Abstract:
A system and method for initiating a deposit transaction, where the depositor is a non-commercial banking customer located at a remote location, and where the item to be deposited is a paper check from a third party, payable to the depositor. The enabling system features a Remote Customer Terminal (RCT) with certain input devices, connected to a bank system. The image and/or other data sent from the RCT to the Bank of First Deposit (BOFD) may be processed by conversion to Electronic Funds Transfer (EFT), via Electronic Check Presentment (ECP), or via check reconstruction. The new system and method provide convenience and improved transaction processing speed compared to other transactions that begin with a third party check.

Description:
FIELD OF THE INVENTION  
       [0001]     The invention relates generally to a system and method for initiating a deposit transaction, where the depositor is a non-commercial banking customer located at a remote location, and where the item to be deposited is a paper check from a third party (i.e. other than the bank customer or the paying bank), payable to the depositor.  
         [0002]     As used herein, a “bank” may be a bank or other financial institution, and a “check” may be a check or other negotiable instrument.  
       BACKGROUND OF THE INVENTION  
       [0003]     Methods and systems for initiating electronic financial transactions from remote locations are increasingly common. Examples are the use of Automated Teller Machines (ATM&#39;s) to withdraw cash, and the use of telephonic systems and personal computers to initiate a transfer of funds between a bank customers accounts, or for electronic payment of bills. Such transactions are commonly referred to as Electronic Funds Transfer (EFT).  
         [0004]     Two principal advantages of EFT, from the perspective of the customer, are convenience and speed. They are convenient to the extent that they do not require customers to physically visit the bank in order to initiate a financial transaction. Electronic transactions are also completed more quickly than those involving paper instruments and/or documents that must be physically routed to different locations in order to complete the transaction. A significant disadvantage of present EFT systems, however, is that they are not equipped to accept paper checks as part of the transaction. Since it is estimated that paper check volume in the United States exceeds sixty billion annually, this is a significant drawback.  
         [0005]     Some approaches have been disclosed for converting paper checks to electronic transactions. Using an approach commonly know as Electronic Check Presentment (ECP), a bank of first deposit (the bank first receiving a paper check for deposit, hereinafter BOFD) will capture an electronic image of the check or otherwise convert the check to an electronic transaction for processing through a clearing house and the paving bank. The image of the check and/or check data essentially take the place of the paper check for the purposes of payment. For a general description of the process, see U.S. Pat. No. 5,237,159. While this method may speed transaction time, it offers no improvement in convenience for the customer who must still initiate the transaction by physically delivering the paper check to the bank.  
         [0006]     A related approach allows a customer to write a check for purchases at the point-of-sale, typically a retail store, where the transaction is then converted into either an EFT or ECP transaction. Under this method, however, the bank customer is the payor. No provision is made for the deposit of checks by a payee.  
         [0007]     In sum, existing systems that perform electronic banking transactions are either not equipped to handle paper checks, are configured only for bank-to-bank transactions, or do not accept third party checks for deposit. The resulting lack of convenience, and other drawbacks, limit the utility of such systems for non-commercial bank customers.  
       SUMMARY OF THE INVENTION  
       [0008]     An object of the invention is to overcome these and other drawbacks in existing methods and systems.  
         [0009]     Accordingly, it is one object of the invention to provide a system and method for allowing non-commercial bank customers to deposit third-party checks from remote locations.  
         [0010]     It is another object of the invention to provide a system and method that would allow bank customers to initiate such transactions at home. Such a method would be a convenience to many bank customers, and provide a new level of independence for customers who are confined to their homes due to poor health, disability, or for other reasons.  
         [0011]     It is another object of the invention to provide a method that would allow bank customers to deposit third party checks at ATM machines. Most ATM&#39;s simply provide a means for holding paper checks until they are collected for processing. The present invention would make ATM&#39;s more useful by providing for electronic deposit of third party checks.  
         [0012]     It is another object of the invention to provide alternative methods for the BOFD to process such transactions. By identifying a system and method for deposit that is compatible with ECP, EFT and reconstructed check processing, banks will have practical alternatives in the implementation of this new approach.  
         [0013]     To achieve these and other objects of the invention, a payee would deposit a third party paper check using a Remote Customer Terminal (RCT) that can communicate with a BOFD system. In general terms, the RCT is equipped to “accept” paper checks. Images and/or other data from the RCT are sent to the BOFD system. The BOFD can process the transaction in several different fashions.  
         [0014]     In the preferred embodiment of the invention, the RCT is located at home, and is a personal computer with an attached image scanner. To initiate the transaction, the customer uses an Internet-based application to access the BOFD system. A pre-assigned Personal Identification Number (PIN) allows the customer to initiate a deposit transaction. When prompted, the customer captures the image of the third-party check on the scanner, and forwards the digital image to the BOFD system. The automated system provides immediate provisional credit from the BOFD to the customer, and forwards the check image and other data to a clearing house in the form of an ECP transaction. Once the transaction has cleared the paying bank, the BOFD issues a permanent credit to the bank customer. Accordingly, the customer has initiated deposit of a third party paper check from the convenience of his/her own home, with the speed of an electronic transaction.  
         [0015]     The following drawings and descriptions further describe the invention, including several different embodiments of the major system components and processes. The construction of such a system, implementation of such a process, and advantages will be clear to a person skilled in the art of automated financial transactions.  
     
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0016]      FIG. 1  is schematic diagram of the system, according to one embodiment of the invention.  
         [0017]      FIG. 2  is a flow diagram from the perspective of a bank customer, according to one embodiment of the invention.  
         [0018]      FIG. 3  is a flow diagram from the perspective of the BOFD system, according to one embodiment of the invention. 
     
    
     DETAILED DESCRIPTION OF THE INVENTION  
       [0019]     As indicated above, the invention is directed to a system and method for the deposit of third party checks at remote locations by non-commercial bank customers.  
         [0000]     Overview of the System  
         [0020]      FIG. 1  is schematic diagram of the system, according to one embodiment of the invention. The key components are a Remote Customer Terminal (RCT)  100  that is connected to a Bank of First Deposit (BOFD) system  110 .  
         [0021]     The RCT  100  may be a telephone, fax machine, personal computer, ATM, or any other computer, apparatus, or system capable of collecting data and communicating with BOFD system  110 .  
         [0022]     Additionally, the RCT  100  may comprise certain input devices  101 , output devices  102 , Central Processing Unit (CPU)  103 , and some amount of machine-readable electronic memory  104 . The RCT input devices  101  may comprise a keypad, a keyboard, a microphone, a Magnetic Ink Character Reader (MICR), a Digital Image Scanner (DIS), and any other device capable of collecting data. The RCT output devices  102  may comprise a speaker, a computer display, a paper printer, and any other output device that can communicate a message to a human.  
         [0023]     Certain software may also be stored in RCT memory  104  and executed by the CPU  103 , for example, to assist in communication and data collection functions. For example, optical character recognition software may be used in conjunction with the DIS to convert machine printed characters to electronic text. Likewise, intelligent character recognition software may be used to convert handwritten characters to electronic text. Additionally, Netscape Navigator™ or Internet Explorer™ may be used as browsers for Internet communications.  
         [0024]     The BOFD system  110  may be a telephone, facsimile machine, personal computer, mainframe computer, or any other computer, apparatus, or system capable of receiving data from the RCT, and initiating a deposit transaction. Like the RCT, the BOFD system may be comprised of input devices  111 , output devices  112 , CPU  113 , and electronic memory  114 . The BOFD system may further comprise a human operator, or it may be fully automated.  
         [0025]     Additionally, the BOFD system is broadly defined to include such network servers or other devices necessary to perform functions such as communication, data collection, and preparation of electronic transactions. Data collection, for example, may be implemented by hosting a World Wide Web site on an Internet server.  
         [0026]     The RCT  100  and BOFD system  110  communicate with each other via a communication link  120 . The link may operate through a network, such as by direct dial connection to the Internet over a telephone network. It may be accomplished via point-to-point communication, such as with a dedicated line or via a radio frequency or microwave link.  
         [0027]     Additionally, the BOFD system  110  may be connected to one or more check clearing systems  130  via a communication link  140 . The check clearing systems may comprise for-profit clearing houses  131 , Federal Reserve banks  132 , and local paying banks  134 . The clearing houses  131  and Federal Reserve banks  132  may in turn have means for communication with non-local paying banks  133 .  
         [0028]     As with link  120 , link  140  may be accomplished through any number of schemes for networked or point-to-point communications.  
         [0029]     The next two sections provide a description of the new method for depositing third party checks that is provided by the invention.  
         [0000]     Overview of the Information Flow From the Customer Perspective  
         [0030]      FIG. 2  is a diagram illustrating the flow of information from the perspective of a bank customer, according to one embodiment of the present invention.  
         [0031]     The process begins when the bank customer receives a check payable to him/her  200 . The check may be drawn on the customer&#39;s bank, a local bank, a non-local bank in the United States, or a foreign bank.  
         [0032]     The customer may then “log on” to the BOFD system  110  from a RCT  100  using a Personal Identification Number (PIN), password, and/or other means of identification  210 . The bank customer may then select “check deposit” from a menu of transaction options  220  as presented by the BOFD system  110 .  
         [0033]     In step  230 , the customer may respond to prompts for each item of data needed to deposit the check. In another embodiment, the customer may enter a predetermined set of data all at once, for example where all data input fields are visible on a video display screen. The customer may be prompted to supply missing information in step  240 . A to complete set of data may comprise customer identification, customer account number, name of payor, name and routing number of payor&#39;s bank, the amount of the check, an image of the check, and other information.  
         [0034]     The bank customer may then submit the transaction data to the BOFD system for processing  250 , and may receive acknowledgement from the BOFD system that the transaction is being processed  260 .  
         [0035]     The customer may receive a response  270  indicating, for example, that immediate provisional credit has been given, that full credit has been awarded, or that the transaction request has been denied, according to bank procedures.  
         [0036]     If credit was issued, the paper check may be subjected to certain check actions  280  in order to prevent re-deposit of the same check. One possible check action is that the check is marked, for example, by human or machine readable ink. Alternatively, the check may be physically captured by the RCT  100 , for example, via deposit into an ATM vault.  
         [0000]     Overview of the Information Flow From the Bank Perspective  
         [0037]      FIG. 3  is a diagram illustrating the flow of information from the perspective of the BOFD system, according to one embodiment of the invention.  
         [0038]     The process may begin with a logon request  300 . A security function  305  may terminate the process for any unauthorized user  310 . An authorized user may be promoted to a data collection step, where transaction data is received  315 , and an acknowledgement of receipt is sent to the customer  320 .  
         [0039]     The BOFD system may then review the identity of the paying bank  325 . If the BOFD is the paying bank, the BOFD may issue immediate full credit to the account of the payee customer  330 . Otherwise, the BOFD may issue “provisional” credit to the customer  335 . Regardless of the type of credit issued, the BOFD system may initiate certain check actions  340  to prevent redeposit of the same check (see discussion of step  280  above). This may end the interactive session with the bank customer.  
         [0040]     Next, the BOFD may make a decision concerning the method for “clearing” the third party check through another bank  345 . If the transaction will be converted to an Electronic Funds Transfer (EFT), the BOFD may have to obtain a payor authorization  350  to support preparation of the EFT transaction  355 . Alternatively, the BOFD may format the transaction for Electronic Check Presentment (ECP)  360 , according to certain pre-established agreements with the paying bank. If, however, the BOFD has neither the payor&#39;s authorization for an EFT, nor an agreement with the paying bank for ECP, then the BOFD may print a reconstructed check  365 .  
         [0041]     In the case of the reconstructed check  370 , the check clearing process  375  is the traditional method for physically routing the paper check to the paying bank for payment. In an EFT or ECP transaction, the check clearing process  375  may be accomplished by automated systems. The BOFD may submit the electronic transactions individually, or in batch. The check clearing process  375  may involve data transfer directly to a local paying bank, of it may involve transfer of data to a clearing house or Federal Reserve bank for ultimate credit by the paying bank.  
         [0042]     The paying bank may issue credit for the check  380 . If credit is given, the BOFD may change the customer&#39;s credit from “provisional” to “full”  385 . If however, the paying bank fails to pay the check, the BOFD may retract the “provisional” credit issued earlier  390 .  
         [0043]     The specification and examples provided above should be considered exemplary only. It is contemplated that the appended claims will cover any other such embodiments or modifications as fall within the true scope of the invention.