Abstract:
A method, apparatus and system for verifying a charge payment transaction subsequent to executing the charge payment transaction in a retail location. The method includes moving a charge payment device into the retail location and presenting the charge payment device at a merchant point of sale located at the retail location for performing the charge payment transaction. A transaction record of the charge payment transaction is stored in a transaction log within the charge payment device. A report record of the charge payment transaction is transmitted from the merchant point of sale to a settlement system and added to an electronic payments report. The transaction log is electronically correlated with the electronic payments report, checking for discrepancies between the transaction log and the electronic payments report.

Description:
CROSS REFERENCE TO RELATED APPLICATIONS 
     This application claims the benefit of U.S. provisional application 60/587,164 filed 13 Jul. 2004 by the present inventor. 
    
    
     FIELD AND BACKGROUND OF THE INVENTION 
     The present invention relates to portable payment devices, and in particular to smart portable charge payment devices that store a record of recent payment transactions. 
     Charge cards of different kinds are commonly used for financial transactions. A credit card is a charge card that accumulates debt. The owner of a credit card is required to settle payment periodically. Debit cards are charge cards that promptly deduct payment from an account held by the cardholder. Most charge cards have a magnetic strip encoded with information identifying the credit or bank account associated with the charge card. Many charge cards are also embossed with the account identification data to allow its imprinting on paper forms. 
     With the advent of smart cards, a new type of charge card has emerged under a de-facto standard called EMV after Europay, MasterCard and Visa. A smart card, when used as a charge card, allows a smart card reader to authenticate the cardholder by presenting a personal identification number (PIN) or biometric signature. Methods for authenticating a smart card include data transfer using tamper resistant hardware and encrypted data transfer protocols. Some smart cards (“contact cards”) use electrical contacts to interface with their compatible readers, while other smart cards (“contactless cards”) use radio frequency (RF) for such interface. The latter case allows embedding charge card functionality within a variety of form factors in addition to the traditional plastic card, which include keyfobs, cellular telephones, watches, etc. 
     Card payment has become the target of a substantial amount of fraud. A cardholder is usually not liable for damages caused by fraud, either by agreement with the charge card issuer or by law. However, the cardholder is required to detect and identify fraudulent charges to his account. For this purpose, a statement is sent periodically to the card holder, detailing the transactions billed to his/her account, and the cardholder is required to check all transactions line by line and compare each transaction with receipts or records, if he/she keeps receipts or maintains records, and if not he/she is expected to detect and identify fraud based on memory or common sense. 
       FIG. 1  (prior art) describes a common charge payment system  100 . A cardholder  102  submits (step  105 ) a charge card  110  for payment (step  115 ). Card  110  includes a payment module  114 , e.g. a magnetic strip or a smart chip, to identify the account and authorize payment from the account. Charge card  110  interfaces with a merchant point of sale (POS)  120 . At merchant POS  120  the payment amount is entered manually by the merchant or received automatically from a scanner or from an automatic vending machine. Transaction details including account details, payment amount and time are sent (step  125 ) as a payment claim by merchant POS  120  to a merchants acquirer server  130 . The claim is sent (step  135 ) from acquirer server  130  to an issuer server  140  of the card issuer of charge card  110 . Receipt by issuer server  140  causes charging (not shown) the payment amount to the respective credit or bank account, and issuing (step  145 ) a report record  147  to the cardholder, usually as a line item in a monthly statement. Report record  147  typically includes the merchant identity, the purchase date and the payment amount. Cardholder  102  is then required to compare each report record  147  in his monthly statement to receipts, records and memorized events, in order to verify or dispute each line item. 
     Charge payment system  100  includes a settlement system  136  that includes acquirer server  130  operative to receive claims from merchants and issuer server  140  operative to collect money from cardholders and to issue monthly statements to the cardholders. Settlement system  136  is common for credit and debit cards issued by financial institutions. An alternative settlement system includes a single server that manages both the acquiring tasks (i.e. receiving claims from merchants) and issuing tasks (i.e. collecting money from cardholders and issuing monthly statement). 
     The more transactions one makes using the card, the more cumbersome, time consuming and prone to error does the review of the monthly statement become. Also, the associated need to keep receipts and records has become a hassle for many. 
     There is thus a need for and it would be highly advantageous to have a better way to compare between transactions made by the cardholder and transactions charged and reported to the cardholder by the issuer. 
     SUMMARY OF THE INVENTION 
     An object of the present invention is to simplify for the cardholder the increasingly difficult task of reviewing a periodic statement of transactions. Transactions are recorded on a charge payment device in a transaction log at the time transactions are made. The transaction log is compared to a periodic, e.g. monthly statement of transactions, i.e. electronic payments report. The cardholder is notified in a discrepancy report of any discrepancies found between the transaction log and the statement. The discrepancy report is shorter than the original statement and contains only the transactions that demand the attention of the cardholder, thus saving time but still allowing for the discovery of fraudulent transactions made to the respective account. 
     According to the present invention, there is provided a method for verifying a charge payment transaction subsequent to executing the charge payment transaction in a retail location, the method comprising (a) moving a charge payment device into the retail location; (b) presenting the charge payment device at a merchant point of sale located at the retail location for performing the charge payment transaction. A transaction record of the charge payment transaction is stored in a transaction log within the charge payment device. A report record of the charge payment transaction is transmitted from the merchant point of sale to a settlement system and added to an electronic payments report. The transaction log is electronically correlated with the electronic payments report, checking for discrepancies between the transaction log and the electronic payments report. Preferably, the discrepancies include: (i) a transaction record being different from a report record and (ii) a payments report including a report record while a corresponding transaction record is absent from the transaction log and (iii) the transaction log including the transaction record while a corresponding report record is absent in the payments report. Preferably, the method further includes removably connecting the charge payment device to a computer for performing the correlation by the computer. Preferably, the charge payment device forms part of a portable device, the portable device including further a comparator software, and the method further includes loading the comparator software onto the computer for enabling the correlation. Preferably, the charge payment device forms part of a portable device, the portable device also includes (i) a user interface and (ii) a comparator performing the correlation; the method further including displaying a result of the correlation on the user interface. Preferably, wherein the charge payment device forms part of a portable device including a comparator performing the correlation, the method further includes removably connecting the portable device to a computer for displaying by the computer a result of the correlation. 
     According to the present invention, there is provided a system for verifying a charge payment transaction made at a retail location, the system including: (a) a charge payment device movable into the retail location; (b) a merchant point of sale at the retail location which receives the charge payment device for performing the payment transaction; (c) a log storage device included in said charge payment device for storing a transaction record of the payment transaction in a transaction log; (d) a communication port operatively connectable to a settlement system, for receiving from the settlement system an electronic payments report including a report record of the charge payment transaction; and (e) a comparator for receiving and correlating said transaction log and said electronic payments report thereby checking for at least one discrepancy. Preferably, the discrepancies include: (i) a transaction record being different from a report record, (ii) the payments report including a report record while a corresponding transaction record is absent in the transaction log, and (iii) the transaction log including a transaction record while a corresponding report record is absent in the payments report. Preferably, the comparator forms part of a computer removably connectable to said charge payment device. Preferably, wherein the charge payment device forms part of a portable device, the portable device also includes comparator software for loading onto the computer and enabling the correlation by the comparator. Preferably, wherein the charge payment device forms part of a portable device, the portable device also includes: a comparator to perform the correlation, and a user interface to show results of the correlation Preferably, the charge payment device forms part of a portable device including a comparator for performing the correlating. The system further includes a computer that is removably connectable to the portable device for displaying results of the correlation. 
     According to the present invention there is provided a portable device for verifying a charge payment transaction, the charge payment transaction performed by the portable device when visiting a merchant point of sale within a retail location, the merchant point of sale connectable to a settlement system for producing an electronic payments report, the portable device comprising: (a) a charge payment device which interfaces with the merchant point of sale, the charge payment device including a payment module to perform the charge payment transaction and a log storage device for recording charge payment transaction details; and (b) a comparator which receives the electronic payments report, retrieves a transaction log from the log storage device, and correlates the electronic payments report with the transaction log to check whether the transaction log and the electronic payments report include a discrepancy. 
     According to the present invention there is provided a portable device for verifying a charge payment transaction, the charge payment transaction being performed by the portable device when visiting a merchant point of sale within a retail location, the merchant point of sale being operatively connectable to a settlement system for producing an electronic payments report, the portable device being removably connectable to a computer, the portable device including: (a) a charge payment device which interfaces with the merchant point of sale, the charge payment device including a payment module for performing the charge payment transaction, the charge payment device further including a log storage device for recording the charge payment transaction; and (b) a comparator software for being loaded onto the computer and running thereon for: (i) receiving the electronic payments report, (ii) retrieving a transaction log from the log storage device, and (iii) correlating the electronic payments report and the transaction log to check whether the electronic payments report and the transaction log include discrepancies. 
    
    
     
       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 simplified block diagram of a charge payment system of the prior art; 
         FIG. 2  is a simplified block diagram of a generalized charge payment system in accordance with a preferred embodiment of the present invention; 
         FIG. 3  is a simplified block diagram of a first variation of a charge payment system according to a preferred embodiment of the present invention; 
         FIG. 4  is a simplified block diagram of a second variation of a charge payment system in accordance with a preferred embodiment of the present invention; 
         FIG. 4A  is a simplified block diagram of a third variation of a charge payment system in accordance with a preferred embodiment of the present invention; and 
         FIG. 5  is a simplified flow chart illustrating the operation of preferred embodiments of the present invention; 
         FIG. 5A  is a simplified flow chart illustrating the operation of the third variation of the present invention. 
     
    
    
     DESCRIPTION OF THE PREFERRED EMBODIMENTS 
     The present invention is of a system and method for automatically “closing the loop” between payments made by a charge card and the statement report received from the issuer of the charge card. By “charge card” is meant any portable personal device, of any form factor, that uses contact or contactless interface with a compatible merchant reader in a brick and mortar business establishment to charge a respective user account. The system and method for closing the loop is based on automatically storing transaction records in a transaction log and comparing and verifying the transaction records in the transaction log against report records in an electronic payments report, e.g. an electronic monthly statement. The present invention preferably includes a charge payment device, e.g. a charge card, including a mechanism that stores a transaction log of transaction reports, each transaction report including details of a payment transaction made with the charge payment device. Upon receipt of a payments report, i.e. a statement, from the issuing financial institution, the transactions reported in the statement are correlated with the transaction details as stored in the transaction log within the charge payment device. The results of the correlation are typically reported to the cardholder on a display or in printed form. Any discrepancy is immediately and automatically identified, thus only discrepancies require attention of the cardholder while all other transactions have been screened and verified automatically. Optionally, special cases, such as payments of unusually large amounts are also reported to the cardholder. The term “correlation” such as between two lists of records is defined herein as a one-to-one correspondence of the respective records of the two lists. The term “discrepancy” is defined herein to include any difference between the two lists of records, including a missing record from either list and further including any difference in any detail for a particular record. The terms “correlate” and “compare” are used herein interchangeably. The phrase “results of a correlation”, “correlation summary” and “results summary” are used herein interchangeably. 
     The term “financial institution” refers herein to a bank, a credit union, investment broker, or other credit or payment service provider that issues the payment device. 
     Before explaining embodiments of the invention in detail, it is to be understood that the invention is not limited in its application to the details of design and the arrangement of the components set forth in the following description or illustrated in the drawings. The invention is capable of other embodiments or of being practiced or carried out in various ways. Also, it is to be understood that the phraseology and terminology employed herein is for the purpose of description and should not be regarded as limiting. 
     The mechanism for storing transaction details in the charge payment device may be of any such mechanisms known in the art. The terms “storage” and “memory” are used herein interchangeably and refer to any such storage mechanisms. 
     The present invention may in whole or in part be installed in different variations as part of a portable device, such as a portable digital assistant (PDA), or a cellular telephone or otherwise a portable computer. The term “computer” as defined herein includes a processor, memory, and user interface devices such as a keyboard, mouse and/or a display; all connected and operative in the usual way, and may be in the form of a desktop computer, a portable, i.e. laptop, computer, a notebook computer, a personal digital assistant or a mobile telephone. 
     The principles and operation of a system and method for automatically storing charge card transaction records and verifying charge card transactions against a monthly statement, according to the present invention, may be better understood with reference to the drawings and the accompanying description. 
     Reference is now made to  FIG. 2 , which illustrates a charge payment system  200  according to a preferred embodiment of the present invention. Charge payment device  210  includes a payment module  214  that interfaces with a merchant point-of-sale (POS), being a brick and mortar business establishment,  220  to conduct (step  215 ) a payment transaction, when submitted by cardholder  102 . Payment module  214  provides account details, e.g. name of cardholder, account number, and expiration date. Charge payment device  210  further includes a storage mechanism for log storage  212 . 
     Transaction details for payments conducted with a single charge payment device  210  at different merchants POS  220  at different times, are all logged in log storage  212 . Each payment is claimed (step  125 ) by merchant POS  220  from acquirer server  130 . Acquirer server  130  settles (step  135 ) payment with issuer server  240  of charge payment device  210 . Issuer server  240  sends (step  245 ) a report record  247  regarding each payment transaction settled with the issuer, preferably as a record within an electronic payments report, i.e. monthly statement, or upon cardholder request via an Internet query. Such query options are commercially common and are not described in detail herein. Report record  247  is preferably in electronic form whereas report record  147  of the prior art is optionally printed on paper. 
     Communication port  219 , comparator  218  and user interface  216  are packaged either in the same enclosure with charge payment device  210 , or within a separate device, e.g. computer. Communication port  219  receives (step  245 ) report records  247  from issuer server  240 , preferably via a data communications network, e.g. the Internet, and transfers report records  247  to a comparator  218 . Comparator  218  is preferably a suitably programmed processor. Comparator  218 , correlates transaction records, i.e. the contents of log storage  212 , with report records  247 , and generates (step  255 ) a comparison result summary  257  presented to the user  102  through user interface  216 , highlighting discrepancies between report records  247  and the transaction records stored in log storage  212 . Preferably, comparison result summary  257  is a correlation summary that includes a transaction record without a corresponding report record  247  and/or report record  247  without a corresponding transaction record or report record  247  and a corresponding transaction record with different transaction details. Optionally, comparator  218  includes in results summary  257  also exceptional transactions as previously defined for instance by user  102  through user interface  216 . Alternatively, exceptional transactions can be previously defined by the issuer. Exceptional transactions include for instance transactions of amounts over a predetermined threshold or transactions initiated overseas. 
     The form of the charge payment device  210  is dependent on the payment interface with merchant POS  220 . For example, if the payment interface uses a contact smart card protocol, then charge payment device  210  is preferably in the shape of a conventional plastic card; if the payment interface uses contactless technology, then charge payment device  210  is very flexible with respect to its shape, and can be formed as a card, a key fob, or double both as a USB token and contactless device. 
       FIG. 3  describes a preferred embodiment of a personal portable device  310 , including charge payment device  210 , communication port  219 , comparator  218  and user interface  216 , as hardware and/or software components. Personal portable device  310  is, for instance, included as part of a mobile telephone or a personal digital assistant (PDA). A functions block  320  represents useful hardware, software and corresponding functions such as telephony, MP3 player, voice recorder or storage. Portable device  310  then provides user  102  with an all-in-one capability for payment (step  215 ), receipt (step  245 ) of report records  247  and producing (step  255 ) comparison results summary  257 . Portable device  310  is operative as in charge payment system  200  illustrated in  FIG. 2 . 
       FIG. 4  describes an alternative embodiment of a charge payment system  400  including a portable device  410  and a computer  404 . Portable device  410  includes payment module  214 , and log storage  212 . After purchases are made (step  215 ) at merchants POS  220  of  FIG. 2 , using payment module  214 , the transaction details are logged in log storage  212 . Subsequent to payment (step  215 ) portable device  410  communicates (step  430 ) using a communications interface (not shown), e.g. USB serial interface with a device interface  420  of computer  404  and charge payment device  210  sends the transaction records stored in the transaction log, i.e. in log storage  212  to computer  404 . Communications (step  430 ) between portable device  410  and device interface  420  preferably uses the payment interface of payment module  214  or alternatively a different interface, such as a USB interface (not shown). Computer  404  receives (step  245 ), report records  247  preferably through communications port  219  to a data network, e.g. Internet. Comparator  218  correlates report records  247  with the transaction records from log storage  212  as received during communications (step  430 ). Comparator  218  is an application previously installed and run on computer  404  to correlate the transaction records of log storage  212  and report records  247 , and the comparison results summary  257  is presented (step  255 ) to user  102  via user interface  216 , e.g. display or printer, of computer  404 . 
     According to an embodiment of the present invention, comparator software resides in memory  413  in charge payment device  210  and is loaded onto computer  404  when charge payment device  210  is communicating (step  430 ). Thus comparator  218  is implemented in computer  404  with software previously stored on portable device  410 , allowing the present invention to operate with computer  404  without requiring comparator software previously installed on computer  404 . 
       FIG. 5  illustrates a method of “closed loop payment” according to embodiments of the present invention. Charge payment device  210  or alternatively portable device  310  or portable device  410  is presented (step  500 ) for payment at a merchant POS  220  which is a brick and mortar business establishment. Charge payment device  210  or portable device  310 / 410  communicates (step  215 ) with merchant point of sale  220  and initiates a payment transaction. Transaction details, e.g. payment amount, merchant identification and transaction date and hour, are logged (step  520 ) in log storage  212 . In parallel, an associated claim is presented (step  125 ) for instance to acquirer server  130  and subsequently settlement (step  135 ) is performed for instance with the issuer of charge payment device  210  or portable device  310 / 410 . Alternatively, if a “single server” payment and settlement system is being used, steps  125  and  135  are consolidated into a single step. 
     User  102  subsequently receives (step  245 ), preferably electronically an electronic payments report, i.e. a statement including report records  247  of all transactions, e.g. to portable device  310 , or for instance, by electronic mail to computer  404 . User  102  now has access to two copies that report the payment transactions initiated in step  115 : one copy has been logged as the transaction log onto log storage  212  in step  520 , and the other copy, the electronic payments record, has been reported to him via the acquirer and issuer in steps  125 ,  135  and  245 . 
     In optional step  542 , operable in portable device  410 , of charge payment system  400 , a comparator software module is loaded onto computer  404 , from comparator software in memory  413 , for implementing comparator  218 . Comparator  218  compares (step  550 ) transaction records in the transaction log of log storage  212  with report records  247 , the result of the comparison may be: (block  551 A) the transaction record equals report record  247 , (block  551 B) the transaction record is different from report record  247 , (block  551 C) the transaction record exists in the transaction log but does not exist in the payments report, or that (block  551 D) report record  247  exists in the payments report but a corresponding record does not exist in the transaction log. A comparison result summary  257  is generated by comparator  218  and presented (step  255 ) to user  102 , highlighting discrepancies between report records  247  as reported in the electronic payments report and the transaction records as reported in the transaction log. In optional step  552 , other previously defined exceptions, e.g. transactions of high amount or transactions made overseas are identified. All exceptions, i.e. discrepancies identified in step  550  and other exceptions identified in step  552 , are presented (step  255 ) in the comparison result summary  257 . 
     Referring to  FIG. 4A , according to an embodiment  600  of the present invention, a portable device  460  includes for instance a processor that is programmed to run as comparator  318 . Reference is also made to  FIG. 5A , a procedure according  10  to the present invention appropriate for embodiment  600 . As in the embodiments of  FIG. 5 , user  102  presents portable device  460  to merchant POS  220 . The transaction is recorded  520  on portable device  460  in log storage  212 . In parallel, the claim is presented (step  125 ) to acquirer server  130 , settled (step  135 ) with issuer server  240  and the transaction is reported (step  245 ) to user  102 . However, unlike the embodiments of  FIG. 5 , user  102  with user interface  216  loads (step  562 ) report  247  through communications interface  630 , e.g. USB serial interface, into report copy file storage  319  of portable device  460 . The copy of report  247  is stored in report copy file storage  319  under a reserved file name, e.g. “transaction—report.txt”. Comparator  318  identifies the presence of an updated copy of report  247  stored in storage  319 , and correlates (step  550 ) on board device  460  the contents of log storage  212  with the contents, e.g. “transaction—report.txt”, of report copy storage  319 . The correlation results, i.e. discrepancies and other exceptions are stored in storage on portable device  460 , for instance in storage  319  overwriting file transaction—report.txt. The correlation results are read (step  564 ) by computer  404  through device interface  420  and communications interface  630 ; and presented (step  255 ) through user interface  216  as comparison result summary  257 . 
     The advantage of embodiment  600  and the method of  FIG. 5A  arises from security issues associated with loading software applications onto computers  404  from external devices. Many computers  404  are configured to block the loading of applications from external storage devices. Embodiment  600  of  FIG. 4A  and the method of  FIG. 5A  include transfer of data only, i.e. text files, and do not include transfer of executable code. 
     The foregoing is considered as illustrative only of the principles of the invention. Further, since numerous modifications and changes will readily occur to those skilled in the art, it is not desired to limit the invention to the exact construction and operation shown and described, and accordingly, all suitable modifications and equivalents may be resorted to, falling within the scope of the invention. 
     As such, those skilled in the art will appreciate that the conception, upon which this disclosure is based, may readily be utilized as a basis for the designing of other structures, methods and systems for carrying out the several purposes of the present invention. It is important, therefore, that the claims be regarded as including such equivalent constructions insofar as they do not depart from the spirit and scope of the present invention. 
     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.