System and method for conducting cashless transactions

In a commercial transaction system, a system user uses a card device to interact with sales or transaction terminals to conduct cashless transactions. Each terminal processes data including a balance stored on the card device and updates the stored data at the end of the transaction. The system is specially designed for purchases of items or transactions of relatively small monetary value, where purchases are generally unattended by salespersons. In this manner, the amount of the transaction is deducted from the balance on the card device. In accordance with the invention, when the existing balance associated with the card does not cover the price of the transaction, the system provides an automatic renewal feature which automatically increases the balance of the card device by a predetermined amount. Such a feature allows the purchase to be made without inconveniencing the card user to increase the balance by other means. Each time the balance is increased by an automatic renewal, the card issuing bank bills the card user for increments of the predetermined amount.

TECHNICAL FIELD 
The present invention relates to a commercial transaction system and method 
and particularly to a system and method for conducting commercial 
transactions of small monetary value without using cash. 
BACKGROUND OF THE INVENTION 
Presently, a customer must physically carry some change or small bills in 
order to conduct day-to-day transactions including paying vending 
machines, parking meters, laundry machines, toll machines, transportation 
fares, etc. for respective products and services. This can be very 
inconvenient for the customer if he/she is not carrying enough small 
currency or does not have exact change in some circumstances. For example, 
when a potential purchaser of a soda from a vending machine is out of 
change or dollar bills to make the purchase, the potential purchaser must 
then get change from larger bills from another source or forgo the 
purchase all together. This is a problem both for the purchaser who is 
inconvenienced and the vendor who may lose a sale. 
Attempts have been made to develop a system that would obviate the need to 
carry around a large amount of change and small bills. One such system is 
a pre-paid money card that is debited each time it is used. A subway 
system such as the Washington D.C. Metro system utilizes such pre-paid 
fare cards. A commuter purchases the card with a certain monetary value 
stored on it. The card is debited for an amount based on the distance 
traveled until the balance falls below the cost of the necessary fare. 
While the above system does overcome the need to carry tokens or change on 
a constant basis for commuters, it has some significant disadvantages. For 
example, when a commuter discovers that the fare level stored on the card 
is not sufficient to pay for the required fare at a turnstile, the 
commuter must inconveniently go to a different, specified location to 
increase the balance on the card with additional money. The specified 
location may be either a machine or a human teller, and long lines can 
form at such a location during rush hours, which might further delay the 
commuter. Another disadvantage is that the fare cards can only be used in 
a closed system which in this case is the metro system and cannot be 
utilized by the card user outside the system to freely spend his pre-paid 
amount. Finally, any money left on the card unspent is not credited back 
to the card user and may be eventually lost at the expense of the user. 
Another example of a cashless transaction system is one involving a 
university dining card. A certain amount of money is purchased on the card 
at the beginning of each semester to be used to purchase food or other 
items. The student then has his/her card debited for each purchase made at 
a university food concession or store. This eliminates the need for the 
student to carry around small bills and change in order to eat. It also 
allows the student to use the same card for a variety of food places. 
However, the university dining arrangement suffers similar disadvantages to 
those of the subway system. The arrangement is also a closed system in 
that the card only works within the university. In addition, the student 
must purchase a large dollar amount on the card in advance and is 
restricted to use the money for food or other university items only. When 
the balance on the student's card is depleted, he/she again must go to a 
specified location other than the location of a transaction or 
point-of-sale (POS) to purchase additional credit on the card. 
Still another example of a cashless transaction is one involving credit 
cards where credit is extended to a cardholder by a financial institution 
to cover purchases from participating merchants. The financial institution 
pays the merchant the purchase price less a service charge fee and later 
bills the cardholder for the purchase price. 
Such credit card transactions, however, need to be attended by a 
salesperson who normally makes an imprint of the credit card, calls a 
processing center via a dial-up modem to obtain authorization, and 
verifies the cardholder's signature to prevent fraud. This involves 
significant transaction costs, which while acceptable for large purchases, 
is not cost effective for relatively small purchases (e.g., a can of soda 
from a vending machine). 
Another system that allows for purchases without use of cash is a debit 
card system. A chain of retail stores may permit processing of a debit 
card which, unlike the processing of a credit card, results in immediate 
electronic debit of the user's bank account. A user normally provides the 
retailer with the debit card which is magnetically read using a "swipe" 
type magnetic reader. The user is then asked by the merchant to secretly 
key in his/her personal identification number (PIN) into a keyboard, and 
the merchant keys in the amount of the purchase. A POS debit request 
digital message is then transmitted either directly over an ATM network 
(or indirectly via a dial-up telephone link to a central computer) for 
receipt by the user's bank. The bank transmits a confirmation message to 
the POS terminal over the ATM network which, when received, assures the 
merchant that the funds are available and have been transmitted to the 
merchant's account. 
Disadvantages associated with a debit card system are that the card user 
usually has to maintain a minimum balance in the account in order to use 
the card, and may be required to pay bank fees for such an account. The 
debit card user also has to check the account balance from time to time to 
ensure sufficient funds to cover his future purchases. Otherwise, the card 
user could be charged for any over-draft. Finally, like a credit card 
transaction, a debit card transaction incurs significant transaction costs 
resulting in part from the requirements of having a salesperson attend the 
sales. As such, the debit card system is again not cost-effective for 
relatively small purchases. 
Still another system for conducting cashless transactions is disclosed in 
PCT International Publication No. WO 91/16691 published Oct. 13, 1991. The 
disclosed value transfer system comprises a computer, a value meter and a 
bulk purse within a bank, and exchange devices and electronic purses 
(e.g., integrated circuit cards or smart cards) outside the bank. In 
accordance with the disclosure, the bulk purse is capable of having cash 
values loaded to and redeemed by electronic purses via a value meter. The 
electronic purses communicate with each other through an exchange device 
to transfer values in transactions which are off-line from the computer. 
The value meter keeps float value records for the computer to derive a net 
value released to the bulk purse. Each float value record is non-specific 
with regard to individual draw-downs and redemptions. This system has 
obvious disadvantages: the holder of an electronic purse must connect to a 
bank via computer to increase his/her monetary level stored in the 
electronic purse. Therefore, if a user purchases an item without 
sufficient funds in the purse, he/she could not immediately purchase the 
item. The user would still need to go on-line with the bank to reload the 
purse and then complete the transaction. 
Accordingly, it is desirable to have a cost-effective and efficient system 
whereby a card user can conduct transactions of relatively small values 
without using cash, without worrying whether the card has sufficient 
funds, and without timely interruptions for verification, authorization, 
and/or obtaining additional funds on the card. 
SUMMARY OF THE INVENTION 
The present invention preferably includes an automatic renewal feature 
which will automatically increase the balance associated with a user's 
financial card (or storage device) of a particular financial card company 
("FCC") at the time of the transaction without interruption, and 
specifically without requiring the user to obtain separately--prior to 
consummation of the transaction--an increase in the funds allocated to his 
or her card. 
The cashless system preferably includes (1) a storage device for system 
users (e.g., an integrated circuit card or credit card with magnetic 
stripe), and (2) sales or transaction terminals (e.g., a soda or toll 
machine) which accept the storage device and which include a 
microprocessor located within the terminal which can read, compare, and 
write back data to the storage device. 
In operation, an issuing bank issues the storage device card to a user with 
a predetermined value, e.g. $25. The user may use that card to complete a 
cashless transaction of a relatively small amount. For example, to 
purchase a soda the user will insert the card at the sales/transaction 
terminal (i.e., soda machine) and the amount of the transaction will be 
deducted from the balance on the card device. If the balance on the card 
is less than the transaction amount, the balance will automatically be 
renewed by the terminal, that is increased by a predetermined amount. In 
this manner, if the user has only a $1.00 balance remaining on the card 
and the transaction amount is $1.50, the user's card will be increased a 
set amount, e.g. $25.00. The new net card balance will be $24.50, taking 
into account the amount previously remaining on the card and the 
transaction amount. 
Upon automatic renewal, the issuing bank (which has been informed of the 
automatic renewal by the FCC) bills the customer for the increase and 
preferably places the increased amount into a separate account out of 
which the amount of the transaction is withdrawn. That separate account 
("Pooled Account") holds all outstanding prepaid revenues for all 
customers of the issuer bank. If no charges are made in a pre-specified 
time, the FCC may direct the issuing bank to reimburse a particular 
cardholder for his or her unspent balance. 
In accordance with one aspect of the invention, operators of the 
sales/transaction terminals are paid by submission of transaction 
information to the acquirer bank which advances the transaction amount 
(possibly less a transaction fee). The acquirer bank then preferably 
transmits the transaction information to the FCC which pays the acquirer 
bank and which informs the issuer bank to reimburse it (the FCC) out of 
the Pooled Account.

DETAILED DESCRIPTION 
The present invention is directed to a technique for conducting cashless 
transactions using a financial card. In this particular illustrative 
embodiment, the financial card takes the form of a conventional integrated 
circuit (IC) card, which typically contains a programmable 
read-only-memory (PROM). 
FIG. 1A provides a front view of financial card 100 which looks similar to 
a conventional credit card. In accordance with the invention, financial 
card 100 can be used as a credit card as well as a card for conducting 
cashless transactions involving relatively small monetary value. Like the 
conventional credit card, located on the face of financial card 100 in 
raised characters are card user's name 101, card account number 105 and 
expiration date 103. Also located on its face is logo 107 of a financial 
card company (i.e., MasterCard in this instance) which defines the 
financial services accompanied by card 100. Card 100 is normally issued to 
card users by member banks of the financial card company and these card 
issuer banks are responsible for billing the customers for their 
purchases. 
FIG. 1B provides a back view of card 100. Signature space 109 is provided 
for a user to sign his/her name. The signature helps vendors to verify 
that the card user is the person to whom the card was issued. Also present 
on the back is magnetic stripe 111. The magnetic stripe is currently used 
for data storage normally needed for conducting a conventional credit card 
transaction. The conventional transaction typically requires a salesperson 
to make an imprint of the credit card, scan a magnetic stripe to call a 
processing center via a dial-up modem to obtain authorization, and verify 
the card user's signature. The required attendance by a salesperson and 
the credit extension approval process incur significant transaction costs. 
As such, the credit card type purchases are not cost-effective for small 
purchases. As a result, a customer is currently inconvenienced to carry 
change or small bills in order to conduct such small purchases or 
transactions as paying vending machines, parking meters, laundry machines, 
toll machines, etc. Thus an object of the invention is to obviate the need 
for carrying small currency to conduct these small purchases at the 
machines or sales/transaction terminals in general. 
In accordance with the invention, card 100 can also be used to conduct the 
small purchases in lieu of cash. Card 100 carries a balance from which the 
price of the purchase or transaction is deducted. It incorporates the 
additional convenience of an automatic renewal feature which automatically 
increases the card balance by a predetermined amount preferably when the 
purchase price exceeds the running balance. The predetermined amount for 
renewal should be a relatively small monetary value such as $25. A larger 
amount is not preferable because it would create significant liabilities 
arising from fraudulent uses such as uses of lost or stolen cards. By 
allowing a small number of renewals of a relatively small amount for a 
limited time period, one can effectively control and contain such 
liabilities. 
Card 100 is issued by issuer bank preferably with a balance of $25. Issuer 
bank preferably maintains in one account all outstanding prepaid revenues 
for all customers of the issuer bank, identified above as the Pooled 
Account. Thus, if issuer bank issues 200 cards with a $25 balance each, 
the Pooled Account will equal $5,000. 
As shown in FIG. 2A, card 100 contains memory 201 for storing data to be 
described. Memory 201 may be a conventional electrically erasable 
programmable read-only-memory (EEPROM) capable of fast data programming 
and erasure, and a large number of program/erase cycles during its 
lifetime. Leads 202 connect memory 201 to input/output (I/O) interface 203 
of conventional design. With this circuit arrangement, when financial card 
100 is inserted in a card receptacle at a sales/transaction terminal, data 
can be transferred between memory 201 and the terminal through I/O 
interface 203. 
FIG. 2B depicts a memory map of data storage in memory 201. The memory map 
identifies various memory modules including identification module 250 
containing data on an account number, a card number, an expiration date, a 
personal identification number (PIN) and a maximum number of PIN entry 
attempts; transaction module 255 containing purchase data such as last 
date and time of purchase, sequence number, amount of purchase and a 
"credit back" period; accounting module 259 containing the balance data, 
the number of renewals remaining, and a predetermined "maximum number of 
renewals"; and work space module 261. All this data is used to identify 
the account, operate the system, and track the purchase after a 
transaction is completed. 
Specifically, the account number identifies the account associated with 
card 100 for billing purposes. The card number acts as a subaccount number 
identifying additional cards issued under the same account number. Thus, 
for example, a spouse may possess an associated financial card having the 
same account number but a different card number. Accounting related to 
such an associated card is handled as if it were an independent card. The 
expiration date is used to make sure the card is unexpired. The PIN is 
used to verify the card ownership in a conventional manner. The maximum 
number of PIN entry attempts is the number of incorrect tries allowed to 
verify the user before the card is returned. The date and time of purchase 
keeps track of the date and time of the last transaction. The sequence 
number identifies which transaction is associated with the balance for 
possible later tracking. As described below, a "credit back" period is 
selected by the card user from a set of predetermined time period, e.g., 
0, 30, 60, 90 days or until the card expires. If card 100 is not used 
during the credit back period, an automatic refund of the balance is given 
to the card user. In the present embodiment, the "credit back" or 
"non-use" time period selected is 90 days. The period may be preselected 
by the card issuer or altered at a specified terminal such as an automated 
cash machine of conventional design. 
The "number of renewals" portion of accounting module 259 in memory 201 
corresponds to the number of renewals remaining. The "maximum number of 
renewals" is the maximum number of renewals allocated to the card user. 
Preferably, if the maximum number is zero, the card user will not be able 
to use the automatic renewal feature. Setting the maximum number allows 
the financial card company and card issuer more control over the entire 
system. Work space module 261 provides temporary memory space for storing 
data pertaining to on-going transactions. 
FIG. 3 illustrates system 300 embodying principles of the invention. System 
300 includes financial card company computer 301, card issuer computer 
303, acquirer computer 305 and sales/transaction terminal 307 which in 
this instance is a soda vending machine. In order to start a cashless 
transaction of purchasing a soda with card 100, card 100 is inserted into 
sales/transaction terminal 307. The terminal then processes the data 
stored in memory 201 of card 100. It suffices to know at this point that 
the balance on card 100 is reduced to account for the price of the item 
purchased. If the balance on card 100 is insufficient to cover the 
purchase price, and the maximum number of renewals has not been reached, 
an automatic renewal is triggered by the terminal to increase the balance 
by $25. Thus, after the purchase is consummated, the net increase in the 
balance on the card is $25 less the price. 
Regarding payments to the operator of the sales/transaction terminal 307, 
upon submission of transaction information either electronically via 
transmission line 311 or physically to the acquirer bank, acquirer 
computer 305 causes advancement of the transaction amount (possibly less a 
transaction fee) to the terminal operator's account. Acquirer computer 305 
then preferably transmits the transaction information (preferably 
including the account number, card number, expiration date, amount of the 
transaction, the last card balance, the transaction sequence number and 
terminal identification code) to FCC computer 301 via transmission line 
313. In return, FCC computer 301 reimburses the acquirer bank and 
communicates with the appropriate card issuer computer 303 via 
transmission line 309 and instructs the issuer to reimburse it (the FCC) 
the transaction amount out of the Pooled Account. 
FCC computer 301 also calculates whether there was an automatic renewal 
(which is logically deduced upon comparison between the transaction amount 
and card balance) and transmits the information regarding any automatic 
renewal of card 100 to card issuer computer 303 via transmission line 309. 
Card issuer computer 303 then bills the card user for the $25 renewal and 
increases the Pooled Account accordingly. 
In the event an operator of terminal 307 delays the submission of 
transaction information to the acquirer bank which in turn delays 
submission to FCC computer 301, FCC computer 301 will nonetheless process 
the subsequent transaction, preferably knowing by receipt of the sequence 
number and last balance that a transaction submission has been delayed. 
FIG. 4 depicts the outside of sales/transaction terminal 307 which as 
mentioned before takes the form of a soda vending machine. Terminal 307 
comprises display module 401, item selector 403 and card receptacle 402 
for receiving card 100. Coin slot 405 and change holder 406, although not 
required by the invention, may be present as an alternative payment 
method. When card 100 is inserted in receptacle 402, the balance stored in 
card 100 may be shown on display module 401. The card user then selects an 
item using item selector 403 and a transaction process is performed as 
described below. At the end of the transaction, the new balance stored in 
card 100 may be shown on display module 401. 
FIG. 5 is a block diagram of sales/transaction terminal 307. 
Sales/transaction terminal 307 contains microprocessor 501, which 
performs, inter alia, data retrieval and writing of new data to card 100 
when inserted into card receptacle 402. Microprocessor 501 is connected to 
card interface 502, selector interface 503, display controller 507, memory 
506, timer 510 and operating circuitry 515. Leads 505a and leads 505b 
connect microprocessor 501 to card interface 502 and to selector interface 
503, respectively. Leads 505c and leads 505d connect microprocessor 501 to 
memory 506 and to display controller 507, respectively. Leads 505e and 
leads 505f connect microprocessor 501 to operating circuitry 515 and timer 
510, respectively. 
Card receptacle 402 is connected to card interface 502 through which data 
is retrieved from and written to memory 201. Item selector 403 is 
connected to selector interface 503 to allow a card user to enter a 
selection for the desired item. The selector interface indicates to 
microprocessor 501 any selection made. In a standard way, microprocessor 
501 downloads information such as the balance from card 100 to display 
memory 509 through display controller 507, and causes the controller to 
display the contents of memory 509 on display module 401. The latter is of 
conventional design and may be of a liquid crystal display (LCD) type. 
Other components in terminal 307 include timer 510 used to generate the 
current date and time which are necessary for transaction identification, 
expiration and credit back calculations. Modem 511 is used to transmit and 
receive messages via transmission line 311 to acquirer computer 305. Modem 
511 establishes a connection between transmission line 311 and 
microprocessor 501, and data stored in memory 506 is transferred through 
modem 511 to acquirer computer 305. Printer 513 may be available to print 
out the information stored in memory 506 regarding all transactions. 
Operating circuitry 515 is needed to provide proper interfaces for printer 
513 and modem 511, and performs other functions necessary to conduct the 
sales such as dispensing a soda of the type selected by the card user. 
FIG. 6 depicts a memory map of data storage in memory 506 of 
sales/transaction terminal 307. The memory map identifies various modules. 
Transaction module 601 records purchases made with financial cards like 
card 100. Card information in transaction module 601 preferably contains a 
record for each purchase including an account number, card number, 
expiration date, amount of purchase, date of purchase, transaction 
sequence and card balance. Terminal identification module 603 includes 
information about the vendor's name and location of the terminal. 
Preferably, the information stored in modules 601 and 603 is later printed 
out by the operator and forwarded to the acquirer bank for payment. 
Alternatively, this information may be electronically transmitted to 
acquirer computer 305. The information is then electronically transmitted 
from acquirer computer 303 via transmission line 313 to FCC computer 301 
to store in a database and for processing. Such information allows FCC 
computer 301 to identify the card user, vendor and transaction. As 
explained above, FCC computer 301 reimburses acquirer bank and instructs 
the appropriate issuer bank to reimburse FCC out of the Pooled Account. If 
FCC computer 301 also calculates that a renewal was necessary it sends a 
message to the issuer bank to bill the user's account. 
Preferably, terminal 307 contains a hot card module 605, which contains a 
list of account numbers of stolen, lost, or payment overdue cards. This 
list of bad accounts allows sales/transaction terminal 307 to identify 
stolen, lost or payment overdue cards placed in card receptacle 402 and 
act accordingly as described below. The list is periodically updated. 
FIG. 7 is a flow chart illustrating the preferable process used in 
sales/transaction terminal 307 to complete a cashless transaction with the 
automatic renewal feature in accordance with the invention. The process 
starts after the card user inserts card 100 into sales/transaction 
terminal 307. The data stored in memory 201 of card 100 is read by 
sales/transaction terminal 307 and the balance stored in card 100 is 
displayed on display module 401, as indicated in step 702. At this point, 
the card user makes a selection of a purchase item. In this example, the 
card user selects a soda for the purchase. The items for purchase are 
stored within terminal 307. 
In step 751, the card account number read from memory 203 of card 100 is 
compared to a list of hot cards stored in memory 506 of terminal 307. If 
the account number matches a number on the list, the card is presumed 
invalid and the card is made inactive. In this preferred embodiment, the 
balance of card 100 is overwritten in step 753 to become zero and the 
maximum number of renewals is overwritten to become zero. A value is 
written in the credit back portion of transaction module 255 of memory 201 
which represents that no more renewals will be allowed for the life of the 
card. The basic effect of the values written will be to render the card 
useless with respect to the cashless system. In the case of the overdue 
payment, the card 100 can be reactivated when the card user has made the 
appropriate payment. The card is then returned in step 755 and a suitable 
message is displayed on display module 401, such as "bad card, card 
deactivated". Alternatively, if card 100 is identified as a stolen card by 
an indication on the hot card list, card 100 can be seized by terminal 307 
and not returned to the card user, where terminal 307 has such capability. 
If the card account number does not match a number on the hot card list, 
the process goes to step 757. In alternative terminals, the card user may 
be asked at this point to type in his PIN to identify himself as the owner 
of card 100. This step is only required in certain circumstances where a 
larger charge amount is possible (e.g., the sales/transaction terminal 
being a pay phone), extra security is needed and a keypad is available to 
enter the PIN. When a PIN is entered manually by the card user, the number 
is checked against the PIN stored in memory 203 of card 100. If the 
numerical sequences are different, sales/transaction terminal 307 asks for 
the PIN again in case it was mistyped or partially forgotten. The card 
user is allowed to have a maximum number of attempts which is stored on 
card 100, in this case three attempts, in order to enter the correct PIN 
before the card is returned. If the PIN number stored in memory 203 
matches the number entered, the transaction continues. 
In step 757, terminal 307 determines if card 100 has expired by comparing 
the expiration date stored in memory 201 of card 100 with the present date 
generated by timer 510. If the card has expired, the card's balance and 
renewals are set to a value of zero in step 753. The card is then either 
returned to the card user in step 755 or alternatively seized by terminal 
307. If the card has not expired, the process goes to step 703. 
In step 703, microprocessor 501 in sales/transaction terminal 307 compares 
the date of the last transaction stored in memory 201 of card 100 with the 
current date from timer 510. In accordance with an aspect of the 
invention, FCC computer reimburses the card user for the unused balance on 
card 100 if card 100 is not used in a 90 day period. The balance on card 
100 is therefore assumed to have been credited back to the user after the 
90 day period in accordance with the invention. With this assumption, the 
balance portion of accounting module 259 of memory 201 in card 100 is 
reset to a zero value in step 705. The "maximum number of renewals" value 
stored in memory 201 is preferably copied into the "number of renewals" 
portion of accounting module 259 of memory 201 in card 100 to allow the 
card user more renewals. The process then skips down to step 715. 
In step 715, microprocessor 501 in sales/transaction terminal 307 
determines if the price of the item selected is less than or equal to that 
of the balance stored in card 100. If the price is less than or equal to 
the balance, the balance is decreased on card 100 by the price amount in 
step 717, and a record of the transaction is stored in memory 506 of 
terminal 307. In step 718, the balance is read once again from card 100 
into sales/transaction terminal 307 to verify the correct balance is 
stored in memory 201 of the card. Preferably, if the balance does not 
match the calculated balance in terminal 307, the correct balance is 
rewritten to card 100. This ensures a proper accounting of money spent. In 
step 719, display module 401 displays the new balance on card 100. In step 
720, the value stored in the sequence number portion of transaction module 
255 of memory 201 in card 100 is increased by one. In step 720a, terminal 
307 transmits the transaction data including renewal information to 
acquirer computer 305 who receives the information and forwards that 
information to FCC computer 301. 
If in step 715 the price of the item is greater than the balance stored on 
the card, the value stored in the number of renewals portion of accounting 
module 259 in memory 201 of card 100 is preferably compared to a value of 
zero in step 721. If the number of renewals does equal zero, then the 
balance is compared to zero in step 722. If the balance is zero, then the 
transaction is not allowed to proceed and the user is displayed a message 
such as "Card Empty", or "Card Needs to be Replenished" in step 722a. The 
card is then returned to the card user in step 724. 
If the number of renewals equals zero but there is a balance of more than 
zero on the card, then the transaction is the final one allowed, and the 
balance is only increased to cover the amount of the purchase. This allows 
the transaction to be completed and reduces the level of reimbursements by 
leaving a balance of zero on card 100. In step 723, the difference between 
the price and remaining balance is added to the balance to ensure enough 
funds to purchase the item. The process then skips to 717 described above. 
If the number of renewals is greater than zero, then the card user's card 
100 has some remaining automatic renewals for a predetermined amount. The 
card balance is incremented in step 725 by the predetermined amount (in 
this example $25) by microprocessor 501 to allow sufficient funds for the 
purchase to be made. The "number of renewals" value in memory 201 of card 
100 is reduced by one in step 727 after a renewal has been triggered. The 
incremented value stored in card 100 is then decreased by the price of the 
item in sales/transaction terminal 307 and this new value is written back 
onto card 100 in the balance portion of accounting module 259 of memory 
201 in step 717. 
FIG. 8A shows the process employed in FCC computer 301 upon an automatic 
renewal. In step 801, FCC computer 301 receives data from acquirer 
computer 305 regarding the transaction at sales/transaction terminal 307 
via transmission line 313. In step 803, FCC computer 301 identifies from 
the transmitted data the account number of card 100 and determines from 
the amount of the transaction and the previous balance on the user's card 
that there was an automatic renewal. FCC computer 301 then transmits 
renewal data information in step 805 to the card issuer computer 303 via 
transmission line 309. 
FIG. 8B describes part of the process employed in the card issuer computer 
303. In step 807, issuer computer 303 receives the data regarding the 
renewal from FCC computer 301. In step 809, issuer computer 303 stores the 
renewal data pertaining to the corresponding account number. Issuer 
computer 303 then periodically bills the card user associated with the 
account number $25, the predetermined level, for each renewal in step 810. 
In step 811, issuer computer 303 then transfers the money billed to the 
card user to a "float" account, i.e. the Pooled Account, in which money is 
placed initially to be paid out over time for reconciliation. 
More specifically, the vendor forwards records of the transactions 
conducted at terminal 307 which are contained in memory 507. The vendor 
can either submit the printouts of the records to an acquirer bank, or 
electronically transmit the records to acquirer computer 305 through modem 
511. The vendor is paid by the acquirer bank for the total amount spent at 
terminal 307 possibly less a financial card company fee. The acquirer bank 
then reports the transaction information, including at least the account 
number and the transaction amount, to FCC computer 301. 
FIG. 8C describes a further process involving FCC computer 301. In step 
813, FCC computer 301 receives the transaction data from the acquirer 
bank. In step 815, FCC computer 301 analyzes the data and stores it in a 
central database; the user's account balance is adjusted by the amount of 
the transaction. If FCC computer 301 determines that there was a renewal, 
the process proceeds as described above (steps 805-811). In step 817, FCC 
computer 301 pays the appropriate acquirer bank preferably the money that 
bank advanced the vendors through any available network connecting the 
banks, such as Banknet. In step 819, FCC computer 301 collects the amount 
paid to the acquirer bank from the appropriate issuer bank's "float" 
account. The central database controlled by FCC computer 301 contains data 
of all transactions in the system and allows for accountability of 
processed as well as unprocessed transactions. 
FIG. 9 describes the credit-back process implemented in FCC computer 301 
after a certain period (preferably 90 days) of no card activity. This 
ensures the card user does not lose the unspent money remaining on card 
100 which is problematic in other systems such as a transportation card 
system. Other systems have card balances that can only be reduced by 
spending it in the closed system associated with the card. Thus cards that 
are lost or stolen or simply unused for other reasons are not refundable 
for the remaining balance. The present invention allows the card user to 
recover unspent money through the credit back system. In step 901, FCC 
computer 301 compares the present date with the date of the last purchase 
associated with card 100 stored in its database and determines if the 
account has not been active for longer than 90 days. If card 100 has been 
used in that period in step 902, FCC computer 301 takes no action. If card 
100 has not been used for more than 90 days in step 902, then FCC computer 
301 communicates with card issuer computer 303 via transmission line 309 
in step 905 that the account should be credited with its outstanding 
balance. Card issuer computer 303 credits the card user's account with the 
outstanding balance accordingly. In step 907, FCC computer 301 directs the 
card issuer to withdraw the amount of the credit-back from the "float" to 
compensate for the credit. The period of time can be selected as "card 
expiration" to have no credit-backs associated with the card if desired. 
The functionality of work space module 261 will now be described. As 
mentioned before, work space module 261 stores data pertaining to on-going 
transactions when the transaction amount is distance dependent or time 
dependent. An example of a distance dependent transaction is collection of 
tolls based on the distance traveled on a highway. When the card user 
initially enters the highway, he inserts card 100 into a terminal in the 
form of a toll machine. Data representing the point of entry is 
temporarily stored in card 100's work space module 261 of memory 201. When 
the card user exits the highway, this data is read by a second terminal 
which determines the point of entry based on the data stored temporarily 
and calculates the appropriate toll. The toll would then be charged to the 
balance on IC card 100 according to the process in FIG. 7. 
Work space module 261 has sufficient memory to allow multiple data 
pertaining to on-going transactions to be stored simultaneously. Thus, for 
example, while driving on a highway the card user may make a phone call 
with card 100 that stores the start time of the phone conversation. When 
the card user finishes the phone transactions, the phone terminal 
calculates the charge based on the stored start time and reduces the 
balance on card 100 according to the process in FIG. 7. Other transactions 
such as the purchase of a soda, candy bar or gas may also take place. 
These operations would require storage of temporary data pertaining to 
multiple on-going transactions. 
FIG. 10 illustrates a statement generated every month of all transactions 
made using the cashless system for card 100. The statement is sent from 
card issuer to card user to describe the purchases made. This preferred 
embodiment details date of purchase 1001, amount spent 1003 and type of 
sales/transaction terminal 1005. The detailed statement may be part of the 
card user's regular credit card bill or may be made sent only if requested 
by the card user. 
The foregoing merely illustrates the principles of the invention. It will 
thus be appreciated that those skilled in the art will be able to devise 
numerous systems and methods which, although not explicitly shown or 
described herein, embody the principles of the invention and are thus 
within the spirit and scope of the invention. 
For example, a person skilled in the art may improve magnetic stripe 111 on 
the back of the card 100 to also contain the data presently stored in 
memory 201. In that case, the magnetic stripe would serve as the sole 
storage device on card 100. The magnetic stripe refers to the conventional 
Track 1 or Track 2 magnetic stripe data as encoded on current bank cards 
in accordance with standards promulgated by the American Bankers 
Association, the American National Standards Institute, and the 
International Standards Organization. Track 3 parameters would be defined 
by the financial card company in accordance with this invention. One 
drawback of using only a magnetic stripe for data storage is its 
susceptibility to demagnetization and the potential loss of data when the 
card is placed near a magnetic field. 
Alternatively, memory 201 could replace magnetic stripe 111 to also contain 
the magnetically stored data needed to conduct conventional credit card 
transactions. This would eliminate the problem of losing data when 
accidentally placed near a magnetic field. 
In addition, card 100 could contain additional memory modules containing 
balances for different foreign currencies. This would allow world-wide 
utilization of the system by keeping separate balances each of which would 
be renewable. The predetermined value of the foreign currency would 
likewise be small and preferably in an amount equivalent to U.S. $25. The 
memory modules could contain associated "credit back" memory locations to 
allow different time periods for credit-backs for each foreign currency. 
The memory modules could also contain individual "maximum number of 
renewals" and "number of renewals remaining" portions of accounting 
modules associated with each currency. 
Furthermore, the system could have a different threshold to activate the 
automatic renewal feature. For example, the balance could be automatically 
increased by a predetermined sum each time the card's balance goes below 
one dollar rather than zero dollars as in the present illustrative 
embodiment. 
In addition, it may be desirable to remove the above described feature of 
forcing the last transaction to completion. That is, the system returns 
the card whenever the number of renewals is zero and the balance is less 
than the price of the desired items regardless of whether the balance is 
non-zero. This would remove the feature of covering the last transaction 
described above but would make the system easier to implement. 
Finally, the present invention has been described and disclosed in a form 
in which the various system functions are performed by discrete functional 
blocks. However, any one or more of these functions could equally well be 
performed by one or more appropriately programmed microprocessors, 
micro-coded chips, etc.