Abstract:
A computer system using a global computer network such as the Internet to effect the selection of banks to issue and to confirm letters of credit. A website ( 15 ) is maintained by a transaction manager and receives requests for the issuance of an LC and the confirming of an LC from a buyer and a seller, respectively. The website also receives bids from LC issuers for an issuance request and from LC confirmers for a confirmation request and formats all of the bids into a formatted form and provides the buyer and the seller access to the formatted form. Upon successful agreement between a buyer and an LC issuer, the website charges each a fee for using the website, and upon successful agreement between a seller and an LC confirmer, the website charges each a fee for using the website.

Description:
CROSS REFERENCE TO RELATED APPLICATION  
       [0001]    This application claims the benefit of U.S. Provisional Application No. 60/179,430, filed Feb. 1, 2000 and entitled “L/C SELECTOR.COM INTERNET EXCHANGE,” which provisional application is incorporated in its entirety herein by reference. 
     
    
     
       FIELD OF THE INVENTION  
         [0002]    The present invention relates in general to a business method and computer system relating to an Internet site that permits a buyer to seek offers from a seller, and relates in particular to a secure Internet system that permits a customer to seek offers from participating providers in the banking industry.  
         BACKGROUND OF THE INVENTION  
         [0003]    Whenever international marketplaces grow exponentially, as they are growing in the digital marketplaces for the industrial sectors, there is a need for an efficient payment mechanism for commercial transactions. The present marketplace of letters of credit is over $120 billion per year.  
           [0004]    Trade is growing rapidly due to free trade and privatizing state-run economics. Trade is cutting costs, but not always credit risk.  
           [0005]    The problems begin after an exporter and importer have made a deal involving the sale of goods in one country and the importation of those goods in a second country. The problem now is how does payment get effected so that the exporter will release the goods knowing it will get paid and the importer will make the payment knowing the goods will be released.  
           [0006]    Many of these emerging economies need basic financial payment/credit risk instruments to finance this trade. One such mechanism is a Letter of Credit, or LC. Buyers need to piggy-back LCs for payment on top of emerging e-procurement vertical exchanges arranged by major multinational suppliers. MNCs and medium sized businesses need to expedite sales and collections. Banks need more efficient exchange system to generate more efficient exchange system to generate more fee-based business, while managing credit risks to corporate exposure.  
           [0007]    Traditional L/C problems will not be solved, but more expansive view of the marketplace battlefield will be visible for corporate strategic e-procurement, return on equity and banks&#39; return on capital.  
         SUMMARY OF THE INVENTION  
         [0008]    The present invention comprises a business method and computer system relating to an Internet site that permits a customer to seek offers from participating issuers of Letters of Credit (LC), and then to select an offered LC commitment with the desired issuer. In a particular embodiment, the invention brings together sellers, buyers, issuing banks, and confirming banks through their own computers using secure or encrypted information over a global computer network, such as the Internet.  
           [0009]    The present invention allows efficient intermediation of available or new credit sources, while generating new fee streams for banks, utilizing bank trade finance facilities more efficiently, and more cheaply. The use of an e-commerce interchange drives costs down, improves balance sheet/cash flow and ROE  
           [0010]    The present, invention allows exporters, importers, and banks to select the most efficient conventional bank letter of credit to handle payments under contractual international sales of goods and services. Exporters can determine the full bank market availability for letter of credit confirmations, at the best commission rates.  
           [0011]    Importers can select from a wider source of trade credit is than previously known, at the best cost. Banks which are actively buying or developing Internet based software products with which to offer to, and service, their customers, can use the present invention to enable them to use existing products, find new customers, and utilize used bank-to-bank credit facilities more efficiently from low cost, existing resources.  
           [0012]    The present invention provides a first-to-market advantage with attendant efficiencies that can very profitably interact with and complement all exchanges with an efficient payment model. The present invention allows all international banks to use their own products, and trade partners to use existing LC documentation accessed securely through a website.  
           [0013]    As a result of the present invention, business exchange is between exporters, importers and banks in all countries of the world. The exchange facilitates world trade through more efficient information exchange as to all available users and/or providers of LC&#39;s to complete trade payments under trade contracts and similar documents.  
           [0014]    One embodiment of the present invention involves a plurality of steps. In a first step, the exporter and importer conclude a sales commitment involving a transaction in goods or services between the importer and exporter in any two or more countries, and information about the transaction is posted on the website of a manager or controller. In a second step, one or more participating opening banks access the website, read the transaction information, and if interested, post a confidential bid that only the importer can read. In a third step, the importer returns to the manager&#39;s website and selects one of the bids. In a fourth step, one or more confirming banks access the website, read the accessible posted information as released by the exporter about the transaction, and posts a confidential confirming bid for the LC for the exporter to consider.  
           [0015]    In a fifth step, the exporter returns to the manager&#39;s website and selects one of the bids of the confirming banks to complete the LC transaction. In an optional sixth step, a confirmation of the LC transaction is sent and the bank transaction fees are transferred through the manager&#39;s website, with the manager receiving a commission.  
           [0016]    These and other features and advantages of the present invention will be further discussed or apparent from the detailed description of the preferred embodiment section set forth hereinbelow.  
         BRIEF DESCRIPTION OF THE DRAWING  
         [0017]    The present invention will become better understood by reference to the following drawing which is a comprehensive system block diagram and flow chart showing five steps of a business model according to the present invention. 
       
    
    
     DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT  
       [0018]    The foregoing aspects and many of the attendant advantages of the present invention will become more readily appreciated from the following description of a presently preferred embodiment thereof with reference to the accompanying drawing.  
         [0019]    Referring to the drawing, there is shown a system and method of selecting a Letter of Credit (LC) opening and/or confirming banks through a computer network such as a global computer network like the Internet. The system has five steps or stages and in the drawing, the flow of information for each step is indicated by a different-type of dashed or dotted line, each dashed or dotted line for convenience being identified by a color, as follows:  
         [0020]    Step I (Transaction Posted): a dashed line consisting of a series of groups of two small, fine lines with an indicated color of link;  
         [0021]    Step II (Issuing Banks Bid): a dashed line consisting of a series of small, thick dashes with an indicated color of green;  
         [0022]    Step III (Importer Selects Issuing Bank): a solid dashed, thick line consisting with an indicated color of black;  
         [0023]    Step IV (Confirmation Banks Bid): a dotted line consisting of a series dots with an indicated color of blue; and  
         [0024]    Step V (Exporter Selects Confirmation Bank): a solid, thin line with an indicated color of red.  
         [0025]    The shorthand title of each step is indicated in parenthesis.  
         [0026]    As shown in the figure, there are five basic participants, each of which has a computer system that is connected to a computer network, such as a global computer network like the Internet. For ease of this description, each of the lines between the participants will be a communication on the Internet. The basic participants are: an Importer Computer System  10  which contains the importer&#39;s data for the transaction (IDT); an Exporter Computer System  12  which contains the exporter&#39;s data for the transaction (EDT); a central computer system of a L/C Selector Internet Exchange or transaction manager  14  which contains the computer software for a website  15 ; one or more participating issuing bank computer systems  16 , three of which are depicted as Bank A numbered  16   a,  Bank B numbered  16   b  and Bank C numbered  16   c;  and one or more participating confirming bank computer systems  18 , three of which are depicted as Bank X numbered  18   a,  Bank Y numbered  18   b  and Bank Z numbered  18   c.    
         [0027]    As is typical in conventional Internet transactions, the software is written in Java and resides on website  15 . When a computer system of an authorized user logs onto website  15 , the necessary computer program parts are down loaded onto the computer system of the user. Alternative, each participant can be provided with the requisite portions of the software to enable that participant to use the exchange.  
         [0028]    Each computer system (not shown in detail) is conventional and can includes as a minimum: a general purpose digital computer, such as a microcomputer utilizing a microprocessor; a mass storage system in communication with the computer, such as a hard disk; software stored on the storage system; a data storage area on the storage system; input equipment such as a keyboard and mouse; output equipment such as a monitor, a printer; and communication hardware such as a modem or in larger systems an entire communications router which are connected to the Internet. Each of importer computer system  10 , exporter computer system  12 , issuing bank computer system  16 , and confirming bank computer system  18  have appropriate software to connect to the Internet, to provide encryption, and to send and receive data to the transaction manager computer system  14 . Tie transaction manager computer system  14  has the requisite computer software to perform the tasks stated below.  
         [0029]    As is schematically shown in FIG. 1B, transaction manager computer system  14  includes a data storage or data base  20 . Data base  20  is either part of website  15  as shown or can be separately stored in another computer system. Data base  20  includes a number of folders, each folder being schematically shown as being accessed during a different step of the process. These folders, which are more fully explained below, include for the importer&#39;s side: a plurality of IDTs folders  22 ; IQCs folders  24 ; ICQ “pages” folders  26 ; and I/BDTs folders  28 . These folders for the exporter&#39;s side include EDTs folders  30 ; CQCs folders  32 ; CQC “pages” folders  34 ; and CBSs folders  36 . In addition, data base  20  includes customer data folders  40 ; e-mail archive folders  42 ,  30  accounting and fee payment records in folders  44 , and IDT/EDT “pages” in folders  46 .  
         [0030]    Also, schematically shown in website  15 -above data base  15  in FIG. 1B is an open space portion which represents an active memory portion  50 . In this active memory portion  50 , central computer system stores active information about pending transactions, and calculates and assemblies information. These memory portions include an IDT memory portion  52  and an EDT memory portion  54 . One third of IDT memory portion  52  is used to store importer&#39;s Data Transaction information being received by website  15  during Step  1  transactions and the other two thirds of which are used Go receive and assemble bids from issuing banks during Step  2  transactions. One third of EDT memory portion  54  is used to store exporter&#39;s Data Transaction information being received by website, 15  during Step  3  transactions and the other two thirds of which are used to receive and assemble bids from confirming banks during Step  4  transactions. There is also an IQC Page Container portion  56  and a CQCs Page Container portion  58 . Each of these container portions are used to assemble and store all valid bids from all bidding importing or confirming banks, respectively. Finally there are fee recordation portions  60  and  62  to calculate and store fees associated with the transaction for each of the issuing side and the confirming side of the transaction.  
         [0031]    In the description of the flow chart, the following acronyms are used:  
         [0032]    CBS=Confirming Bank Selected  
         [0033]    CQC=Confirming (bank) Quote Commitment  
         [0034]    EDT=Exporter&#39;s Data Transaction  
         [0035]    I/BDT=Importer/Bank Data Transaction  
         [0036]    IDT=Importer&#39;s Data Transaction  
         [0037]    IQC=Issuance (bank) Quote Commitment  
         [0038]    SSL=Secure Socket Layer.  
         [0039]    Each transaction from and to a bank is encrypted and thus is conducted through a secure socket layer. In this way, one bank is unable to see or have access to the transactional information of another bank. This ensures that the bidding for the Letter of Credit, whether it is by an issuing bank or by a confirming bank, is truly secret. Thus, the preferred embodiment of the present invention is a blind bid. However, it is also within the scope of the present invention that a fully competitive bidding system is supported in which each issuing bank or confirming bank can see the bid of the other bidding issuing banks or confirming banks, respectively, and thereby decide whether to bid lower or not.  
         [0040]    As stated above, a complete transaction usually has five steps. A summary of these steps, and with reference to the drawing the “color” of the flow lines are as follows:  
         [0041]    Step  1 , depicted by the “pink” line which is a series of sets of two dots per set, is the posting of a request for a Letter of Credit (LC) by the importer/buyer on the website of a transaction manager;  
         [0042]    Step  2 , depicted by the “green” line which is a series of short, thick dashes, is the posting of an offer or bid by one or more banks for issuing the LC;  
         [0043]    Step  3 , depicted by the “black” line which is a thick solid line, is the posting of the issuing bank selected by the importer;  
         [0044]    Step  4 , depicted by the “blue” line which is a series of dots is the posting of an offer by the exporter of a request for a proposal for confirming the offered LC; and  
         [0045]    Step  5 , depicted by the “red” line which is a thin solid line is the posting of the confirming bank selected by the exporter.  
         [0046]    The individual steps will now be discussed in detail.  
         [0047]    STEP  1 .  
         [0048]    Step  1  begins after an exporter and importer have made a deal involving the sale of goods in one country and the importation of those goods in a second country. A system according to the present invention now permits the transaction to go forward by providing a mechanism through which the contracting parties can locate two banks, one in the geographical location of the exporter and one in the geographical location-of the importer, who will issue and oversee an LC. Thus, step 1 begins with the posting of sales commitment information on website  15  and the solicitation of bids from an issuing bank or other source.  
         [0049]    The typical transaction begins when an exporter or a group of exporters conclude sales commitments to sell goods and/or services to an importer or a group of importers who desire to buy and import into their country the goods and/or services. The sales commitments are usually embodied in a written or oral contract that includes as one of its terms the obtaining,of a Letter of Credit (sometimes referred to herein as an “LC”) by the importer from an issuing bank which usually deals only with the importer and the obtaining by the exporter of a performance confirmation by a confirming bank which usually deals only with the exporter. The contract sets the obligations for the payment of the issuing and confirming banks services, with the particular parties, although usually the importer is responsible for obtaining and paying for the LC and the exporter is responsible for obtaining and paying for a confirming bank. Up to this point in the transaction, all actions by the importer and the exporter are conventional.  
         [0050]    The present invention is now used to secure the best terms for each of the parties. The exporter or importer logs onto website  15  of transaction manager computer system  14  The sale commitment information is then posted on website  15  by the importer and/or exporter. This sale commitment information includes the amount of sales commitment by currency; the type and quantity description of goods/services; the exporter&#39;s name and address; the importer&#39;s name and address; the terms of the sale which includes the payment terms, and the address of the to and from shipment addresses; the duration of the posting; and any other relevant transaction descriptions which are thought to be helpful in getting bids to be placed on website  15 .  
         [0051]    The path of Step  1 , indicated by the “pink” lines, begins at Importer Computer System  10  in FIG. 1A, where the IDT information to be posted is encrypted, and proceeds through a secure socket layer SSL as indicated at  64  to website  15  (FIG.1B). Upon logging onto website  15 , the IDT is stored in IDTs folders  22  of data base  15 . The IDT is also made available to any participating issuing bank, called issuing bank candidates in Steps  1  and  2 , such as issuing bank candidates  16   a,    16   b,  and  16   c,  when they log onto website  15 . The IDT is then sent encrypted by website  15  to a requesting bank through a secure socket layer, SSL  66 , shown in FIG. 1C. This completes Step  1 .  
         [0052]    STEP TWO  
         [0053]    Step two involves the collection of bids from one or more issuing banks by website  15 , checking the bids to ensure that they are legitimate and are from participating banks or other institutions, reformatting the bids so as to present only certain information and present it in a predetermined way, and transmitting the bids to the importer. The bids are not shown to either the exporter or the other issuing or confirming banks.  
         [0054]    Having received the IDT from website  15  in. Step  1 , three issuing Bank candidates  16   a,    16   b  and  16   c  have decided to place a bid, also called an issuance (bank) quote commitment or IQC, to issue an LC. Each bank candidate  16   a,    16   b,  and  16   c  places an encrypted bid through respective secure socket layers  67 ,  68  and  69 . Each bank making a bid has previously executed a contract with the transaction manager of website  15  and thus has qualified as a participating bank. The offer to issue an LC has committed each candidate issuing bank to an open sight LC at a particular fee charge, usually expressed as a percentage of the request amount of tie LC. In addition, a candidate issuing bank will usually state other conditions such as deposit requirements and the length of time the bid will be considered active.  
         [0055]    The IQC bids are encrypted and sent to website  15  where they are stored in active IDT memory portion  52  until the time posted for receiving the bids has closed. Thereupon, they are assembled into an IQC “page” at container memory portion  56 . At the same time the IQC page container information is being assembled, the IQC data is sent for permanent storage in IQCs and I/BDTs storage subdirectories or folders  24  and  28 .  
         [0056]    The path of Step 2, indicated by the “green” lines, begins at Bank Computer Systems  16   a,    16   b,  and  16   c  in FIG. 1C, where these computer systems access website  15 , find the requests for bids, select and make a bid. Banks A, B, and C make a bid by providing an Issuance (bank) Quote Commitment that is encrypted and sent to website  15  through a secure socket layer as indicated respectively in SSL boxes  67 ,  68  and  69 . An IQC commits the bank to an open sight LC at a stated percent fee, and under terms and conditions they separately state. The bids from the three bidding banks are posted as either a “market” bid or a “limit” bid. A market bid is one that remains until either withdrawn or the importer has selected another LC issuer. This type of bid is useful because it may take several days, if not weeks, before the importer selects a bank. A limit bid is one that stays open only up to a stated time.  
         [0057]    As stated above, at website  15 , the bids are retained in IDT memory portion  52  until the time for bids expires, and then they are sent to IQC Page Container portion  56  where the bids are assembled into a page of formatted information and encrypted. From portion  56  the assembled bids are automatically sent in an e-mail to importer computer system  10  through a secure socket layer as indicated by SSL box  70 . A copy of the e-mail is retained, as are all e-mail notifications by website  15  of transaction steps, in EMAIL archives  42 .  
         [0058]    This completes Step  2 .  
         [0059]    STEP  3 .  
         [0060]    In Step  3 , the importer makes the desired selection of a bank and enters it into importer computer system  10 . This is shown in FIG. 1A, by the “black” lines beginning at importer computer system  10  and proceeding as shown to an importer/bank data transaction box  71 . Transaction box  71  in turn assembles and encrypts the selection as an importer/bank data transaction message, as shown in a message box  72 .  
         [0061]    From message box  72  the secure information is transmitted to website  15  through a secure socket layer, as shown in Van SSL box  74 , FIG. 1A, for relay of the acceptance to Bank A computer system  16 a. Also, a fee message is transmitted from message box  72  to fee recordation portions  60  (FIG. 1B) where a fee is recorded against the account of the importer for a successful transaction in obtaining an LC from a participating issuer bank.  
         [0062]    In this example, the bid from bank A is selected and this is indicated by the choice in message box  72  and also by the notification path extending from fee recordation portions  60 , across the page divide to a fee paid transaction box  76  of Bank A computer system  16   a.  Fee box  76  records a predetermined fee, usually in point, against the issuing bank A as a percentage of the LC and are paid to the transaction manager for the services of using website  15 . The fees paid by importer  10  to Bank A for issuing an LC is based on the bid price and are paid outside of the present system.  
         [0063]    Also, in Step  3 , exporter computer system  12  is notified of the bid acceptance and issuance of an LC. In FIG. 1B, the acceptance notification is also sent from fee recordation portion  60  of website  15  to an importer/bank data transaction portion  78  where the information is stored during the present transaction. From transaction portion  78 , the information is reformatted and encrypted and enters a secure socket layer as shown by an SSL box  80  in FIG. 1A. Flow then goes to exporter computer system  12 . At this point Step  3  is finished.  
         [0064]    STEP  4 .  
         [0065]    In Step  4 , the process switches to the exporter obtaining a confirming bank and involves the posting of a request for bids and-the making of such bids by one or more confirming banks. However, the process can proceed only because an LC has been opened. The process will not proceed, and will be delayed at website  15 , until the importer and an issuing bank have agreed on the terms of the LC and the bank has agreed to open one.  
         [0066]    The process in STEP  4  begins at exporter computer system  12  where the exporter reviews the accepted LC and assembles its request to be posted on website  15 . Exporter Computer System  12  also encrypts the information and sends it to the Internet as shown by the “blue” line, through a secure socket layer, as shown by SSL box  82 . The flow of the exporter&#39;s data transaction (EDT) proceeds to website  15  and then is stored in EDTs folder  30  and made available on website  15  at EDT memory portion  54 .  
         [0067]    During their periodic search of website  15 , or in another embodiment (not shown), upon specific, automatic notification by website  15  when the criteria from a participating confirming bank is reached. Thus Banks X, Y and Z having been informed about the posted LC confirmation solicitation, assemble their own bids or confirming (bank) quote commitment, and encrypt,them as shown by corresponding SSL boxes  87 ,  88 , and  89 . The CQC is then sent to and posted or retained in website  15  in the EDT memory portion  54  for temporary storage and sent to CQCs folders  32  for permanent storage. The banks X, Y and Z confirming LC bid is posted as either a “market” bid or a “limit” bid, which are the same as described above with respect to the issuing banks bids.  
         [0068]    As soon as the time has closed for the receipt of bids, the received bids are packaged into a page by CQCs Page  58  and from there stored in CQC “pages” folders  34  and sent to exporter&#39;s data transaction computer system  12 . This completes step  4 .  
         [0069]    STEP  5 .  
         [0070]    Step  5 , the last step in the process, involves the selection of a bid by the exporter. The process flow is shown by the “red” line.  
         [0071]    When the bids are received, as shown by process box  90  in FIG. 1A, the exporter will evaluate them and select one. This decision is effected and submitted by exporter&#39;s computer system  12  to website  15  as shown in process box  90  with Bank x having been selected, in this example, as seen in process box  92 .  
         [0072]    At website  15  the information is stored in CBSs folders  36  and transmitted to a fee recordation box  62  as shown in FIG. 1C. Fee box  62  records a predetermined fee, usually in point, against the confirming bank x as a percentage of the LC and are paid to the transaction manager for the services of using website  15 . The fees paid by the exporter to Bank x for confirming an LC is based on a percentage of the LC and are paid outside of the present system.  
         [0073]    This completes Step  5 .  
         [0074]    The present invention has now been described with respect to a specific embodiment thereof. However, modifications, substitutions and other changes can be made thereto without effecting the scope of the invention, which is set forth in the claims appended hereto.