Abstract:
As an alternative to bill payments made with paper checks, customers are provided with “Sign-to-Pay” payment coupons along with their bills. A customer elects to pay the bill either by check or by returning the “Sign-to-Pay” payment coupon. The coupon will not contain the customer&#39;s checking account information. However, the payment amount indicated on the coupon will subsequently be deducted from the customer&#39;s checking account. Preferably, bill payments will be made through the Automated Clearing House (ACH) network which is an efficient and less expensive alternative to the traditional check clearing process.

Description:
CROSS REFERENCE TO RELATED APPLICATIONS  
       [0001]     This application claims the benefit of U.S. Provisional Application Ser. No. 60/494,307, filed by Stanley et al. on Aug. 11, 2003 and entitled “Coupon Payment System”, which is incorporated herein by reference. 
     
    
     FIELD OF THE INVENTION  
       [0002]     The present invention relates generally to electronic payment, and, more particularly, to methods and systems for providing coupon payments as an alternative to payments made with paper checks.  
       BACKGROUND OF THE INVENTION  
       [0003]     Every day millions of bills are received in the mail and then paid by check. However, there are numerous difficulties associated with this practice. A check may be stolen in the mail and cashed by someone other than the payee. The account number may be copied from the check and later used to commit fraud. There is also considerable cost and time delay when checks are used as the payment method. The check clearing process usually takes several days, and checks must be physically handled and stored. Furthermore, many banks mail cancelled checks back to their customers, which is yet another cost involved in using checks.  
         [0004]     In recent years, various methods have been developed to electronically make bill payments without checks. One such method is called direct deposit. In this scheme, a specified amount is deducted from the customer&#39;s checking account on a specified date, and transferred to a billing entity. However, the bill is automatically paid without review by the customer.  
         [0005]     There are also several ways to pay recurring bills via the Internet. When a particular bill is to be paid, the bill is forwarded to a bill payment system. The bill then is either automatically paid or it is presented to the customer online and then the customer selects the bill for payment. An example of such a bill payment system is described in U.S. Pat. No. 6,289,322 to Kitchen et al., entitled “Electronic Bill Processing,” and assigned to CheckFree Corporation. Although many individuals use such bill payment systems, drawbacks include the necessity to deviate from the usual bill paying method and the requirement that the customer have Internet access. Moreover, many people feel uncomfortable about making online payments.  
       SUMMARY OF THE INVENTION  
       [0006]     As an alternative to bill payments made with paper checks, customers are provided with payment coupons along with their statements. A customer elects to pay the bill either by check or by returning the payment coupon. The payment coupon will not contain the customer&#39;s checking account information. However, the payment amount indicated on the payment coupon will subsequently be deducted from the customer&#39;s checking account. Preferably, bill payments will be made through the Automated Clearing House (ACH) which is an efficient and less expensive alternative to the traditional check clearing process.  
         [0007]     According to a first aspect of the invention, a computer-implemented method for providing coupon payments as an alternative to payments made with checks, includes the steps of determining whether a bill is eligible for coupon payment; generating a coupon for the bill, if it is determined that the bill is eligible for coupon payment; receiving the coupon from a customer, the coupon including the customer&#39;s election to make the coupon payment for the bill; and paying the bill using a check-less payment network, in accordance with information from the coupon. According to a second aspect of the invention, a bill is considered eligible for coupon payment based on bill payment history or certain characteristics of the bill. Eligible bills include utility bills, mortgage bills, credit card bills, automobile financing bills, and bills for most other types of recurring payments.  
         [0008]     According to a third aspect of the invention, the payment coupon and the bill are mailed to the customer. According to a fourth aspect of the invention, the payment coupon and the bill are included in the same envelope.  
         [0009]     According to a fifth aspect of the invention, the payment coupon includes at least a portion of the customer&#39;s billing account information. According to a sixth aspect of the invention, the payment coupon includes an amount to be paid. According to a seventh aspect of the invention, checking account information is absent from the payment coupon. According to an eighth aspect of the invention, the payment coupon includes a portion to indicate election of payment by either coupon or check.  
         [0010]     According to a ninth aspect of the invention, the check-less payment network includes the Automated Clearing House (ACH). According to a tenth aspect of the invention, a billing entity matches the customer account number against a list of eligible customer account numbers. According to an eleventh aspect of the invention, customer account numbers are encrypted. According to a twelfth aspect of the invention, the list of eligible account numbers is created by an Originating Depository Financial Institution (ODFI). According to a thirteenth aspect of the invention, the payment is debited from the customer&#39;s checking account.  
         [0011]     These and other aspects, features and advantages of the present invention will become apparent from the following detailed description of preferred embodiments, which is to be read in connection with the accompanying drawings. 
     
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0012]      FIG. 1  is a diagram illustrating an exemplary system for paying bills using Coupon Payments;  
         [0013]      FIG. 2  is an exemplary Coupon; and  
         [0014]      FIG. 3  is a diagram illustrating another exemplary embodiment of the present invention in which aspects of payment processing are outsourced.  
     
    
     DESCRIPTION OF PREFERRED EMBODIMENTS  
       [0015]     Throughout the disclosure various terms and expressions are used with meanings as per the following definitions:  
         [0016]     Automated Clearing House (ACH): a secure, private network that connects banks to one another by way of various ACH operators. This network enables electronic payments, such as automatic payroll deposits and debit card purchases, to be handled and processed. Operating details of the ACH are well-known within the financial services industry, and are documented in 2004 ACH Operating Rules &amp; Guidelines, published by NACHA, which is incorporated herein by reference.  
         [0017]     Originator: Any individual, corporation or other entity that initiates entries into the Automated Clearing House (ACH). An example of an Originator is a Biller that initiates bill payments from customers who have elected to use Coupon Payments to pay their bills.  
         [0018]     Originating Depository Financial Institution (ODFI): A participating financial institution that originates ACH entries at the request of and by agreement with its customers.  
         [0019]     Receiving Depository Financial Institution (RFDI): Any financial institution qualified to receive ACH entries that agrees to abide by the NACHA Operating Rules and Guidelines  
         [0020]     It is to be understood that the present invention may be implemented in various forms of hardware, software, special purpose processors, or a combination thereof. Preferably, the present invention is implemented in a high-level programming language such as C, C++, COBOL, or Java. The software of the invention is tangibly embodied on various program storage devices. The programs are uploaded to, and executed by, a computer platform having hardware such as one or more central processing units (CPU), a random access memory (RAM), and input/output (I/O) interface(s). The computer platform also includes an operating system and microinstruction code. The various processes and functions described herein may either be part of the microinstruction code or part of the program (or combination thereof) which is executed via the operating system. In addition, various other peripheral devices may be connected to the computer platform such as additional data storage devices, printing devices, and Magnetic Ink Character Recognition (MICR) devices for reading encoded information printed on the surface of an envelope, statement, check, or coupon.  
         [0021]     Referring to  FIG. 1 , a diagram illustrating an exemplary system for paying bills using Coupon Payments is illustrated. The system includes an ODFI  102 , a Biller  104 , a Customer  106 , and an RFDI  110 . The OFDI  102  is the financial institution that receives payment instructions from the Biller  104 . In this capacity, the Biller  104  acts as an “Originator.” The OFDI  102  forwards entries via the ACH  108  to the RFDI  110 . The RFDI  110  is the depository financial institution that participates in the ACH system to initiate entries in the Biller&#39;s  104  account. Although the diagram shown in  FIG. 1  includes a single Customer  106  associated with only one Biller  104 , it is to be appreciated that there will generally be several Customers  106  each associated with various Billers  104 . The diagram of  FIG. 1  is provided for illustrative purposes.  
         [0022]     In operation, the Biller  104  periodically forwards customer check data to the ODFI  102 . This customer check data is compiled from the bills paid by check by the Customers  106 . This customer check data will include historical payment information for each bill payment made by check to the Biller  104 .  
         [heading-0023]     (Step  1 ).  
         [0024]     At the OFDI  102 , the customer check data are examined to determine which bills are eligible for coupon payment in subsequent billing cycles. Coupon payment eligibility involves a determination as to whether the Customer&#39;s  106  bill payments are recurring (e.g., a periodic bill payment) and are capable of being processed through the ACH  108 . If the payment is determined to be recurring, MICR information from the customer&#39;s check is then read. This information includes the customer&#39;s checking account number and routing number. This information is formatted into an ACH-format, and the ODFI  102  then runs a test to determine whether the bill could have been paid through the ACH  108 . If it passes this test, the billing information and the Customer&#39;s  106  checking information are added to an entry in an “Eligible” File. (Step  2 ).  
         [0025]     Next, the Eligible File is transmitted from the ODFI  102  to the Biller  104 . Only bills that the Biller  104  is responsible for are provided to the particular Biller  104 . (Step  3 ) The Biller  104  may then append coupons to the bills matched against the Eligible File, starting in the next billing cycle. (Step  4 )  
         [0026]     When the Customer  106  receives his or her next statement, it will include the payment coupon. The Customer  106  elects to pay the bill either in the conventional manner (by check) or by submitting the Coupon (without a check). (Step  5 ).  
         [0027]     The Biller  104  receives the bill payment. If it was made by check, the bill is processed according to the conventional check-clearing process. However, if the Customer  106  elected to pay the bill via payment coupon, then the payment is forwarded by the Biller  104  to the ODFI  102  (Step  6 ), and then to the ACH  108  (Step  7 ). Finally, the ACH  108  requests that the payment amount be added to the Biller&#39;s  104  account by the RFDI  110  (Step  8 ).  
         [0028]     An exemplary Coupon  200  is shown in  FIG. 2 . As depicted, the Coupon  200  includes a Biller identifier  201  (e.g., Biller XYZ), the customer&#39;s account number  202 , a total amount due  203 , a minimum amount due  204 , a specific payment amount  205 , a payment due date  206 , and a signature line  207 . To pay the bill using the Coupon  200 , the Customer  106  would simply indicate the amount to be paid by checking one of the payment choices  203 - 205  (and, in the case of payment of a specific amount, write the amount to be paid) and sign the Coupon  200  at the signature line  207 . The Coupon  200  would then be returned by the Customer  106  via U.S. Mail to the Biller  104 .  
         [0029]     Unlike conventional schemes, the present invention does not need to include full customer account information (or other “sensitive” personal data) on any document sent through the U.S. Mail or even transmitted through the billing system. For example, the Coupon  200  may include only a “masked” version of the customer account number  202  (such as the last few digits as an identifier only). Digits that are not revealed may be substituted by other characters (e.g., an ‘X’). While the customer bank account number can be decoded through a biller identifier (e.g., the customer account number), the Biller  104  can also be provided with a software utility to derive the financial information securely and privately. When the Biller  104  receives the remittance from the customer (including the Coupon  200 ), the Biller  104  identifies the customer and the receipt of payment. The Biller  104  then matches the customer with the encrypted version of the customer&#39;s bank account number. The encrypted version of the bank account number is then sent to the ODFI  102 , where it will be decrypted. It should be appreciated that other sensitive information (financial or otherwise) may also be similarly processed.  
         [0030]     Referring to  FIG. 3 , an alternate embodiment of the present is illustrated. In this example, a Lockbox Vendor  150  is provided to carry out much of the payment processing.  
         [0031]     As depicted in  FIG. 3 , the customer check data is transmitted from the Lockbox Vendor  150  to the ODFI  102 . (Step  1   a ). As before, the ODFI  102  analyzes this customer check data to determine eligibility for coupon payment in subsequent billing cycles. As mentioned, if the bill payment history indicates that the bill is for recurring payments, MICR information from the check is obtained to produce a test against the ACH  108 . If it passes the test, the billing information and the Customer&#39;s  106  checking information are added to an entry in an “Eligible” File. (Step  2   a ).  
         [0032]     Next, the Eligible File is transmitted from the ODFI  102  to the Biller  104 . Only bills that the Biller  104  is responsible for are provided to the particular Biller  104 . (Step  3   a ) The Biller  104  may then append coupons to the bills matched against the Eligible File, starting in the next billing cycle. (Step  4   a )  
         [0033]     When the Customer  106  receives his or her next statement, it will include the payment coupon. The Customer  106  elects to pay the bill either in the conventional manner (by check) or by submitting the Coupon (without a check). (Step  5   a ).  
         [0034]     However, instead of the Biller  104  receiving the bill payment, this step will be outsourced to the Lockbox Vendor  150 . In other words, the Lockbox Vendor  150  receives and processes the payment. If it was made by check, the bill is processed according to the conventional check-clearing process. However, if the Customer  106  elected to pay the bill via payment coupon, then notification of the payment is sent by the Lockbox Vendor  150  to the Biller  104  (Step  6   a ) and the payment is forwarded by the Lockbox Vendor  150  to the ODFI  102  (Step  7   a ), and then to the ACH  108  (Step  8   a ). Finally, the ACH  108  requests that the payment amount be added to the Biller&#39;s  104  account by the RFDI  110  (Step  9   a ).  
         [0035]     Although illustrative embodiments of the present invention have been described herein with reference to the accompanying drawings, it is to be understood that the invention is not limited to those precise embodiments, and that various other changes and modifications may be affected therein by one skilled in the art without departing from the scope or spirit of the invention.