Abstract:
A system and method for direct authentication and/or authorization of transactions. The system includes a trusted Digital Identity (DID) Network connecting an Originating Participating Financial Institution (OPFI) and a Receiving Participating Financial Institution (RPFI) through a DID Operator. The DID Operator may further be coupled to a DID System that calculates digital identities for Originators. According to the method, direct authentication of the Originator and/or authorization of the transaction is initiated upon the Originator communicating its digital identity to the Receiver. The Receiver subsequently provides the digital identity to the RPFI. The RPFI is then able to communicate with the OPFI for authentication of the Originator and/or authorization of the transaction through the DID Operator based on Originator&#39;s digital identity. The transaction between the Originator and Receiver can be financial or non-financial and may include, for example, account-to-account transfers, identity authentication or express agreements. In another embodiment, authentication and/or authorization may be performed in real time.

Description:
CROSS-REFERENCE TO RELATED APPLICATIONS 
   This application is a continuation in part of and claims priority to U.S. patent application Ser. No. 09/940,635 filed Aug. 29, 2001. This application also claims priority to U.S. provisional patent application Ser. No. 60/615,603 filed Oct. 5, 2004. 

   BACKGROUND OF THE INVENTION 
   1. Field of the Invention 
   The present invention generally relates to a direct authentication and authorization system and method for trusted network of financial institutions allowing them to directly authenticate their customers and receive their authorization of financial transactions over a communication network such as the Internet. More specifically, the present invention is based on a new identification and authentication scheme as digital identity that enables financial institutions to directly authenticate their account owners and/or receive their authorization of financial transactions over a communication network such as the Internet. 
   2. Background of the Invention 
   With the advent of the Internet, the number of online financial transactions has increased dramatically. With this increase, concerns for the security of the financial transactions, proof of authorization for such transactions, and the need for direct authentication of the parties to these transactions have also risen. Therefore the Internet is more than just a different delivery channel for online financial transactions. There are two unique characteristics of the Internet that require special considerations:
         The anonymity of the Internet creates an environment in which parties are not certain with whom they are doing business, which poses unique opportunities for fraud   The Internet is an open network, which requires special security procedures to be deployed to prevent unauthorized access to the consumer financial information       

   These unique characteristics of the Internet needed to be addressed by financial institutions in order to maintain their dominance in the payment arena. Today, any authentication over a communication network such as the Internet is an indirect authentication. Meaning, customers provide confidential, personal and financial information, in the form of social security numbers, names, addresses, credit card and bank account numbers, and businesses verify this information by accessing external databases. This type of authentication is not sufficient to truly identify the identity of customers and tell whether the customer is the actual account owner. This is why financial institutions have limited their online interbank and intrabank service offerings. For example, today, the financial institutions require their account owners to do their interbank funds transfer at a branch office and send a physical check to the receiver of the funds for payment, both of which are inconvenient and burdensome to corporate and individual customers. 
   NACHA (National Clearing House Association) operating rules and federal government regulations also require financial institutions to authenticate their customers&#39; identity and receive their authorization for any type of financial transaction such as payment or funds transfer over the Internet. In the physical world, financial transactions are authorized by the account owners in writing and signed or similarly authenticated. In the online world however, financial institutions do not have any solution to meet these requirements. An electronic authorization for an online transaction should be authenticated by a method that 1) identifies the customer (account owner), and 2) manifests the assent of the customer to the authorization. Therefore, financial institutions must use a method that provides the same assurance as a signature in the physical world (a signature both uniquely identifies a person and evidences his assent to an agreement). These objectives should be met by whatever method or process a financial institution employs when obtaining a customers&#39; authorization electronically. 
   When dealing with customers over any communication network such as the Internet, financial institutions are facing numerous challenges:
         Be able to identify the identity of the customers;   Be able to obtain transaction authorization from customers over the Internet;   Be able to confirm that the customer is the account owner and is authorized to use such account       

   Financial institutions must meet these challenges in order to expand their online service offerings (interbank and intrabank) and maintain their dominance in the market. But lack of identification and real-time account verification methods have prevented financial institutions to achieve their goals. 
   Today, there are three different identification and authentication schemes in the market:
         Knowledge-based, which involve allowing access according to what a user knows;   token-based, which involve allowing access according to what a user possesses;   biometrics-based, which involve allowing access according to what the user is.       

   Due to various problems the current authentication schemes have, financial institutions have not been able to successfully use these technologies to perform direct authentication and authorization of their customers. Passwords are inexpensive and easy to use, but the static nature of passwords, makes them vulnerable for replay attacks. Another drawback of passwords is that online banking password cannot be used for identification and verification of financial account at the third party web sites. Biometrics can also be useful for user identification, but one problem with these schemes is the difficult tradeoff between imposter pass rate and false alarm rate. In addition, many biometric systems require specialized devices, which may be expensive. Token-based schemes are problematic as well. These are expensive to implement and require users to install special devices and software. Most token-based authentication systems also use knowledge-based authentication to prevent impersonation through theft or loss of the token. 
   National Clearing House Association (NACHA) and several financial institutions such as Visa and MasterCard have also attempted to develop authentication systems and methods, such as ISAP (Internet Secure ATM Payments) and SET (Secure Electronic Transaction) using smart card technology, but due to aforementioned smart card problems they failed to achieve customer acceptance. Therefore, they are now experimenting new password based programs such as VPAS (Visa Payer Authentication Service) and UCAF (MasterCard Payer Authentication Service) to allow registered cardholders to verify their purchases, a process known as payer authentication, but unfortunately these have abovementioned password issues and are specific to credit card transactions and do not apply to bank account transactions. It is also very difficult for a customer to manage. Owning N different credit cards requires recalling N different passwords for payment at checkout. According to a survey from Jupiter Media Metrix (epaynews.com, Feb. 21 2002), these systems and methods are also complicating the picture for consumers, who are worried by the mix of identification and authentication schemes. 
   As for the financial account ownership verification, currently, there are several companies that are attempting to bring systems and methods for verifying account ownership, such as Paypal (EBAY) and CashEdge. 
   Paypal introduces a system that initiates one or more verifying transactions using financial account information given by the customer. Selected details of the transaction(s) are saved, particularly details that may vary from one transaction to another. Such variable details may include the number of transactions performed, the amount of a transaction, the type of transaction (e.g., credit, debit, deposit, withdrawal), the merchant name or account used by the system for the transaction, etc. The customer then retrieves evidence of the transaction(s) from his or her financial institution, which may be accomplished on-line, by telephone, in a monthly statement, etc., and submits the requested details to the Paypal system. The submitted details are compared to the stored details and, if they match, the account ownership is verified and the customer is then allowed to use the financial account. There are many drawbacks associated with the Paypal&#39;s system, including:
         No real-time account verification: It takes 2 to 3 days to verify customer&#39;s financial account   High cost: Paypal suggests sending two deposits (credits) to the user&#39;s financial account, each of which is less than $0.99 in value.   Weak account verification: An unauthorized individual who has access to the details about verifying transactions would be verified as the account owner.       

   CashEdge&#39;s system requires the customer to provide bank account information along with the username and password of the online banking web site that the customer is using to access his/her bank account. The system then applies the customer&#39;s username and password to login to the online banking system for verification of the account ownership. The drawback of CashEdge system includes:
         Security and Privacy Concerns: Requesting the customer to provide the online banking username and password to CashEdge raises customers&#39; security and privacy concerns.   Weak account verification: An unauthorized individual who has access to the customer&#39;s username and password would be verified as the account owner.   Fraud Risk: Without CashEdge&#39;s system, a fraudster who has access to customer&#39;s online banking username and password, is not able to transfer funds from the customer&#39;s account, but CashEdge system provides this opportunity to an unauthorized individual to commit fraud.       

   Financial institutions need a system that eliminates the aforementioned problems and concerns by:
         verifying customers&#39; identity   verifying account ownerships in real-time   providing prove of transaction authorization   being secure, inexpensive and easy to use   not requiring financial institutions to change their existing systems and processes   covering bank account as well as credit card transactions       

   For convenience, the term “customer” is used throughout to represent a financial institution&#39;s individual or corporate customer. 
   The term “financial institution” is used herein to denote any institution such as bank, credit card issuer, brokerage firm, debit card or credit card Company such as Visa, Master card, and AMEX or any other company that offers financial services. 
   The term “financial account” is used herein to denote any bank account, brokerage account, debit card and credit card account. 
   The term “account ownership verification” is used herein to denote the process of verifying that the financial account belongs to the customer and the customer is authorized to use such financial account. 
   The term “communication network” is used herein to denote any private, wireless or public network such as Internet. 
   The term “indirect authentication” is used herein to denote any authentication method that authenticates the customers based on customers&#39; information. Meaning, customers provide confidential, personal and financial information, in the form of social security numbers, names, addresses, credit card and bank account numbers, and businesses verify this information by accessing external databases. 
   The term “direct authentication” is used herein to denote any authentication method that authenticates the customers based on customers&#39; credentials such as biometric data or smart card. 
   The term “funds transfer network” is used herein to denote any network that financial institutions use to transfer funds, such as ACH, Fed wire, Visa network. 
   The term “interbank funds transfer” is used herein to denote account-to-account funds transfer between accounts at different financial institutions. 
   The term “debit pull” is used herein to denote the way electronic payments and funds transfer are authorized and executed, where the receiver of funds is asking customer&#39;s financial institution to debit the customer&#39;s account. 
   The term “credit push” is used herein to denote the way electronic payments and funds transfer are authorized and executed, where the customer instructs his/her financial institution to credit the account of the receiver (e.g. merchant account). 
   The term “digital identity” is used herein to denote a dynamic, non-predictable and time dependent alphanumeric code, or any other key, which may be given by customer&#39;s financial institution to the customer over a communication network such as the Internet, and may be valid for one-time use. The customer&#39;s digital identity is used for identification, authentication and authorization purposes for processing transactions over the communication network. Digital identity is calculated using a proprietary algorithm that may include any other customer and/or transaction specific information to make the digital identity customer and transaction specific. 
   The term “identity authority” is used herein to denote any entity that offers direct authentication services to other businesses. Identity authority issues and manages the digital identity. 
   The term “Digital Identity System” is used herein to denote the system that deals with the calculation, transformation and validation of the digital identity using a proprietary algorithm. 
   The term “Digital Identity Network” is used herein to denote the trusted network between financial institutions using any communication network such as the Internet. The Digital Identity Network enables the communication between financial institutions to send and receive Digital Identity Messages for identification and authentication of account owners and authorization of financial transactions. 
   The term “Digital Identity Message” is used herein to denote the message sent or received over the Digital Identity Network that may include customer&#39;s digital identity and transaction information. 
   SUMMARY OF THE INVENTION 
   The present invention provides solution to the aforementioned problems and the challenges the financial institutions face today. The present invention relates to a direct authentication and authorization system and method for trusted network of financial institutions allowing them to directly authenticate their customers and receive their authorization of financial or non-financial transactions over a communication network such as the Internet. 
   To overcome the drawbacks of the known systems and methods discussed above, the present invention is based on a new identification and authentication method as digital identity. The new digital identity-based identification and authentication system and method:
         verifies customers&#39; identity   verifies account ownerships in real-time   provides prove of transaction authorization   reduces the risk of fraud and identity theft   is secure, inexpensive and easy to use   does not require financial institutions to change their existing systems and processes   could be utilized for bank account as well as credit card transactions       

   The digital identity is an alphanumeric code and unlike password, biometric and smart card, the digital identity may be valid for one time use and is dynamic, non-predictable and may be time dependent, which is calculated using a proprietary algorithm that may include other customer&#39;s specific information, which makes the digital identity customer specific. Thus, it is impossible to calculate the same digital identity for two different customers or two different customers receive the same digital identity. Therefore, the digital identity offers the benefits of a password, biometric and smart card, without their disadvantages. It&#39;s as easy to use as password and as secure as biometric and smart card. 
   This invention comprises of Digital Identity System and Digital Identity Network. The Digital Identity System deals with the calculation, transformation and validation of the digital identity. The Digital Identity Network is the trusted network between financial institutions that enables the communication between financial institutions to send and receive Digital Identity Messages for identification and authentication of account owners and authorization of financial or non-financial transactions. The Digital Identity Message may include customer&#39;s digital identity and transaction information. 
   Direct authentication and authorization system and method according to the present invention may include the following participants:
         Originator—the Originator is the individual or corporate customer of the Participating Financial Institution (PFI). The Originator receives a new digital identity from its Participating Financial Institution (PFI) each time the Originator desires to initiate and authorize any non-financial or financial transaction such as payment or funds transfer. The Originator provides the digital identity to the Receiver for identification, authentication and/or authorization of the transaction.   Receiver: Receiver is the individual or corporate customer of the Participating Financial Institution (PFI) that receives Originator&#39;s digital identity for identification, authentication and/or authorization of the non-financial or financial transaction such as payment or funds transfer.   PFI—the Participating Financial Institution is the financial institution that has an existing relationship with Originators and/or Receivers and offers services to the Originators and/or Receivers. When a PFI serves Originators, the PFI is acting as an Originating Participating Financial Institution (OPFI) and when a PFI serves Receivers the PFI is acting as a Receiving Participating Financial Institution (RPFI). A Participating Financial Institution (PFI) may participate in the Digital Identity Network as an OPFI as well as a RPFI.   DID Operator—the Digital Identity Operator is the digital identity authority that provides digital identity-based authentication and authorization services to the Participating Financial Institutions (PFIs) by maintaining, operating and managing the Digital Identity System and Network. Each time the Originator desires to initiate and authorize any non-financial or financial transaction such as payment or funds transfer, its Participating Financial Institutions (OPFI) requests the DID Operator to calculate a new digital identity for that Originator.       

   Financial institutions need to become the Digital Identity Network participants to perform identification and authentication of their customers and/or receive their authorization of transactions. 
   This invention enables financial institutions and their business customers to perform identification and authentication of their customers and/or to manifest their assent to the authorization of transactions. The customer&#39;s digital identity, which has been provided to that customer by the customer&#39;s financial institution, is issued and used at the time when third parties (e.g. merchant, billers) or other Participating Financial Institution needs to authenticate the customer&#39;s identity, verify the account ownership and/or receive the customer&#39;s authorization for the financial or non-financial transaction. Participating Financial Institutions issue digital identities to their account holders and validate digital identities issued by other Participating Financial Institutions in real time. Using Digital Identity System and Network, financial institutions can establish an environment in which parties to a transaction can reliably verify the electronic identities of customers, engage in legally binding agreements, and maintain auditable electronic information trails. The resulting high level of security and trust enables financial institutions to better serve the customers by enhancing their online service offerings. 
   This invention enables financial institutions to enhance security and reduce fraud by identifying their customers and account holders. This will allow them to provide various services to their customers. As an example, the invention may be used in interbank funds transfer transactions to perform identification and authentication, receive customers&#39; authorization and verify account ownership. As another example, the invention may be used in online payment transactions to perform identification and authentication of customers, receive customers&#39; authorization, obtain payments and receive account ownership verification. 
   As another example, the invention may be used in identity verification service offered by financial institutions to provide customer identification in e-commerce. 
   This invention relates to a system and method for verification of customers&#39; identity over a communication network such as the Internet. 
   Accordingly, it is a principal objective of the invention to perform account ownership verification in real-time over a communication network such as the Internet. 
   It is another objective of the invention to allow all parties involved in a transaction to give and receive transaction authorization over a communication network such as the Internet. 
   It is another objective of the invention to provide a direct authentication and authorization system and method that is secure, inexpensive, easy to use and offers privacy to the financial institutions customers. 
   It is another objective of the invention to provide a direct authentication and authorization system and method that does not require financial institutions to change their existing systems. 
   It is another objective of the invention to provide a direct authentication and authorization system and method that is independent from any financial institution and applies to various types of financial accounts. 
   It is another objective of the invention to reduce fraud and identity theft and increase security. 
   It is another objective of the invention to build a circle of trust between customers, financial institutions, and businesses in e-commerce. 
   It is another objective of the invention to enable financial institutions to become the identity authority. 
   These and other objects of the present invention will become readily apparent upon further review of the following specification and drawings. 

   
     BRIEF DESCRIPTION OF THE DRAWINGS 
       FIG. 1  is a high-level overview of a direct authentication and authorization system and method for trusted network of financial institutions according to the present invention. 
       FIG. 2  is a high-level overview of Digital Identity System and Digital Identity Network in a direct authentication and authorization system and method according to the present invention. 
       FIG. 3  illustrates the participants of direct authentication and authorization system and method according to the present invention. 
       FIG. 4  illustrates financial institutions utilizing direct authentication and authorization system and method to process an interbank funds transfer transaction according to the present invention. 
       FIG. 5 ,  6 ,  7  are block diagrams illustrating the process flow of financial institutions utilizing direct authentication and authorization system and method to process an interbank funds transfer transaction according to the present invention. 
       FIG. 8  illustrates financial institutions utilizing direct authentication and authorization system and method to process an online payment transaction according to the present invention. 
       FIG. 9 ,  10 ,  11  are block diagrams illustrating the process flow of financial institutions utilizing direct authentication and authorization system and method to process an online payment transaction according to the present invention. 
   

   DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS 
   Detailed descriptions of the preferred embodiment are provided herein. It is to be understood, however, that the present invention may be embodied in various forms. Therefore, specific details disclosed herein are not to be interpreted as limiting, but rather as a basis for the claims and as a representative basis for teaching one skilled in the art to employ the present invention in virtually any appropriately detailed system, structure or manner. 
   The present invention  FIG. 1  relates to a direct authentication and authorization system and method  1 , for trusted network of financial institutions  25 ,  35  allowing them to directly authenticate their customers  20  and receive their authorization of financial or non-financial transactions over a communication network  50  such as the Internet. More specifically, the present invention is based on a new identification and authentication method as digital identity  10  that enables financial institutions  25 ,  35  to directly authenticate their account owners  20  and/or receive their authorization of financial or non-financial transactions over a communication network  50  such as the Internet. The digital identity  10  based authentication is secure, inexpensive, easy to use and does not require financial institutions&#39; customers  20  to install any hardware or software on their systems. 
   The digital identity  10  is an alphanumeric code and unlike password, biometric and smart card, the digital identity  10  is dynamic, non-predictable and may be time dependent, which is calculated using a proprietary algorithm that may include other customer&#39;s  20  specific information, which makes the digital identity  10  customer  20  specific. Thus, it is impossible to calculate the same digital identity  10  for two different customers  20  or two different customers  20  receive the same digital identity  10 . Those skilled in the art appreciate that for digital identity  10  many different configurations are possible. In one embodiment the digital identity  10  is valid for one-time use and in another embodiment the digital identity is valid for multiple-time use. 
   The digital identity  10  is: 
   
       
       
         
           Dynamic—each time a digital identity  10  is requested, a different digital identity  10  is calculated; 
           Non-predictable—there is no concern with recognizing the pattern, therefore it is impossible to predict the next digital identity  10 ; 
           Time dependent—the digital identity  10  may be valid within certain time constraints to prevent replay attacks; 
           Sensitive—any change to a digital identity  10  in transit results in an invalid digital identity  10 . 
         
       
     
  
   The digital identity  10  offers the benefits of a password, biometric and smart card, without their disadvantages. It  10  is as easy to use as password and as secure as biometric and smart card. 
   As illustrated in  FIG. 2 , this invention comprises of Digital Identity System  2  and Digital Identity Network  3 . The Digital Identity System  2  deals with the calculation, transformation and validation of the digital identity  10  using a proprietary algorithm. The Digital Identity Network  3  is the trusted network between financial institutions  25 ,  35  that enables the communication between financial institutions  25 ,  35  to send and receive Digital Identity Messages for identification and authentication of account owners  20  and authorization of financial or non-financial transactions. The Digital Identity Message may include customer&#39;s digital identity  10  and transaction information. When a financial institution  25 ,  35  agrees to use the Digital Identity System  2 , the financial institution  25 ,  35  will participate in the Digital Identity Network  3  to interchange authentication and authorization messages as well as Digital Identity Messages with other Participating Financial Institutions  25 ,  35 . 
   The Digital Identity System  2  and Digital Identity Network  3  are managed and operated by the DID Operator  30 . 
   The Digital Identity Network  3  is used for identification and authentication of the financial institutions&#39;  25 ,  35  account owners  20  and/or authorization of financial or non-financial transactions. The Digital Identity Network  3  will not be used for the transfer of the actual funds between financial institutions  25 ,  35 . Upon successful authentication and authorization, the Participating Financial Institutions  25 ,  35  or any third party on their behalf, will use their desired funds transfer network, such as ACH or Fed wire, to transfer funds between accounts. 
   Performing identification, authentication and authorization using digital identity  10  is secure. It is possible to compute millions of digital identities  10  for the same customer  20 , and it is computationally infeasible to find customer&#39;s information from a given digital identity  10 , or to find two different customers  20  with the same digital identity  10 . Any change to a digital identity  10  in transit will fail to verify. The timing and dynamic nature of the digital identity protects the system  1  from replay attacks. Therefore the digital identity  10  offers more benefits to the financial institutions  25 ,  35 , and their customers  20 ,  40  than the existing technologies such as biometrics. 
   Direct authentication and authorization system and method  1 ,  FIG. 3  according to the present invention may include the following participants:
         Originator  20 : The Originator  20  is the individual or corporate customer of the Participating Financial Institution (PFI)  25 ,  35 . The Originator  20  receives a new digital identity  10  from its Participating Financial Institution (PFI)  25  each time the Originator  20  desires to initiate and authorize any non-financial or financial transaction such as payment or funds transfer. The Originator  20  provides the digital identity  10  to the Receiver  40  for identification, authentication and/or authorization of the transaction. A plurality of Originators  20  has an existing relationship with a Participating Financial Institution (PFI)  25 . The Originator  20  could also act as a Receiver  40  in a transaction.   Receiver  40 : The Receiver  40  is an individual or corporate customer of the Participating Financial Institution (RPFI)  35  that receives Originator&#39;s  20  digital identity  10  for identification, authentication and/or authorization of the non-financial or financial transaction such as payment or funds transfer. The Receiver  40  processes the digital identity  10  received from the Originator  20  through its existing relationship with its Participating Financial Institution (RPFI)  35 . The Receiver  40  could also act as an Originator,  20  in a transaction.   PFI  25 ,  35 : The Participating Financial Institution  25 ,  35  is an institution that has an existing relationship with a plurality of Originators  20  and/or Receivers  40  and offers services to them  20 ,  40 . When a PFI serves the Originator  20 , the PFI is acting as an Originating Participating Financial Institution (OPFI)  25  and when a PFI serves the Receiver  40  the PFI is acting as a Receiving Participating Financial Institution (RPFI)  35 . A Participating Financial Institution (PFI) could act as an OPFI  25  as well as a RPFI  35 .   DID Operator (Digital Identity Operator)  30 : The DID Operator  30  is the digital identity authority that provides digital identity-based authentication and authorization services to the Participating Financial Institutions (PFls)  25 ,  35  by maintaining, operating and managing the Digital Identity System  2  and Network  3 . Each time the Originator  20  desires to initiate and authorize any non-financial or financial transaction such as payment or funds transfer, its Participating Financial Institutions (OPFI)  25  requests the DID Operator  30  to calculate a new digital identity  10  for that Originator  20 . A plurality of Participating Financial Institutions  25 ,  35  (PFIs) have an existing relationship with the DID Operator  30  to process digital identities. There could be a single DID Operator  30  or multiple DID Operators  30  that are connected by a communication network  50  to perform as one.       

   As illustrate in  FIG. 3 , a Participating Financial Institution  25 ,  35  communicates with other Participating Financial Institutions  25 ,  35  through the DID Operator  30  over the Digital Identity Network  3 . 
   The Originator  20 , the Participating Financial Institutions (PFIs)  25 ,  35 , the Receiver  40  exchange information and messages over any communication network  50  such as the Internet. 
   When dealing with customers  20  over any communication network  50  such as the Internet, financial institutions  25 ,  35  are able, for any type of services, to use the digital identity-based authentication and authorization system and method  1  to perform identification and authentication of their customers  20 , receive their authorization and verify account ownership. 
   As one example, the invention could be used in an interbank funds transfer transaction where identification, authorization and verification of account ownership at both side of the transaction are required. In this example  FIG. 4 ,  5 ,  6 ,  7 , a financial institution&#39;s  25  customer  20  requests to transfer funds between his/her accounts at two different financial institutions  25 ,  35 . In Interbank funds transfer, the customer  20  acts as an Originator  20  as well as a Receiver  40 . This example highlights the benefits of this invention to the customer (Originator)  20 , the Originating Participating Financial Institution (OPFI)  25  and the Receiving Participating Financial Institution (RPFI)  35 , where both Participating Financial Institutions (PFIs) are able to identify the customer  20 , receive the evidence of the account ownership and the transaction authorization. 
   To request an interbank funds transfer  FIG. 4 ,  FIG. 5  between two different Participating Financial Institutions  25 ,  35 , the customer (Originator)  20  authenticates him/herself to the first financial institution (OPFI)  25  over a communication network  50 ,  100  and requests an interbank funds transfer  105 ,  110 . The OPFI  25  starts the funds transfer process by requesting a new digital identity  10  for that customer (Originator)  20  from the DID Operator  30  over the Digital Identity Network  3 ,  115 . 
   The DID Operator  30  that manages the Digital Identity System  1 , processes the request, calculates a new digital identity  10  that may be specific to that customer  20  and/or transaction, and forwards the customer&#39;s digital identity  10  to the OPFI  25  over the Digital Identity Network  3 ,  120 . For security reasons, the customer&#39;s digital identity  10  could be time dependent and may be valid for one-time use. 
   When the OPFI  25  receives the customer&#39;s digital identity  10  from the DID Operator  30 , the OPFI  25  present that to the customer (Originator)  20  over the communication network  50 . The OPFI  25  might also record the digital identity  10  along with the transaction information for its authentication and authorization purposes  125 . In addition to providing the digital identity  10  to the customer  20  (Originator), the OPFI  25  may request the customer (Originator)  20  to provide the digital identity  10  to the second financial institution (ORFI)  35  to finalize and complete the funds transfer transaction  130 . Since the customer&#39;s digital identity  10  is used for identification, authorization of funds transfer and as evidence of account ownership, the funds transfer transaction will not be finalized unless the customer  20  provides his/her digital identity  10  to the RPFI (second financial institution)  35 . 
   The customer (Receiver)  20  authenticates him/herself to the RPFI  35  over a communication network  50 ,  140  and provides his/her digital identity  10  to the RPFI  35  and requests to finalize the funds transfer  145 . The RPFI  35  may also request the customer  20  to provide other customer specific information for validation. 
   The RPFI  35  may validate the information provided by the customer  20  and for validation of customer&#39;s digital identity  10  and the transaction processing, the RPFI  35  may forward a Digital Identity Message  15  containing the customer&#39;s digital identity  10  to the DID Operator  150 . 
   The DID Operator  30 , upon receiving the Digital Identity Message from the RPFI  35 , validates the customer&#39;s digital identity  10  and identifies the customer (Originator)  20 ,  40 ,  155 . Upon successful validation and identification, the DID Operator  30  may send a Digital Identity Message containing the customer&#39;s digital identity  10  and possibly other transaction information to the OPFI  25  for processing  160 . 
   The OPFI  25 , upon receiving the Digital Identity Message from the DID Operator  30 , may validate the customer&#39;s digital identity  10  and/or verify the transaction  180 . A valid digital identity  10  provides evidence that the customer  20  is the actual account owner at the receiving bank (RPFI)  35  and manifest customer&#39;s assent to the transaction. An invalid digital identity  10  will cause a denial message to be sent to the RPFI and to the customer  20 ,  157 ,  181 ,  182 . 
   Upon successful validation, the OPFI  25  might record the transaction authorization and may either:
         finalizes the funds transfer transaction by sending credit to customer&#39;s  20  account at the RPFI  35  using the desired funds transfer network, such as ACH network and notifies the RPFI (credit push)  185 ; or   sends the customer&#39;s  20  account information back to the RPFI  35  and RPFI  35  finalizes the funds transfer transaction by sending debit to the customer&#39;s  20  account at the OPFI  25  using the desired funds transfer network, such as ACH network (debit pull)  191 .       

   The RPFI  35  may be responsible for notifying the customer (Receiver)  20  of the status of the transaction  195 . To the RPFI  35 , the validation of the customer&#39;s digital identity  10  is the evidence of the account ownership at the OPFI  25  and proves the customer&#39;s assent to the funds transfer transaction (transaction authorization). 
   As another example  FIG. 9 ,  10 ,  11 , where identification, authorization and verification of account ownership at both side of the transaction are required is the online payment service. In an online payment transaction, the customer (Originator)  20  desires to pay a third party (Receiver)  40  such as online merchant from a financial account such as the checking account  200 . The customer  20  authenticates him/herself to the first financial institution (OPFI)  25 ,  205  over a communication network  50  and requests to send the payment to the third party (Receiver)  40 ,  210 . The OPFI  25  starts the payment process by requesting a new digital identity  10  from the DID Operator  30  over the Digital Identity Network  3  specific to that customer  20  and/or transaction  215 . 
   The DID Operator  30  that manages the Digital Identity System  1 , processes the request, calculates a new digital identity  10  that may be specific to that customer  20  and/or transaction, and forwards the customer&#39;s digital identity  10  to the OPFI  25  over the Digital Identity Network  3 ,  220 . For security reasons, the customer&#39;s digital identity  10  could be time dependent and may be valid for one-time use. 
   When the OPFI  25  receives the customer&#39;s digital identity  10  from the DID Operator  30 , the OPFI  25  present that to the customer (Originator)  20  over the communication network  50 ,  225 . The OPFI  25  might also record the digital identity  10  along with the transaction information for its authentication and authorization purposes. In addition to providing the digital identity  10  to the customer  20  (Originator), the OPFI  25  may request the customer (Originator)  20  to provide the digital identity  10  to the third party (Receiver)  40  to finalize and complete the payment transaction  230 . Since the customer&#39;s digital identity  10  is used for identification, authorization of payment and as evidence of account ownership, the payment will not be finalized unless the customer  20  provides his/her digital identity  10  to the third party (Receiver)  40 . 
   The customer (Originator)  20  provides the digital identity received from OPFI  25  to the third party (Receiver)  40  for authentication and authorization of the payment. By providing the digital identity to the third party (Receiver)  40 , the customer  20  proves the account ownership at the originating bank (OPFI)  25  and his assent to the payment transaction. The third party (Receiver)  40  may also request the customer  20  to provide other customer specific information for validation. To process the payment, the Receiver  40  forwards the customer&#39;s  20  digital identity to the RPFI  35  along with the transaction information using any communication network  50 ,  250 . 
   The RPFI  35  may validate the information provided by the customer  20  and for validation of customer&#39;s digital identity  10  and the transaction processing, the RPFI  35  may forward a Digital Identity Message  15  containing the customers digital identity  10  to the DID Operator for authentication and transaction authorization  255 . 
   The DID Operator  30 , upon receiving the Digital Identity Message from the RPFI  35 , validates the customer&#39;s digital identity  10 , identifies and authenticates the customer (Originator/Receiver)  20 ,  40 ,  260 . Upon successful validation and identification, the DID Operator  30  may send a Digital Identity Message containing the customer&#39;s digital identity  10  and possibly other transaction information to the OPFI  25  for processing  265 . A denial identification and authorization message will be send to the RPFI, the Receiver and also the customer if the digital identity is invalid  267 ,  268 ,  269   
   The OPFI  25 , upon receiving the Digital Identity Message from the DID Operator  30 , may validate the customer&#39;s digital identity  10  and/or verifies the transaction  285 . A valid digital identity  10  provides evidence that the customer  20  is the actual account owner at OPFI  35  and manifest customer&#39;s assent to the payment transaction. An invalid digital identity will cause a denial message to be sent to the RPFI, Receiver and to the customer  157 ,  158 . 
   Upon successful validation, the OPFI  25  might record the transaction authorization and may either:
         finalizes the payment transaction by sending credit to receiver&#39;s  20  account at the RPFI  35  using the desired funds transfer network, such as ACH network and notifies the RPFI (credit push)  291 ; or   sends the customer&#39;s  20  account information back to the RPFI  35 ,  296  and RPFI  35  finalizes the payment transaction by sending debit to the customer&#39;s  20  account at the OPFI  25  using the desired funds transfer network, such as ACH network (debit pull)  297 .       

   The RPFI  35  may be responsible for notifying the Receiver  20  of the status of the transaction. To the RPFI  35 , the validation of the customer&#39;s digital identity  10  is the evidence of the account ownership at the OPFI  25  and proves the customer&#39;s assent to the payment transaction (transaction authorization). 
   Those skilled in the art appreciate that the present invention may be embodied in various forms. In one embodiment, the Participating Financial Institutions (PFIs)  25 ,  35  might communicate directly with the customers (Originator and Receiver)  20 ,  40  and might be in charge of processing the transactions and transferring funds. In another embodiment, the DID Operator  35  might communicate directly with the customers (Originator and Receiver)  20 ,  40  and might be in charge of processing the transactions and transferring funds. Therefore, it will be apparent to those skilled in the art that in processing the transactions and transferring funds many different forms are possible. It is not intended to limit the scope of the invention to the particular form set forth, but on the contrary, it is intended to cover such alternatives, modifications, and equivalents as may be included within the spirit and scope of the invention.