Patent Publication Number: US-11379807-B2

Title: Methods and systems for initiating a financial transaction by a cardholder device

Description:
CROSS REFERENCE TO RELATED APPLICATIONS 
     This application is a continuation application of U.S. patent application Ser. No. 12/888,278, filed Sep. 22, 2010, entitled “METHODS AND SYSTEMS FOR INITIATING A FINANCIAL TRANSACTION BY A CARDHOLDER DEVICE”, the disclosure of which is hereby incorporated herein by reference in its entirety. 
    
    
     BACKGROUND OF THE INVENTION 
     This invention relates generally to processing transactions associated with financial transaction card accounts and, more particularly, to network-based methods and systems for processing payment card transactions initiated by a cardholder using a cardholder controlled input device. 
     Historically, the use of “charge” cards for consumer transaction payments was at most regional and based on relationships between local credit issuing banks and various local merchants. The payment card industry has since evolved with the issuing banks forming associations (e.g., MasterCard®) and involving third party transaction processing companies (e.g., “Merchant Acquirers”) to enable cardholders to widely use charge cards at any merchant&#39;s establishment, regardless of the merchant&#39;s banking relationship with the card issuer. 
     For example,  FIGS. 1 and 2  of the present application show exemplary payment-by-card systems.  FIG. 1  shows an exemplary private label payment card system, and  FIG. 2  shows an exemplary multi-party payment card industry system for enabling payment-by-card transactions in which the merchants and issuer do not need to have a one-to-one special relationship. Various scenarios exist in the payment-by-card industry today, where the card issuer has a special or customized relationship with a specific merchant, or group of merchants. These special or customized relationships may, for example, include private label programs, co-brand programs, proprietary card brands, rewards programs, and others. The special or customized issuer-merchant relationships often require direct communications between the parties for transaction authorization and/or clearing (e.g., for financial transactions). Further, the issuer may be required to maintain back office processes to manage the financial aspects of these special or customized relationships. Alternatively, the issuers may exploit communications through merchant acquirers to facilitate indirect communications with the merchants. 
     There are also scenarios in the payment-by-card industry where the card issuer does not have a special or customized relationship with a specific merchant, or group of merchants. These types of transactions are typically processed using a multi-party payment card system similar to the one shown in  FIG. 2 . 
     Traditional card account payment environments involve a merchant-controlled point of interaction (POI). Traditional points of interaction include point of sale devices, access through a merchant website, and interaction through a merchant telephone to initiate the authorization request. Collectively, these traditional points of interaction might be referred to as a merchant environment. For all interactions within this environment, an account number associated with a cardholder&#39;s financial transaction card is entered into the specific merchant&#39;s environment in order to conduct the transaction and/or obtain an authorization. 
     The specific cardholder interactions could include the cardholder giving his financial transaction card to a merchant to swipe or key into the merchant point of sale device, the merchant initiating a telephone call and entering the account number through interactive voice or through the telephone keypad, the cardholder himself swiping his card into the merchant&#39;s point of sale device, or the merchant or cardholder entering the account number into the merchant&#39;s website. Payments for approved transactions are managed with the issuer or merchant&#39;s acquirer based on the specific card payment network or closed loop environment. 
     One problem with the merchant environment is that the card and the account number are exposed to potential fraud. Though various security features for the card and account number are used, a more secure environment is needed. Consideration is now being given to ways to enable account holders to utilize their accounts remotely from the above listed devices, such that the account holder can initiate or “push” transactions which are then processed over the bankcard network without a merchant-controlled POI. 
     Another problem with the merchant environment is the cost associated with the merchant having to communicate with the issuer, the merchant acquirer and/or the payment card network. These costs include costs for both equipment and data transmission. In some cases, merchants are not able to afford these costs, and therefore, these merchants are unable to take advantage of the payment-by-card systems. In other cases, the merchants may be able to afford the upfront equipment costs and/or data transmission costs for each transaction being processed, but are required to pass these costs on to their customers. In some cases, these costs may be passed on to customers that do not even utilize the payment-by-card system. Further, in some cases, a merchant may wish to accept payment cards but lack the capacity, for a variety of reasons, to connect to the payment card network. 
     Accordingly, it would be beneficial to have a payment-by-card system that allows the cardholders to initiate a transaction using a cardholder controlled input device for a variety of reasons including improved security and reduced merchant costs. Such a system would allow a merchant to reduce its upfront equipment costs and its data transmission costs since the cardholder input device would be utilized for performing at least part of the transaction. 
     BRIEF DESCRIPTION OF THE INVENTION 
     In one embodiment, a computer-based method for processing a financial transaction initiated by a cardholder with a merchant is provided. The cardholder initiates the transaction using a cardholder input device, and the cardholder input device stores account data that is associated with a payment account. An issuer associates the payment account with the cardholder. The method includes receiving, at the issuer, an authorization request message relating to the transaction. The authorization request message is transmitted by the cardholder input device and includes transaction data received by the cardholder input device from a point of sale (POS) device associated with the merchant. The transaction data is validated, and an approved authorization response message is transmitted after validation. The cardholder input device forwards the approved authorization response message to the POS device for completing the transaction. 
     In another embodiment, a device for processing a financial transaction is provided. The device includes a memory device configured to store account data associated with a cardholder, a communication interface configured to receive transaction data from a point of sale (POS) device associated with a merchant, and a processor that is coupled to the memory device and the communication interface. The processor is programmed to transmit an authorization request message relating to the transaction to a computer system via the communication interface. The authorization request message includes the transaction data and the account data. 
     In another embodiment, a computer-based method for processing a financial transaction initiated by a cardholder via a cardholder input device is provided. The method includes receiving from the cardholder input device an authorization request message relating to the transaction. The authorization request message includes transaction data received by the cardholder input device from a point of sale (POS) device associated with a merchant. The transaction data is validated, and when the transaction data is successfully validated, an approved authorization response message is transmitted to the cardholder input device. The cardholder input device forwards the approved authorization response message to the POS device. 
     In another embodiment, a system for processing a financial transaction initiated by a cardholder with a merchant is provided. The system includes a point of sale (POS) device associated with the merchant and a computer device. The POS device is configured to transmit transaction data to a cardholder input device associated with the cardholder. The transaction data relates to the financial transaction. The computer device is configured to receive an authorization request message including the transaction data directly from the cardholder input device. The computer device is also configured to validate the transaction data and to transmit directly to the cardholder input device an authorization response message indicating whether the transaction data was successfully validated. 
     In another embodiment, one or more computer-readable media having computer-executable instructions embodied thereon are provided. When executed by a computer device, the computer-executable instructions cause the computer device to initiate a financial transaction with a point of sale (POS) device associated with a merchant; to receive transaction data relating to the financial transaction from the POS device; to transmit to a remote computer an authorization request message that includes the received transaction data and account data stored at the computer device; to receive an approved authorization response message from the remote computer; and to forward the approved authorization response message to the POS device. 
    
    
     
       BRIEF DESCRIPTION OF THE DRAWINGS 
         FIGS. 1-12  show exemplary embodiments of the methods and systems described herein. 
         FIG. 1  is a schematic diagram of an exemplary private label card account payment environment that includes a point of interaction controlled by a private label merchant, a card issuer or issuing bank, and a transaction processor interconnecting the point of interaction and card issuer. 
         FIG. 2  is a schematic diagram illustrating an exemplary multi-party payment card industry system for enabling ordinary payment-by-card transactions in which merchants and card issuers do not necessarily have a one-to-one relationship. 
         FIG. 3  is a simplified block diagram of an exemplary payment card system in accordance with one embodiment of the present invention. 
         FIG. 4  is an expanded block diagram of an exemplary embodiment of a server architecture of a payment card system in accordance with one embodiment of the present invention. 
         FIG. 5  is a block diagram of an exemplary embodiment of a user computer device as shown in  FIGS. 3 and 4 . 
         FIG. 6  is a block diagram of an exemplary embodiment of a server computer device as shown in  FIGS. 3 and 4 . 
         FIG. 7  is a block diagram of a portion of an exemplary payment card system showing an authentication data flow between a merchant POS device, a cardholder input device, and a payment network. 
         FIG. 8  is a block diagram of a portion of an exemplary payment card system showing a first alternative authentication data flow between a merchant POS device, a cardholder input device, and a payment network. 
         FIG. 9  is a block diagram of an exemplary payment card system showing a second alternative authentication data flow between a merchant POS device, a cardholder input device, a payment network, an issuing bank, and an acquiring bank. 
         FIG. 10  is a more detailed block diagram of an exemplary payment card system showing a payment data flow between a merchant POS device, a cardholder input device, an issuing bank computer system, a payment network and a merchant bank account. 
         FIG. 11  is a more detailed block diagram of the exemplary payment card system shown in  FIG. 8  showing a first alternative payment data flow between a merchant POS device, a cardholder input device, an issuing bank computer system, a payment network, an acquiring bank computer system, and a merchant bank account. 
         FIG. 12  is a more detailed block diagram of the exemplary payment card system shown in  FIG. 9  showing a second alternative payment data flow between a merchant POS device, a cardholder input device, an issuing bank computer system, a payment network, an acquiring bank computer system, and a merchant bank account. 
     
    
    
     DETAILED DESCRIPTION OF THE INVENTION 
     Embodiments of the methods and systems described herein facilitate communication of transaction data from a point of sale (POS) device associated with a merchant to a remote computer system associated with a payment network, an acquiring bank, and/or an issuing bank via a cardholder device. In some embodiments, the cardholder device initiates a transaction with the POS device, receives data from the POS device, and transmits an authorization request message including data from both the POS device and the cardholder device to the remote computer system. The remote computer system validates the data and, upon a successful validation, transmits an approved authorization response message to the cardholder device. The cardholder device may forward the approved authorization response message to the POS device to complete the transaction. 
     By using the wireless communication link of the cardholder device, the merchant is able to reduce its hardware and transmission costs that are typically associated with a payment by card transaction. In addition, the transmission by the cardholder device may reduce certain security concerns with providing an account number to a merchant. 
     The following detailed description illustrates embodiments of the invention by way of example and not by way of limitation. It is contemplated that the invention has general application to processing financial transaction data by a third party in industrial, commercial, and residential applications. 
     As used herein, an element or step recited in the singular and proceeded with the word “a” or “an” should be understood as not excluding plural elements or steps, unless such exclusion is explicitly recited. Furthermore, references to “one embodiment” of the present invention are not intended to be interpreted as excluding the existence of additional embodiments that also incorporate the recited features. 
     The methods and systems described herein may be implemented using computer programming or engineering techniques including computer software, firmware, hardware or any combination or subset thereof, wherein the technical effects may include at least one of: a) transaction data is received from a point of sale (POS) device by a cardholder device; b) an authorization request message including the transaction data is transmitted by the cardholder device to a computer system associated with a payment network, an issuing bank, and/or an acquiring bank; c) the transaction data is validated; d) upon successful validation, an approved authorization response message is transmitted by the computer system to the cardholder device; and e) the cardholder device forwards the approved authorization response message to the POS device. 
       FIG. 1  is a schematic diagram of an exemplary private label card account payment environment  1  that includes a point of interaction  2  controlled by a private label merchant, a card issuer or issuing bank  3 , and a transaction processor  4  interconnecting point of interaction  2  and card issuer  3 . The merchant&#39;s point of interaction  2  generally includes one or more of a point of sale device  10 , a telephone  11 , and/or a merchant website  12 , through which authorization requests are initiated. 
     More specifically, a merchant authorization request  15  is generated at the merchant&#39;s point of interaction  2  which is sent to the transaction processor  4  and forwarded to the card issuer  3  as a request for authorization  16 . Upon verifying a status of the cardholder account, the card issuer  3  responds to the transaction processor  4  with an authorization response  18  which is received by the transaction processor  4  and forwarded to the merchant&#39;s point of interaction  2  as an authorization response to merchant  19 . 
     In regard to the card account payment environment  1 , a cardholder&#39;s account number is entered into the merchant&#39;s environment with which the cardholder is doing business, in order to obtain the authorization. As described above, this conventionally includes one or more of the following: a cardholder giving his card to a merchant to swipe or key into the merchant point of sale device  10 , the cardholder or merchant initiating a phone call from telephone  11  to enter a card account number, the cardholder himself swiping his card in the merchant&#39;s point of sale device  10 , or the merchant or cardholder entering the account number associated with the financial transaction card into the merchant&#39;s website  12 . Payments for approved transactions are managed with the card issuer  3  or merchant&#39;s acquirer (not shown in  FIG. 1 ) based on the specific card payment network or other closed-loop environment. In the exemplary embodiment, private label card account payment environment  1  generally includes point of interaction  2 , card issuer  3 , and transaction processor  4  in a closed communication network such that authorization requests  15  and  16  remain within private label card account payment environment  1  and authorization responses  18  and  19  also remain within private label card account payment environment  1 . 
       FIG. 2  is a schematic diagram  20  illustrating an exemplary multi-party payment card industry system for enabling ordinary payment-by-card transactions in which merchants and card issuers do not necessarily have a one-to-one relationship. The present invention relates to a payment card system, such as a credit card payment system using the MasterCard® interchange. The MasterCard® interchange is a proprietary communications standard promulgated by MasterCard International Incorporated® for the exchange of financial transaction data between financial institutions that are members of MasterCard International Incorporated®. (MasterCard is a registered trademark of MasterCard International Incorporated located in Purchase, N.Y.). 
     In a typical payment card system, a financial institution called the “issuer” issues a payment card, such as a credit card, to a consumer, who uses the payment card to tender payment for a purchase from a merchant. To accept payment with the payment card, the merchant must normally establish an account with a financial institution that is part of the financial payment system. This financial institution is usually called the “merchant bank” or the “acquiring bank” or “acquirer bank.” When a consumer  22  tenders payment for a purchase with a payment card (also known as a financial transaction card), the merchant  24  requests authorization from the merchant bank  26  for the amount of the purchase. The request may be performed over the telephone, but is usually performed through the use of a point-of-sale terminal, which reads the consumer&#39;s account information from the magnetic stripe on the payment card and communicates electronically with the transaction processing computers of the merchant bank. Alternatively, a merchant bank may authorize a third party to perform transaction processing on its behalf. In this case, the point-of-sale terminal will be configured to communicate with the third party. Such a third party is usually called a “merchant processor” or an “acquiring processor.” 
     Using the interchange  28 , the computers of the merchant bank or the merchant processor will communicate with the computers of the issuer bank  30  to determine whether the consumer&#39;s account is in good standing and whether the purchase is covered by the consumer&#39;s available credit line. Based on these determinations, the request for authorization will be declined or accepted. If the request is accepted, an authorization code is issued to the merchant. 
     When a request for authorization is accepted, the available credit line of consumer&#39;s account  32  is decreased. Normally, a charge is not posted immediately to a consumer&#39;s account because bankcard associations, such as MasterCard International Incorporated®, have promulgated rules that do not allow a merchant to charge, or “capture,” a transaction until goods are shipped or services are delivered. When a merchant ships or delivers the goods or services, the merchant captures the transaction by, for example, appropriate data entry procedures on the point-of-sale terminal. If a consumer cancels a transaction before it is captured, a “void” is generated. If a consumer returns goods after the transaction has been captured, a “credit” is generated. 
     For debit card transactions, when a request for a PIN authorization is approved by the issuer, the consumer&#39;s account  32  is decreased. Normally, a charge is posted immediately to a consumer&#39;s account. The bankcard association then transmits the approval to the acquiring processor for distribution of goods/services, or information or cash in the case of an ATM. 
     After a transaction is captured, the transaction is settled between the merchant, the merchant bank, and the issuer. Settlement refers to the transfer of financial data or funds between the merchant&#39;s account, the merchant bank, and the issuer related to the transaction. Usually, transactions are captured and accumulated into a “batch,” which is settled as a group. 
     Financial transaction cards or payment cards can refer to credit cards, debit cards, and prepaid cards. These cards can all be used as a method of payment for performing a transaction. As described herein, the term “financial transaction card” or “payment card” includes cards such as credit cards, debit cards, and prepaid cards, but also includes any other devices that may hold payment account information, such as mobile phones, personal digital assistants (PDAs), and key fobs. 
       FIG. 3  is a simplified block diagram of an exemplary payment card system  100  in accordance with one embodiment of the present invention. System  100  is a payment card system, which can be utilized by account holders as part of a process of initiating an authorization request and performing a transaction as described below. 
     More specifically, in the example embodiment, system  100  includes a server system  112 , which is a type of computer system, and a plurality of client sub-systems (also referred to as client systems  114 ) connected to server system  112 . In one embodiment, client systems  114  are computers including a web browser, such that server system  112  is accessible to client systems  114  using the Internet. Client systems  114  are interconnected to the Internet through many interfaces including a network, such as a local area network (LAN) or a wide area network (WAN), dial-in-connections, cable modems, and special high-speed ISDN lines. Client systems  114  could be any device capable of interconnecting to the Internet including a web-based phone, personal digital assistant (PDA), or other web-based connectable equipment. 
     System  100  also includes point-of-sale (POS) terminals  115 , which are connected to client systems  114  and may be connected to server system  112 . POS terminals  115  are interconnected to the Internet through many interfaces including a network, such as a local area network (LAN) or a wide area network (WAN), dial-in-connections, cable modems, wireless modems, and special high-speed ISDN lines. POS terminals  115  could be any device capable of interconnecting to the Internet and including an input device capable of reading information from a consumer&#39;s financial transaction card. 
     A database server  116  is connected to database  120 , which contains information on a variety of matters, as described below in greater detail. In one embodiment, centralized database  120  is stored on server system  112  and can be accessed by potential users at one of client systems  114  by logging onto server system  112  through one of client systems  114 . In an alternative embodiment, database  120  is stored remotely from server system  112  and may be non-centralized. Database  120  may store transaction data generated as part of sales activities conducted over the bankcard network including data relating to merchants, account holders or customers, and purchases. Database  120  may also store account data including at least one of a cardholder name, a cardholder address, an account number, and other account identifier. Database  120  may also store merchant data including a merchant identifier that identifies each merchant registered to use the payment card network, and instructions for settling transactions including merchant bank account information. 
     System  100  also includes at least one input device  118 , which is configured to communicate with at least one of POS terminal  115 , client systems  114  and server system  112 . In the exemplary embodiment, input device  118  is associated with or controlled by a cardholder making a purchase using a payment card and payment card system  100 . Input device  118  is interconnected to the Internet through many interfaces including a network, such as a local area network (LAN) or a wide area network (WAN), dial-in-connections, cable modems, wireless modems, and special high-speed ISDN lines. Input device  118  could be any device capable of interconnecting to the Internet including a web-based phone, personal digital assistant (PDA), or other web-based connectable equipment. Input device  118  is configured to communicate with POS terminal  115  using various outputs including, for example, Bluetooth communication, radio frequency communication, near field communication, network-based communication, and the like. 
     In the example embodiment, one of client systems  114  may be associated with an acquirer while another one of client systems  114  may be associated with an issuer, POS terminal  115  may be associated with a merchant, input device may be associated with a cardholder, and server system  112  may be associated with the interchange network. 
       FIG. 4  is an expanded block diagram of an exemplary embodiment of a server architecture of a payment card system  122  in accordance with one embodiment of the present invention. Components in system  122 , identical to components of system  100  (shown in  FIG. 3 ), are identified in  FIG. 4  using the same reference numerals as used in  FIG. 3 . System  122  includes server system  112 , client systems  114 , POS terminals  115 , and input devices  118 . Server system  112  further includes database server  116 , a transaction server  124 , a web server  126 , a fax server  128 , a directory server  130 , and a mail server  132 . A storage device  134  is coupled to database server  116  and directory server  130 . Servers  116 ,  124 ,  126 ,  128 ,  130 , and  132  are coupled in a local area network (LAN)  136 . In addition, a system administrator&#39;s workstation  138 , a user workstation  140 , and a supervisor&#39;s workstation  142  are coupled to LAN  136 . Alternatively, workstations  138 ,  140 , and  142  are coupled to LAN  136  using an Internet link or are connected through an Intranet. 
     Each workstation,  138 ,  140 , and  142  is a personal computer having a web browser. Although the functions performed at the workstations typically are illustrated as being performed at respective workstations  138 ,  140 , and  142 , such functions can be performed at one of many personal computers coupled to LAN  136 . Workstations  138 ,  140 , and  142  are illustrated as being associated with separate functions only to facilitate an understanding of the different types of functions that can be performed by individuals having access to LAN  136 . 
     Server system  112  is configured to be communicatively coupled to various individuals, including employees  144  and to third parties, e.g., account holders, customers, auditors, etc.,  146  using an ISP Internet connection  148 . The communication in the exemplary embodiment is illustrated as being performed using the Internet, however, any other wide area network (WAN) type communication can be utilized in other embodiments, i.e., the systems and processes are not limited to being practiced using the Internet. In addition, and rather than WAN  150 , local area network  136  could be used in place of WAN  150 . 
     In the exemplary embodiment, any authorized individual having a workstation  154  can access system  122 . At least one of the client systems includes a manager workstation  156  located at a remote location. Workstations  154  and  156  are personal computers having a web browser. Also, workstations  154  and  156  are configured to communicate with server system  112 . Furthermore, fax server  128  communicates with remotely located client systems, including a client system  156  using a telephone link. Fax server  128  is configured to communicate with other client systems  138 ,  140 , and  142  as well. 
       FIG. 5  illustrates an exemplary configuration of a user computer device  202  operated by a user  201 . User computer device  202  may include, but is not limited to, client systems  114 ,  138 ,  140 , and  142 , POS terminal  115 , input device  118 , workstation  154 , and manager workstation  156  (shown in  FIG. 4 ). 
     User computer device  202  includes a processor  205  for executing instructions. In some embodiments, executable instructions are stored in a memory area  210 . Processor  205  may include one or more processing units (e.g., in a multi-core configuration). Memory area  210  is any device allowing information such as executable instructions and/or other data to be stored and retrieved. Memory area  210  may include one or more computer readable media. 
     User computer device  202  also includes at least one media output component  215  for presenting information to user  201 . Media output component  215  is any component capable of conveying information to user  201 . In some embodiments, media output component  215  includes an output adapter such as a video adapter and/or an audio adapter. An output adapter is operatively coupled to processor  205  and operatively couplable to an output device such as a display device (e.g., a liquid crystal display (LCD), organic light emitting diode (OLED) display, cathode ray tube (CRT), or “electronic ink” display) or an audio output device (e.g., a speaker or headphones). 
     In some embodiments, user computer device  202  includes an input device  220  for receiving input from user  201 . Input device  220  may include, for example, a keyboard, a pointing device, a mouse, a stylus, a touch sensitive panel (e.g., a touch pad or a touch screen), a gyroscope, an accelerometer, a position detector, or an audio input device. A single component such as a touch screen may function as both an output device of media output component  215  and input device  220 . 
     User computer device  202  may also include a communication interface  225 , which is communicatively couplable to a remote device such as server system  112 . Communication interface  225  may include, for example, a wired or wireless network adapter or a wireless data transceiver for use with a mobile phone network (e.g., Global System for Mobile communications (GSM), 3G, 4G or Bluetooth) or other mobile data network (e.g., Worldwide Interoperability for Microwave Access (WIMAX)). 
     Stored in memory area  210  are, for example, computer readable instructions for providing a user interface to user  201  via media output component  215  and, optionally, receiving and processing input from input device  220 . A user interface may include, among other possibilities, a web browser and client application. Web browsers enable users, such as user  201 , to display and interact with media and other information typically embedded on a web page or a website from server system  112 . A client application allows user  201  to interact with a server application from server system  112 . 
       FIG. 6  illustrates an exemplary configuration of a server computer device  301  such as server system  112  (shown in  FIGS. 3 and 4 ). Server computer device  301  may include, but is not limited to, database server  116 , transaction server  124 , web server  126 , fax server  128 , directory server  130 , and mail server  132 . 
     Server computer device  301  includes a processor  305  for executing instructions. Instructions may be stored in a memory area  310 , for example. Processor  305  may include one or more processing units (e.g., in a multi-core configuration). 
     Processor  305  is operatively coupled to a communication interface  315  such that server computer device  301  is capable of communicating with a remote device such as user computer device  202  or another server computer device  301 . For example, communication interface  315  may receive requests from user computer device  114  or input device  118  via the Internet, as illustrated in  FIGS. 3 and 4 . 
     Processor  305  may also be operatively coupled to a storage device  134 . Storage device  134  is any computer-operated hardware suitable for storing and/or retrieving data. In some embodiments, storage device  134  is integrated in server computer device  301 . For example, server computer device  301  may include one or more hard disk drives as storage device  134 . In other embodiments, storage device  134  is external to server computer device  301  and may be accessed by a plurality of server computer devices  301 . For example, storage device  134  may include multiple storage units such as hard disks or solid state disks in a redundant array of inexpensive disks (RAID) configuration. Storage device  134  may include a storage area network (SAN) and/or a network attached storage (NAS) system. 
     In some embodiments, processor  305  is operatively coupled to storage device  134  via a storage interface  320 . Storage interface  320  is any component capable of providing processor  305  with access to storage device  134 . Storage interface  320  may include, for example, an Advanced Technology Attachment (ATA) adapter, a Serial ATA (SATA) adapter, a Small Computer System Interface (SCSI) adapter, a RAID controller, a SAN adapter, a network adapter, and/or any component providing processor  305  with access to storage device  134 . 
     Memory areas  210  and  310  may include, but are not limited to, random access memory (RAM) such as dynamic RAM (DRAM) or static RAM (SRAM), read-only memory (ROM), erasable programmable read-only memory (EPROM), electrically erasable programmable read-only memory (EEPROM), and non-volatile RAM (NVRAM). The above memory types are exemplary only, and are thus not limiting as to the types of memory usable for storage of a computer program. 
       FIG. 7  is a block diagram of a portion of an exemplary payment card system  500  showing an authentication data flow between a merchant POS device  502 , a cardholder input device  504 , and a payment network  506 .  FIG. 8  is a block diagram of a portion of an exemplary payment card system  550  showing a first alternative authentication data flow between merchant POS device  502 , cardholder input device  504 , and payment network  506 .  FIG. 9  is a block diagram of an exemplary payment card system  570  showing a second alternative authentication data flow between merchant POS device  502 , cardholder input device  504 , payment network  506 , an issuing bank  572 , and an acquiring bank  574 . Any of the data flows shown in  FIGS. 7-9  may be used for authenticating a cardholder, and generating and sending an authorization request. 
     In the example embodiment and referring to  FIGS. 3 and 7 , merchant POS device  502  is similar to POS terminal  115 , cardholder input device  504  is similar to cardholder input device  118 , and payment network  506  is similar to at least one of client system  114  and server system  112 . Payment network  506  is associated with any of an issuing bank, a merchant bank, an interchange network or any other third-party service provider. 
     When processing a payment-by-card transaction, input device  504  is authenticated  510  by merchant POS device  502 . Authentication  510  is substantially the same process in both  FIGS. 7 and 8  and may be used as part of a payment card system, as described below with reference to  FIGS. 10-12 . 
     Authentication process  510  occurs by cardholder input device  504  transmitting  512  account data to merchant POS device  502 . In the example embodiment, input device  504  is associated with or controlled by a cardholder making a purchase using a payment card. The payment card is associated with an account. Input device  504  is interconnected to the Internet through many interfaces including a network, such as a local area network (LAN) or a wide area network (WAN), dial-in-connections, cable modems, wireless modems, and special high-speed ISDN lines. Input device  504  could be any device capable of interconnecting to the Internet including a web-based phone, personal digital assistant (PDA), or other web-based connectable equipment. Input device  504  is also configured to communicate with POS device  502  using various outputs including, for example, Bluetooth communication, radio frequency communication, near field communication, network-based communication, and the like. Input device  504  also includes account data stored within memory associated with input device  504 . The account data includes at least one of a cardholder name, a cardholder address, an account number or other account identifier, an expiration date, and/or a security token, such as a cryptographic key. Input device  504  is configured to communicate or transmit at least a portion of the account data to POS device  502  for authentication purposes. 
     POS device  502  receives the account data from input device  504  and validates the account data. For example, POS device  502  may determine whether the account number conforms to a predefined account numbering scheme and/or whether the expiration date has passed. If POS device  502  successfully validates the account data, POS device  502  may then transmit  514  a confirming authorization message back to input device  504  confirming that POS device  502  recognizes input device  504  as an authentic and genuine payment card. 
     Cardholder input device  504  receives the confirming authorization message from POS device  502 . Based at least in part on the received authorization message, input device  504  determines that POS device  502  is an authentic and genuine POS device registered with the appropriate payment card system. This completes authentication process  510 . 
     In some embodiments, POS device  502  and input device  504  authenticate each other, such as by exchanging and validating cryptographic keys. For example, input device  504  may include a cryptographic key associated with input device  504  when transmitting  512  account data. POS device  502  may validate the key and include a cryptographic key associated with POS device  502  when transmitting  514  the authorization message. 
     In some embodiments, POS device  502  communicates with payment network  506  via input device  504 , as described in  FIG. 7 . In such embodiments, input device  504  may be understood to act as a proxy or a gateway between POS device  502  and payment network  506 . In other embodiments, input device  504  collects information from POS device  502  and is responsible for initiating communication with payment network  506 , as described in  FIG. 8 . 
     Referring to  FIG. 7 , after authentication  510  is completed, POS device  502  “pairs” with input device  504 , using the various outputs of input device  504 , to initiate a communication link via the network capabilities of input device  504  with payment network  506 . POS device  502  is then able to transmit  520  an authorization request message to payment network  506  using the network capabilities of input device  504 . Payment network  506  processes the authorization request message and transmits  530  an authorization response message to POS device  502  using the same communication link, namely the network capabilities of input device  504 . Since POS device  502  and input device  504  are paired in communication, input device  504  communicates  540  the authorization response message to POS device  502  with both such devices optionally being able to display at least a portion of the authorization response message. For example, POS device  502  and/or input device  504  may display an indication of whether the financial transaction related to the authorization response message is approved or declined. In one embodiment, a financial transaction is approved when data related to the transaction (e.g., transaction data, account data, and/or merchant data) is successfully validated and is declined when such data is unsuccessfully validated. 
     Referring to  FIG. 8 , after authentication  510  is completed, input device  504  is presented in proximity to POS device  502  such that an exchange of transaction data can occur between the two devices. Specifically, POS device  502  transmits  552  transaction data including at least a merchant identifier, and a transaction amount to input device  504 . Input device  504  captures the transaction data and, using computer-readable instructions stored on input device  504 , creates and transmits  554  an authorization request message to payment network  506 . Payment network  506  processes the authorization request message and transmits  556  an authorization response message to input device  504  using the network capabilities of input device  504 . After receiving the authorization response message, input device  504  can again be presented in proximity to POS device  502  such that the authorization response message can be transmitted  558  to POS device  502 . 
     Referring to  FIG. 9 , in some embodiments, POS device  502  transmits  552  transaction information to input device  504 , as described above with reference to  FIG. 8 . The transaction information includes merchant data corresponding to the merchant associated with POS device  502 . For example, the merchant data may include a merchant identifier, a merchant name, a merchant address, and/or a cryptographic key associated with the merchant. 
     Input device  504  transmits  554  an authorization request message to payment network  506 . The authorization request message includes at least a portion of the transaction data (e.g., including the merchant data, such as the cryptographic key associated with the merchant) and account data associated with input device  504 . For example, the account data may include a cryptographic key associated with input device  504 . 
     Payment network  506  receives the authorization request message and “splits” the authorization request message. More specifically, payment network  506  transmits  582  the authorization request message, or a merchant authentication request message that includes a portion of the authorization request message (e.g., the merchant data), to an acquiring bank  572  associated with the merchant. Payment network  506  also transmits  584  the authorization request message to an issuing bank  574  associated with the cardholder. 
     Acquiring bank  572  authenticates POS device  502  by validating the merchant data from the authorization request message or merchant authentication request message, and transmits  586  an authorization response message or a merchant authentication response message to payment network  506  indicating whether the validation was successful. For example, a positive response message may indicate a successful validation, and a declined response message may indicate an unsuccessful validation. 
     Issuing bank  574  authenticates input device  504  by validating the account data from the authorization request message. Issuing bank  574  also validates the payment-by-card transaction associated with the authorization request message. For example, issuing bank  574  may determine whether the cardholder has sufficient funds for the transaction. If the account data is successfully validated, and the cardholder has sufficient funds, issuing bank  574  transmits  588  an approved authorization response message. Otherwise, issuing bank  574  transmits  588  a declined authorization response message. 
     Payment network  506  receives the response messages from acquiring bank  572  and issuing bank  574 . When both acquiring bank  572  and issuing bank  574  indicate a successful validation, payment network  506  transmits  590  an approved authorization response message to input device  504 . If either or both of acquiring bank  572  and issuing bank  574  indicate an unsuccessful validation, payment network  506  transmits  590  a declined authorization response message to input device  504 . Input device  504  receives the authorization response message from payment network  506  and transmits  592  the authorization response message to POS device  502 . Such an embodiment facilitates authenticating POS device  502  and input device  504  even when the security of one or both of POS device  502  and input device  504  is compromised. 
       FIG. 10  is a more detailed block diagram of an exemplary payment card system  600  showing a payment data flow between a merchant POS device  602 , a cardholder input device  604 , an issuing bank computer system  606 , a payment network  608 , and a merchant bank account  610 . 
     In the example embodiment and referring to  FIGS. 3 and 10 , merchant POS device  602  is similar to POS terminal  115 , cardholder input device  604  is similar to cardholder input device  118 , issuing bank computer system  606  and merchant bank account  610  are similar to client systems  114 , and payment network  608  is similar to server system  112  or any other communication network for processing payments by transaction cards. 
     When processing a payment-by-card transaction using system  600 , merchant POS device  602  and cardholder input device  604  initiate authentication process  510  as described in  FIGS. 7 and 8 . After authentication process  510  is performed, an authorization request message is created as described in  FIGS. 7 and 8 . Cardholder input device  604  transmits  620  the authorization request message, via the network capabilities of input device  604 , directly to issuing bank computer system  606 . Issuing bank computer system  606  validates the transaction, such as by determining by searching its database whether the cardholder has adequate funds to cover the transaction amount. Issuing bank computer system  606  then transmits  630  an authorization response message, via the network capabilities of input device  604 , back to input device  604 . 
     Cardholder input device  604  transmits  640  the authorization response message to merchant POS device  602 . As explained above in  FIG. 7 , in one embodiment, POS device  602  is “paired” in communication with input device  604 , using the various outputs of input device  604 . This pairing allows cardholder input device  604  to transmit  640  the authorization response message to POS device  602  with both such devices being able to display the authorization response message. Alternatively, and as explained above in  FIG. 8 , in another embodiment, input device  604  is presented in proximity to POS device  602  such that an exchange of data can occur between the two devices. Specifically, cardholder input device  604  transmits  640  the authorization response message to POS device  602  with both such devices being able to display the authorization response message. 
     Settlement of the transaction amount must then occur within payment system  600 . In the example embodiment, settlement occurs by issuing bank computer system  606  transmitting  650  settlement account data to payment network  608 . In one embodiment, the settlement account data includes a settlement identifier for identifying the proper bank account of the merchant that the transaction funds are to be transferred to. The settlement identifier may be provided to issuing bank computer system  606  as part of the original authorization request message transmitted by cardholder input device  604  to issuing bank computer system  606 . 
     In another embodiment, the settlement account data includes a merchant identifier, which it received as part of the original authorization request message transmitted by cardholder input device  604 , to payment network  608 . Payment network  608  includes a merchant database that stores information on each merchant including instructions for settling the transaction and a settlement identifier for the corresponding merchant. According, payment network  608  receives the merchant identifier from the issuing bank computer system  606 , and performs a look up within the merchant database to find a settlement identifier corresponding to the merchant identifier. 
     Once payment network  608  has the settlement identifier for the transaction, network  608  is able to transmit  660  the settlement data, representing the settlement funds, to the appropriate merchant account  610  with the help of the acquiring bank. The appropriate merchant account is designated by the settlement identifier. The cardholder is eventually billed by the issuing bank for the transaction amount. This completes payment process  600  of a payment-by-card transaction. 
       FIG. 11  is a more detailed block diagram of an exemplary payment card system  700  showing a first alternative payment data flow between a merchant POS device  702 , a cardholder input device  704 , an issuing bank computer system  706 , a payment network  708 , an acquiring bank computer system  710 , and a merchant bank account  712 . 
     In the example embodiment and referring to  FIGS. 3 and 11 , merchant POS device  702  is similar to POS terminal  115 ; cardholder input device  704  is similar to cardholder input device  118 ; issuing bank computer system  706 , acquiring bank computer system  708  and merchant bank account  712  are similar to client systems  114 ; and payment network  708  is similar to server system  112  or any other communication network for processing payments by transaction cards such as an interchange network. 
     When processing a payment-by-card transaction using system  700 , merchant POS device  702  and cardholder input device  704  initiate authentication process  510  as described in  FIGS. 7 and 8 . After authentication process  510  is performed, an authorization request message is created as described in  FIGS. 7 and 8 . Cardholder input device  704  transmits  720  the authorization request message, via the network capabilities of input device  704 , to payment network  708 . Payment network  708  processes the received authorization request message, and transmits  725  the authorization request message to issuing bank computer system  706 . Issuing bank computer system  706  determines by searching its database whether the cardholder has adequate funds to cover the transaction amount. Issuing bank computer system  706  then transmits  730  an authorization response message back to payment network  708 . Payment network  708  forwards  735  the authorization response message, via the network capabilities of input device  704 , back to cardholder input device  704 . 
     Cardholder input device  704  transmits  740  the authorization response message to merchant POS device  702 . As explained above in  FIG. 7 , in one embodiment, POS device  702  is “paired” in communication with input device  704 , using the various outputs of input device  704 . This pairing allows cardholder input device  704  to transmit  740  the authorization response message to POS device  702  with both such devices being able to display the authorization response message. Alternatively, and as explained above in  FIG. 8 , in another embodiment, input device  704  is presented in proximity to POS device  702  such that an exchange of data can occur between the two devices. Specifically, cardholder input device  704  transmits  740  the authorization response message to POS device  702  with both such devices being able to display the authorization response message. 
     Settlement of the transaction amount must then occur within payment system  700 . In the example embodiment, settlement occurs by payment network  708  transmitting  745  settlement account data to acquiring bank computer system  710 . In the example embodiment, the settlement account data includes a merchant identifier, which payment network  708  received as part of the original authorization request message transmitted by cardholder input device  704 . Thus, after payment network  708  receives an approved authorization response message from issuing bank computer system  706  for the transaction, payment network  708  is able to provide settlement account data to acquiring bank computer system  710 . Acquiring bank computer system  710  uses the settlement account data including the merchant identifier to determine the appropriate merchant bank account to deposit the transaction funds in. 
     Once acquiring bank computer system  710  has the merchant identifier for the transaction, acquiring bank computer system  710  is able to transmit  750  settlement data, representing the settlement funds, to the appropriate merchant account  712 . The appropriate merchant account is designated by the merchant identifier and the merchant account data stored at the acquiring bank. The cardholder is eventually billed by the issuing bank for the transaction amount. This completes payment process  700  of a payment-by-card transaction. 
       FIG. 12  is a more detailed block diagram of an exemplary payment card system  800  showing a second alternative payment data flow between a merchant POS device  802 , a cardholder input device  804 , an issuing bank computer system  806 , a payment network  808 , an acquiring bank computer system  810 , and a merchant bank account  812 . 
     In the example embodiment and referring to  FIGS. 3 and 12 , merchant POS device  802  is similar to POS terminal  115 ; cardholder input device  804  is similar to cardholder input device  118 ; issuing bank computer system  806 , acquiring bank computer system  808  and merchant bank account  812  are similar to client systems  114 ; and payment network  808  is similar to server system  112  or any other communication network for processing payments by transaction cards such as an interchange network. 
     When processing a payment-by-card transaction using system  800 , merchant POS device  802  and cardholder input device  804  initiate authentication process  510  as described in  FIGS. 7 and 8 . After authentication process  510  is performed, an authorization request message is created as described in  FIGS. 7 and 8 . Cardholder input device  804  transmits  820  the authorization request message, via the network capabilities of input device  804 , to acquiring bank computer system  810 . In the example embodiment, input device  804  receives an identifier from merchant POS device  802  that identifies the merchant&#39;s acquiring bank so that input device  804  is able to transmit  820  the authorization request message to acquiring bank computer system  810 . 
     Acquiring bank computer system  810  then forwards  825  the received authorization request message to payment network  808 . Payment network  808  processes the received authorization request message, and transmits  830  the authorization request message to issuing bank computer system  806 . Issuing bank computer system  806  determines by searching its database whether the cardholder has adequate funds to cover the transaction amount. Issuing bank computer system  806  then transmits  835  an authorization response message back to payment network  808 . Payment network  808  forwards  840  the authorization response message to acquiring bank computer system  810 . Acquiring bank computer system  810  then transmits  845 , via the network capabilities of input device  804 , the authorization response message to cardholder input device  804 . 
     Cardholder input device  804  transmits  850  the authorization response message to merchant POS device  802 . As explained above in  FIG. 7 , in one embodiment, POS device  802  is “paired” in communication with input device  804 , using the various outputs of input device  804 . This pairing allows cardholder input device  804  to transmit  850  the authorization response message to POS device  802  with both such devices being able to display the authorization response message. Alternatively, and as explained above in  FIG. 8 , in another embodiment, input device  804  is presented in proximity to POS device  802  such that an exchange of data can occur between the two devices. Specifically, cardholder input device  804  transmits  850  the authorization response message to POS device  802  with both such devices being able to display the authorization response message. 
     Settlement of the transaction amount must then occur within payment system  800 . In the example embodiment, settlement occurs after payment network  808  provides acquiring bank computer system  810  with the authorization response message. In the example embodiment, after payment network  808  receives an approved authorization response message from issuing bank computer system  806  for the transaction, payment network  808  is able to provide settlement data to acquiring bank computer system  810 . Acquiring bank computer system  810  uses the settlement data including the merchant identifier to determine the appropriate merchant bank account to deposit the transaction funds in. 
     Once acquiring bank computer system  810  has the merchant identifier for the transaction, acquiring bank computer system  810  is able to transmit  855  settlement data, representing the settlement funds, to the appropriate merchant account  812 . The appropriate merchant account is designated by the merchant identifier and the merchant account data stored at the acquiring bank. The cardholder is eventually billed by the issuing bank for the transaction amount. This completes payment process  800  of a payment-by-card transaction. 
     Based on the foregoing specification, the above-discussed embodiments of the invention may be implemented using computer programming or engineering techniques including computer software, firmware, hardware or any combination or subset thereof. Any such resulting program, having computer-readable and/or computer-executable instructions, may be embodied or provided within one or more computer-readable media, thereby making a computer program product, i.e., an article of manufacture, according to the discussed embodiments of the invention. The computer readable media may be, for instance, a fixed (hard) drive, diskette, optical disk, magnetic tape, semiconductor memory such as read-only memory (ROM) or flash memory, etc., or any transmitting/receiving medium such as the Internet or other communication network or link. The article of manufacture containing the computer code may be made and/or used by executing the instructions directly from one medium, by copying the code from one medium to another medium, or by transmitting the code over a network. 
     While the disclosure has been described in terms of various specific embodiments, it will be recognized that the disclosure can be practiced with modification within the spirit and scope of the claims.