CURRENCY INDEPENDENT ELECTRONIC CASH

Abstract: A system of electronic currency is shown adapted for use in electronic transactions conducted using a variety of national currencies. A credit issuing authority issues a number of credits that possess value independent of a national currency. The value of the credit may be tied to the value of services provided by the credit issuing authority. In operation, a consumer surrenders value to the credit issuing authority in exchange for credits. The consumer transfers the value to another during transactions. The second party may either surrender the credits back to the credit issuing authority in exchange for value, redeem them with the credit issuing authority in exchange for services or transfer them to other third parties in other transactions.

Description: CURRENCY INDEPENDENT ELECTRONIC CASH BACKGROUND OF THE INVENTION The present invention relates to electronic cash systems and, more particularly, to systems wherein the Acurrency≡ is independent of any national currency. One of the problems facing electronic commerce is the difficulty of finding suitable reference units for multi- currency transactions. For example, existing debit cards debit monies directly from a consumer=s account. Value resides at all times with the financial institution administering the account. Such debit card transactions are tied to a specific currency which are not exchanged for other currencies unless exchange services are provided by the financial institution. Smart card applications have been proposed to support electronic cash transactions. Electronic cash resembles physical cash in that it conveys value itself. Electronic cash is a form of bearer instrument and permits two-party transactions without requiring contact with the financial institution that issued the electronic cash. However, electronic cash is tied to a specific national currency. It does not permit an exchange among currencies. At a minimum, to exchange among currencies, the smart card must maintain up-to-the-minute information of exchange rates. Such monitoring would reduce the convenience to the consumer and limit the market acceptance of the electronic cash system. Further, because electronic money is considered a promising means of making micropayments, payments of very small sums for incremental purchases of information, even small transaction costs of converting among denominations could eviscerate micropayments over national borders. Accordingly, there is a need in the art for an electronic cash system that permits consumers to make purchases without regard to the denomination of currency at use at the point of sale. There is a need for such a system that incurs significantly reduced transaction costs. SUMMARY OF THE INVENTION The disadvantages of known systems are alleviated to a great extent by an electronic transaction system that issues electronic credits that are independent of any national currency. A credit issuing authority issues credits to a consumer in exchange for value. The consumer carries the credits on a smart card and redeems the credits to merchants when the consumer purchases goods or services. As a predicate to the purchase, the merchant offers the goods or services for a designated purchase price offered for a predetermined number of credits. During the purchase transaction, the consumer transfers credits to the merchant for the goods or services . The merchant may redeem the credits back to the credit issuing authority. Upon redemption, the credit issuing authority redeems the credits for value in whatever denomination the merchant accepts. Thus, purchasing decisions may be made without reference to individual denominations of currency. In a second embodiment, a customer and a merchant transact business entirely over a network. A customer communicates to a first network gateway to issue a payment order and submit the electronic cash. The first gateway reformats the payment order message and sends it to a second gateway. If the customer=s payment order contains electronic cash of a national denomination, the gateway converts the currency to an independent network credit. The second gateway reformats the payment order for delivery to the merchant. If the merchant does not accept network credits, the second gateway converts the network credits into a denominator that the merchant does accept. The value of the network credit, in both embodiments, is tied to a value of services or some other international commodity that the credit issuing authority offers. BRIEF DESCRIPTION OF THE DRAWINGS Fig. 1 is a schematic diagram of the present invention. Fig. 2 is a block diagram of the smart card of Fig. 1. Fig. 3 is a flow diagram of the credit terminal and the smart card operating during a credit purchasing transaction. Fig. 4 is a flow diagram of the merchant terminal and the smart card operating during a sales transaction. Fig. 5 is a flow diagram of the merchant terminal and the credit issuing authority operating during a credit redemption transaction. Fig. 6 is a schematic diagram of the present invention constructed in accordance with a second embodiment. Figs. 7(a) and 7(b) are flow diagrams of the operation of the present invention when executing a purchase transaction. DETAILED DESCRIPTION FIG. 1 shows the present invention constructed in accordance with a first embodiment. A credit issuing authority 100 is provided in communication with a credit terminal 200 over a network 300. Similarly, the credit issuing authority 100 is in communication with a merchant terminal 410 via a second network 500. In practice, the first and second networks 300 and 500 may be replaced by a single network (not shown) . A credit storage medium 600 engages with either the purchase reader 200 or the merchant reader 400. The credit storage medium 600, shown in Fig. 2, may be a smart card 600 that includes a processor 610, a power source 620, on board RAM and ROM memories 630 and 640 and non-volatile memory such as electronically erasable programmable ROM 650. The smart card 600 possesses an I/O interface 660 for communicating with smart card readers, such as the credit reader 200 and the merchant reader 400. The smart card may interface with smart card readers according to one or more protocols known in the art for smart cards. Further, the credit reader and merchant reader each include hardware typical for current smart card applications. Alternatively, the smart card 600 may be substituted by a card with magnetic memory. The credit issuing authority issues electronic cash, Anetwork credits, = using a denomination that is independent of any national currency. The credits typically are used and interchanged between consumers and a network of participating merchants. To purchase network credits, a consumer presents the smart card 600 to a credit terminal 210 during a credit purchase transaction, shown in Fig. 3. After the consumer exchanges value (cash or its equivalent) at the credit terminal 210, the smart card 600 engages with the credit reader 200. The smart card 600 authenticates to the credit reader 200 (step 1000) and the credit reader 200 authenticates to the smart card 600 (step 1010) . The credit reader 200 communicates with the credit issuing authority 100 via the network 300 and reports the transaction (step 1020) . The credit issuing authority transfers a number of network credits to the credit terminal 210 equal to the value paid by the consumers (step 1030) . The credit reader 200 stores the network credits on the smart card 600 (step 1040) . Thereafter, the smart card 600 is removed from the credit reader 200 and the connection is broken (step 1050) . At this point, the consumer carries the network credit currency on the smart card 600. The consumer is permitted to purchase goods or services from a variety of merchants that transact with the credit issuing authority. In practice, the merchants will have registered with the credit issuing authority 100 and become a member of a network of merchants that accept the network credits as electronic currency. Each merchant possesses a merchant reader 400, a smart card reader, at the merchant terminal 410. The merchant reader 400 engages with the smart card 600 to redeem network credits. Ideally, each merchant advertises its goods or services by advertising their purchase price in terms of the network credit. When the consumer decides to execute a purchase transaction, the consumer engages his smart card 600 with the merchant reader 400. To redeem network credits, the smart card 600 authenticates to the merchant terminal 410 as shown in Fig. 4 (step 2000) . In turn, the merchant terminal 410 authenticates to the smart card (step 2010) . The merchant terminal 410 provides purchase price information to the smart card 600 (step 2020) . The smart card 600 decrements the stored network credits by the purchase price; the merchant terminal 410 adds the purchase price to its store of network credits (step 2030) . After the network credits are exchanged, the smart card 600 disconnects from the merchant reader 400 (step 2040) . The merchant redeems network credits by causing the merchant terminal 410 to contact the credit issuing authority 100 over the network 500, shown in Fig. 5. The merchant terminal 410 authenticates to the credit issuing authority 100 (step 3000) and the credit issuing authority 100, in turn, authenticates to the merchant terminal 410 (step 3010) . Upon authentication, the merchant terminal 410 returns network credits to the credit issuing authority 100 (step 3020). Upon receipt of the network credits, the credit issuing authority 100 pays value to the merchant in a denomination identified by the merchant (step 3030). The network connection is then broken (step 3040) . The benefits of the present invention are applicable to transactions where buyer and seller do not meet face-to face but rather transact business entirely over a network, which could be an international network. For example, an internet marketplace is envisioned as one application of the present invention where information and software may be sold over the network itself. The transactions may require micropayments, payments of a few cents or fractions of a cent, to be made for the good or service. Fig. 6 illustrates the present invention as applied to a network transaction. In this embodiment, a single network is used for the entire purchase transaction. A customer computer 700 is in communication with a gateway 110 in the network 300, called a Acustomer gateways for convenience. A merchant computer 800 in another country is in communication with a second gateway 120 in the network 300, a Amerchant gateway. = Further, the customer may maintain an account at a first bank 750 issuing a first type of electronic cash and the merchant may maintain its own account at a second bank 850 that recognizes its own form of electronic cash. Before commencement of the transaction, the customer and merchant communicate sufficiently over the network 300 to permit the customer to identify goods or services that he determines to purchase. Figs. 7(a) and 7(b) illustrate a protocol that is used to consummate the purchase. The customer=s computer issues a payment order signal to the customer gateway according to locally established protocols (Step 4000) . For example, if a customer in Sweden were to purchase from a United States merchant, the customer sends a payment order according to Sweden=s PROTON protocol. The customer gateway 110 communicates with the merchant gateway 120 over the network 300. The customer and merchant gateways confirm that each is operational and prepared to execute the purchase transaction and, further, that the merchant is a member of the merchant network (Step 4010) . The customer tenders electronic cash to execute the purchase (Step 4020). The customer gateway confirms that the electronic cash is network credits (Step 4030) . The customer gateway also reformats the payment order into a format common to both the customer and merchant gateways (Step 4040) . For example, Swift=s Inter-linking message forma t may be appropriate. The customer gateway transmits the payment order to the merchant gateway. (Step 4050). In a preferred embodiment, the customer gateway accommodates currencies other than network credits. If the customer tenders another type of electronic cash, the customer gateway 110 identifies the issuing bank 750 of the electronic cash and converts the cash into network credits (Step 4060) . Alternatively, the payment order may identify a bank 750 and an account from which the customer gateway 110 should extract cash, whether it be network tokens or some other electronic cash, to execute the transaction. Once converted into network tokens, the customer gateway 110 continues with Step 4040 as described above. The merchant=s payment gateway 120 receives the payment order message and converts it from the common format into a format used locally between the merchant gateway 120 and the merchant computer (Step 4070) . The merchant gateway 120 also determines if the merchant is a member of the merchant network (Step 4080) . If so, the merchant gateway 120 transfers the network credits to the merchant=s computer 800 (Step 4090) . If not, the merchant gateway 120 communicates with the merchant=s computer 800 to determine a form of electronic currency that the merchant carries and communicates with the bank 850 that issues the merchant=s preferred form of currency to convert the currency from the network credits (Step 4100). Upon conversion, the merchant gateway 120 transfers the new electronic cash to the merchant computer 800 (Step 4110) . Alternatively, the merchant gateway may deposit the value, whether it be in the form of network credits or some other currency form, with a bank 850 into an account designated by the merchant. As shown above, purchase of goods and services can be made without regard to any national denomination of currency. The consumer is free to purchase network credits with any kind of value that the credit issuing authority 100 deigns to accept. Similarly, the credit issuing authority 100 pays the merchant according to a mutually agreeable currency established when the merchant registers with the credit issuing authority. In a preferred embodiment, the credit issuing authority 100 provides services of its own. In such a case, network credits may represent a right to such services. For example, American Telephone and Telegraph (AAT&T≡) , the assignee of the present invention, may issue each network credit as a right to a predetermined unit of telecommunication services, such as one minute of international long distance telephone services. The consumer who purchases network credits may redeem them back to the credit issuing authority for such services or may use them as cash with a participating merchant. When the smart card 600 surrenders network credits to the merchant terminal 410, the smart card in effect transfers rights to telecommunications services to the merchant. The merchant also may redeem network credits for the credit issuing authority's services as an alternative to redeeming them for value. By tying the value of a network credit to a known service, such as the value of telecommunication services in the AT&T example above, the credit issuing authority 100 maintains independence from a fluctuating relative value of the various national currencies but provides network credits at a value that is intuitively familiar to a consumer. Additionally, a service based network credit may avoid regulatory constraints that may be associated with conventional banking institutions. The foregoing description of the present invention has described the credit storage medium 600 as a smart card. It should be appreciated that the present invention is not so limited. A variety of alternative credit storage media may find application with the present invention, including magnetic credit cards and disposable cards with magnetic information provided thereon.

Claims: CLAIMS 1. An electronic transaction system, comprising a credit issuing authority that issues electronic credits that is independent of any national currency denomination . a credit terminal in communication with . the credit issuing authority, including a card reader, that stores credits on a credit storage medium, and a second terminal in communication with the credit issuing authority, including a card reader, for redeeming credits from the credit storage medium. 2. The system of claim 1, wherein the credit issuing authority redeems credits from the second reader in exchange for value. 3. The system of claim 2, wherein the credit issuing authority redeems credits from the second reader in exchange for services. 4. The system of claim 2, wherein the credit issuing authority redeems credits from the credit storage medium in exchange for services. 5. The system of claim 1, further comprising a plurality of other terminals, wherein the second terminal transfers credits to one of the plurality of other terminals. 6. The system of claim 1, further comprising a plurality of other credit storage media, wherein the second terminal transfers electronic credits to one of the plurality of other credit storage media. 7. A system for commercial transactions, comprising: a first gateway associated with a first party, and a second gateway associated with a second party, wherein the first gateway converts a payment order, generated by a first party according to a first protocol, to a network protocol and transmits the payment order to the second gateway, and the second gateway converts the converted payment order to a third protocol and transmits the payment order to the second party, and the payment order includes an electronic credit that is independent of any national currency denomination. 8. The system of claim 7, wherein the first gateway is in communication with an electronic bank, and when the payment order includes an electronic currency of a national currency, the first gateway communicates with the electronic bank to convert the electronic currency to the electronic credit. 9. The system of claim 7, wherein the second gateway is in communication with an electronic bank, and when the second party does not accept electronic credits, the second gateway communicates with the bank to convert the electronic credits to a denomination that the second party does accept. 10. A method of electronic payment, comprising the steps of: issuing electronic credits to a first party in exchange for value, said credits being independent of any national currency denomination, and transferring the credits to a second party as payment. 11. The method of claim 10, wherein each credit represents a right to services offered by a service provider. 12. The method of claim 10, further comprising a step of redeeming the electronic credits from the second party in exchange for value. 13. The method of claim 12, further comprising a step of redeeming the electronic credits from the second party in exchange for services. 14. The method of claim 10, further comprising a step of transferring the electronic credits from the second party to a third party. 15. A method of electronic payment, comprising the steps of: receiving a payment order according to a first protocol, converting the payment order according to a network protocol, transmitting the payment order through a network, converting the payment order from the network protocol to a third protocol, and delivering the payment order to a payee, wherein the payment order contains at least one network credit having a value that is independent of any national currency. 16. The method of claim 15, wherein the payment order initially contains an electronic currency of a national denomination and the first converting step includes a step of converting the electronic currency to network credits. 17. The method of claim 16, wherein the step of converting to network credits includes a step of communicating with a bank that issued the electronic currency in the national denomination. 18. The method of claim 15, further comprising a step of, when the payee does not accept electronic cash in the form of network credits, before the delivering step, converting the network credits to a form of electronic currency that the payee accepts. 19. The method of claim 18, wherein the step of converting to network credits includes a step of communicating with a bank that issues electronic currency in a denomination that the recipient accepts. 20. The method of claim 15, wherein the second party is a merchant.

Inventors: MOSTAFA HASHEM SHERIF, MOSTAFA, HASHEM, SHERIF
Applicants: AT & T CORP, AT & T CORP.
Application year: 1998
Main classification: G07F7
IPC codes: G06Q20, G07F7