SYSTEM AND METHOD FOR MULTIPLE CURRENCY TRANSACTIONS

Abstract: A system and a method for supporting e-commerce transactions in multiple currencies, in which the preferred currency of the buyer is different from the preferred currency of the seller, such that the exchange between the currencies is hedged at the time of sale of the product. The system and method enable the buyer to receive a final price for the product before the transaction is performed. The system and method also provide a mechanism for the actual exchange between the currencies of the buyer and of the seller, such that the aspects of the transaction regarding payment are fully supported. Preferably, online hedging of the currency transactions is performed, in order to reduce the risk involved with predetermination of prices.

Description: SYSTEM AND METHOD FOR MULTIPLE CURRENCY TRANSACTIONS FIELD OF THE INVENTION The present invention relates to a system and a method for transactions in a plurality of currencies, and in particular, to such a system and method which enable a price of a product to be accurately determined in the plurality of currencies before the transaction is performed. The transaction is "hedged", preferably through risk management of the currency transactions, such that the final price of the product is guaranteed to the seller of the product in the preferred currency of the seller, and to the buyer of the product in the preferred currency of the buyer. BACKGROUND OF THE INVENTION The Internet has enabled computer users all over the world to interact and communicate electronically. One particularly popular mode for communication is through Web pages, which collectively form the World Wide Web. Web pages are useful for displaying text and graphics, and even animation, video data and audio data. Unsurprisingly, Web pages have also become popular for electronic commerce (e-commerce), as they enable sellers to display various types of goods to users, and to effectively advertise these goods. A large number of Web sites are currently devoted to e-commerce, allowing consumers to purchase and businesses to bid, quote and trade in a wide range of goods and services on line. Part of the attraction to producing a Web site for e-commerce is that international sales of products are possible. Computer users can view and purchase products without being in the physical "brick and mortar" store of the seller, and even without being in the same geographical area. However, although the Internet and the World Wide Web have easily crossed international boundaries for communication, e-commerce is still hampered by the requirement for payment in the currency of a particular country. Typically, a seller must be paid in the currency of the seller's own country, which may be different from that of the buyer. The problem has been at least partially solved through payment cards which can be used for purchases internationally. Such payment cards enable a buyer to purchase goods through e- commerce from a seller in a different country. However, although payment card companies processing these payments handle currency transactions from the currency of the buyer to the currency of the seller, thereby enabling multiple currency e-commerce transactions to occur, the final cost may vary widely. For example, payment card companies may use a conversion rate which is less favorable to the user, than if the user had performed the currency transaction through a bank or other financial institution. In other cases, e-commerce Web sites which attempt to provide information concerning the final cost of their goods in a variety of currencies may find that changes in the currency market during the period that funds are settled, have caused their prices to be inaccurate, thereby exposing the sellers to currency risks, regardless of the actions of the credit card companies. In addition, sellers who wish to support transactions in multiple currencies, regardless of the risk, must also handle complex accounting issues in these multiple currencies. SUMMARY OF THE INVENTION More useful solutions to the problems of the background art would enable the buyer to purchase goods with currency which is preferred to the buyer, at a price which is known to the buyer in advance, through e-commerce Web sites on an international basis. This solution would enable the buyer to examine goods from the Web site of choice, and then to view information concerning the final cost of these goods in the buyer's preferred currency, regardless of the currency of seller. In addition, such a solution would enable the seller to handle transactions with only a single currency, thereby minimizing risk and simplifying accounting issues, while still enabling the buyers to use the currency of choice for purchases. Unfortunately, such a solution is not currently available. In a B2B (business to business) scenario, a different set of problems may arise with regard to currency transactions. In one scenario, the buyer may negotiate to purchase goods from the seller through the Internet, such as through a Web site, or through other means. The buyer guarantees payment to the seller for the goods via a payment mechanism. There are several payment mechanisms available to guarantee large amount transfers between business trading partners, including Letter of Credit, Swift, ACH and others. On-line hedging mechanisms, which would support these types of transactions at the "point of sale", or business transaction, would also be useful, but unfortunately are not available. In another B2B scenario, a buyer may publish a request for quotation (RFQ) on the network, inviting suppliers to offer quotations for goods or services. The solution would allow sellers to offer quotations in their preferred currency and buyers to evaluate and compare offers in their own chosen currency, while both parties are protected from currency fluctuations that could occur in the period between the quotation and final settlement of payment. Unfortunately, such a solution is not currently available. Therefore, there is an unmet need for, and it would be highly useful to have, a system and a method for multiple currency transactions for e-commerce, whether from a business to a consumer or between businesses, in which the final price of the product is given to the buyer in the preferred currency of the buyer before a purchase is made, and such that a final price is also guaranteed to the seller in the preferred currency of the seller, through hedging of the currency transaction on behalf of the seller, preferably with associated risk management on behalf of the central hedging service. The present invention overcomes these problems of the background art by providing a system and a method for supporting e-commerce transactions in multiple currencies, in which the preferred currency of the buyer is different from the preferred currency of the seller. The preferred currency of the buyer and/or seller may optionally be local to the buyer and/or seller, or alternatively may be a different but preferred currency. The system and method enable the buyer to receive a final price for the product in the preferred currency of the buyer before the transaction is performed, and also enable the seller to receive a guarantee for the price in the preferred currency of the seller, before the amount of payment is exchanged. The system and method also provide a mechanism for the actual exchange between the currencies of the buyer and of the seller, such that the aspects of the transaction regarding payment are fully supported. More preferably, the buyer and/or the seller are charged a fee for performing such a guaranteed exchange, for example by incorporating such a fee into the rate which is used to calculate the price given to the buyer in the preferred currency. Thus, even before the settlement date, at which point the transaction is completed and the amount of payment has been received from the buyer and given to the seller, the final price is guaranteed, or "hedged". Preferably, risk management is applied to the currency transactions, by combining a plurality of such transactions such that the amount of currency can be managed through international currency trading, in order to minimize any loss which may occur as a result of fluctuations in the exchange rates. According to the present invention, there is provided a method for supporting a transaction for purchasing a product by a buyer from a seller, the product having a price, a preferred currency of the buyer being different from a preferred currency of the seller, the buyer communicating with the seller through a network, the method comprising: determining an exchange rate of the preferred currency of the seller to the preferred currency of the buyer; converting the price of the product from the preferred currency of the seller to the preferred currency of the buyer to form a final price according to the exchange rate, such that the buyer receives information concerning the final price before a payment transaction is performed; receiving payment from the buyer for the final price to perform the payment transaction; converting the payment from the preferred currency of the buyer to the preferred currency of the seller to form a converted payment according to the exchange rate; and paying the seller with the converted payment. According to another embodiment of the present invention, there is provided a method for performing online hedging at a point of sale for a transaction for purchasing a product by a buyer from a seller, the product having a price, a preferred currency of the buyer being different from a preferred currency of the seller, the buyer communicating with the seller through a network, the method comprising: determining an exchange rate of the preferred currency of the seller to the preferred currency of the buyer; converting the price of the product from the preferred currency of the seller to the preferred currency of the buyer to form a final price according to the exchange rate, such that the buyer receives information concerning the final price before a payment transaction is performed; hedging the payment transaction; receiving payment from the buyer for the final price to perform the payment transaction; converting the payment from the preferred currency of the buyer to the preferred currency of the seller to form a converted payment according to the exchange rate; and paying the seller with the converted payment. According to yet another embodiment of the present invention, there is provided a system for supporting a transaction for purchasing a product by a buyer from a seller, the product having a price, a preferred currency of the buyer being different from a preferred currency of the seller, the system comprising: (a) a currency server for receiving an exchange rate from the preferred currency of the buyer to the preferred currency of the seller; (b) a seller server for operation by the seller, the seller server receiving the exchange rate from the currency server and the seller server converting the price from the preferred currency of the seller to the preferred currency of the buyer to form a final price, the seller server providing a Web page containing information about the product and the final price; (c) a Web browser for interaction with the buyer, the Web browser being operated by a buyer computational device, the buyer computational device being connected to the seller server through the network, such that the Web browser displays the Web page and receives financial information from the buyer for purchasing the product according to the final price, the financial information being sent to the seller server; and (d) a central hedging service for receiving the financial information from the seller server and for establishing the exchange rate between the preferred currency of the buyer and the preferred currency of the seller, the central hedging service receiving payment from the buyer in the preferred currency of the buyer, the central hedging service exchanging the payment to the preferred currency of the seller, and the central hedging service paying the seller, such that a transaction between the seller and the buyer is hedged by the central hedging service. According to still another embodiment of the present invention, there is provided a method for supporting automated hedging of a plurality of multi-currency transactions by a corporation in a preferred currency, comprising: determining an exchange rate of the preferred currency of the corporation to the preferred currency of a plurality of at least one of buyers and sellers; converting prices from the preferred currency of the corporation to the preferred currencies of at least one of the buyers and sellers to form a final price according to the exchange rate, such that the at least one of the buyers and sellers receive information concerning the final price before an action is performed; aggregating multiple transactions according to currencies and settlement dates to form currency positions; performing hedging on the currency positions of the corporation; performing the payment transactions at the final price; and converting payments from the preferred currency of at least one of the buyer and seller to the preferred currency of the corporation to form a converted payment according to the exchange rate. Hereinafter, the term "network" refers to a connection between any two or more computational devices which permits the transmission of data. Hereinafter, the term "computational device" includes, but is not limited to, personal computers (PC) having an operating system such as DOS, Windows™, OS/2™ or Linux; Macintosh™ computers; computers having JANA™-OS as the operating system; graphical workstations such as the computers of Sun Microsystems™ and Silicon Graphics™, and other computers having some version of the UNIX operating system such as AIX™ or SOLARIS™ of Sun Microsystems™; or any other known and available operating system, or any device, including but not limited to: laptops, hand-held computers, PDA (personal data assistant) devices, cellular telephones, any type of WAP (wireless application protocol) enabled device, wearable computers of any sort, which can be connected to a network as previously defined and which has an operating system. Hereinafter, the term "Windows™" includes but is not limited to Windows95™, Windows 3.x™ in which "x" is an integer such as "1", Windows NT™, Windows98™, Windows CE™, Windows2000™, and any upgraded versions of these operating systems by Microsoft Corp. (USA). For the present invention, a software application could be written in substantially any suitable programming language, which could easily be selected by one of ordinary skill in the art. The programming language chosen should be compatible with the computational device according to which the software application is executed. Examples of suitable programming languages include, but are not limited to, C, C++ and Java. In addition, the present invention could be implemented as software, firmware or hardware, or as a combination thereof. For any of these implementations, the functions performed by the method could be described as a plurality of instructions performed by a data processor. Hereinafter, the term "Web browser" refers to any software program which can display text, graphics, or both, from Web pages on World Wide Web sites. Hereinafter, the term "Web server" refers to a server capable of transmitting a Web page to the Web browser upon request. Hereinafter, the term "Web page" refers to any document written in a mark-up language including, but not limited to, HTML (hypertext mark-up language) or VRML (virtual reality modeling language), dynamic HTML, XML (extensible mark-up language) or XSL (XML styling language), or related computer languages thereof, as well as to any collection of such documents reachable through one specific Internet address or at one specific World Wide Web site, or any document obtainable through a particular URL (Uniform Resource Locator). Hereinafter, the term "Web site" refers to at least one Web page, and preferably a plurality of Web pages, virtually connected to form a coherent group. Hereinafter, the phrase "display a Web page" includes all actions necessary to render at least a portion of the information on the Web page available to the computer user. As such, the phrase includes, but is not limited to, the static visual display of static graphical information, the audible production of audio information, the animated visual display of animation and the visual display of video stream data. BRIEF DESCRIPTION OF THE DRAWINGS The invention is herein described, by way of example only, with reference to the accompanying drawings, wherein: FIG. 1 is a schematic block diagram of a background art system; FIG. 2 is a schematic block diagram of an exemplary system according to the present invention; FIG. 3 is a schematic block diagram of certain components of Figure 2 in greater detail; FIG. 4 is a flowchart of an illustrative method according to the present invention; FIG. 5 is a detailed implementation of the central hedging service of Figure 3 according to the present invention; FIG. 6 is a flow diagram of an illustrative method according to the present invention in which hedging is performed by the central hedging service; FIG. 7 is a flow diagram of an illustrative method according to the present invention in which rates for hedging are obtained from a third party; and FIG. 8 is a schematic block diagram of an exemplary system according to the present invention. DESCRIPTION OF THE PREFERRED EMBODIMENTS The present invention is of a system and a method for supporting e-commerce transactions involving multiple currencies. The system and method convert the price of a product from the preferred currency of a seller to the preferred currency of a buyer, when the currency of the seller differs from that of the buyer. The buyer then receives the final price of the product in the preferred currency of the buyer, preferably including any transaction costs which may be incurred as a result of the currency exchange. The seller also receives a guarantee for the final amount of payment which is to be received in the preferred currency of the seller. Preferably, the guaranteed exchange rate is provided for a predetermined period of time. Also preferably, the buyer and/or the seller are charged a fee for performing such a guaranteed exchange, for example by incorporating such a fee into the rate which is given to the buyer. Thus, hedging is provided for the transaction at the point of sale for e-commerce activities, which has not been previously provided in the art. Once the buyer decides to purchase the product, the financial payment details of the buyer are sent to a particular payment mechanism. The mechanism receives the amount of payment in the preferred currency of the buyer from the buyer. The payment is converted to the preferred currency of the seller according to the system of the present invention, which may optionally be completely separate from the payment mechanism which receives payment from the buyer. The seller then receives payment in the preferred currency of the seller. Preferably, a plurality of transactions is combined for the stage of conversion, rather than buying and selling currencies separately for each transaction. According to a preferred embodiment of the present invention, the seller may optionally allow the buyer to pay for a product with a plurality of separate payments at different points in time, for payment in installments. For example, the buyer may be allowed to pay for the product with a plurality of monthly payments. From the perspective of the seller, such a plurality of separate payments may potentially increase the risk associated with fluctuating exchange rates. The present invention overcomes such a risk by enabling exchange rates to be set which are valid for the period starting at the first installment and ending with the final installment payment. According to another preferred embodiment of the present invention, the seller may optionally pay a plurality of suppliers of products in a plurality of preferred currencies of the suppliers, while in turn accepting payment from a plurality of buyers in a plurality of preferred currencies of the buyers. In this case, multiple exchange rates are set, including at least a first exchange rate for paying at least one supplier by the seller and at least a second exchange rate for paying the seller by at least one buyer. Each of the first and the second exchange rates is therefore guaranteed for a separate predetermined period of time. One example of such a seller is a travel agent who wishes to sell hotel rooms. The hotel typically wishes to receive payment in a currency which is local to, or otherwise preferred by, the hotel, while a customer would want to pay for the hotel room in another, potentially different preferred currency. The present invention enables the seller to apply online hedging at the point of sale, so that the seller is protected from currency risks on transactions with both suppliers and buyers. Preferably, risk management is provided for the currency transactions, through international currency trading, in order to minimize any loss which may occur as a result of fluctuations in the exchange rates. The present invention is thus able to advantageously use the currency conversion with bulk transactions for both greater efficiency and to lower the costs of such currency exchanges. The present invention preferably also provides for security and verification mechanisms, in order to ensure that sellers receive the proper payment, and that the correct currency exchange rates are used for calculating the prices and for effecting payment to the sellers. According to a particular preferred implementation of the present invention, there is provided software components and services to enable multi-currency e-commerce, allowing sellers to conduct their operations in a single currency while accepting payments in multiple currencies. The central hedging service for these transactions is responsible for hedging transactions against currency fluctuations, thereby ensuring that the seller receives complete payment for goods in the preferred currency of the seller. Thus, sellers are assured that the expected prices which are established for goods match funds received in their bank accounts, through hedging of the transaction at the point of sale, while buyers are able to determine the final price for a product in the preferred currency of the buyer at the time of sale. With the trend towards expanded on-line international trading activity, ease of use, cost effectiveness and immediacy become top priorities. The online point-of-sale hedging and transaction exchange services of the present invention reduce complexity of international e- commerce transactions. Furthermore, the described solution of the present invention is independent of applied payment mechanisms, and does not assume liabilities for financial settlements or delivery of products. These liabilities remain with the banks, credit card companies and shipping companies, as they do in a non-Internet and/or non e-commerce environment. The principles and operation of the present invention may be better understood with reference to the drawings and the accompanying description. Referring now to the drawings, Figure 1 is a schematic block diagram of a background art system for a typical single currency online transaction, as such a transaction is currently performed according to the background art. In a typical online transaction 10, a seller 12 and a buyer 14 negotiate online to exchange goods or services for payment. By "online", it is meant that communication is performed through an electronic communication medium, including but not limited to, telephone voice communication through the PSTN (public switched telephone network), cellular telephones or a combination thereof; exchanging information through Web pages according to HTTP (HyperText Transfer Protocol) or any other protocol for communication with and through markup language documents; online auctions and B2B exchanges allowing consumers and businesses to bid, quote and trade goods and services online; exchanging messages through e-mail (electronic mail), messaging services such as ICQ™ for example, and any other type of messaging service; as well as any other type of communication which incorporates an electronic medium for transmission. Seller 12 agrees to deliver goods or services to buyer 14, who in turn contracts to pay a negotiated amount in a negotiated currency to seller 12 in exchange for the product(s) (goods and/or services). As shown in Figure 1, typically, a third party payment clearance service 16 enables the transaction to occur, by providing varying degrees of assurance for the flow of payment from buyer 14 to seller 12. Such a service is particularly useful for transactions when buyer 14 and seller 12 are physically separated, as for example in e-commerce transactions. Third party payment clearance service 16 allows seller 12 to ship goods prior to settlement of cash in his bank. Various types of third party payment clearance services exist, providing different degrees of assurance for the ultimate flow and deposition of funds, and offering different settlement periods for delivery of funds. Third party payment clearance service 16 acts as a bridge between the "virtual" Internet world and the "real" financial world, and as previously described, is currently used for e- commerce transactions. As shown in Figure 2, the system according to the present invention for supporting e- commerce transactions involving multiple currencies can optionally be implemented with the third party payment mechanism, although this mechanism is not required, as the present invention does not rely upon the use and/or provision of such a clearance service; if online payment mechanisms become available in the future which do not require a third party to guarantee the transfer of funds, the present invention could also optionally be used with such online payment mechanisms. Examples of various types of online payment mechanisms include, but are not limited to, e-money cards and accounts, and micropayment mechanisms of various types. The schematic block diagram shows the flow through an exemplary system 20 for providing a guaranteed price to both buyer 14 and seller 12 in their respective preferred currencies through hedging at the point of sale, supported through the direct exchange of funds, preferably by including the process of risk management for the actual conversion of the funds. As for Figure 1, buyer 14 and seller 12 engage in an online transaction, with a direct negotiation flow 22 for the actual purchase of the product, whether goods or services. Again, buyer 14 receives the product through a product exchange flow 24 after the process of fund transfer has occurred, or at least has been guaranteed to occur such that seller 12 is satisfied. Unlike Figure 1, however, system 20 provides currency hedging at an on-line point-of- sale 26. An online hedging service 28 is inserted in the flow between the process for receiving payment 30 from buyer 14, and the process for effecting payment 32 to seller 12. The online hedging service 28 is also optionally and preferably described as a central hedging service, as the online hedging service 28 preferably manages the transactions. Online hedging service 28 determines the actual amount of payment required from buyer 14, in order to pay the requested amount to seller 12 in the preferred currency of seller 12. Preferably, hedging enabler process 28 combines a plurality of such transactions, in order to more effectively exchange currencies through the international currency exchange market, optionally and more preferably without incurring foreign currency exchange risk. Thus, hedging enabler process 28 receives the price from seller 12, determines the appropriate exchange rate from the preferred currency of seller 12 to the preferred currency of buyer 14, and then provides the price to buyer 14, while also guaranteeing that seller 12 will receive the full payment in the preferred currency of seller 12 at a future settlement date. This entire process can also be described as hedging at the point of sale. If buyer 14 decides to purchase the product, then the amount of payment is determined according to these previously defined prices. The solution protects seller 12 from currency fluctuations occurring between the time of price negotiation and the time of payment settlement. Since a plurality of such transactions are preferably aggregated, the aggregated positions can optionally be managed for risk in the inter-bank market by applying standard risk management strategies, previously available for large transaction amounts only. The solution of system 20 is widely applicable for online hedging for all types of online multi-currency trading interactions, regardless of the size of the transaction, regardless of the relationship between parties (business-to-business, business-to-consumer, consumer-to- consumer) and regardless of the mechanism which is used to assure payment. Although third party payment clearance service 16 may be involved as shown, such a service is an optional component of system 20. Also optionally and more preferably, a plurality of third party payment clearance services 16 (not shown) may be involved, such that seller 12 can optionally receive payment in parallel from several third party payment clearance services 16, which is a preferred feature of the present invention. Figure 3 is a schematic block diagram of a more detailed exemplary implementation of system 20, showing the flow of the processes through system 20. System 20 preferably features a hedging engine 34, which is the core component for distributing currency rates, receiving payment information from seller 12 and also optionally receiving payment information from third party clearance mechanism 16. With regard to the first function, hedging engine 34 sends updated currency rates to a currency module 36 installed at a seller server 38. The combination of hedging engine 34 and currency module 36 is optionally and preferably described as a "central hedging service" 28, as these two components together support and control the process of hedging at the point of sale. Seller server 38 may optionally include such functions as a Web server 40, for providing Web pages for e-commerce through Web-based communication; electronic shop software module 42, for managing e-commerce, accounting and other functions of seller 12 or an interface to a B2B trading platform. However, with regard to the present invention, currency module 36 is the required feature of seller server 38, as these other functions may optionally be moved to a different server and/or replaced with other types of functionality. Currency module 36 receives the rate exchange information from hedging engine 34, preferably at intervals which are defined by seller 12, more preferably with a margin supplement as per agreement with seller 12. The margin supplement is an additional fee, which is optionally added to each transaction, whether directly or indirectly, for example through the determination of the exchange rate. When currency module 36 receives a request from electronic shop software module 42 for a price in a particular preferred currency for buyer 14, currency module 36 calculates the price in the preferred currency of buyer 14 using the currency exchange rate previously received from the hedging engine. As shown for this optional but preferred implementation of system 20 for Web-based communication, buyer 14 interacts with a buyer computational device 44, which in turn operates a Web browser 46. Web browser 46 receives Web pages from Web server 40. Each such Web page may optionally include information about the product to be purchased, for example, including the price in the preferred currency of buyer 14. For this implementation, the transaction negotiation between buyer 14 and seller 12 occurs through Web-based communication, such that buyer 14 enters information and/or commands through Web browser 46, and in turn receives information through Web pages from Web server 40. Preferably, electronic shop software module 42 interacts with currency module 36 in order to receive the price in the preferred currency of buyer 14, for adding this price dynamically to Web pages which are served by Web server 40. Also optionally and preferably, the preferred currency for buyer 14 is automatically determined by currency module 36 through the use of DNS lookup information or cookies. Buyer 14 is preferably able to override such an automatic currency detection mechanism by entering the preferred currency manually. Once buyer 14 has decided to purchase the product, Web browser 46 is optionally redirected toward third party payment mechanism 16, for a typical payment process for e- commerce transactions. Third party payment mechanism 16 collects payment credentials from buyer 14, such as payment card details or other information. Third party payment mechanism 16 may optionally perform an authorization request to a buyer account 48, which could be a bank account and/or payment card account for example, in order to determine whether funds are available for the purchase. Following authorization, confirmation of the transaction is sent to buyer 14 and seller 12. If a plurality of third party payment mechanisms 16 is available, then seller 12 optionally and preferably is able to select a particular third party payment mechanism 16 for receiving payment from buyer 14, for example according to the criterion of the amount of fees which are charged by third party payment mechanism 16. In addition, third party payment mechanism 16 also optionally sends the amount of authorized payment to hedging engine 34. Alternatively or additionally, currency module 36 can also send such information to hedging engine 34. Such information is preferably dynamically aggregated by hedging engine 34 with information collected from other sellers. Foreign currency positions in each of the currencies for each settlement date are monitored by the operator of hedging engine 34, as described in greater detail with regard to Figure 4 below. Associated currency dealers preferably manage the risks exposed by these positions using various risk management strategies, resulting in the execution of forward and options deals in the interbank market. On the settlement date for at least one transaction, and preferably for a plurality of transactions, the actual payment is optionally and preferably sent to a bank account 50, in the currency of each buyer 14, for example from third party payment mechanism 16. Preferably simultaneously, hedging engine 34 provides instructions for transferring amounts for these transactions in the currencies expected by each seller 12 to bank 50. If the amounts transferred match the instructions received by seller 12 and hedging engine 34, bank 50 releases funds transferred by third party payment mechanism 16 to hedging engine 34, and also releases funds transferred by hedging engine 34 to seller 12. Figure 4 is a flowchart of an exemplary but preferred method for performing the transaction of Figures 2 and 3, according to the present invention. As shown, in stage 1, updated exchange rates are sent from the central hedging service to the server of the seller. For example, in Figure 3, the hedging engine sent this information to the currency module on the seller server. The exchange rate may optionally reflect a transaction or margin fee, in addition to the exchange rates which are available through the FOREX markets. In stage 2, the buyer requests a description of the product through online communication, for example through the Web browser of the buyer computational device as explained in Figure 3. In stage 3, the price of the product is converted to the currency of the buyer, and is preferably displayed to the buyer, for example through a Web page. In stage 4, optionally payment authorization for purchasing the product is performed through a third party payment enabling mechanism, in the preferred currency of the buyer. In stage 5, transaction details, including the amount of the transaction in the currencies of the buyer and the seller, are transferred to the central hedging service. These transaction details are used for the purposes of hedging the currency exchanges and settlement of the payment transactions in the currency of the seller. In stage 6, preferably transaction amounts in the preferred currencies of the buyer and the seller are aggregated, more preferably according to type of currency and payment delivery date (settlement due date). In stage 7, dealers who are associated with the central hedging service perform currency trades in order to assure that currency is available to meet the required settlements on the settlement due date. The amount of each such settlement is determined for each seller, in the preferred currency of the seller, according to a rate which is set in stage 1. Thus, the amount of the transaction is fixed, yet the currency market may cause the exchange rate to fluctuate, such that the dealers are preferably able to mitigate any risk associated with such fluctuations by combining or aggregating transactions and hedging the aggregated positions. Optionally and more preferably, stage 7 is performed automatically, for example by software programs which monitor the positions held in each currency as well as the overall market behavior, in order to effect trades at the most advantageous moment for minimizing risk. In addition, also more preferably, risk is managed by guaranteeing a particular exchange rate for a limited period of time, such that the settlement date must fall within the time period for the exchange rate is guaranteed. In stage 8, on each settlement date, payments to the trading parties, such as the sellers, are delivered in the preferred currency of each seller. Figure 5 is a schematic block diagram of an exemplary but preferred embodiment of hedging engine 34 of Figure 3, showing the components of hedging engine 34 and their interaction with various other entities. Hedging engine 34 is a particularly important component of the central hedging service of Figure 4, also previously described with regard to Figures 2 and 3. The other entities which are separate from hedging engine 34 are shown only as general blocks, rather than with the specific technological features which would enable them to communicate with hedging engine 34, as such technological features are well known in the art and could easily be implemented by one of ordinary skill in the art. As shown, hedging engine 34 preferably features a central database 52 for storing such information as the exchange rates, identification information for sellers, transaction information, and information about other parties involved in the transactions, such as third party payment mechanisms for example. In a first process, a rate feeder 54 receives currency exchange rate information from a rate source 56, such as the FOREX markets for example. Optionally, rate feeder 54 receives such information periodically, according to a schedule 58. The rate information is posted to central database 52. Next, the rates are distributed from central database 52 to a rate distribution module 55, and thence to an electronic shop software application 56 which contains the currency module of Figure 3, as previously described with regard to Figure 3. In turn, shop transaction information is received from electronic shop software application 56 by a shop transaction collection module 58. The transaction information is posted to central database 52. Central database 52 also provides information about consolidated positions, preferably with regard to a plurality of transactions, to a consolidate position module 60, which in turn is accessed by a dealing "room" 62, managed by the central hedging service, for actually performing risk management on the transaction operations. Information concerning the outcome of such operations is also preferably stored in central database 52. Dealing "room" 62 may optionally be implemented manually, with one or more human dealers, but is preferably implemented automatically, with a software program for performing the trades as previously described. A gateway transaction collection module 64 receives information about collected funds from a third party payment mechanism such as a payment card gateway 66, for example, and transfers this information to central database 52. Reports, both before and after settlement of the payment, are optionally and more preferably provided by a pre-settlement reporting module 68 and a post-settlement reporting module 70, respectively. This information may optionally be provided to sellers 72 and/or banks 74, for example. Any required adjustments are preferably performed through an adjustment module 76, with banks 74. According to another preferred embodiment of the present invention, as shown with regard to Figure 6, hedging is optionally performed by a separate entity than the entity which actually handles the monetary aspect of the transaction. As shown in the flow diagram of Figure 6, a buyer requests a price at an IPOS (Internet Point of Sale). The price is converted by a rates enabler, which communicates with a rates engine at the hedging service (arrow 1) to receive the correct rate. This information may optionally be requested from a rates source, shown as "Reuters™" for the purposes of explanation only and without any intention of being limiting. The rate information may also optionally be stored in a database (DB) at the hedging service. Once the transaction has been performed and the product has been purchased by the buyer, the IPOS at the seller sends information about the buyer payment transaction to the gateway at a payment service, such as a payment card company for example (arrow 2). Next, a transaction enabler at the seller preferably notifies the transaction engine at the hedging service with an estimation of amounts transacted at the IPOS in each of the supported currencies (arrow 3). The payment service provides advance notification of the actual amounts to be settled in each currency from a reporting module at the payment service (arrow 4). A settlement process at the payment service provides notification of the final amounts in the buyer's local currency following actual settlement to the seller's bank account via the reporting module (arrow 6). Both the actual amount (4) and the settlement notification (6) are sent to the transaction engine at the hedging service. Funds are transferred in the local or preferred currency of the buyer from the payment service to the sellers account in LC (local currency of buyer) via the banking system (arrow 5). Upon notification of settlement by the payment service (arrow 6), the hedging service performs the conversion by sending instructions using standard procedures available in the banking system to transfer the LC to the hedging service, while simultaneously transferring an equivalent amount to the seller's account in BC (the preferred/Base Currency of the seller) from the hedging service (arrow 7). As shown, positions and remittance are optionally and more preferably manually monitored by the hedging service. In addition, the seller also optionally and more preferably receives periodic reports about the financial transactions from the hedging service. Figure 7 shows another optional but preferred embodiment of the present invention, in which the actual hedging is performed by a third party service, other than the service which determines the amount of currency for the buyer and the seller. The flow is similar to Figure 6, except that the rates are obtained (arrow la) from a third party hedging service, rather than from a service which only provides rate information. Rate information optionally and more preferably includes a forecast schedule, which is a forecast per pair of currencies (for the buyer and seller) and the period for which the rate is valid. Also, the third party hedging service may optionally and more preferably provide information about the commission and/or other charges which may be incurred for this transaction by the hedging service. Estimated positions, or amounts of money which should be transferred from the buyer (in the local currency of the buyer) to the seller (in the local currency of the seller), are transmitted to the third party hedging service (arrow 4a). Also, the actual settlement amounts are preferably transferred by the remittance application to the third party hedging service as well (arrow 6a). Figure 8 shows an illustrative implementation of a system for the embodiment of the method of Figure 7. The merchant site (POS or point of sale) receives the rates for various currencies, optionally upon request or alternatively on a regularly scheduled basis, or a combination thereof, from the hedging service (arrow 1). The hedging service then sends this information to the third party hedging service (arrow la). The merchant site also communicates estimates of sales to the hedging service (arrow 3) and payment information to the credit card network or other payment service (arrow 2). The payment service, such as the credit card network, then sends information about the payment transactions collected to the hedging service (arrow 4). The amount of the money to be collected is passed to the third party hedging service (arrow 4a). The actual money is settled from the credit card network or other payment service in the preferred currency of the buyer (LC from acquirer, arrow 5) to the merchant's bank account. The notification of the actual amount settled is also given to the hedging service (arrow 6), which passes this information to the third party hedging service (arrow 6a). Once both the information and the money have been received, the money is converted from the local or preferred currency of the buyer (LC) to the local or preferred (base) currency of the seller (BC), and is then sent to the merchant as payment (arrow 7). According to optional features of the present invention, the system supports flexibly determined attributes or parameters which are controlled by trading partners, particularly sellers. Such parameters include, but are not limited to, the selection of supported currencies; treatment for taxes, shipping charges and other costs; support for price drift and mark-ups; risk management strategy for cancelled transactions; price differentiation by currency; periods for rate (price) fixing for each supported currency; rounding method per currency; and margin discounts based on transaction and settlement ceilings, settlement periods, payment installments and chargeback statistics. In addition, another such factor optionally includes the choice of the seller to adjust the exchange rate with regard to a particular currency, for example in order to promote marketing and sales in a particular country as part of a marketing campaign. These parameters determine the margins and/or transaction fees which are added to the exchange rates quoted to sellers and together with statistics provided by the system, thus allowing risk to be managed by purchasing options contracts based on the expected transaction traffic flow. Furthermore, optionally and more preferably, the exchange rate is also at least partially determined according to a margin fee, which most preferably at least partially reflects market driven pricing, such that the base price of goods or services can differ for different target markets through manipulation by the seller of the conversion rate. Also optionally and more preferably, the exchange rate is determined by determining a plurality of exchange rates, each of the plurality of exchange rates being guaranteed for separate predetermined periods of time, for supporting different methods of payment by the buyer (cash or installments). In the case of installments, the price of the product is preferably calculated by converting the price of the product to a plurality of payments to be paid by the buyer at a plurality of separate points in time, each payment being converted according to the exchange rates sent for the installment mode of payment, such that the stage of receiving the payment from the buyer is performed repeatedly for each payment by the buyer. This method supports buyers of subscription services and making payments distributed over multiple installments; the method ensures that the amounts of each installment remains constant in the local currency of the buyer, while assuring that the amount received by the seller in the local currency of the seller also remains constant for the entire duration of the subscription or installment plan. According to another preferred embodiment of the present invention, there is provided a method for supporting automated hedging of a plurality of multi-currency transactions by a corporation in a preferred currency. This corporation can preferably hedge such transactions for at least one of buyers and sellers. According to this method, first an exchange rate of the preferred currency of the corporation to the preferred currency of a plurality of at least one of buyers and sellers is determined. Next, transaction amounts are converted from the preferred currency of at least one of the buyers and sellers to the preferred currency of the corporation to form a final amount according to the exchange rate. Therefore, at least one of the buyers and sellers receive information concerning the final transaction amount in their preferred currency before an action is performed. Next, multiple transactions are preferably aggregated according to currencies and settlement dates to form currency positions for the corporation, which then preferably hedges these positions. Payment transactions from buyers are received with amounts reflecting the final price in the buyer's preferred currency and are then preferably converted from the preferred currency of the buyer to the preferred currency of the corporation to form a converted payment according to the exchange rate. Payment transactions to sellers are preferably issued with amounts reflecting the final price in the seller's preferred currency, and are preferably previously converted from the preferred currency of the corporation to the preferred currency of the seller to form a converted payment according to the exchange rate. It is envisaged that the automated aggregation and hedging service described above may optionally and more preferably be integrated with an ERP (Enterprise Resource Planning) system deployed at the corporation. With regard to the treatment of canceled payments and/or fraud, the system of the present invention preferably supports two alternative modes of risk management for trading partners. One mode involves the combination of all payment transactions registered by the seller, (currency rate for return or chargeback transaction based on rate at day of settlement). Another mode involves the matching of account activity including returns and chargebacks to the original payment transaction (currency rate for return or chargeback transaction based on rate at day of payment transaction). Depending on the alternative selected by the seller, positions will either reflect payment transactions only or all transactions in the database. In addition, optionally the present invention is used for exchanging currencies which are not otherwise freely exchangeable directly. Such currencies can be exchanged if a mechanism exists for purchasing and/or selling an amount of such a currency in a different currency, such that eventually a directly exchangeable currency may be used to complete the transaction. Thus, the present invention is also suitable for currencies of smaller countries and/or countries with exchange restrictions, which might otherwise be difficult to exchange. Various hedging strategies may optionally be used with the present invention. For example, the previously described dealing room preferably trades standard currency forward and options contracts in the inter-bank market to hedge against exposure to currency fluctuation risks. Netting is preferably automatically performed by the system of the present invention, whereby for example, an exposure to deliver yen to a seller in Japan against purchases in US dollars by US buyers could optionally be offset against anticipated receipts in yen of a US based seller from Japanese buyers. While the invention has been described with respect to a limited number of embodiments, it will be appreciated that many variations, modifications and other applications of the invention may be made.

Claims: WHAT IS CLAIMED IS: 1. A method for supporting a transaction for purchasing a product by a buyer from a seller, the product having a price, a preferred currency of the buyer being different from a preferred currency of the seller, the buyer communicating with the seller through a network, the method comprising: determining an exchange rate of the preferred currency of the seller to the preferred currency of the buyer; converting the price of the product from the preferred currency of the seller to the preferred currency of the buyer to form a final price according to said exchange rate, such that the buyer receives information concerning said final price before a payment transaction is performed; receiving payment from the buyer for said final price to perform said payment transaction; converting said payment from the preferred currency of the buyer to the preferred currency of the seller to form a converted payment according to said exchange rate; and paying the seller with said converted payment. 2. The method of claim 1, wherein receiving said payment from the buyer includes the stage of receiving payment from an account of the buyer in a financial institution, such that said financial institution does not perform conversion of said payment. 3. The method of claim 1, wherein the network is the Internet. 4. The method of claim 3, wherein the seller has a Web site and the buyer purchases the product through said Web site to form an e-commerce transaction. 5. The method of claim 4, wherein converting the price of the product further comprises: receiving said exchange rate at said Web site; converting the price according to said exchange rate to form said final price; constructing a Web page including said final price; and displaying said Web page to the buyer. 6. The method of claim 5, wherein converting said payment further comprises: providing a plurality of currency accounts, each currency account having a different type of currency; and transferring an amount of said payment from a currency account containing the preferred currency of the buyer to a currency account containing the preferred currency of the seller to form said converted payment. 7. The method of claim 6, wherein transferring said amount of said payment is performed for a plurality of payments from the buyer to the seller, such that a plurality of converted payments are formed. 8. The method of claim 1, wherein said exchange rate is guaranteed for a predetermined period of time. 9. The method of claim 8, wherein said exchange rate is determined for a plurality of payments at separate predetermined period of time, wherein the price of the product is converted by converting the price of the product to a plurality of payments for being paid by the buyer at a plurality of separate points in time, each payment being converted according to an applicable exchange rate, such that receiving said payment from the buyer is performed repeatedly for each payment by the buyer, while guaranteeing that the seller receives a fixed amount in the seller's preferred currency for each payment. 10. The method of claim 8, wherein the seller purchases a plurality of products from a plurality of suppliers, each supplier being paid in a separate preferred currency of said supplier, and wherein the sellers sells said plurality of products to a plurality of buyers, each buyer paying in a separate preferred currency of said buyer, such that said exchange rate is determined by determining a first exchange rate for paying said supplier by the seller and determining a second exchange rate for paying the seller by said buyer, each of said first and said second exchange rates being guaranteed for a separate predetermined period of time. 11. The method of claim 1 , further comprising: combining payments from a plurality of transactions for each currency account; and purchasing currency forward and option contracts for each currency account to hedge the combined FOREX positions. 12. The method of claim 1, wherein determining said exchange rate further comprises: receiving said exchange rate from a FOREX market; and transmitting said exchange rate to the seller. 13. The method of claim 12, wherein said exchange rate is also at least partially determined according to a margin fee. 14. The method of claim 13, wherein said exchange rate is set for a predetermined period of time. 15. The method of claim 12, wherein transmitting said exchange rate to the seller further comprises automatically detecting the preferred currency of the buyer. 16. The method of claim 12, wherein said exchange rate is also at least partially determined according to a markup factor, and said markup factor at least partially reflects market driven pricing. 17. The method of claim 1, wherein said receiving payment from the buyer and paying the seller are performed through at least one bank, such that said bank receives payment from the buyer and gives payment to the seller. 18. The method of claim 1, wherein said bank receives payment for the seller on a settlement date. 19. The method of claim 18, wherein converting said payment further comprises: aggregating payments from a plurality of buyers; exchanging said payments through a currency exchange market, to provide funds in the preferred currency of the seller; and transferring said payment to the seller from said funds in the preferred currency of the seller on said settlement date. 20. The method of claim 19, wherein determining said exchange rate includes adjusting said exchange rate according to a transaction fee, for exchanging said payments through said currency exchange market. 21. The method of claim 1 , wherein receiving said payment from the buyer is performed by a third party payment clearance mechanism. 22. The method of claim 21 , wherein a plurality of third party payment clearance mechanisms are available for receiving payment from the buyer, such that the seller selects one of said plurality of third party payment clearance mechanisms for receiving said payment from the buyer. 23. A method for performing online hedging at a point of sale for a transaction for purchasing a product by a buyer from a seller, the product having a price, a preferred currency of the buyer being different from a preferred currency of the seller, the buyer communicating with the seller through a network, the method comprising: determining an exchange rate of the preferred currency of the seller to the preferred currency of the buyer; converting the price of the product from the preferred currency of the seller to the preferred currency of the buyer to form a final price according to said exchange rate, such that the buyer receives information concerning said final price before a payment transaction is performed; hedging said payment transaction; receiving payment from the buyer for said final price to perform said payment transaction; converting said payment from the preferred currency of the buyer to the preferred currency of the seller to form a converted payment according to said exchange rate; and paying the seller with said converted payment. 24. The method of claim 23, wherein determining said exchange rate further comprises requesting a rate for converting the preferred currency of the seller to the preferred currency of the buyer from a third party hedging service, and wherein said payment transaction is hedged by hedging aggregated payment transactions with said third party hedging service. 25. The method of claim 24, wherein determining said exchange rate further comprises estimating a future volume of sales in each of the preferred currencies of a plurality of buyers before requesting said rate from said third party hedging service. 26. The method of claim 23 wherein said payment transaction is hedged by: estimating a future volume of sales in each of the preferred currencies of a plurality of buyers; purchasing options contracts in the FOREX market to hedge a projected exposure in each of the currencies; monitoring actual purchase transactions against projected transactions; and purchasing forward contracts in the FOREX market if actual purchases exceed projections to at least partially cover an amount of a difference. 27. A system for supporting a transaction for purchasing a product by a buyer from a seller, the product having a price, a preferred currency of the buyer being different from a preferred currency of the seller, the system comprising: (a) a currency server for receiving an exchange rate from the preferred currency of the buyer to the preferred currency of the seller; (b) a seller server for operation by the seller, said seller server receiving said exchange rate from said currency server and said seller server converting the price from the preferred currency of the seller to the preferred currency of the buyer to form a final price, said seller server providing a Web page containing information about the product and said final price; (c) a Web browser for interaction with the buyer, said Web browser being operated by a buyer computational device, said buyer computational device being connected to said seller server through the network, such that said Web browser displays said Web page and receives financial information from the buyer for purchasing the product according to said final price, said financial information being sent to said seller server; and (d) a central hedging service for receiving said financial information from said seller server and for establishing said exchange rate between the preferred currency of the buyer and the preferred currency of the seller, said central hedging service receiving payment from the buyer in the preferred currency of the buyer, said central hedging service exchanging said payment to the preferred currency of the seller, and said central hedging service paying the seller, such that a transaction between the seller and the buyer is hedged by said central hedging service. 28. A method for supporting a transaction for requesting quotations for a product by a buyer from a plurality of sellers, the product having a price, a preferred currency of the buyer being different from the preferred currencies of one or more of the sellers, the buyer communicating with the seller through an online marketplace, the method comprising: distributing requests for quotations to multiple sellers by the buyer; determining an exchange rate of the preferred currency of the seller to the preferred currency of the buyer; converting the price of the product from the preferred currency of the seller to the preferred currency of the buyer to form a final price according to said exchange rate, such that the buyer receives information concerning said final price before an order is executed or a payment transaction is performed; receiving payment from the buyer for said final price to perform said payment transaction; converting said payment from the preferred currency of the buyer to the preferred currency of the seller to form a converted payment according to said exchange rate; and paying the seller with said converted payment. 29. The method of claim 28 wherein converting the price of the product is performed by the buyer for each of the quotations received from a plurality of sellers for price comparisons in the preferred currency of the buyer. 30. A method for supporting automated hedging of a plurality of multi-currency transactions by a corporation in a preferred currency, comprising: determining an exchange rate of the preferred currency of the corporation to the preferred currency of a plurality of at least one of buyers and sellers; converting prices from the preferred currency of the corporation to the preferred currencies of at least one of the buyers and sellers to form a final price according to said exchange rate, such that at least one of said buyers and sellers receive information concerning said final price before an action is performed; aggregating multiple transactions according to currencies and settlement dates to form currency positions; performing hedging on said currency positions of the corporation; performing said payment transactions at said final price; and converting payments from the preferred currency of at least one of the buyer and seller to the preferred currency of the corporation to form a converted payment according to said exchange rate.

Inventors: CARMON EYAL, ISHAI MIKI, KOMEM OFER, SHALGI ZELIG, TAL YUVAL, CARMON, EYAL, ISHAI, MIKI, KOMEM, OFER, SHALGI, ZELIG, TAL, YUVAL
Applicants: CARMON EYAL, E4X INC, ISHAI MIKI, KOMEM OFER, SHALGI ZELIG, TAL YUVAL, CARMON, EYAL, E4X INC., ISHAI, MIKI, KOMEM, OFER, SHALGI, ZELIG, TAL, YUVAL
Application year: 2001
Main classification: G06F17
IPC codes: G06Q30