also be associated with multiple products offered by various
merchants
or manufacturers. For example, a newspaper may contain an insert containing
various coupons or discount offers. Data to be read may be associated with all
the various coupons or discount offers on the newspaper insert. When a
customer uses the data reader to read the data, all the various coupons or
discount offers are stored in association with the transponder. Further, the
data
to be read may be associated with all the various coupons or discount offers
in a
newspaper section or in the entire newspaper.
[060] When the data to be read is associated with a coupon or discount offer
listed on an Internet website, the customer may read the data with the data
reader
as presented on a computer monitor. Further, a customer may transmit the
website data to a computer printer. The customer may thereby read the data
with
the data reader as presented on the printed out hardcopy of the website.
[061] The data to be read may comprise text, graphics, numbers, or patterns,
or a combination thereof, that are capable of being read by the data reader.
For
example, the data to be read may comprise bar codes and the data reader may
comprise a bar code reader. The data reader may be capable of reading more
than one form of data. For example, the data reader may be capable of reading
bar codes, text, graphics, numbers, or patterns, or a combination thereof.
[062] In a further embodiment of the present invention, the data to be read
may be associated with a URL address of an Internet website. For example, an
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article in a newspaper may reference an Internet website. The Internet website
may be referenced because it is a topic of the article or because it provides
further background or more in-depth information related to the topic of the
article. Data to be read corresponding to the referenced Internet website may
be
presented. The data to be read may be at the end of the article, in the
article, or
in the margin of the article. A customer may read the data with the data
reader
associated with the customer's transponder. In this embodiment, a transponder
reader may be connected to a computer. The computer may have access to the
Internet. When the customer's transponder is read by the transponder reader
connected to the computer, the previously read data associated with the URL
address may be transmitted to the transponder reader. The transponder reader
may then transmit the URL address to the computer and the computer may
access the URL address. The Internet website corresponding to the URL address
may then be presented to the customer.
[063] In a further embodiment, a coupon or discount offer may also provide a
URL address for an Internet website where the customer may purchase the
product or service associated with the coupon or discount offer. Data to be
read
may be associated with the coupon or discount and/or the URL address. The
customer may read the data with the data reader associated with the customer's
transponder. The data may be stored in association with the customer's
transponder. The transponder may be read by a transponder reader connected to
a computer with access to the Internet. The data associated with the URL
address is transmitted from the transponder to the transponder reader. The
Internet website corresponding to the URL address may then be presented to the
customer. The customer may purchase the product or service through the
Internet website and may authorize the purchase with the customer transponder.
The data associated with the coupon or discount offer is transmitted from the
transponder to the transponder reader. The data is transmitted from the
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transponder reader to the computer. The computer transmits the data to the
Internet website. The coupon or discount offer associated with the data may
then
be applied to the customer's purchase of the product or service.
[064] While the data to be read may be associated with a coupon or discount
offer, the data to be read may also be associated with the identification of a
product or service. When read and stored, the data may be transmitted to a
merchant's transponder reader.
[065] In an embodiment of the present invention, data identifying a product or
service is presented to a customer. For example, data identifying a movie
video
may be presented at the end of a movie review in a newspaper. A customer may
read the data with the data reader. The data reader stores the data in
association
with the transponder. The data may be transmitted to a merchant's transponder
reader. For example, a video rental merchant's transponder reader may receive
the data stored in association with the customer's transponder which
identifies a
movie video. The video rental merchant may then provide the customer with the
movie video and authorization for the rental transaction may be provided by
the
transponder.
[066] Alternatively, in the above example, the customer may indicate that
he/she does not wish to rent the identified movie video at this particular
time.
The identified movie video title may be stored in the video rental merchant's
database as a "wishlist" item corresponding to the customer's transponder. On
a
subsequent visit to the video rental merchant, the customer's transponder may
be
read by the video rental merchant's transponder reader. The customer's
"wishlist" corresponding to the customer's transponder may be accessed in the
merchant's database and the customer may choose to rent a movie video listed
on the customer's "wishlist".
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[067] In another embodiment, if the customer indicates that he/she does wish
to rent the identified movie video, the merchant's POS terminal communicates
with merchant's database or other database to communicate information regard-
ing the identified movie video to the customer. The information communicated
may include, but is not limited to: whether the movie is "in stock" or
available,
when the movie needs to be returned if rented, when the movie will be
returned,
etc.
[068] In another embodiment, the data to be read may be presented on the
product itself. The customer may read the data on the product with the data
reader and the data may be stored in association with the transponder. The
data
may be transmitted to a transponder reader and the product may then be
identified to the merchant. Further, the transponder reader may be connected
to
a customer's personal computer. The data identifying the product may be
transmitted to the transponder reader which subsequently transmits the data to
the computer. The computer may transmit the data to an Internet merchant. The
customer may then be presented with an Internet website where he/she may
purchase the product identified by the data. For example, a customer may scan
household items which will soon be used or depleted by the customer. The data
corresponding to this shopping list of items is stored in association with the
customer's transponder. The data may be transmitted to a merchant or Internet
merchant and the customer may be given the option to purchase one, some, or
all
of the items.
[069] Alternatively, the data may be transmitted to a customer's computer
printer or to a home personal computer associated with a computer printer. The
printer may be used to print a hardcopy shopping list. In a further
embodiment,
the data may be transmitted to a database which can identify other information
that corresponds to the data transmitted by the customer. This information may
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include the name of the items) corresponding to the data, local stores or
Internet
sites upon which the item is available, the store row or product location
within a
store, item price, etc. This further information or shopping list may also be
transmitted to a customer's personal digital assistant. The further
information or
shopping list may also be transmitted to a kiosk at a local store. For
example,
this kiosk may be on a shopping cart. The customer may then have access to the
shopping list and further information on the shopping cart kiosk.
[070] The transponders utilized by the present invention may be inserted or
built into any appropriate device or form factor. In this manner, the
transponder
may be customized to a customer's lifestyle and preferences. For example, a
transponder may be integrated into a smart card with a magnetic stripe. The
transponder may be integrated into a soft fabric form. The transponder may
also
be integrated into devices such as a personal digital assistant, watch, or
mobile
phone, or covers for same. The transponder may also be integrated into
functional forms, such as a money or tie clip, or clothing button or pin. A
customer may possess more than one transponder. Different customer profiles
or accounts may be associated with each transponder. For example, a
customer's profile associated with a transponder in the customer's mobile
phone
may be different from the customer's profile associated with a transponder in
the
customer's personal digital assistant. Different customer profiles or accounts
may also be associated with a single transponder. The single transponder may
have means for a customer to select between the different customer profiles or
accounts. The transponder may also have means for a customer to indicate or
select between different preferences or indicate a response to a question.
[071] In a further embodiment of the present invention, the transaction
authorization further comprises an additional means of validation. The
additional means of validation may be any means of identifying the customer as
the owner of a transponder. For example, the customer may enter a personal
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identification number (PIN), biometric data, or a password in combination with
use of the transponder. The additional means of validation may be used with
every transaction, no transaction, or only for predefined merchants, products,
services, transaction types or amounts. This predefined list may be determined
by the customer or the merchant. For example, if a transaction is over a
predefined purchase amount, additional means of validation may be required for
completion of the transaction. In another means of validation, the customer
may
move the transponder in a predefined manner in front of the transponder reader
to provide validation. The movement in the predefined manner is detected by
the transponder reader and transmitted to the central database for
verification.
The predefined manner may be any manual movement which may be suitably
reproduced by the customer. The preference information regarding whether a
customer should be prompted for additional means of validation may be stored
in the customer profile contained in the central database. The preference
information regarding whether a customer should be prompted for additional
means of validation may also be stored in the transponder itself or in the
merchant POS terminal or database.
[072] The central database may also store a customer's purchase profile.
Before authorizing a transaction, the central database may analyze the type of
purchase for which payment authorization is requested. This analysis may
utilize an algorithm to compare the purchase for which payment authorization
is
requested and the customer's purchase profile. Based upon the analysis,
further
identification or validation may be requested from the customer; particularly
if
the analysis shows a likelihood of fraud.
[073] In a further embodiment, the present invention comprises a system for
associating a unique ID code, information regarding a person and payment
information for a person. In one preferred embodiment, a transponder transmits
a unique ID code to a transponder reader. The unique ID code is stored in a
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central database. Information regarding the user of the transponder is entered
into the central database and associated with the unique ID code. Payment
information for the user is entered into the central database and associated
with
the unique ID code. In a further embodiment, the present invention comprises a
device for reading a unique ID code from a transponder, reading payment
information from a magnetic stripe of a credit card, and associating the
unique
ID code and the payment information. In a another embodiment, the present
invention further comprises means for automatically entering information
regarding a person. For example, means for automatically entering the
information may comprise optically scanning a person's driver license or
reading
the magnetic stripe on the back of a driver license.
[074] Further, the device may transmit this information to a central database.
In another embodiment, the payment information may be entered by other means
not utilizing the magnetic stripe. For example, the payment information may be
entered manually using a keyboard or the credit card information may be
scanned by an optical reader. In another embodiment, the unique ID code from a
transponder may be transmitted to a reader which is then transmitted to a
central
database. At a later point in time, the transponder user may transmit payment
information to be associated with the unique ID code. For example, the user
may enter payment information through an Internet website for transmission to
the central database or the user may enter payment information onto a paper
form which is then scanned into the central database. Once payment information
is received by the central database, it is associated with the unique ID code
corresponding to the user.
[075] In a further embodiment, means for identifying the transponder is
located on the outside of the transponder casing or on the packaging
containing
the transponder unit or otherwise associated with the transponder or on the
packaging of or on a device comprising the transponder. The means for
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identifying may comprise, for example, a bar code or other code capable of
being optically scanned. The packaging may comprise shipping or merchandiz-
ing packaging. In this embodiment, a central database associates the means for
identifying and the unique ID code stored in the transponder. User information
is transmitted to the central database. Payment information for the user is
transmitted to the central database. The central database associates the means
for identifying with the corresponding user information and payment informa-
tion for the user. For example, a user may present user information and
payment
information to a merchant. The merchant may or may not utilize a transponder
reader. The merchant may scan a bar code on the packaging of a transponder.
The merchant transmits the bar code, user information and payment information
to a central database. The central database matches the bar code to the
corresponding unique ID code associated with the transponder. The central
database associates the user information and payment information with the
unique ID code corresponding to the bar code. In this manner, the merchant
does not need to utilize a transponder reader to enroll a user in the system
and
method of the present invention.
[076] A customer transponder, transceiver, or user profile may be associated
with more than one manner or method of payment. The customer may input
preferences or indicate a default payment method to be used depending on
transaction type, merchant or purchase amount. The payment methods may
include, but are not limited to, at least one of the following: credit card,
debit
card, ATM card, or bank account.
[077] The customer transponder or transceiver can be associated with two or
more different networks or host systems. If a merchant's transceiver reader is
presented with a customer transponder that is not currently enrolled or
activated
for the host network associated with the merchant's reader, then the reader
may
receive the customer's unique ID code or transmitter code stored in the
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customer's transponder. The code is transmitted to the merchant's host
computer along with the customer's payment and identification information.
The customer's identification information may be transmitted electronically
derived such as from a magnetic stripe of a credit/debit card or a driver's
license.
Or the indentification information may be submitted separately. In a preferred
embodiment, at least one payment method is transmitted to the host computer
with the unique ID for the transponder. The merchant may provide to the
customer a paper form to be completed by the customer to provide the name of
the customer, address, phone number, credit card number, debit card number, or
other payment or customer information. The form may also comprise a
preprinted or otherwise applied bar code or other identifying code. This
identifying code may be transmitted to the host computer with the unique ID
and
payment information. When the information from the form is manually entered
or optically scanned by a computer, the information may be identified by the
identifying code and more efficiently matched with the corresponding unique ID
and payment information. All this information may then be stored together in
the host computer.
[078] In another embodiment of the present invention, a user's unique ~ code
stored in the user's transponder may be associated with a second transponder.
A
customer profile stored in the central database which corresponds to a user's
unique ID code may also be associated with a second transponder. The second
transponder may be utilized in the system and method of the present invention.
Transactions completed with the second transponder may be compiled and
presented to the user separate from the transactions completed with the user's
transponder. A different form of payment may also be associated with the
second transponder than the payment information associated with the user's
transponder.
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[079] For example, a user may rent a car for use on a business trip. The user
presents his/her personal transponder to a rental car agency. The rental car
agency associates the user's transponder with a second transponder. The second
transponder may also be associated with a customer profile which the user
utilizes with the rental car agency. The second transponder may comprise a
transponder contained in the key associated with the rental car or a
transponder
associated with the keyring of the key associated with the rental car. The
user
may make purchase transactions with the second transponder. The second
transponder may utilize the payment information associated with the user's
personal transponder or it may utilize different payment information. The
permitted uses of the second transponder can be restricted according to the
preselections of the user or in the case of business travel, preselections by
the
business for its employees as communicated to the rental car agency in its
stored
profiles for the business' employees. For example, the second transponder
could
utilize a user's personal credit card or it could be associated instead with a
user's
business expense credit card. When the user returns the rental car to the
rental
car agency, the user is presented with a receipt. The receipt may contain all
transactions made with the second transponder, as well as the car rental
transaction. In this example, a user may more easily itemize business expenses
at the end of a business trip. In a further embodiment, the second transponder
is
on the same keyring as the ignition key for the rental car. In an further
embodiment, the second transponder or the ignition key is detachable from the
keyring. In this manner, when the user provides the ignition key to a third
person (e.g., parking attendant, valet, etc.), the.third person does not have
access
to the second transponder.
[080] In a further embodiment of the present invention, the customer
transponder may be used to obtain access to a hotel room. In one embodiment, a
customer wishing to obtain a hotel room may present his personal transponder
to
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a transponder reader. Authorization for the transaction is obtained using the
system and method of the present invention. Upon obtaining authorization, the
customer is given the key for a hotel room. The customer may be given the key
by a hotel agent, such as a desk clerk. Alternatively, the customer may be
given
the key automatically by a self-service check-in kiosk containing a
transponder
reader. In this embodiment, if the room key does not display the room number,
the kiosk may print out the room number. The kiosk may also print a receipt
for
the transaction. In an alternative embodiment, the customer is not given a
separate key for a hotel room. Instead, the customer's transponder is
associated
with a hotel room. The hotel room door contains a transponder reader. The
hotel room door transponder reader reads the customer's transponder and
unlocks the door accordingly.
[081] In a further embodiment, the present invention comprises a system and
method for restaurant transactions. In an embodiment of the present invention,
a
customer orders food and payment for the food is authorized using the
previously described system and method for authorizing transponder
transactions. The customer may order the food through a restaurant employee.
Alternatively, the customer may select a food order using a self-service kiosk
or
by pushing buttons on the ordering system normally utilized by employees. In a
further embodiment, a customer may order food prior to arriving at the
restaurant. The customer may order via automated telephone selection, Internet
website or other suitable means for ordering food. Upon arriving at the
restaurant, the payment for the previously ordered food is authorized using
the
customer transponder. A customer profile may store a customer's preferred food
order. Upon arriving at the restaurant, a customer's transponder is read by a
transponder reader. The preferred food order stored in the customer's profile
is
automatically selected and ordered.
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[082] Upon ordering food, a customer may wait at an order counter for
delivery of the food. Alternatively, a customer may sit at a dining table. The
dining table may have a transponder reader. The customer's transponder is read
by the dining table transponder reader. The dining table transponder reader
communicates the customer's dining table location to a restaurant employee.
The restaurant employee may then deliver the customer's food to the dining
table at which the customer is seated. Alternatively, a customer profile may
store a customer "will call" name or nickname. This "will call" name or
nickname may be communicated to a restaurant employee. Upon hearing the
"will call" name or nickname, the customer would know that the food order is
prepared and may receive the food at a designated order pick-up site.
Alternatively, a preferred food order is stored in a customer's profile. When
a
customer enters a restaurant, rather than ordering at an order counter, the
customer may sit at a dining table. The dining table may have a transponder
reader. The customer's transponder is read by the dining table transponder
reader. The preferred food order stored in the customer profile and the
customer's dining table location are communicated to the restaurant. The
customer's preferred food order may be delivered to the customer's dining
table
location.
[083] In a further embodiment, a customer places a food order prior to
arriving at a restaurant. This food order may be made using any suitable
means.
For example, the food order may be placed through an Internet website, a
telephone call, mobile telephone call, or mobile telephone Internet
connection.
Upon arnving at the restaurant, the customer parks his/her car in one of a
number of designated restaurant parking spaces. A transponder reader is
associated with the parking space. The customer's transponder is read by the
transponder reader. The transponder reader communicates the customer's
parking space location to a restaurant employee. The restaurant employee may
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deliver the food order to the customer at the customer's parking space.
Alternatively, a customer may place an order while at a designated restaurant
parking space. For example, when the customer's transponder is read by the
transponder reader associated with the restaurant parking space, a preferred
food
order stored in a customer profile is communicated to the restaurant. The
preferred food order is delivered to the customer's parking space.
[084] The aforementioned embodiments specifically involving restaurant
ordering and payment have several advantages over current systems and
methods. For example, a customer does not need to wait in line to place an
order. All customers may order concurrently and simultaneously. Further, in
some embodiments, restaurant employees do not have to be trained to take
customer orders or even speak the same language as the customer order is
automated or performed directly by the customer.
[085] A customer profile may store data regarding customer preferences. This
customer profile may be stored in a central database. Customer preferences may
include whether a customer wishes to receive a receipt for purchases and what
type of receipt the customer wishes to receive. For example, a customer may
prefer to receive a receipt after each transaction or for certain transactions
over a
predefined purchase amount. Alternatively, a customer may prefer not to
receive a receipt after each transaction. Instead, a customer may prefer to
receive a daily e-mail communication detailing purchases made within the past
24 hours.
[086] In an embodirilent of the present invention, loyalty points are
accumulated by a customer based on transactions and associated with the
customer in a central database. When sufficient loyalty points have been
accumulated, a customer may be offered a loyalty award from a merchant. This
loyalty award may be a free or reduced price good or service. Alternatively,
the
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loyalty award may be a credit or discount on a future transaction with the
merchant. A customer's loyalty award qualification may be communicated to a
merchant employee at the customer's next purchase. Alternatively, a customer
may receive notification of the loyalty award via e-mail, telephone call or by
accessing a customer account on an Internet website. The customer may be
provided means for identifying the loyalty award qualification to a merchant.
For example, a special loyalty award code or coupon may be given to the
customer or printed from an e-mail or website. Alternatively, loyalty award
qualification may be embedded in the customer's transponder. When the
customer's transponder is subsequently read by a merchant transponder reader,
the loyalty award qualification is then communicated to the merchant by the
transponder reader.
[087] In a further embodiment, the present invention may be used to gain
access to a service or event. For example, in this embodiment, a customer may
purchase a ticket and the ticket purchase is associated with the customer in a
central database. The customer's transponder unique code or other means for
identifying the customer's transponder are communicated to the event location.
The customer's transponder is read by a transponder reader at the event
location.
The customer's transponder is recognized as being associated with a customer
that has previously paid for a ticket or tickets. A corresponding receipt,
ticket
stub, or seat assignment may be printed for the customer. However, a receipt,
ticket stub, or seat assignment are not necessary as the transponder serves as
the
identification that the customer has paid for access to the event or service.
[088] In a further embodiment of the present invention, a customer's profile
may store preferences regarding certain types of purchases. For example, a
customer's profile may only authorize transactions made within a certain
geographic area, at a certain type of merchant, for certain types of products,
or
within a particular transaction price range.
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[089] It should be noted that, while many of the above disclosed embodiments
and examples of the present invention specify a transponder device, the
present
invention is not so limited. The present invention does not require a
transponder. For example, if a merchant does not utilize a transponder reader,
a
customer may provide other means for communicating the unique ID code
stored in the customer's transponder. This other means may comprise
information stored in the customer profile that is unique to the customer. For
example, the customer may provide a PIN, biometric data or knowledge specific
to the customer. This information may be communicated directly to the central
database without allowing access by a merchant agent to the information.
[090] A preferred method for processing a financial transaction will now be
described in conjunction with Figs. 13-17. As described above, the system 10
is
operative for capturing a customer's transmitter ID at a POS device 34,
combining the captured data with the merchant ID and the customer's selected
purchase items into an authorization request, encrypting at least a portion of
the
request (if desired), and transmitting it to transaction processing system 26.
Once it receives the authorization request, the transaction processing system
26
identifies the appropriate payment processing system 16 and then transmits the
customer's payment data and the transaction data to the payment processing
system 16 for authorization. After the payment processing system 16 authorizes
the transaction, it transmits an authorization code back to the merchant via
the
transaction processing system 26. The transaction processing system 26 may
also transmit customer identification and purchase data upon request by a
participating merchant. In addition to its function of authorizing retail
transactions, transaction processing system 26 also collects the transaction
data
for later use in compiling consumer purchasing trend data and tracking a
consumer's progress in a merchant's loyalty program.
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[091] Fig. 13 is a flow diagram illustrating a preferred method 200 for
processing financial transactions. The steps that comprise the method
described
in 200 are carried out by the various equipment that form a part of system 10
for
processing financial transactions. The method begins at step 300 with the
customer accessing the enrollment subsystem of the transaction processing
system 26. This step includes all the activities that must take place before
an
individual can consummate retail transactions with customer transceiver 50
using transaction processing system 26. After the customer is enrolled,
processing flows to step 400 and the system then is capable of processing a
customer transaction. At a predetermined time interval, preferably every 24
hours, processing then flows to step 500 where system 10 updates customer
preferences and profiles and settles charges for the time period. Next
processing
flows to step 600 at which time system 10 performs the processing necessary to
archive captured data and update loyalty program data.
[092] Fig. 14 is a detailed flow diagram depicting the steps performed by
system 10 in step 300 of Fig. 13. As shown in Fig. 14, the process begins in
step
310 when a customer accesses the enrollment subsystem of the transaction
processing system 26 for the purpose of opening an account. The act of
accessing the enrollment subsystem of transaction processing system 26 can be
performed any number of ways from simply telephoning a human customer
assistance representative and verbally communicating the information over the
telephone, to dialing a telephone number and interfacing with a computer using
dial tone mufti frequency (DTMF) tones, to logging onto the Internet and
accessing a predetermined uniform resource locator (URL). Once the customer
is logged onto the system, processing flows to step 320 and the enrollment
subsystem of transaction processing system 26 prompts the user to enter
customer information. During this process, the customer provides customer
profile information 102, customer payment method information 112, and
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customer personal information 114. These data are used for communicating
with the customer and may be combined with other data (e.g., transaction
information 110, customer personal information 114, etc.) to provide special
promotions of particular interest to the customer. During enrollment, the
customer also provides the payment methods to be invoked by the transaction
processing system 26, whenever he/she initiates a transaction. For example, a
customer will provide credit, debit, and other payment-related data so that
the
customer may be properly charged for purchases. When the customer enters
data in the customer transaction database 100, he/she may select any one of
the
merchant's accepted payment methods in which he/she also has accounts. That
is, the customer may choose to have all of his transactions conducted in
merchant #1's retail establishments allocated to his VISATM card even though
he
has several other cards that are also accepted by merchant #l. Alternatively,
the
customer may specify that his transceiver-based transactions will be processed
and paid through his bank credit or debit card. Furthermore, the customer may
specify that all transactions at merchant #1 will be cash transactions,
despite the
fact that the customer also has credit accounts accepted by merchant #l. The
number of merchants associated with each customer record in customer
transaction database 100 depends on the number of merchants entered into the
system by a particular customer. In other words, customer #1 may have two
merchant entries, corresponding to the number of merchants that the customer
frequents, whereas customer #2, who is less debt averse may have 20 merchant
entries. It is important to realize that certain information must be entered
in
order for the system to operate properly (e.g., name, address, PIN, etc.), and
other information can be entered at the discretion of the customer (e.g.,
marital
status, birth date, etc.). When enrolling, the customer is informed that not
only
is the input of certain information discretionary , but that they can restrict
the
publication and use of the information by the transaction processing system
26.
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[093] Customers may also identify a default payment method to be applied to
a participating merchant for which no other payment method has been
identified.
This default payment method would also be applied to new merchants that join
the transaction processing system 26 after the customer enrolled. Part of the
enrollment process includes the customer providing customer personal informa-
tion such as preferred product brands at different merchants, anniversary and
other important dates, clothing sizes, etc. As explained below, all of the
data
provided by the customer during the enrollment process can be later changed at
the customer's discretion. A customer can request more than one customer
transceiver 50 to be associated with each account as well as identify other
authorized users for each customer transceiver. The rules for use of multiple
customer transceivers 50 by multiple individuals are controlled based on the
rules of the payment processor 16.
[094] Once the customer has entered the requested information, system 26
validates the payment methods selected by the customer for legitimacy and
acceptance. This process is carried out by comparing user-inputted information
with data stored in payment processing terminal 52. Once the data is
determined
to be valid, processing flows to step 345 and the data is stored in customer
information database 100. A customer transceiver 50 is programmed with the
customer's ID number in step 370, the customer transceiver 50 is mailed to the
customer in step 3~0. Before the customer can use customer transceiver 50 to
authorize a transaction, customer transceiver 50 must be activated by the
customer. This security process helps ensure legitimate use of the customer
transceiver 50 by authorized personnel. In a preferred embodiment, customers
activate customer transceiver 50 using identification information provided by
them during enrollment and information provided to them in the device package.
Once customer transceiver 50 is activated, it can be used by a customer to
activate a transaction. If the data is invalid, the system prompts the user to
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correct the invalid information and processing is routed back to step 320
where
the customer is prompted to re-input the invalid information.
[095] Fig. 14b illustrates a further preferred embodiment of step 300 of Fig.
13. As shown in Fig. 14b, the process beings in step 1405 when a customer
presents a customer transceiver to a merchant reader or POS terminal. A
transmitter ID or code is transmitted from the transceiver to the reader or
POS
terminal. In step 1410, the customer provides at least one method of payment
and additional information corresponding to the at least one method of
payment.
In step 1415, the customer supplies additional customer identification. This
information may include, for example, customer name, account password, PIN,
mailing address, email address, daytime telephone number, evening telephone
number, date of birth, Social Security number, driver's license number,
spending
limits, PIN usage preferences, photograph of customer, etc. In step 1420, the
transmitter ID is associated with the additional customer identification. In
step
1425, this transmitter ID is transmitted to a host transaction processing
system or
database along with the associated payment and customer information. In step
1430, the host transaction processing system determines whether the payment
information supplied by the customer is valid and authorized for purchase
transaction. If any payment information is invalid or not authorized for
purchase
transactions, the process flows to step 1435 and the customer is requested to
provide further or corrected payment information. If the payment information
is
valid, then the process flows to step 1440. In steps 1440 and 1450, the
payment
and customer information is stored in association with the transmitter ID in a
database utilized by the transaction processing system. The process may
include
merchant validation of the additional customer information (e.g., by comparing
a
photographic identification on a driver's license with the presenting
customer).
[096] The process may continue, as shown in step 1450, the customer wishes
to then make a purchase with the newly enrolled customer transceiver. If the
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customer does not want to make a purchase, the process terminates. If the
customer wishes to make a purchase, the process flows to step 1455. In step
1455, the customer presents the product or service desired for purchase. In
step
1460, the merchant enters the transaction data for the product or service into
merchant's POS terminal. In step 1465, an authorization request is transmitted
to the transaction processing system by the POS terminal. The customer does
not have to re-present the customer transponder to the POS terminal as the
transmitter ID is already registered with the POS terminal from the enrollment
process. From step 1465, the authorization request follows the methods and
processes disclosed and discussed elsewhere in this specification.
[097] Fig. 15 is a detailed flow diagram depicting the steps performed in step
400 of Fig. 13. As shown in step 410, the first step occurs when a customer
shopping in merchant store 12 identifies merchandise for purchase to a sales
associate. Next in step 415, the sales associate utilizes input device 40 of
POS
device 34 to enter the merchandise into CPU 36 which then computes a trans-
action amount. After reviewing the transaction record, the customer in step
420
identifies him/herself to system 26 by interfacing customer transceiver 50
with
merchant transceiver 48. Customer transceiver 50 consists of an electronic
transmitter/receiver combination including a unique customer/transmitter ID
number programmed therein. When customer transceiver 50 interfaces with
merchant transceiver 48, a customer identification signal including the unique
customer/transmitter ID number is transmitted to merchant transceiver 48. To
provide security, merchant transceiver 48 and customer transceiver 50 employ
technology in which an interrogation signal is transmitted from merchant
transceiver 48 to customer transceiver 50. customer transceiver 50 processes
the
interrogation signal with an algorithm which is fixedly programmed into
customer transceiver 50 and then transmits a response back to merchant
transceiver 48, consisting of a customer/transmitter ID number. The interroga-
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tion signal and the response signal are highly encrypted such that intense
processing power over a long period of time will be necessary to fraudulently
extract the unique customer/transmitter ID number from the customer
transceiver 50.
[098] Once merchant transceiver 48 receives the customer/transmitter ID
number, it transmits the data, together with the specifics of the retail
transaction
(cost, identification of merchandise, etc.) over communications link 28 to
transaction processing system 26 (step 425). An important feature of system 10
is that the customer's credit card is never exchanged with a sales associate.
Therefore, the possibility that the card will be fraudulently used by an
unscrupulous sales associate does not arise.
[099] An alternate embodiment of the present invention includes a system 26
that instead of transmitting a customer's credit card number across communica-
tion links (Figs. 3 and 9), only transmits a customer/transmitter ID across
communication links. In this embodiment, payment processor 16 maintains data
that provides a correlation between customer/transmitter ID numbers and
payment methods. Also, merchant store 12 creates a transaction record based
using the customer/transmitter ID number instead of the creditldebit card
number. In operation, when an authorization request is transmitted to trans-
action processing system 26 from a merchant store 12, transaction processing
system 26 processes transactions by matching the customer/transmitter ID
number with data stored in customer information database 100. After the system
identifies the customer ID (step 435), it links it to the customer's name
(step
445) and then to the transaction information (step 450). If the system does
not
find the customer ID in step 435, it transmits a message to the merchant
informing it that the customer is attempting to utilize an invalid customer
transceiver (step 440). If the system finds the customer ID in step 435, it
may
simultaneously authorize the retail transaction, pending final authorization
by the
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payment processor 16. That is, at the same time as the rest of the
authentication
process is occurring, the system may authorize the initiation of delivery of
the
desired goods services. For example, during an automobile refueling process,
the system will activate a fuel pump, minimizing the customer's delay even
though final approval has not yet been obtained. If in step 460, the system
finds
the merchant's name, it identifies the customer's payment method for that
particular merchant (step 470) and determines the flow and destination of the
authorization data, based on the type of transaction (credit, debit, cash,
etc.).
Security information may also be utilized by the transaction processing system
26 to reduce misuse of customer transceiver 50. Examples of controls include
but are not limited to checking the frequency of use of a particular customer
transceiver 50 within a certain period of time, frequency of use a customer
transceiver 50 within certain financial limits and frequency of use of
customer
transceiver 50 and financial limits within a specific geographic region.
[100] In the event that the transaction requires authorization, such as in a
credit card transaction, the merchant POS device 34 communicates with
transactions processing system 26 as described above to identify the correct
payment processor 16 and transmit the transaction request to that payment
processor for disposition. If the transaction is authorized in step 484, the
system
next in step 488 determines whether the customer is entitled to any frequent
customer, or loyalty awards by comparing the customer's transaction activity
stored in transaction information 110 with the loyalty program information
108.
The authorization and the award data (if any) are transmitted to the merchant
via
the transaction processing system 26 (step 490) and in step 492, the customer
is
given his merchandise or services and notified of his/her award. In step 494
the
transaction processing system 26 archives the transaction data in secondary
storage device 94 for later analysis. If for some reason the payment
processing
system 16 is not able to process this particular transaction due to, for
example,
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communication's difficulties or a transaction amount causing the customer to
exceed his credit limit, a message is transmitted to the merchant via the
transaction processing system 26 in step 486 that the transaction is not
authorized and the in-progress delivery of merchandise (e.g., gasoline) is
immediately discontinued. The sales associate is then notified in a well-known
manner to ask the customer for an alternative method of payment and processing
terminates. While this specification provides that the transaction terminates
when the payment method cannot be authorized, there are several other alterna-
tives that can be implemented without departing from the scope of the present
invention. For example, if the payment method does not work, it is possible
that
an alternate could be requested by the system and utilized.
[101] If the transaction does not require authorization (i.e., cash or other
liquid
asset is used), POS device 34 still communicates with transaction processing
system 26 to provide transaction information 110 and loyalty program informa-
tion 108 to customer information database 100 and to determine whether the
customer is entitled to a loyalty award.
[102] A customer may also utilize transaction processing system 26 to
conduct inquiries into the customer's progress toward fulfilling the
requirements
of a particular loyalty program. To initiate the request, the customer
accesses
the transaction processing system 26 as mentioned above (i.e., by telephoning
a
human customer assistance representative and verbally communicating the
request over the telephone, or dialing a telephone number and interfacing with
a
computer using DTMF tones, or logging onto the Internet and accessing a
predetermined URL), and then communicating his/her request.
[103] Fig. 16 is a detailed flow diagram depicting the steps performed in step
500 of Fig. 13. In a preferred embodiment, customers can update information
contained in the customer information database 100 by following the same
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process utilized when the information is first communicated to the system. The
reason for the update can range anywhere from changed circumstances
(customer address, status change, etc.) to changing preferences with respect
to
specific merchants to adding new merchants for customer. Data security
controls are utilized to ensured that only legitimate customers can access and
modify their profile data. To preclude customer updates from interfering with
the operation of the system, it is envisioned that transaction processing
system
26 will update customer information database 100 at predetermined times during
the day, preferably during off-peak usage times. As shown in step 510,
transaction processing system 26 periodically retrieves updated customer
profile
data from an online memory location (RAM 88, or secondary storage device 94).
In step 520, the transaction processing system 26 reconciles merchant
accounts.
That is, the system aggregates merchant sales, credits merchants and payment
processors when appropriate and then presents invoices to each merchant and
payment processor, based on sales activities. Customer profile information
102,
merchant information 104, transaction information 110, and customer payment
method information 112 are used to determine the fees to be paid to each
entity
(merchant store 12 and payment processor 16, and transaction processing system
26, as appropriate.). Once the information is aggregated, the transaction
processing system 26 updates customer profile data (step 530).
[104] The process depicted in Fig. 16 does not include the process performed
when a user seeks to have his/her transponder activated due to it being lost
or
stolen. In this case, the database will be immediately updated in order to
preclude fraudulent use of the transponder by unauthorized personnel.
[105] Fig. 17 is a detailed flow diagram depicting the steps performed in step
600 of Fig. 13. The transaction processing system 26, as shown in step 610,
periodically retrieves raw transaction data from secondary storage device 94.
This retrieval can be performed at a predetermined time each day, or it can be
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performed shortly after the transaction is completed. In any event, the raw
transaction data consists of customer profile information 102, merchant
information 104, loyalty program information 108, transaction information 110,
and customer personal information 114. This data is collected and analyzed for
different purposes such as determining the effectiveness of the transaction
processing system 26, refining and developing new, related products, and
developing, tracking and analyzing loyalty programs and special promotions
that
are of specific interest to transaction processing system 26 customers and
merchants. In addition, the information may be sold to merchant companies 12
and payment processing systems 16 to provide personalized service to
individual
customers. It is expected that merchant companies would pay for data from
transaction processing system 26 based on volume or a per project basis. In
step
620, the transaction processing system 26 updates loyalty data and in step
630,
the updated information is transmitted to merchants who desire the additional
data customer transaction data with demographic data that may be used to track
customer purchasing trends.
[106] Fig. 18 is a detailed flow diagram depicting the steps performed to
process a multi-payment method transaction in accordance with the present
invention. The process begins in step 10 with a user desiring to make a
purchase
transaction and flows to step 20. At step 20, a user transmits user
identification
to a point-of-sale (POS) terminal. For example, a user's transceiver transmits
a
user and/or transceiver identification code to a reader on a POS terminal. It
should be noted that this embodiment, nor any of the others disclosed in this
application, are limited to a transceiver, a smart card, or any particular
means for
transmitting an identification code associated with the user. The transceiver
described in the embodiment shown in Fig. 18 may alternatively be substituted
with a plastic card with a magnetic stripe containing the user identification
code
or a unique code associated with the user. In another embodiment, the user may
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simply submit a biometric indicator (e.g., fingerprint, retinal scan, voice
wave,
or the like). The biometric indicator is subsequently matched with the user
and
the user's identification code and the process continues as if the
identification
code had been transmitted by the transceiver discussed with regard to Fig. 18.
[107] Step 20 may, optionally, require a further method of identification or
validation. For example, the user may be required to present a photographic
identification, enter a personal identification number (PIN), or submit a
biometric indicator. The process then flows to step 30, where pertinent
transaction information is entered into the POS terminal. This transaction
information may include, for example, price of a good or service, type of good
or service, coupon or discount information, date or time of the transaction,
or
other further information regarding the transaction. It should be noted that
in
this particular embodiment, step 20 occurs before step 30. However, in other
preferred embodiments, step 30 may occur before step 20. Following steps 20
and 30, the process flows to step 40. At step 40, the POS terminal transmits
the
user and/or transceiver identification code and transaction information to a
host
computer. Optionally, at step 40, the POS terminal may transmit a merchant
identification code to the host computer. In this embodiment where a merchant
identification code is transmitted to the host computer, step 30 is not
required as
the system of the present invention can access payment methods for the
transaction in a user preference table based on the type of merchant. In this
embodiment, no preferences are allowed based on product type or amount of
purchase. For example, when a merchant identification code is transmitted to
the host computer, the host computer determines the method of payment based
on the user preference table. The user preference table may instruct the host
computer to use a credit card at all department store merchant types, but to
use a
debit card at all retail or discount grocery stores. Thus, in this example,
the
payment method used would be determined based upon the merchant type, as
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determined from the merchant identification code, and not based on the product
or transaction type or amount of purchase, or any other transaction
information.
[108] The process then flows to step 50. At step 50, the host computer
compares the received user andlor transceiver identification code to
authorized
identification codes. Authorized identification codes are codes which are
authorized for use in the financial transaction processing system of the
present
invention. In a further preferred embodiment, at step 50, the host computer
can
match the received user and/or transceiver identification code to issued and
activated identification codes. Or, in this further preferred embodiment, the
host
computer can match the received user and/or identification code to a "negative
file" comprising identification codes that have been issued to users but that
have
not been activated. Or, in this further preferred embodiment, the host
computer
can match the received user and/or identification code to identification codes
that have been issued but that have been deactivated or disallowed for use in
the
system of the present invention. In this further embodiment, if the host
computer matches the received user and/or identification code to an issued and
activated identification code, the process of the further embodiment flows to
step
60.
[109] If, in step 60, the host computer determines that the user and/or
transceiver identification code is an authorized identification code then the
process flows to step 70. Otherwise, if the user and/or transceiver
identification
code is not an authorized identification code then the process flows to step
65.
At step 65, the host computer communicates to the POS terminal that the user
and/or tranceiver identification code is not authorized for use in the
financial
transaction processing system of the present invention. Following such
communication, the process flows to step 110 wherein the POS terminal prompts
the user for a different or alternate form of payment.
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[110] If the host computer, at step 60, determines that the user and/or
transceiver identification code is an authorized identification code then the
process flows to step 70. At step 70, the host computer compares transaction
preferences stored in a user profile associated with the user and/or
transceiver
identification code to the transaction information received from the POS
terminal. As previously discussed, the user has the option of entering more
than
one type of payment method that is associated with the user and/or transceiver
identification code. The user can then be requested to indicate transaction
preferences for each type of payment method. These transaction preferences
may be communicated to the host computer by the user via a telephone customer
service representative, Internet site, written enrollment or other indication.
Each
of these methods of communication may be optionally subject to verification of
the user's identification. The transactions preferences may be changed or
revised by the user. For example, the user may add or delete a new payment
method or may add new preferences for a payment method associated with a
loyalty or reward program.
[111] The transaction preferences comprises, for example, merchant-specific
preferences, merchant-type preferences, product/service preferences, product
amount preferences, interest preferences, payment modality preferences,
loyalty/reward preferences, credit balance preferences, geographical
preferences,
business travel preferences, or other preferences or a combination of the
above.
Merchant-specific preferences comprise user selections regarding payment
methods to be utilized for transactions involving specific merchants. For
example, at a specific grocery store "A", the user can specify that a credit
card or
even a specific credit card be utilized for transactions at grocery store "A".
As
previously discussed, merchant-type preferences comprise user selections
regarding payment methods to be utilized for transactions involving types of
merchants. For example, the user can specify that a debit card or even a
specific
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debit card be utilized for transactions at restaurants. Product/service
preferences
comprise user selections regarding payment methods to be used for specific
products or services or types of products or services. For example, the user
can
specify that a specific credit card be used for all transaction purchases of
airline
tickets; that another specific credit card be used for transactions involving
grocery and hardware stores; and that a debit card be used for all restaurant
food
and beverage transactions. Product amount preferences comprise user selections
regarding payment methods to be used for transaction involving different
monetary amounts. For example, a user can specify that a specific credit card
be
used for all transactions over $100; that a debit card be used for all
transactions
between $20 and $100; and that a checking account be used for all transactions
under $20. Interest preferences comprise a selection by the host computer of a
user specified payment method having the lowest interest rate for unpaid
balances. Interest preferences are pre-determined and authorized by the user.
For example, the user may authorize that for transactions involving
restaurants,
airline tickets, or monetary amounts over $100, the host computer is
authorized
to select the payment method associated with the user's identification code
that
currently has the lowest interest rate for unpaid balances. In a further
preferred
embodiment, the host computer would select the credit card payment method
associated with the user's identification code that currently has the lowest
interest rate for unpaid balances. Payment modality preferences comprise user
selected monetary amounts for various payment methods associated with the
user and/or transceiver identification code. For example, the user can specify
that the host computer use the debit card for all purchases in a given month
up to
a total of a certain monetary amount, then that the host computer use the
credit
card until a certain monetary amount is reached, and so on. Loyalty/reward
preferences comprise user selected and host computer selected elements. User
selected loyalty/reward preferences comprise user selections regarding payment
methods to be used for transactions that provide accrual of loyalty or reward
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points through the use of a particular payment method. For example, the user
has a credit card "A" which accrues airline frequent flier points with
purchases
made with the credit card. The user also has a credit card "B" which provides
the user with a coupon for a free movie rental with every $20 worth of trans-
actions paid for with credit card "B". The user can specify that credit card
"A"
be used for transactions unless the merchant does not accept credit card "A",
in
which case credit card "B" should be used for that transaction. Host computer
loyalty/reward preferences comprise host computer selections regarding pay-
ment methods to be used for transactions that afford the user with the
greatest or
optimum reward or loyalty accrual for that specific transaction. Through user
profile preferences, the user can authorize host computer loyalty/reward
preferences. For example, the user has specified that credit card "A" is to be
used for transactions, but has also associated credit card "B" with the user
and/or
transceiver identification code. The user has also authorized host computer
loyalty/reward preferences. In this example, a particular reward or loyalty
point
accrual may be attained by using credit card "B" with a specific merchant,
product, or merchant- or product-type. The host computer would not use credit
card "A", but instead would select credit card "B" as it provides the greatest
or
optimum reward for the particular transaction among all the methods of payment
associated with the user and/or transceiver identification code. In further
preferred embodiments, the host computer loyalty/reward preferences comprise
selecting the payment method that provides the best travel insurance or which
provides the best purchase protection for a specific transaction. Credit
balance
preferences comprise the host computer selecting the method of payment having
the lowest unpaid credit balance or with a credit balance matching user-
defined
criteria. For example, the user can specify that credit card "A" be used
unless
another form of payment has a lower unpaid credit balance and/or the credit
balance of credit card "A" is greater than a specified monetary amount.
Geographical preferences comprise the host computer selecting a method of
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payment based upon the geographical location of the transaction. The host
computer determines the geographical location based upon, among other things,
the information associated with a merchant identification code or the type of
currency unit involved in the transaction. For example, the user can specify
that
all transactions in the United States utilize credit card "A" while all
transaction
in Europe utilize credit card "B". Business travel preferences comprise the
host
computer selecting a method of payment based upon the distance proximity of
the transaction to a user's home or business address. For example, the user
can
specify that transactions within a specified distance from the user's home
utilize
the user's personal debit card, while transactions greater than a specified
distance from the user's home utilize the user's corporate credit card (e.g.,
because the greater distance is an indicator that the user is on a business-
related
trip).
[112] It should be noted that the user preferences discussed with regard to
step
70 include and are in addition any and all other preferences discussed else
where
in this specification. Further, the user preferences discussed with regard to
step
70 are subordinate to any merchant acceptance indicators or criteria (e.g.,
the
merchant does not accept credit card "A", a credit card is not allowed for
transactions with a merchant under a certain monetary amount, and the like).
Also, these user preferences are subordinate to any fraud indicators (e.g.,
bad
check information from clearance study for a debit card account).
[113] As shown in Fig. 18, these user preferences and other selection criteria
for methods of payment can be variously located by the host computer in at
least
a payment method table 72, a user product preference table 74, a user merchant
preference table 76 or other user preferences 78. After the host computer has
located all preference information and indicators associated with a user
and/or
transceiver identification code in step 70 and has compared said information
and
indicators to the transaction information, the process flows to step 80. At
step
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80, the host computer selects a method of payment for the transaction based
upon an algorithm weighing the preference information and indicators in view
of
the transaction information. Once the host computer has selected a method of
payment for the transaction, the process flows to step 90. At step 90, the
host
computer requests payment authorization from the authorization computer,
database or entity associated with the selected method of payment for the
transaction. The process then flows to step 100. If, at step 100, payment is
authorized by the authorization computer, database or entity, the process
flows
to step 120. Otherwise, if, at step 100, payment is not authorized by the
authorization computer, database or entity, the process flows to step 105. At
step 105, the host computer communicates the disapproval or lack of
authorization for the transaction to the POS terminal and the process flows to
step 110. Optionally, after step 105, the host computer selects a secondary
method of payment and, upon authorization from the authorization computer,
communicates this authorization from the secondary method of payment to the
POS terminal. For example, the first method of payment determined by the host
computer is denied authorization by the authorization computer. A second
method of payment is automatically determined by the host computer and
authorization is requested. If this second method of payment is authorized,
the
authorization is communicated to the POS terminal. This can, for example,
prevent a customer from experiencing possible embarrassment at having their
credit denied (e.g., on a date or in front of a client at a business dinner,
etc.). At
step 110, the POS terminal prompts the user for a different or alternate form
of
payment. Step 110 may, optionally, require a further method of identification
or
validation. For example, the user may be required to present a photographic
identification, enter a personal identification number (PIN), or submit a
biometric indicator.
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[114] If, at step 100, payment is authorized by the authorization computer,
database or entity, the process flows to step 120. At step 120, the host
computer
communicates authorization for the selected method of payment to the POS
terminal. In another preferred embodiment, the host computer additional
communicates the selected payment method and/or the user preferences) that
determined the selection of the payment method according to the user's
preference profile. The POS terminal can then provide the communicated
information to the user. Following communication between the host computer
and the POS terminal at step 120, the process flows to step 130. At step 130,
the
POS terminal conveys the communicated information to the user and the process
flows to step 125. At step 125, the user accepts or rejects the selected
payment
method. Step 125 may, optionally, require a further method of identification
or
validation. For example, the user may be required to present a photographic
identification, enter a personal identification number (PIN), or submit a
biometric indicator. If the user rejects the selected payment method, the
process
flows to step 110 which is discussed supra. If the user accepts the selected
payment method, the process flows to the termination of the process at step
140.
[115] Although the present invention has been described in terms of
particularly preferred embodiments, it is not limited to these embodiments.
Alternative embodiments and modifications which would still be encompassed
by the invention may be made by those skilled in the art, particularly in
light of
the foregoing teachings. Therefore, this invention is intended to cover any
alternative embodiments, modifications or equivalents which may be within the
spirit and scope of the invention.
