Abstract:
The present invention relates to a system and method for using a payroll deduction process as a payment process and efficient means by which employees of a business can purchase and manage their employee benefits. An employer authorizes the inventive system to accept payroll deduction as a payment option for the employer&#39;s employees and to allow them to purchase benefits offered through the employer. The employer and/or the system establish guidelines for utilizing the payroll deduction option during public commerce or via the company&#39;s internal benefits administration system and the system stores the guidelines and identifying information for the employer and corresponding employees in a database. Merchants also sign up to offer employee benefits through the employer with the inventive system may agree to accept the payroll deduction process is a payment process. Thereafter, when an employee selects benefits from the list of benefits offered by their employer, the employee may use the payroll deduction process to pay for the selected benefits.

Description:
CROSS-REFERENCE TO RELATED APPLICATIONS  
       [0001]     This application is a continuation-in-part of U.S. application Ser. No. 09/497,142, filed Feb. 3, 2000, which is a continuation-in-part of application Ser. No. 09/429,616, filed on Oct. 29, 1999, both of which are hereby incorporated by reference in their entireties. 
     
    
     FIELD OF THE INVENTION  
       [0002]     The present invention relates to a system and method for processing providing a flexible, dynamic system that allows employers to integrate company benefits selections into their payroll system. The present system permits an employee to select and purchase benefits provided by their employer conveniently and efficiently, by permitting the enrollment process and payroll deduction procedure to be handled automatically and dynamically.  
       BACKGROUND OF THE INVENTION  
       [0003]     Advances in computer processing power and network communications have made information from a wide variety of sources available to users on computer networks. Computer networking allows network computer users to share information, software applications and hardware devices, and internetworking enables a set of physical networks to be connected into a single network such as the Internet. Computers connected to the Internet or connected to networks other than the Internet also have access to information stored on those networks. The World Wide Web (Web), a hypermedia system used on the Internet, enables hypertext linking, whereby documents automatically reference or link other documents located on connected computer networks around the world. Thus, users connected to the Internet have almost instant access to information stored in relatively distant regions.  
         [0004]     A page of information on the Web may include references to other Web pages and may include a broad range of multimedia data including textual, graphical, audio, and animation information. Currently, Internet users retrieve information from the Internet, through the Web, by ‘visiting’ a web site on a computer that is connected to the Internet.  
         [0005]     The web site is, in general terms, a server application that displays information stored on a network server computer. The web site accepts connections from client programs, such as Internet browser applications. Browser applications, such as Microsoft Explorer™ or Netscape Internet Browser™, allow Internet users to access information displayed on the web site. Most browser applications display information on computer screens and permit a user to navigate through the Web using a mouse. Like other network applications, Web browsing uses a client-server paradigm. When given a Uniform Resource Locator (URL) of a document, the browser application becomes a client and it contacts a server application specified in the URL to request the document. After receiving the document from the server application, the browser application displays the document to the user. When the browser application interacts with the server application, the two applications follow the Hyper-Text Transport Protocol (HTTP). HTTP allows the browser application to request a specific article, which the server application then returns. To ensure that browser applications and server applications inter-operate unambiguously, HTTP defines the exact format for requests sent from the browser application to the server application as well as the format of replies that the server application returns.  
         [0006]     As the number of physical networks connected to the Internet continues to grow, so too will the number of web sites that are accessible to Internet users and so too will commercial activity on the Internet. Providers of a wide range of products and/or services are continuously exploring new methods for promoting and selling them. Commercial vendors&#39; web sites are similar to other types of web sites except that they usually incorporate functionality to enable financial transactions between users and vendors.  
         [0007]     Currently, during an electronic commerce transaction on the Internet, a consumer enters the URL of a vendor and the browser application requests a web page associated with the URL from the appropriate server application. The consumer may select benefits displayed on the vendor&#39;s web page and submit the selection to the vendor through the browser application. For example, a consumer on the Internet, wishing to purchase a software application, may enter the URL of a vendor into the browser application. The browser displays a corresponding web page and the consumer may order the software application on the web page through the browser application. Upon receiving the consumer&#39;s selection, the vendor requests payment for the selected benefits before delivering them to the consumer. The consumer may pay the vendor through credit cards or the vendor may require cash upon delivery of the selected benefits. However, for consumers who do not have credit cards, do not wish to use credit cards, or do not have cash available at the time of delivery of the selected benefits, this method of purchasing benefits during electronic commerce is unsatisfactory.  
         [0008]     Some employers currently offer, as a benefit to their employees, payroll deduction plans as a method of paying for predetermined products and/or services with predetermined vendors. Under the payroll deduction plan, the employer may deduct the cost of already purchased benefits and/or services from an employee&#39;s future pay checks. Before the employee can use the payroll deduction plan as a payment option, the employer must approve the total purchase amount and the vendor. While this scheme affords employees the option of purchasing products and services on future earnings, the list of predefined products/services and vendors is usually limited. Moreover, the payroll deduction payment option is not utilized in electronic commerce. As electronic commerce on the Internet grows, so too will the desire to use the payroll deduction plan as an option for on-line purchases.  
         [0009]     The current process by which employees of various organization purchase benefits is known to be cumbersome and tedious. Many employees, in fact, may rate their employers performance on the basis of how easily and efficiently benefits, such as health care, dental, long-term care, disability, life insurance, etc., are made available to the employee and the level of flexibility and control the employee has over that program. To date, there are no known systems that allow an employee to purchase and modify their elective insurance and similar benefits in a manner that is as efficient and flexbile as, for example, retail purchasing. Moreover, due to the cumbersome and administrative intensive nature of providing employee benefits, many employers find it economically infeasible to provide their employees with as wide a range of benefit choices as the employees would like. To this end, employers often tend to avoid providing benefits beyond health care and basic insurance needs, due to the difficulties associated with administering such programs.  
         [0010]     In order to expand on the benefits that employers may offer employees, it would be desirable to have system that would provide employees with greater flexibility and control over their selected benefits and the manner in which they pay for those benefits. As well, such as system would preferably provide employers with a convenient manner in which to provide employees with a wide range of benefits above and beyond the traditional health care and other insurance benefits that most employers provide to their employees.  
       SUMMARY OF THE INVENTION  
       [0011]     The present invention relates to a system and method for permitting employees to use their payroll as a payment process for employer-sponsored benefits, whereby a purchase price of the benefits purchased on-line or off-line is deducted from an employee&#39;s paycheck, automatically and dynamically. Although a card may be issued to the employees that may appear and function similarly to a credit card and contain the employees relevant information, no card is contemplated nor necessary for use in connection with the present system and method. Rather on-line or off-line enrollment processes for purchasing—such as enrollment websites, paper enrollment forms, telephone response, enrollment software programs at kiosks or on employer computers, face-to-face enrollment with an internal or outsourced employee benefit enrollment specialist, etc.—are preferred. A services provide may be used to effect integration of such enrollment processes, convert the resulting premiums or fees into payroll deductions in an automated, dynamic and variable fashion, allowing for elections, cancellations, changes, etc. This may be done at any time with maximum flexibility for the employee and minimum disruption or administrative burden on the employer.] 
         [0012]     With the present inventive system, an employer authorizes the system to accept payroll deduction as a payment option for the employer&#39;s employees. The employer and/or the system establish guidelines for employee utilization of the payroll deduction option during commerce and for the purchase of benefits from various vendors sponsored by the employer—not necessarily limited to traditional health care and insurance benefits, but may include a wide-variety of employer sponsored benefits such as home/auto insurance, health club memberships, and any other benefit that an employer wishes to offer their employee. The system stores the guidelines and identifying information for the employer and corresponding employees who will use the payroll deduction in a database. Alternatively, the employer may periodically provide a list of employees (with corresponding information) who qualify to participate in the payroll deduction plan and the system then updates the database with the periodic list. Merchants also sign up with the inventive system and agree to accept the electronic payroll deductions transactions as a payment process.  
         [0013]     Thereafter, when an employee selects benefits from the employers available benefits or merchant&#39;s web site, store, catalog, or other related device, the employee may use the payroll deduction process or other means that identify their participation in the payroll deduction program, to pay for the selected benefits. The payroll deduction system (i.e. via card or by identification of the employee) may be executed on its own network infrastructure or on existing network infrastructures, such as an American Express network infrastructure or a Visa/Mastercard network infrastructure, a human resources outsourcing platform, or an employee benefits enrollment system.  
         [0014]     When the employee purchases a benefit from the employer&#39;s list of sponsored benefits and uses the payroll deduction system as a payment process, information for the employee is transmitted to a network processor. Alternatively, the employee may provide identifying information to process the charge against their payroll. The processor verifies the employee and benefit provider status, and verifies the employee account information in order to approve or reject the transaction. This method, therefore, affords authorized employees the option of using the payroll deduction system as a payment process for any employer-sponsored benefit.  
         [0015]     Specifically in a preferred embodiment of the present invention, when an employee chooses from among their employer&#39;s available benefits, or enters a merchant&#39;s web site or store and chooses benefits to be purchased, the employee may pay for the items with the payroll deduction system. Account information is transmitted to the network processor. The network processor is a processor used in an existing network infrastructure or one set-up by the benefits/product provider, and all account information stored in the database is also stored in the processor&#39;s database. The network processor uses the account information to verify the employee&#39;s employment status and to verify that the employee is authorized to use payroll deduction for the amount of the purchase. The network processor also verifies that the benefit provider is a participating vendor according to the employer&#39;s list of sponsored benefits. Upon verifying the employee and vendor information, the network processor may approve or reject the transaction. If the transaction is approved, the employee&#39;s payroll account is debited (although not necessarily immediately or for the full amount of the transaction, as some purchases may include delayed or installment payments) and the employee is notified. Alternatively, the system may include its own processor for processing transactions.  
         [0016]     Data is uploaded to the database at specific times during predefined periods. Information in the database is downloaded to a payroll processor (which can, of course, be the employer) at predetermined times. The payroll processor deducts the transaction amount from the employee&#39;s paycheck and information regarding the deduction may be given to the employee.  
         [0017]     In a preferred embodiment of the invention, a payroll deduction process may also serve as a smart card. A chip is embedded in a payroll deduction process and the information on the chip is updated when a transaction is approved.  
         [0018]     It is therefore the object of the present invention to provide a method for authorizing selected employers and/or vendors to offer payroll deduction as a payment option to appropriate consumers during commerce transactions and for establishing guidelines for the payroll deduction plan.  
         [0019]     It is another object of the invention to provide a method for allowing the consumer to select payroll deduction as a payment option during on-line or off-line shopping for employee benefits and for confirming the selection before it is processed via payroll deduction.  
         [0020]     Additional features and advantages of the invention will be set forth in the description that follows, and in part will be apparent from the description, or may be learned by practice of the invention. The objectives and advantages of the invention will be realized and attained by the system particularly pointed out in the written description and claims hereof as well as the appended drawings.  
         [0021]     To achieve these and other advantages and in accordance with the purpose of the invention, as embodied and broadly described, the present invention provides a method for using payroll deduction as a payment process during on-line and off-line purchases with a participating merchant, whereby a purchase amount paid with payroll deduction is deducted from an employee&#39;s future paycheck(s), the method comprising the steps of: authorizing, by an employer, a processing system to offer payroll deduction as a payment option during commerce transactions between the employee and the participating merchant; signing-up, by the processing system, merchants who agree to accept the payroll deduction process; establishing, by the processing system and the employer and by the processing system and the participating merchant, guidelines for using the payroll deductions; creating, by the processing system, payroll deduction processes that are used as a payment option by authorized employees; selecting, by the employee, benefits to be purchased from the participating merchant and paying for the benefits with the payroll deduction process; submitting, by the participating merchant to a network processor, information stored on the payroll deduction process; verifying, by a network processor, the employee and merchant status; processing, by the network processor, a transaction reflecting the employee&#39;s purchase; transferring, by the network processor to a payroll processor, the transaction in order for the transaction amount to be deducted from the employee&#39;s future paycheck; and updating the employee&#39;s corresponding account and notifying the employee by the processing system.  
         [0022]     An alternate embodiment of the present invention provides a system for using an payroll deduction process as a payment process during on-line and off-line purchases with a participating merchant, whereby a purchase amount paid with the payroll deduction process is deducted from an employee&#39;s future paycheck, the system comprises: first processing means for authorizing, by an employer, a processing system to offer payroll deduction as a payment option during commerce transactions between the employee and the participating merchant; second processing means for signing-up, by the processing system, merchants who agree to accept the payroll deduction process; third processing means for establishing, by the processing system and the employer and by the processing system and the participating merchant, guidelines for using the payroll deduction process; fourth processing means for creating, by the processing system, payroll deduction processes that are used as a payment option by authorized employees and accounts that correspond to the payroll deduction processes; fifth processing means for selecting, by the employee, benefits to be purchased from the participating merchant and for paying for the benefits with the payroll deduction process; sixth processing means for submitting, by the participating merchant to a network processor, information regarding the payroll deduction process; seventh processing means for verifying, by a network processor, the employee and merchant status; processing means for processing, by the network processor, a transaction reflecting the employee&#39;s purchase; ninth processing means for transferring, by the network processor to a payroll processor, the transaction in order for the transaction amount to be deducted from the employee&#39;s future paycheck; and tenth processing means for updating the employee corresponding account and for notifying the employee by the processing system.  
     
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0023]     The accompanying drawings, which are included to provide a further understanding of the invention and are incorporated in and constitute a part of this specification, illustrate embodiments of the invention that together with the description serve to explain the principles of the invention.  
         [0024]      FIG. 1  illustrates a computer network in which the inventive payroll deduction plan may be incorporated;  
         [0025]      FIG. 2  illustrates the TCP/IP Layering Model Protocol used during communications between components on the computer network;  
         [0026]      FIG. 3  illustrates a method for using a payroll deduction process as payment process during on-line or off-line purchases;  
         [0027]      FIGS. 4A and 4B  illustrate the steps implemented according to the preferred embodiment of the inventive method of  FIG. 3 . 
     
    
     DESCRIPTION OF THE PREFERRED EMBODIMENTS  
       [0028]     Reference will now be made in detail to the preferred embodiments of the present invention, examples of which are illustrated in the accompanying drawings. The present invention described below describes the functionality of the inventive system and method for processing payroll deduction by using a payroll deduction process.  
         [0029]      FIG. 1  is an example of a local area network (LAN)  100  that is configured to utilize a non-repudiation protocol. LAN  100  comprises a server  102 , four computer systems  104 ,  106 ,  108 , and  110 , and peripherals  112 , such as printers and other devices that may be shared by components on LAN  100 . Computer systems  104 ,  106 ,  108  and  110  may serve as clients for server  102  and/or as clients and/or servers for each other and/or for other components connected to LAN  100 . Components on LAN  100  are preferably connected together by cable media, for example copper or fiber-optic cable and the network topology may be a token ring topology  114 . It should be apparent to those of ordinary skill in the art that other media, for example, wireless media, such as optical and radio frequency, may also connect LAN  100  components. It should also be apparent that other network topologies, such as Ethernet, may be used.  
         [0030]     Data may be transferred between components on LAN  100  in packets, i.e., blocks of data that are individually transmitted over LAN  100 . Routers  120 ,  122  create an expanded network by connecting LAN  100  to other computer networks, such as the Internet, other LANs or Wide Area Networks (WAN). Routers are hardware devices that may include a conventional processor, memory, and separate I/O interface for each network to which it connects. Hence, components on the expanded network may share information and services with each other. In order for communications to occur between components of physically connected networks, all components on the expanded network and the routers that connect them must adhere to a standard protocol. Computer networks connected to the Internet and to other networks typically use TCP/IP Layering Model Protocol. It should be noted that other internetworking protocols may be used.  
         [0031]     As illustrated in  FIG. 2 , the TCP/IP Layering Model comprises an application layer (Layer  5 )  202 , a transport layer (Layer  4 )  204 , an Internet layer (Layer  3 )  206 , a network interface layer (Layer  2 )  208 , and a physical layer (Layer  1 )  210 . Application layer protocols  202  specify how each software application connected to the network uses the network. Transport layer protocols  204  specify how to ensure reliable transfer among complex protocols. Internet layer protocols  206  specify the format of packets sent across the network as well as mechanisms used to forward packets from a computer through one or more routers to a final destination. Network interface layer protocols  208  specify how to organize data into frames and how a computer transmits frames over the network. Physical layer protocols  210  correspond to the basic network hardware. By using TCP/IP Layering model protocols, any component connected to the network can communicate with any other component connected directly or indirectly to one of the attached networks.  
         [0032]      FIG. 3  illustrates an inventive method for using a payroll deduction process as a payment process in order to deduct the price of a purchased benefit from an employee&#39;s future paycheck. According to the invention, an employer  302  authorizes system  304  to accept payroll deduction as a unique form of payment during a commerce transaction with the employer&#39;s employees, an example of which is shown as employee  306 . System  304  also enables merchants  308 , who agree to accept the payroll deduction process as a payment process, to participate in a payroll deduction plan. During the initial authorization, employer  302  and/or system  304  representative establish guidelines for a payroll deduction plan. For example, employer  302  and system  304  representative may establish a purchase price limit versus a maximum balance that an employee may purchase through the payroll deduction process, the number of pay periods during which deductions can occur and the number of transactions allowed to each employee  306 . They also may base the number of payroll deductions on the total purchase price. For example, a purchase price that is less than forty-nine dollars and ninety nine cents is deducted from one future paycheck; a purchase price that is greater than fifty dollars and less than ninety-nine dollars and ninety nine cents is deducted from two future paychecks, and so on.  
         [0033]     Employer  302  and system  304  representative also may establish several sets of guidelines, whereby each set is associated with employees  306  within a specific status. For example, one set of guidelines may apply to hourly employees and another set may apply to salaried employees. Employees  306  may view all guidelines or only those that apply to them and guidelines associated with each employee  302  may change as the employee&#39;s status changes.  
         [0034]     During initial setup, system  304  also may setup guidelines with merchants  308 . For example, a merchant  308  may be authorized to offer interest free payroll deductions up to a predefined time for payments over a certain amount. Merchants  308  using system  304  may also automatically deduct monthly payments, such as insurance premiums or benefit fees, if employee  306  is authorized to use payroll deduction for such transactions. The payroll deduction plan guidelines and other information that identify employer  302  and corresponding employees  306  are stored on a database  310  in system  304 . Alternatively, employer  302  may periodically provide a list to the system  304  with information about employees who qualify to participate in the payroll deduction plan. The system  304  then updates database  310  with the periodic list.  
         [0035]     Thereafter, when an employee selects benefits from the merchant&#39;s  308  web site, enrollment process or store, employee  306  may use the payroll deduction process to pay for the selected benefits. Additionally, an employee may use the payroll deduction process in commerce in any similar fashion as any type of credit card is used. For example, employee  306  may use the payroll deduction process when purchasing items from a catalog, through telemarketing, offers appearing on the television, etc. Other methods of purchase will be known to those skilled in the art and are within the scope of this invention.  
         [0036]     The payroll deduction process used is similar to a credit card, but is not bound by the same terms and conditions of a credit card. For example, employees using the payroll deduction process may not be charged interest or transaction fees to use the payroll deduction process. The payroll deduction process may be executed on its own network infrastructure or on existing network infrastructures, such as an American Express network infrastructure or a Visa/Mastercard network infrastructure. Existing networks issue private brand cards, which carry the network&#39;s logo. Thus, an payroll deduction process may be a private brand that is executed on an existing network infrastructure and looks the same as a currently used credit card, such as American Express card and Visa card, among others. Of course, the payroll deduction process may not necessarily utilize any card or necessarily carry a network&#39;s logo. A magnetic stripe on a payroll deduction card could store employee  306  account information, as is stored in database  310 .  
         [0037]     Thereafter, employees  306  may use the payroll deduction process as a payment process for benefits purchased on-line or in a store, or for benefits provided by their employer. When an employee  306  chooses benefits to be purchased through their employer, the employee  306  may use the payroll deduction process in an existing network infrastructure, enter the number on a form or into a field on a website, or have an account or employee number attached to their employee-ID, depending on which method is most convenient for the employer/benefits provider. Alternatively, employee  306  may ‘enter’ the benefits provider&#39;s  308  web site and upon selecting benefit to be purchased, enter an account or employee number for the payroll deduction process on the benefit provider&#39;s web site, or may select benefit from a list and enter an account or employee number for the payroll deduction process on a form or over the telephone. Other commerce transactions are known to those skilled in the art and are within the scope of this invention.  
         [0038]     When the payroll deduction process is used within a network infrastructure, account information is transmitted to network processor  312 . Network processor  312  may be a processor used in an existing network infrastructure and all account information stored in database  310  also is stored in the network processor&#39;s database  314 . Network processor  312  uses the account information and information stored in the processor&#39;s database  314  to verify the employee&#39;s employment status and to verify that employee  306  is authorized to use payroll deduction for the amount of the purchase. The network processor also verifies that merchant  308  transmitting the account information is a participating merchant by verifying that merchant  308  account number exists in the processor&#39;s database. Upon verifying employee  306  and merchant  308  information, network processor  312  may approve or reject the transaction. Alternatively, the payroll deduction process may be used in its own network infrastructure and system  304  may verify employee  306  and merchant  308  account information and approve or reject the transaction.  
         [0039]     Data in the network processor&#39;s database  314  and database  310  are synchronized at predetermined times and synchronized data from either database  314  or database  310  is transmitted to appropriate payroll processors at predetermined times. For example, at the end of a work week, accounts in database  310  that have been updated since the last transmission are sent to the appropriate payroll processor. Based on employee  306  account information in database  310 , system  304  can determine who is employee&#39;s  306  employer, and which payroll processor processes the employee  306  paychecks. Some employers use paycheck processing companies to process their payroll and other employers perform this task themselves. Information transmitted from database  310  to a payroll processor may include employee&#39;s  306  social security or employee number, name, and the amount to be deducted from each paycheck or the total amount of a transaction. When the payroll processor cuts the next check for employee  306 , it deducts the appropriate amount and notifies system  304 . System  304  updates employee  306  account in database  310  in order to reflect the payment. A statement notifying employee  306  of the payroll deduction is sent to employee  306  through the mail or by e-mail. If employee  306  is notified by e-mail, employee  306  may link to a system web site to review a purchasing history. Thus, employee  306  may review all payroll deductions for all benefits purchased within a predefined period of time:  
         [0040]     In an alternate embodiment of the invention, the payroll deduction process may include a card with a chip that stores employee  306  account information and purchasing history, thereby functioning as a smart card. Information in the chip may include, among other things, employee  306  account number, employer, and payroll deduction status. Information in the payroll deduction card chip is updated after each transaction to reflect the transaction.  
         [0041]      FIG. 4  illustrates the steps implemented in a preferred embodiment of the inventive payroll deduction method. In Step  410 , employer  302  and merchant  308  sign up with system  304  to use the payroll deduction process as a unique form of payment during a commerce transaction with the employer&#39;s employees and establish guidelines for a payroll deduction plan.  
         [0042]     In Step  420 , the payroll deduction plan guidelines and other information that identify employer  302 , merchant  308 , and corresponding employees  306  are stored on a database  310  in system  304 . In Step  430 , account information is stored on employee  306  payroll deduction process. In Step  440 , employee  306  selects benefits from the merchant&#39;s  308  web site, enrollment process or store, uses the payroll deduction process in a network infrastructure or enters an account or employee number on the payroll deduction process on the merchant&#39;s web site. In Step  450 , account or employee information is transmitted to network processor  312 . In Step  460 , network processor  312  uses the account information and information stored in database  314  to verify employee&#39;s employment status, that employee  306  is authorized to use payroll deduction for the amount of the purchase, and that merchant  308  transmitting the account information is a participating merchant. In Step  470 , network processor  312  may approve or reject the transaction.  
         [0043]     In Step  480 , data in the network processor&#39;s database  314  and database  310  are synchronized at predetermined times and synchronized data from either database  314  or database  310  is transmitted to appropriate payroll processors at predetermined times. In Step  490 , the payroll processor deducts the appropriate amount from employee  306  future paychecks and notifies system  304 . In Step  500 , system  304  updates employee  306  account in database  310  in order to reflect the payment. In Step  510 , a statement notifying employee  306  of the payroll deduction may be sent to the employee through the mail, an e-mail, or by the employee accessing a web site containing the information.  
         [0044]     The foregoing description has been directed to specific embodiments of this invention. It will be apparent, however, that other variations and modifications may be made to the described embodiments, with the attainment of some or all of their advantages. Therefore, it is the object of the appended claims to cover all such variations and modifications as come within the true spirit and scope of the invention.