Electronic confirmation to debit or credit an account

A method for processing a check transaction includes receiving transaction information that is transmitted by a terminal; determining eligibility of the transaction for payment via a bank account; providing an electronic authorization response that is transmitted to the terminal, the authorization response including a unique transaction identifier if the transaction is eligible for payment via the bank account; and receiving an electronic response packet that is transmitted by the terminal if the transaction is eligible for payment via the bank account, the response packet including the unique transaction identifier and a transaction decision regarding payment via the bank account.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The invention relates to a method for processing a transaction that involves debiting or crediting a bank account.

2. Background Art

A prior method of paying for goods and/or services includes writing a check drawn against a checking account. It is also known to pay for goods and/or services by providing a checking account number to a merchant so that the merchant can initiate electronic transfer of funds from the checking account. Such transactions involving a check and/or a bank account, such as a checking account, may be referred to as check transactions. A known method for processing a check transaction includes entering transaction information, such as dollar amount of the transaction, check number and bank numbers, into a point of sale terminal. The terminal then communicates with an authorization source to obtain authorization for the check transaction. Once the transaction is authorized, the terminal captures or otherwise stores the transaction information. The transaction information is then uploaded to the host computer in batches and at certain time periods, such as at the end of each day, for settlement purposes.

If the authorization response sent by the host is not received by the merchant for whatever reason, such as failed communication link, the merchant will not know whether the transaction was successfully processed. As a result, the merchant may resubmit the transaction to the host computer. If the original transaction and subsequent transaction are both processed, the checking account may be debited twice.

Furthermore, under the above method, the merchant will not know whether the terminal accurately captured the transaction information. The merchant may also not know if the terminal accurately transmitted the transaction information to the host computer.

SUMMARY OF THE INVENTION

The invention addresses the shortcomings of the prior art by providing an improved method and system for processing check transactions. Advantageously, the method and system involve obtaining electronic confirmation to debit bank accounts so that multiple debits for the same transaction may be reduced or eliminated.

Under the invention, a method for processing a check transaction includes receiving transaction information that is transmitted by a terminal; determining eligibility of the transaction for payment via a bank account; providing an electronic authorization response that is transmitted to the terminal, the authorization response including a unique transaction identifier if the transaction is eligible for payment via the bank account; and receiving an electronic response packet that is transmitted by the terminal if the transaction is eligible for payment via the bank account, the response packet including the unique transaction identifier and a transaction decision regarding payment via the bank account.

The transaction identifier may be a numeric identifier that is used to uniquely identify the check transaction on an authorization source computer system, for example. The transaction identifier may, however, comprise one or more numbers, letters, symbols and/or images.

The method may further include storing the authorization response in an authorization response file, storing the response packet in a response packet file, and comparing the response packet file with the authorization response file prior to settling the transaction.

Further under the invention, a method of processing a check transaction includes providing transaction information to an authorization source using a terminal so as to determine eligibility of the transaction for payment via a bank account; receiving at the terminal an electronic authorization response provided by the authorization source, the authorization response including a unique transaction identifier if the transaction is eligible for payment via the bank account; and providing an electronic response packet to the authorization source using the terminal if the transaction is eligible for payment via the bank account, the response packet including the unique transaction identifier and a transaction decision regarding payment via the bank account.

A computer system according to the invention for processing a check transaction initiated by a terminal includes instructions for determining eligibility of the transaction for payment via a bank account; instructions for generating an electronic authorization response that is communicated to the terminal, the authorization response including a unique transaction identifier if the transaction is eligible for payment via the bank account; and instructions for receiving an electronic response packet provided by the terminal if the transaction is eligible for payment via the bank account, the response packet including the unique transaction identifier and a transaction decision regarding payment via the bank account.

Further under the invention, a system for processing a check transaction includes a terminal for transmitting transaction information associated with the transaction, and an authorization source computer system in communication with the terminal and operative to receive the transaction information from the terminal. The authorization source computer system includes instructions for determining eligibility of the transaction for payment via a bank account, and instructions for generating an electronic authorization response for transmission to the terminal. The authorization response includes a unique transaction identifier if the transaction is eligible for payment via the bank account. Furthermore, the terminal is operative to receive the authorization response from the authorization source computer system and to transmit an electronic response packet to the authorization source computer system if the transaction is eligible for payment via the bank account. The response packet includes the unique transaction identifier and a transaction decision regarding payment via the bank account.

These and other objects, features and advantages of the invention are readily apparent from the following detailed description of the preferred embodiments for carrying out the invention when taken in conjunction with the accompanying drawings.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT(S)

FIG. 1shows a system10for processing check transactions according to the invention. The term “check transaction” as used herein refers to a transaction involving the purchase or sale of goods and/or services, for which a check and/or a bank account, such as a savings account or a checking account, is used as the method of payment. Suitable types of checks include, for example, personal checks, traveler's checks, credit card checks, and other corporate checks. Similarly, suitable bank accounts include personal bank accounts and corporate bank accounts.

The system10includes one or more transaction initiating terminals, such as a point of sale (POS) terminal12and a personal computer14. The POS terminal12may include a key pad16, a display device18, an imaging device20for creating electronic images of checks, and/or a check reader21for electronically reading information from checks. In one embodiment of the invention, the POS terminal12is an Eclipse® terminal available from (Corporation) of (City and State). Similarly, the computer14includes a key pad22and a display device24. The computer14may also include an imaging device (not shown) and/or a check reader (not shown) that are similar to the imaging device20and check reader21.

The POS terminal12is preferably owned and/or operated by a merchant engaged in the business of selling goods and/or services. The computer14may also be owned and/or operated by the merchant. Alternatively, the computer14may be owned and/or operated by a customer attempting to purchase goods and/or services from the merchant.

The initiating terminals12and14are in communication with a merchant computer system26via any suitable communication system or network, such as a local area network, a wide area network, a dial-up network, the Internet, a wireless network or any combination thereof. While the merchant computer system26may include one or more computers, in the embodiment shown inFIG. 1, for example, the merchant computer system26includes a merchant host28in communication with a merchant gateway30.

The merchant gateway30includes hardware and/or software necessary for transmitting information between the merchant host28and another computer or electronic device. When transmitting information to the merchant host28, the merchant gateway30may also translate the information into a suitable language recognizable by the merchant host28.

The merchant computer system26is in communication, via any suitable communication system or network, with an authorization source computer system32of an authorization source for obtaining authorization of check transactions. While the authorization source computer system32may include one or more computers, in the embodiment shown inFIG. 1, the authorization source computer system32includes an authorization gateway34in communication with an authorization host36. The authorization gateway34includes hardware and/or software necessary for transmitting information between the authorization host36and another computer or electronic device, such as the merchant host28. When transmitting information to the authorization host36, the authorization gateway34may also translate the information into a suitable language recognizable by the authorization host36.

The authorization source computer system32may be in communication, via any suitable communication system or network, with one or more financial institutions38so as to obtain bank account information or other information.

In an alternative embodiment of the system10, the initiating terminals12and14may be linked directly with the authorization gateway34and/or authorization host36via any suitable communication system or network, such as described above in detail. With such a configuration, the initiating terminals12and14may communicate directly with the authorization gateway34and/or authorization host36.

FIG. 2is a flow chart illustrating operation of a method or system, such as system10, for processing a check transaction according to the invention. As will be appreciated by one of ordinary skill in the art, many of the steps inFIG. 2represent control logic which may be affected or implemented by hardware, software, or a combination of hardware and software.

At step100ofFIG. 2, transaction information may be entered into the POS terminal12, such as by using the key pad16. The transaction information may include, for example, customer information such as customer name, check number of a check to be used as payment, and one or more bank numbers associated with the check. Such bank numbers may include, for example, an account number associated with the check, such as a checking account number and/or savings account number, a routing number of financial institution38, or other financial institution associated with the check. The transaction information may also include additional information such as dollar amount of the transaction, store code of the merchant, a merchant identifier associated with the merchant, etc. Alternatively or supplementally, the imaging device20and/or check reader21may be used to enter transaction information associated with the check into the POS terminal12.

Next, the transaction information is captured or otherwise stored on the POS terminal12at step101. The transaction information is then transmitted or otherwise communicated from the POS terminal12to the merchant host28, at step102. In addition to or as an alternative to storing the transaction information on the POS terminal12, the transaction information may be captured or otherwise stored on the merchant host28. At step104, the transaction information and an authorization request are communicated from the merchant host28through the gateways30and34to the authorization host36. Alternatively, the transaction information and authorization request may be transmitted or otherwise communicated from the POS terminal12directly to the authorization gateway34and/or authorization host36.

At step106, the authorization host36determines eligibility of the transaction for payment via a bank account associated with the check, such as a checking account and/or savings account. For example, the authorization host36may determine eligibility based on bank account rules developed by the authorization host36and/or provided by the financial institution38. As another example, the authorization host36may communicate with the financial institution38to determine if sufficient funds exist in the bank account.

Next, at step108, the authorization host36generates an electronic authorization response, such as an electronic check acceptance (ECA) response. The ECA response preferably, but not necessarily, includes some or all of the transaction information, as well as a transaction identifier if the transaction is eligible for payment via the bank account. The transaction identifier may be a numeric identifier that is used to uniquely identify the check transaction on the authorization host36, or elsewhere. The transaction identifier may, however, comprise one or more numbers, letters, symbols and/or images. The ECA response may also include a confirmation request message, for requesting that the merchant confirm whether or not the customer wishes to proceed with payment via the bank account.

Next, at step110, the authorization host36stores the ECA response. For example, the ECA response may be stored as an authorization response file or transaction record file. At step112, the authorization host36communicates or otherwise provides the ECA response to the POS terminal12through the gateways34and30and merchant host28. Alternatively, the authorization host36or authorization gateway34may communicate or otherwise provide the ECA response directly to the POS terminal12.

When the POS terminal12receives the ECA response, the ECA response may be displayed on the display device18. For example, the display device18may display the following message: “Transaction approved; transaction identifier is 0123. Does customer want ECA?” At step114, the merchant enters a check transaction decision into the POS terminal12that indicates whether or not the customer wishes to proceed with the check transaction. The POS terminal12combines this decision with the ECA response to form an ECA response packet. Thus, the ECA response packet includes the transaction identifier as well as the customer's decision regarding the check transaction. If the customer decides to proceed with the check transaction, then the ECA response packet may be referred to as an electronic confirmation to debit the customer's bank account.

At step115, the POS terminal12captures or otherwise stores the ECA response packet. Next, at step116, the ECA response packet is communicated from the POS terminal12, through the merchant host28and gateways30and34, to the authorization host36. Alternatively, the ECA response packet may be communicated from the POS terminal12directly to the authorization gateway34and/or authorization host36. The authorization host36then stores the ECA response packet in an ECA response packet file, at step118. At step120, the authorization host36may also send a notice to the POS terminal12and/or merchant host28confirming that the ECA response packet was received. Such a notice may be referred to as an electronic confirmation of receipt of the ECA response packet.

Next, at step122, the authorization host36compares the ECA response packet file with the corresponding transaction record file. If the transaction identifier and/or other transaction information in the ECA response packet file does not match the transaction identifier and/or other transaction information in the corresponding transaction record file, then the authorization host36may terminate the check transaction and return an error message to the POS terminal12. Such an error message may be communicated directly to the POS terminal12, or routed through the gateways34and30and merchant host28. If, on the other hand, the transaction identifier and/or other transaction information in the ECA response packet file matches the transaction identifier and/or other transaction information in the corresponding transaction record file, then the check transaction is ready for settlement.

Settlement includes a first settlement process between the authorization source, which functions as an acquirer, and the merchant. Settlement also includes a second settlement process between the authorization source and the financial institution38associated with the bank account.

Settlement of the check transaction may occur in any suitable manner. For example, at step124, the POS terminal12or the merchant host28may generate a settlement request to settle the check transaction. Preferably, the settlement request is transmitted concurrently with the ECA response packet so that the check transaction may be settled immediately between the authorization source and the merchant. As another example, the POS terminal12or the merchant host28may submit, at a predetermined time, a batch of transactions for settlement. As yet another example, the authorization host36may determine when to settle the transaction or batch of transactions.

Because the method of the invention involves utilizing an ECA response packet, the method provides a safeguard against multiple debiting of a bank account for the same check transaction. Furthermore, because the ECA response, sent directly or indirectly from the authorization host36to the POS terminal12, may include some or all of the transaction information originally entered into the POS terminal12, the merchant will be able to confirm whether or not the POS terminal12accurately stored and transmitted the transaction information.

The method of the invention may also include a similar process for crediting a bank account, such as a checking account or a savings account. For example, credit transaction information associated with a credit transaction may be entered into the POS terminal12, such as by using the key pad16. The credit transaction information may include, for example, customer information such as customer name and bank account number. The credit transaction information may also include additional information such as store code and merchant identifier.

Next, the credit transaction information is captured or otherwise stored on the POS terminal12. The credit transaction information is then transmitted from the POS terminal12to the merchant host28. The credit transaction information may also be captured or otherwise stored on the merchant host28. The credit transaction information and a credit authorization request are then communicated from the merchant host28through the gateways30and34to the authorization host36. Alternatively, the credit transaction information and credit authorization request may be transmitted or otherwise communicated from the POS terminal12directly to the authorization gateway34and/or authorization host36.

In response to the credit authorization request, the authorization host36may confirm that the bank account is active and eligible for an electronic credit. The authorization host36may then generate an electronic authorization response, such as an electronic bank account credit (EBAC) response. The EBAC response preferably, but not necessarily, includes some or all of the credit transaction information, as well as a credit transaction identifier if the bank account is eligible for an electronic credit. The credit transaction identifier may be a numeric identifier that is used to uniquely identify the credit transaction on the authorization host36, or elsewhere. The credit transaction identifier may, however, comprise one or more numbers, letters, symbols and/or images. The EBAC response may also include a confirmation request message for requesting that the merchant confirm whether or not the customer wishes to proceed with the credit transaction.

Next, the authorization host36stores the EBAC response. For example, the EBAC response may be stored as a credit authorization response file or transaction record file. The authorization host36then communicates or otherwise provides the EBAC response to the POS terminal12through the gateways34and30and merchant host28. Alternatively, the authorization host36or authorization gateway34may communicate or otherwise provide the EBAC response directly to the POS terminal12.

When the POS terminal12receives the EBAC response, the EBAC response may be displayed on the display device18. For example, the display device18may display the following message: “Credit transaction approved; transaction identifier is 0456. Does customer want to proceed with credit?” The merchant then enters a credit transaction decision into the POS terminal12that indicates whether or not the customer wishes to proceed with the credit transaction. The POS terminal12combines this decision with the EBAC response to form an EBAC response packet. Thus, the EBAC response packet includes the credit transaction identifier as well as the customer's decision regarding the credit transaction. If the customer decides to proceed with the credit transaction, then the EBAC response packet may be referred to as an electronic confirmation to credit the customer's bank account.

Next, the POS terminal12captures or otherwise stores the EBAC response packet. The EBAC response packet is then communicated from the POS terminal12, through the merchant host28and gateways30and34, to the authorization host36Alternatively, the EBAC response packet may be communicated from the POS terminal12directly to the authorization gateway34and/or authorization host36. The authorization host36then stores the EBAC response packet in an EBAC response packet file. The authorization host36may also send a notice to the POS terminal12and/or merchant host28confirming that the EBAC response packet was received. Such a notice may be referred to as an electronic confirmation of receipt of the EBAC response packet.

Next, the authorization host36compares the EBAC response packet file with the corresponding transaction record file. If the credit transaction identifier and/or other credit transaction information in the EBAC response packet file does not match the credit transaction identifier and/or other credit transaction information in the corresponding transaction record file, then the authorization host36may terminate the credit transaction and return an error message to the POS terminal12. Such an error message may be communicated directly to the POS terminal12, or routed through the gateways34and30and merchant host28. If, on the other hand, the credit transaction identifier and/or other credit transaction information in the EBAC response packet file matches the credit transaction identifier and/or other credit transaction information in the corresponding transaction record file, then the credit transaction is ready for settlement.

Settlement includes a first settlement process between the authorization source and the merchant. Settlement also includes a second settlement process between the authorization source and the financial institution38associated with the bank account.

Settlement of the credit transaction may occur in any suitable manner. For example, the POS terminal12or the merchant host28may generate a settlement request to settle the credit transaction. The settlement request may be transmitted concurrently with the EBAC response packet so that the credit transaction may be settled immediately between the authorization source and the merchant. As another example, the POS terminal12or the merchant host28may submit, at a predetermined time, a batch of credit transactions for settlement. As yet another example, the authorization host36may determine when to settle the credit transaction or batch of credit transactions.

Advantageously, the method of the invention may also be practiced over the Internet. In such a case, the computer14may be utilized by a customer to access a web site of a merchant. The computer14may then be used to perform the method steps of the POS terminal12described above in detail.