System and method for electronic transaction settlement

A method for electronic transaction settlement includes a customer providing an account identifier and contact information to a merchant, the merchant contacting a settlement house and transmitting the account identifier and a transaction amount, the settlement house contacting the customer, preferably via a mobile communication device. The customer then chooses a payment method such as a credit card and the settlement house contacts a credit provider for authorization. If the settlement house receives an authorization, the settlement house transmits it to the client, who approves the amount. The settlement house then completes the transaction with the credit provider and the merchant's bank.

FIELD OF THE INVENTION

This invention relates generally to electronic transactions and more particularly to electronic transaction settlement.

BACKGROUND

Customers are increasingly using electronic means to purchase goods and services. To complete a credit card transaction, merchants typically no longer make a physical imprint of the card. Instead, a magnetic strip on the card is read by a computer to access the customer's credit card number and expiration date. Many people now also use debit cards to pay for goods and services, where the transaction amount is deducted from a bank account. Some transactions are carried out where the merchant has no physical contact with the credit card. For example, when ordering goods or services via a merchant's Internet website, a customer typically enters a credit card type, number, and expiration date into fields of a web form.

Enjoyment of some goods and services still requires the physical presence of the customer, for example dining at a restaurant. In such a situation, if customers wish to use a credit or debit card, then they must have that card upon their person. For this reason, many people habitually carry multiple cards with them at all times. This increases the chances of one or more of the cards being lost or stolen.

Also, in a restaurant situation, a credit or debit card may be out of the customer's possession for a length of time, when one or more persons may have an opportunity to copy the card number and expiration date. It is a significant concern of customers to be able to enjoy the convenience of using credit and debit cards while minimizing the risk of unauthorized access to their card numbers.

SUMMARY OF THE INVENTION

The method for electronic transaction settlement includes a customer providing an account identifier and contact information to a merchant, the merchant contacting a settlement house and transmitting the account identifier and a transaction amount, the settlement house contacting the customer, preferably via a mobile communication device such as a mobile telephone or a handheld computing device.

The customer then selects a payment method, such as a credit card or debit card. The customer may have several options to choose from. The customer's communication device transmits the selection to the settlement house. The settlement house contacts a credit provider or the customer's bank for authorization. If the settlement house receives an authorization, the settlement house transmits it to the client, who then typically approves the amount.

The settlement house then completes the transaction with the credit provider or customer's bank and the merchant's bank. If the customer selected a credit card, the credit provider adds a charge in the transaction amount to the customer's account. If the customer selected a debit card, the customer's bank deducts the transaction amount from the customer's bank account. The merchant's bank credits the merchant's account with the transaction amount.

DETAILED DESCRIPTION

FIG. 1shows an electronic transaction settlement system including, but not limited to, a settlement house110, a merchant112, a merchant's bank114, a credit provider116, and a customer118. Merchant112may be a retail store, restaurant, wholesaler, or any other type of provider of goods or services. Merchant's bank114may be any type of financial service provider where merchant112maintains an active account. Credit provider116is a financial service provider that provides a line of credit to customer118. For example, credit provider116may have issued a credit card to customer118. Customer118is preferably an individual consumer, but may also be a representative of a business or non-profit organization.

Settlement house110is preferably an entity independent of merchant112, merchant's bank114, credit provider116, and customer118; however, in some embodiments settlement house110may be affiliated with one or more of the other parties. For example, settlement house110may include credit provider116. Settlement house110preferably has communication paths to merchant112, merchant's bank114, and credit provider116. The communication paths may include an Internet connection, a PSTN connection, a Local Area Network (LAN) connection, a Wide Area Network (WAN) connection, a wireless network connection, or a combination of the above.

Customer118preferably communicates, at least in part, via a wireless communication path with settlement house110. Customer118may use any type of mobile communication device, including but not limited to a mobile telephone, a pager, and a handheld computing device such as a personal digital assistant (PDA). Customer118may use any type of interface to communicate with settlement house110, including key strokes, voice commands, or a touchscreen.

Settlement house110manages settlement of transactions between merchant112, merchant's bank114, credit provider116, and customer118. For instance, a purchase by customer118from merchant112may include a transaction between customer118and credit provider116, a transaction between credit provider116and merchant's bank114, and a transaction between merchant112and merchant's bank114.

Customer118preferably maintains an account with settlement house110. The account may contain information regarding several options for payment, including a bank debit card and one or more credit cards.

To initiate a purchase, customer118provides contact information of settlement house110to merchant112. Customer118also provides account information, such as a name or account number, to merchant112. Merchant112uses the contact information to initiate communications with settlement house110. Merchant112then transmits the account information for customer118and the purchase amount. Settlement house110then completes the transaction so that credit provider116adds a charge to the credit account of customer118and merchant's bank114records a payment into the account of merchant112. Further details of a transaction settlement are discussed below in conjunction withFIG. 3.

Throughout the purchase transaction, merchant112does not have access to the credit account number of customer118, which provides privacy to customer118. If credit provider116denies the transaction, customer118may then select a credit account with another credit provider (not shown). Customer118is thus spared any embarrassment due to a denial of a credit transaction.

FIG. 2shows an electronic transaction settlement system including, but not limited to, settlement house110, merchant112, merchant's bank114, a customer's bank216, and customer118. Customer118maintains an account with customer's bank216. The account may be a checking account, a savings account, or any other type of bank account. Customer118preferably has a debit card with an associated debit card number that allows him or her to pay for purchases with monies from the account with customer's bank216.

In theFIG. 2embodiment, settlement house110uses the debit card number to settle transactions with customer's bank216. Customer118provides contact information and a name or account information to merchant112. Merchant112contacts settlement house110and transmits the name or account information and the amount of the transactions. Settlement house110then contacts customer118via a mobile telephone or other communication device. Customer118selects a payment method, in this embodiment the debit card. Settlement house110then contacts customer's bank216to request payment for the amount of the transaction.

Although not shown ifFIG. 2, customer118may also select additional payment methods. Customer118may have an account with a financial service provider that may or may not be a bank or credit provider and may select to pay using that account. For example, if customer118is a teenager, a parent may deposit an amount of money with a financial service provider who establishes an account accessible by the teenager. Thus the parent may provide spending money to the teenager without using cash.

FIG. 3is a flowchart of method steps for settling electronic transactions, according to one embodiment of the invention. First, in step310, customer118provides identification to merchant112. The identification may include the customer name, an account name or number, or any other type of identification. Customer118may also provide contact information for settlement house110. Next, in step312, merchant112transmits the identification of customer118to settlement house110.

In step314, settlement house110contacts customer118. Settlement house110, may place a call to a mobile telephone of customer118, or contact customer118via any other type of mobile communication device. Then, in step316, customer118selects a payment method, for example a credit card, and this selection is transmitted to settlement house110. Customer118may have the option of choosing among several credit cards or debit cards, depending on his or her arrangement with settlement house110.

In step318, settlement house110contacts credit provider116for approval of the transaction. Settlement house110then transmits the account information, for example the credit card number, and the amount of the transaction. In step320, credit provider116approves or denies the transaction. If credit provider116denies the transaction, then in step322settlement house110forwards the denial to customer118. The method returns to step316, where customer118may select an alternate payment method.

If credit provider116approves the transaction, then in step324settlement house110forwards the approval to customer118, and customer118approves (OKs) the transaction to settlement house110. Customer approval may include an additional amount to add to the transaction, for example when using a debit card and requesting cash. In step326, settlement house110sends the approval of customer118to credit provider116, which then adds a charge in the transaction amount to the account of customer118. In step328, settlement house110sends a transaction record to merchant's bank114, which the credits the account of merchant112with the transaction amount.

The invention has been explained above with reference to a preferred embodiment. Other embodiments will be apparent to those skilled in the art in light of this disclosure. For example, the present invention may readily be implemented using configurations other than those described in the preferred embodiment above. Additionally, the present invention may effectively be used in conjunction with systems other than the one described above as the preferred embodiment. Therefore, these and other variations upon the preferred embodiments are intended to be covered by the present invention, which is limited only by the appended claims.