MXPA97007739A - Instruments for defon electronic transfer - Google Patents

Abstract

The present invention relates to a computer-based method, comprising: creating an electronic instrument for effecting a transfer of funds from a payer's account in an institution that maintains funds to a beneficiary, the instrument including an electronic signature of the payer, and attach, to the electronic instrument, digital representations of a verifiable certificate by the institution on the authenticity of the account or the owner of the account.

Description

INSTRUMENTS FOR TRANSFER ELECTRONICS OF FUNDS BACKGROUND The invention relates to instruments for electronic funds transfer. As seen in Figure 1, in a typical financial transaction 10, a payer 12 transfers funds to a beneficiary 14. Payers and individual beneficiaries prefer different methods of payment at different times, including cash, checks, credit cards and credit cards. debit. The transfer of funds between the payer 12 and the beneficiary 14 may involve intermediate transactions with one or more banking institutions 16. The functions of the banks include charging and holding funds deposited by account holders and responding to the instructions of the account holders. Checks are an example of financial transactions that invoke these functions of banking institutions. Figure 2 shows a paper check transaction , in which a check 22 is transferred from the payer 12 to the beneficiary 14. The check 22 is typically found in a checkbook 24. Each check has several blank spaces (for the date 34, the name of the beneficiary 30, the sum of money to be paid 28, and the signature of the payer 38) to be filled out by the payer 12. Upon writing each check, the payer 12 keeps a record of the check in a check register 26 that lists the check transactions, including the sum per paid 28, the name of the beneficiary 30, the identification number of the check 32, and the date of the transaction 34. On the body of the check 22, the payer 12 instructs the payer bank 36 to pay the mentioned sum of money 28 to the beneficiary 14. Check 22 identifies payer bank 36, payer account number 40 (using magnetically readable characters) in the payer's bank, and payer 23 (usually by printed name and address). After completing the date 34, the name of the beneficiary 30 and the sum of money 28, as ordered by the beneficiary 14, the payer signs the check 22. A beneficiary typically considers a check authentic and accepts it in payment if it contains the signature 38 of the payer, the printed identification of the payer 23 and the printed name and logo 42 of the payer bank 36, and does not appear to be altered. The check 22 also contains a routing and transit number 25, which indicates the route of the check to the bank of payer 36 for presentation thereof. After the payer 12 presents the completed check 22 to the beneficiary 14 in a financial transaction (such as a sale of goods or services), the beneficiary 14 endorses the check 22 on the reverse with the signature of the beneficiary 44 and deposits the check 22 in the beneficiary's bank 46. If the check appears authentic, the beneficiary's bank 46 provisionally credits the beneficiary's account 48 with the amount of money designated on the front of check 28, while passing through the federal reserve system or camera of compensation and is accepted and paid by the payer's bank 36. The payee bank 46 routes the check 22 to the payer's bank, possibly using the clearing house 50 of the central bank or the federal reserve or other compensation arrangement established , which uses the routing and transit number 25 to deliver it to the payer bank 36, which then verifies the authenticity of the check 22 and (at least for the checks) signature 38 of payer 12. If check 22 is authentic and the payer has sufficient funds in his account 40 to cover the amount of the check 28, the payer's bank 36 charges the payer's account 40 and transfers funds to the bank of the beneficiary 46 for the amount designated on the check 28. A complete check transaction 20 thus includes the verification steps carried out by the beneficiary 14 and the payer and beneficiary banks 36 and 46. Banks 36 and 46 send states of account 52 and 54 to payer 12 and beneficiary 14, respectively, that reflect the events of transaction 20 relevant to each of the parties for reconciliation of their accounts with their records. Processing a paper check requires time while the physical check is routed to the payer, the payee, the payee's bank, the clearing house and the payer's bank. The same is true for other types of financial transactions involving paper instruments, such as credit card payment forms generated during a credit card sale. In a credit card transaction, a merchant makes an impression of the customer's card, which the customer signs at the time, to function as receipt of the transaction. The merchant typically obtains a positive credit confirmation or authorization from the customer's credit card issuer before accepting the credit card payment format. This ensures that the payment will be received. Several mechanisms to use electronic communication to replace paper flow in financial transactions are in use or have been proposed. Electronic check submission (ECP) is a standard banking channel used to pay checks cashed by banks before or without routing physical checks. The automated compensation chamber (ACH) is an electronic funds transfer system used by commercial and sales organizations. The ACH acts as a normal compensation chamber, receiving a transaction through the network and then separating and routing the debit and credit portions of the transaction to the payer and beneficiary banks. Electronic data interchange (EDI) is a similar system of electronic transactions, mainly used for the exchange of business documents such as invoices and contracts. With EDI, the transfer of funds is frequently transmitted by other financial networks, such as through electronic funds transfer or ACH. The so-called bank at home allows a client to use a personal or home computer to, for example, request that the bank pay certain accounts. Electronic funds transfer (EFT), or wire transfer, is used for direct transfer of funds from a payer to a beneficiary, both usually companies, using the central computer of a bank as an intermediary. The EFT system can be used in conjunction with the ACH system described above. ATM machines and point-of-sale (POS) devices allow a person to carry out a transaction from a place outside the home. The ATMs have remote computer terminals connected to the user's bank, which allow access, directly or indirectly through switching networks, to the user's account in the bank's central computer. Similarly, POS devices are remote computer terminals located in a business site that allow access to a person's account information stored on a computer within a network of financial institutions, to allow the transfer of funds from the user's account to the merchant's account in another bank. The capture of check images, another electronic transaction procedure, involves the exploration of a paper check by means of a scanner, which digitizes the image of the check pixel by pixel and stores the image electronically in a memory. The image can then be transferred electronically to replace or precede the physical delivery of the check, for example to truncate the payment process. The image of the check can be recreated on a computer monitor or on paper for verification through the appropriate banking institutions. Several systems are currently used to secure electronic financial transactions. For example, cards with IC chips (integrated circuit) or smart cards, are small devices (that contain chips with memories) that are able to exchange data with a computer or a terminal and carry out simple data processing functions, and are thus more versatile than a simple credit card. The smart card is portable and can be easily used in POS and ATM environments. Compendium In general, in one aspect, the invention relates to a computer-based method in which an electronic instrument is created to effect a transfer of funds from a payer's account in an institution that stores funds to a beneficiary, the instrument including an electronic signature of the payer. A digital representation of a certificate verifiable by the institution of the authenticity of the account, the payer, and the public key of the payer, is attached to the instrument. This allows a party receiving the instrument, for example the beneficiary or a bank, to verify the payer's signature on the instrument. The implementations of the invention may also include one or more of the following aspects. The electronic instrument may include digital representations of (a) the payment instructions, (b) the identity of the payer, (c) the identity of the beneficiary, and (d) the identity of the institution that holds the funds. Digital representations of a verifiable signature of the payer can also be attached to the electronic instrument. The electronic instrument can be sent electronically to the institution at least in part via a means of publicly accessible data communications. At the institution, the payer's signature and certificate can be verified in relation to the transfer of funds to the beneficiary. An account number can be included in the electronic instrument. The account can be a deposit account or a credit account. The instrument can be an electronic substitute for a check, a traveler's check, a certified check, a cashier's check, or a credit card payment format. The publicly accessible data communication medium may not be insured. The institution can be a bank. Also attached to the instrument may be representations of a verifiable signature of the beneficiary, a certificate verifiable by an institution that keeps a beneficiary account, and a verifiable certificate by a central banking authority with respect to the institution that keeps the beneficiary's account. The delivery of the instrument can partly be via a secure, controlled, private means of communication, and partly via a publicly accessible means of data communication. The electronic instrument can be sent from an institution that keeps a beneficiary account to the institution that has the funds via an electronic compensation camera.

In the beneficiary, the signature of the payer and the certificate of the institution can be verified. In the institution that keeps a beneficiary account, the payer's signature and the certificate of the institution that keeps the funds can be verified. Signatures can be generated by public-key cryptography. The step of annexing can be done by means of a signature device separated from the device that carries out the creation of the electronic instrument. The digital representations of a proposed transaction and a verifiable signature of the beneficiary can be sent from the beneficiary to the payer at least in part via the publicly accessible communication network. The information can be automatically transferred from the electronic instrument to a computer-based accounting system that tracks accounts receivable or process orders. A log of electronic instruments can be created. In general, in another aspect, the invention incorporates an apparatus that includes a portable card that has a memory, a processor and a communications port with a computer. The memory contains a private encryption key associated with an account in an institution that holds funds and can be used to attach a secure, verifiable signature to an electronic payment instrument written in the account. The implementations of the invention may include one or more of the following aspects. The report may contain certification information provided by the institution and which can be used to attach secure, verifiable certificates to electronic payment instruments to certify a relationship between the owner of a firm and a public key of the owner. A unique identifier can be assigned to each electronic payment instrument. The portable card can be a PCMCIA compatible card, a smart card, or smart disk, which can internally contain a private signature key and a secure memory for the serial number of the check. The certification information may also contain certification information provided by a central banking authority and may be used to attach secure, verifiable certificates to electronic payment instruments to certify the authenticity of the institution that holds the funds. The certification information provided by the central banking authority may have a limited useful life. The central banking authority can be a federal reserve bank in the case of the United States. The report may also contain a complete or partial record of electronic payment instruments, or a subset of the information contained in the instruments, to which the signatures have been attached. The attached signature can be a signature of a payer that has the account in the institution, or an endorsement signature of a beneficiary. The memory may also contain a personal identification number to control access to the memory. In general, in another aspect, the invention relates to a computer-based method of creating an electronic payment instrument. Data of digital payments are formed, which represent the identity of the payer, the identity of the beneficiary, and the amount to be paid. Then, in a secure hardware tab, a digital signature is attached to the data. In general, in another aspect, the invention relates to a method based on a computer to endorse a payment instrument capturing information included in the payment instrument in digital form in a secure hardware file and, in the file, attaching a signature digital information. In general, in another aspect, the invention relates to a computer-based method for regulating the use of account numbers with respect to accounts in an institution that holds funds. Digital account numbers are assigned for use by account holders when creating electronic instruments, digital account numbers being distinct from non-electronic account numbers used by account holders with respect to non-electronic instruments. In the institution that keeps funds, electronic instruments are then accepted from account holders only if the electronic instruments include one of the digital account numbers. In implementations of this aspect, each digital account number can be linked to a non-electronic account number, and the two numbers can be linked with a common account in the institution, so that electronic instruments and non-electronic instruments can be rotated against the same account. In general, in another aspect, the invention relates to a method based on a computer of joining a document to an electronic payment instrument related forming a cryptographic shredding of the document, and attaching the shredded to the electronic payment instrument. In general, in another aspect, the invention relates to a computer-based method for reducing fraud with respect to the deposit of an electronic instrument in an institution that holds funds. A signature encrypted in the beneficiary's key, a public key of the beneficiary, a routing code of the institution, and a number of the beneficiary's account in the institution are included in the instrument and, in the institution, there is an automatic verification of the code of routing and the account number before accepting the electronic instrument. In general, in another aspect, the invention relates to a computer-based method for reducing fraud associated with an electronic payment instrument. A cryptographic signature associated with a part of the instrument is attached to the instrument. Upon receipt of an electronic payment instrument, there is automatic verification of the cryptographic signature against the information of the cryptographic signature of other electronic payment instruments previously received. The advantages of the invention may include one or more of the following. The invention provides a fully electronic instrument that collects payments and deposits that can be initiated from a variety of devices, such as a personal computer, videophone, ATM or payment accounting system. Financial accounts can be paid quickly and securely between business partners by proprietary networks or open public networks, without requiring pre-arrangement, by interconnection with the infrastructure of the compensation systems and existing bank payments. The integration of existing, controlled banking communications systems with fast growing public networks in a secure manner will allow implementation and acceptance by banking institutions, industry and consumers. The invention focuses on the problem of collecting deposits electronically by public networks, because it allows all customers, retail and commercial, to collect, transmit and deposit, for example, checks, in their accounts, without physically going to a bank branch. The invention provides an electronic payment alternative for trading using public data networks to carry out transactions. The invention electronically imitates to some degree processes of existing paper checks, widely used and well understood, in order to be easily accepted in the market. By retaining the basic characteristics and flexibility of, for example, the paper check, the invention can be adapted more quickly. Due to its similarity to, for example, paper checks, the invention can be used within the structure of existing laws, regulations and conventional business practices. A variety of types of payment instruments can be implemented, for example certified checks, cashier's checks and formats for credit card payments, and additional capabilities can be provided, for example post-dating, check limit and multi-currency payments. The invention can be used in all market segments, from individual consumers to large companies. It will allow businesses to securely and cheaply complete payments through public networks. Because the content of the payment instrument can be attached to the referral information of the business partner, the instrument will be easily integrated with existing or new applications, such as accounts receivable systems. The security of payment instruments allows to link open public networks with the networks of bank compensation and financial payments in a secure way. The use of digital signatures, hardware-based firms, and banks as certification agents, means that instruments are accepted with confidence and are safe. They are resistant to alterations due to the use of cryptographic signatures. This will provide greater security and reduced losses from fraud for all parties in the payment process, eliminating most common causes of rebounding paper checks. To provide confidentiality, the instrument can also be encrypted when it is sent over public networks. The use of public key certificates allows easy electronic authentication by a beneficiary, and the banks of the beneficiary and the payer. Digital signatures can be validated automatically. As systems can be fully automated, and new processing can be performed outside of existing applications, such as a standard demand deposit account (DDA), the cost of processing an electronic instrument will be quite low, and implementation costs will be minimized. .

To further minimize implementation costs, the electronic instruments can be integrated with the existing infrastructure of the bank, including some of the mechanisms currently used for interbank clearing of checks and electronic payments, such as bilateral arrangements, ACH and ECP. Payers of all sizes get substantial benefits. The use of electronic checks will be more cost-effective than existing paper checks, due to volume efficiencies and the automatic processing capabilities of computers. The use of electronic mail or electronic transmission is less expensive than physically transporting paper. In addition to the considerably reduced costs of creating and mailing a payment (there is no check material, no envelopes, no stamps, no labor in increments), the payer obtains the ability to control the timing of payments, both through future date of payments as through the increased reliability and speed of email delivery. The invention focuses on the problem of fraud and supports the prudent management of fraud by means of integrated fraud prevention measures and distributed liability for fraud. These mechanisms will reduce most of the current causes of fraud, including falsification, alteration, duplication and fraudulent deposits. In addition, because the implementation of electronic check observes the payment model by check, the potential liability of banks for fraudulent transactions will be limited, while equally sharing the responsibilities for the integrity of the system between the payer, the beneficiary, and the banks. An electronic check can be issued from personal financial software and other computer applications, through the use of a set of open programming tools and application programming interfaces. The capacity of electronic instruments can be integrated directly into a payer application, and does not require a payer to be offline to complete a transaction. This benefit will be available both to consumers, through integration with packages such as Intuit's Quicken, and for businesses through integration with existing accounting systems. Other aspects and advantages of the invention will be apparent from the following description and from the claims. Desorption Figure 1 is a block diagram of a financial transaction. Figure 2 is a flowchart of the steps of a check transaction. Figure 3 is a flowchart of the steps of an electronic instrument transaction. Figure 4 is a block diagram of a work station. Figure 5 is a format of an example electronic check template for use with the so-called Internet World Wide Web. Figure 6 is a format of an electronic check and a deposit endorsement instrument. Figure 7 is a block format of a portion of an electronic check. Figure 8 is a format of a digital cryptographic signature based on DDS. Figure 9 is a block diagram of an electronic check card. Figure 10 is a block diagram of the interaction between a videophone and a server. Figure 11 is a block diagram of a certified check transaction. Figure 12 is a block diagram of a normal transaction flow. Figure 13 is a block diagram of a cash and transfer transaction flow.

Figure 14 is a block diagram of a safe deposit transaction flow. Figure 15 is a block diagram of a funds transfer transaction flow. Figure 16 is a block diagram of an electronic checkbook application interface. Figure 17 is a block diagram of electronic check APIs, modules and protocols. An implementation of the invention called electronic check will first be described. The electronic check is an electronic financial instrument that in some aspects imitates the paper check. It is initiated and routed electronically, uses digital signatures to sign and endorse, and is based on digital cryptographic certificates to authenticate the payer and the beneficiary and their respective banks and bank accounts and to provide a measure of security to all parties of the transaction. As seen in Figure 3, the use of electronic checks can have the advantage of interaction between publicly available, relatively unsafe electronic networks 65, such as telephone, Internet, wireless or email networks, and financial networks and systems non-public, relatively secure 80. Public networks and banking networks are distinct entities in terms of information security during transmission by two types of networks. The communications approaches existing in the banking system are safe and well disciplined. Public electronic networks are not safe and to a certain extent less disciplined. The cryptographically authenticated sealed and authenticated check that passes through gateway 60 is the link between public networks and secure financial networks. The gateway filters undesirable traffic and helps prevent the corruption of secure financial networks that results from intentional or accidental access by people operating on public networks. As seen in Figure 3, in a broad sense, a transaction is initiated when a payer 12, for example a consumer, electronically receives a memorandum of a proposed transaction 66, such as an invoice, receipt or order form, from a beneficiary 14, for example a merchant. Alternatively, a transaction may be initiated only by payer 12. Memorandum 66 may contain the digital signature of the payee, which can be secured by the secure authenticator 68 of the payee using public-key cryptography. The payer 12 validates the signature of the payee using the public key of the payer to verify the digital signature of the payee and thus authenticates the payee 14. To proceed with the transaction, the payer 12 electronically creates a financial instrument 74, for example an electronic check ( for example, on a personal computer), payable to the beneficiary's order 14, and it is signed and registered using the secure authenticator 70 of the payer. In effect, secure authenticator 70 allows payer 12 to digitally sign instrument 74 with a private signature key and capture the transaction in a secure register, such as an electronic checkbook 71. A record of the transaction can also be kept in the system 72 of the beneficiary. The authenticator also attaches to the check certificates cryptographically signed from, for example, the payer's bank and the federal reserve bank that authenticates the payer's account and the payer's bank, respectively. The payer 12 then electronically sends the instrument 74 and the memo 66 via a public network 65 to the beneficiary 14. Upon receiving the instrument 74 from the payer 12, the beneficiary 14 validates the digital signature of the payee using public key cryptography. The beneficiary 14 checks the bank 82 of the payer and the account of the payer with the certificates. The beneficiary 14 also verifies that the instrument 74 is not a recent duplicate, and keeps it stored until the date specified by the payer 12, if necessary. The beneficiary 14 endorses the instrument 74 with the digital signature of the beneficiary using his authenticator 68. In effect, this allows the beneficiary 14 to digitally sign the instrument 74 with a private signature key and captures the transaction in a secure register, such as a electronic checkbook 69. The authenticator also attached to the check certificates signed cryptographically from, for example, the beneficiary's bank and the federal reserve bank that authenticates the beneficiary's account and the beneficiary's bank, respectively. The beneficiary 14 separates the memorandum 66 and sends the memorandum and information of appropriate payment of the electronic check to the system of accounts receivable 76 of the beneficiary.

Finally, the beneficiary 14 deposits, electronically, typically via a public network, the instrument 74 with the banking institution that maintains account 78 of the beneficiary. Bank 78 of the beneficiary receives the endorsed instrument 74 deposited by the beneficiary 14, validates both the digital endorsement signature of the beneficiary and the original digital signature of the payer using public key cryptography, verifies that the instrument 74 is not a recent duplicate and that the instrument date 74 is valid and verifies the certificates. Bank 78 of the payee then credits the payee's account and offsets the instrument 74 with payer bank 82 via existing electronic payment procedures, for example bilateral arrangement, ECP, ACH, ATM, EFT or check image capture. The payment procedures are carried out by a network 80 that connects the computers of a large number of banking institutions, the network 80 itself indirectly connected to the public network 65. After compensating the instrument, the banking institution 82 of the payer receives the instrument 74. Bank 82 of the payer validates both the payer's signature and that of the payee using public-key cryptography. The bank 82 of the payer also verifies that the instrument 74 is not a duplicate and that the date of the instrument 74 is valid, and verifies the certificates. If there are sufficient funds to cover the nominal value of the instrument 74 in the payer's account, the payer's bank 82 charges the payer's account, treating the case as a normal DDA transaction, and electronically sends the payment to the beneficiary's bank 78 for the 80 financial network to cover the payment. The instrument 74 is archived for storage and permanent recovery 83 at the payer's bank or elsewhere. After the transaction has been consummated, payer bank 82 issues a DDA 84 statement to payer 12, reflecting the charge to the payer's account, and payee bank 78 issues a statement of account, report or update to accounts receivable 86 to beneficiary 14, reflecting the credit to the beneficiary's account. Additional information related to the transaction in instrument 14, such as the names of the payer and beneficiary or memorandum lines, may be included in the account statement 84 or the report 86. The information contained in the account statement 84 and the report 86 can be automatically compared with the payer's accounting system 72 and the beneficiary's account receivable system 74, respectively, to verify that the transaction has been properly carried out. As seen in Figure 4, a financial instrument such as an electronic check can be created or verified and endorsed in a computer or workstation terminal, such as the payer's workstation 90 or the beneficiary's workstation 92. . Both workstations have the same general format. Each one has a CPU (central processing unit) with storage of disk and memory and a keyboard, mouse and screen for interaction with the user. Modems 91 and 93 (or other network connections) are attached to work stations 90 and 92 to allow information, including the electronic check, to be electronically passed on to other parts of the transaction via one of the electronic networks. Each work station 90 and 92 also has a PCMCIA port 98 and 100, in which a signature card, such as a PCMCIA card 94 or 96, can be inserted. The PCMCIA 94 or 96 card is an electronic device that acts as the user's digital signature card, provides secure means to generate a signature with a private signature key, and acts as an electronic checkbook. Alternatively, the electronic checkbook with your registration can be a separate card from the digital signature card. Each workstation 90 and 92 contains a software package 102 or 104 to be run by the CPU. In addition to the usual operating system, the software package contains programs for the management of electronic checks. The payer's workstation 90 has electronic checkbook manipulations as one of its software applications, including invoking the signature function of the PCMCIA card 94 to join the payer's signature to an electronic check. The electronic checkbook application prepares an electronic check by being sent to the beneficiary 14 upon the capture of the necessary information by the payer 12 and registers the transaction in a secure electronic register 95. The payer's workstation 90 also has financial software to track the payer's transactions and communications software to send the electronic check and other information electronically by one of the networks of his modem 91 to the modem of another party. The beneficiary's workstation 92 similarly has financial and communications software applications. However, beneficiary workstation 92 has software to prepare an order or invoice to be sent to payer 12. It also contains software to invoke the signing function of the PCMCIA 96 signature card to join the payee's signature to an electronic check as an endorsement before the beneficiary 14 sends the electronic check to the beneficiary's bank for deposit. The format of an electronic check is similar to the format of a conventional paper check. The electronic check is a standardized text block consisting of the body of the check, one or more signatures and one or more endorsements and certificates. It was formatted as a series of 7-bit ASCII text lines using a restricted character set in order to be compatible with a wide variety of electronic mail systems, including those that implement the simple Internet mail transfer protocol. The format of the electronic check is based on pairs of values with a queue. Each line of information is composed of a label name and a value, for example, amount = $ 19.95. An electronic check is typically created with a template document, as seen in figure 5. The upper portion 106 of the template 105 contains the remittance information of the beneficiary. The lower portion 107 of the template contains a field to be filled by the payer to prepare the electronic check. The template can be sent by email from the beneficiary to the payer, in which case the payer can use an editor or word processor to capture the information of the order and the remittance. The body of the check can also be pre-formatted by the payee with the amount, payable to the order of, and payer's public key lines already filled, allowing the payer to capture minimal information in the body of the electronic check before signing it. Alternatively, the payer may use a general template and an editor, word processor, or other application, such as Quicken, to create an appropriately formatted electronic check. Once the template is filled out by the payer, the electronic check is signed, passing it through the payer's electronic checkbook. The electronic checkbook is contained within a PCMCIA card that contains the private signature key of the payer and certificates of the bank and the federal reserve or central bank. Certificates are cryptographically signed reference letters that attest to the validity of the payer's account and the payer's authority to write checks against the account, and the bank, respectively. For example, in Figure 6 the electronic check 110 contains an identification number for the electronic check 112, the date the electronic check 114 was created, an order to the bank to pay a certain amount of money 116, the name of the beneficiary 118 , the public key of the beneficiary 119, the sum of money to be paid 120, the account number of the payer 122, the name, address and telephone number of the payer 124, and the signature of the payer 126 in digital format verifiable using the public signature key 134 of the payer. An additional aspect of the electronic check sent by a public network is the recipient's network address 128, for example an Internet address, to allow the beneficiary to acknowledge receipt of the electronic check. The electronic check may also contain a line of memo 130 for storing personal information of the payer and a secure shredding algorithm (SHA) 132 resulting from a calculation of an associated document, for joining items with security, such as an invoice received from the beneficiary . The standardized format of an electronic check makes it a flexible instrument, allowing multiple signatures, annotations and transformations in other types of documents. The standardized electronic check is also capable of being used by different means of transport, such as the Internet and e-mail. In particular, transport protocols include FTP, STTP and HTTP for the Internet. The format of the electronic check is independent of the transport protocol. In addition, the format of an electronic check is modular, since several lines of information can be grouped as a block, as seen in Figure 7. Any number of information lines 3 grouped between start and end lines 4 and 5 is a block 6. Each block has an identification name that is used as a reference, and the blocks can be combined to form more complicated documents with a target line 7. The modularity of the electronic checks also allows the independent signature of any block by any entity and for use of the system for other financial instruments, such as letters of credit and loan documents. The security and authentication aspects of electronic checks are supported by digital signatures using public key cryptography. Public-key cryptography uses extremely large numbers and complex mathematical calculations to protect the integrity and secrecy of an encrypted electronic transmission. As seen in Figure 8, a digital cryptographic signature 101 is a long number or numbers (expressed here in hexadecimal format) 102 that are produced by the signer's use of his private signature key and the message to be signed as inputs to the public key signature algorithm. The signature can also be accompanied by a date and time stamp 103. The cryptographic infrastructure is used to authenticate the payer and the account, the electronic check document and the issuing bank, and securely seal the electronic check, allowing the use of public networks to send the electronic check. More importantly, digital signatures can be used to verify a document after the issue. A public key, applied to verify a cryptographic digital signature, is always generated in conjunction with the private key that is used to create the signature. The digital signature of payer 126, the public verification key of payer 134, and the message that was signed are used as inputs to the public key signature verification algorithm, which produces a true or false value. Public-key cryptographic signatures are useful because the signature of a person signing, calculated using the signer's private key, can be verified by anyone else who knows the signer's public key. Since the signature calculates your signature on a document using your private key, and since the verifier verifies the signature of the signer using the signer's public key, there must be a way for the verifier to trust the association between the signer (and your account information) ) and the public key used to verify the signature of the signer on the electronic check. Cryptographic signatures are used to sign checks when they are written, jointly signed, endorsed and processed. Cryptographic signatures are also used by certification authorities to sign certificates or reference letters that contain a name or description of a person signing and the signer's public key. In this way, anyone who trusts the certification authority and who knows the signature verification key broadly advertised by the certification authority can verify the certificate and trust the signer's public key for use in verifying the signature of the signer . A party that signs an electronic check is the only entity in possession of its private signature key. The private signature key never needs to be exposed to a third party, making it difficult to alter. The private signature key generates a cryptographic signature in a secret code, which is unique and is uniquely identified with the signer. Signature cards always keep the private key inside the processor and the memory on the card. The document to be signed is sent to the signature card, and the signature card uses the private key to calculate the signature. The private key is never accessible via the card connector. The public signature key must be used in conjunction with a cryptographic signature verification algorithm upon receipt of the signature of the signer to verify the signature. The public signature key is known and used by others, who obtain public keys before or during a transaction. The use of public key cryptography allows the use and storage of public keys independently of private keys. However, public and private keys are linked mathematically, as they are generated as a pair. Alterations-resistant signature cards or other hardware devices are useful for calculating cryptographic digital signatures without the ability to reveal the signer's private signature key. It is possible to make an electronic check and the information associated with it tamper-proof using digital signatures and a secure shredding algorithm. Signature cards, or special cryptographic processors, can be used to better secure private keys and greatly reduce the need for diligence and dexterity on the part of account holders to secure their keys, especially against attacks through network connections by so-called computer hackers (pirates). In addition, the signature card can maintain a non-erasable record of signed documents, so that the cardholder can review if all uses of the card have been legitimate. A different between an electronic check and a paper check is the presence of authentication certificates, in particular an account certificate 136 and a bank certificate 138. The payer can accelerate the establishment of trust between the parties to the transaction by attaching to the signed check a reference letter or cryptographic certificate 136 relating to the payer's account, indicating the name, address and telephone number 124 of the payer and the Internet address 128 thereof, the account number 122, and the verification code of public signature 134, signed by the bank that has the payer's account with its digital signature private key 140. Similarly, a second reference letter or certificate 138 relating to the payer's bank establishes the name of the payer's bank 142, the address 144, an electronic network routing code 146 and the public signature verification key 148, signed by a central authority such as the federal reserve, with its digital signature private key 150. Therefore, anyone who knows the public signature verification key 152 of the federal reserve can sequentially verify the bank's certificate 138, the account certificate 136, and then the signature of the payer 126 on the electronic check. Certificates are the electronic check mechanism to provide reliable identification among business partners. The trust mechanism currently used is the pre-settlement of the transaction, so that the receiving party is assured of the secure transmission of the transaction. The structure of the electronic check system with certificates allows banks or their agents, in the role of reliable parties, to provide certificates that validate the identity and authenticity of the person issuing the electronic check. Business partners will be able to validate these certificates, if desired, online, and conduct business without pre-arrangement, but with the assurance that the other part of the transaction is authentic. The use of certificates in the electronic check system allows validation at any point, by anyone, in the payment cycle. Electronic checks and electronic checkbooks can be authenticated through the use of public key certificates at any point in the payment cycle by the beneficiary or the bank. In addition, deposit slips and endorsements by the beneficiary can be linked cryptographically to an electronic check when it is processed, resulting in an electronic document suitable for filing and using as evidence of payment. In order for the payers to determine the public signature keys of the beneficiaries, and thereby help ensure that their checks are paid to the right person, it may be useful to publish the public signature keys in a public directory. Alternatively, the beneficiary can provide their public signature key and certificates with the order, invoice or remittance information. In this case, the payer can check the certificate revocation list (CRL) portion of the directory service to determine if the certificate and account are still valid. Similarly, the beneficiary may consult the CRL to determine the status of the payer's account before endorsing and depositing the electronic check. An electronic check can be delivered by hand, through direct transmission or public e-mail systems. An electronic check can be printed at the first deposit bank and passed through the system as a paper check. Signatures and certificates are also produced with OCR (optical character recognition) or scanned by the issuing bank. Electronic checks transmitted via email can be accessed on personal computers with standard protocols in the industry or application programming interfaces (APIs), such as VIM or MAPI, or they can be embedded within dedicated application protocols such as the HTTP server protocol used by the servers of the Internet World Wide Web call. In any case, the format of the electronic check is independent of the underlying transmission protocol. In addition, the disclosure of the electronic check instrument during the transmission will not allow the fraudulent presentation thereof by third parties. In this way, the beneficiary does not need to acknowledge receipt of the electronic check. However, the payer's email address is included to allow acknowledgment of receipt. Systems that provide certified email to provide a shipping guarantee can be used.

Upon receipt of the signed electronic check and the associated order, invoice or remittance information, the beneficiary processes the payer's order, extracts the electronic check and endorses the electronic check. The endorsement is made by the beneficiary's electronic checkbook, which signs the check, adds its own endorsement information and attaches the information of the payer's certificate. The beneficiary's PCMCIA card also automatically assigns sequential transaction numbers to endorsements to ensure that such endorsement is unique. This number must be included in the deposit and the compensation information, so that the beneficiary can reconcile checks sent to the payer's bank for payment with deposits registered in his bank account statement. Upon endorsement of the electronic check, the beneficiary creates a deposit instrument 160, which is attached to the electronic check 110, as shown in figure 6. The deposit instrument 160 may contain some of the same information as in the endorsement, such as the beneficiary's account number. The deposit instrument 160 contains an identification number 162, the date 164, and the sum of money to be deposited 166. It also contains the account number 168 of the beneficiary, the name, address and telephone number 170 of the beneficiary, the address Internet 174 of the beneficiary, and signature 175 of the beneficiary in digitally readable form using the public signature key 172 of the beneficiary. The deposit instrument 160 may also contain a memo line 180. The deposit instrument may also contain an account certificate 190 and a bank certificate 192. The account certificate 190 indicates the name, address and telephone number 170 of the deposit. beneficiary and the Internet address 174, the account number 168, and the public signature verification key 172, signed by the bank that has the beneficiary's account with its digital signature 176. Similarly, the relative bank certificate 192 the beneficiary's bank establishes the name of the beneficiary's bank 178, the address 182, the electronic network routing code 184 and the public signature verification code 186, signed by a central authority such as the federal reserve, with its digital signature 188. Anyone who knows the public signature verification key 152 of the federal reserve can sequentially verify the bank's certificate or 192, account certificate 190, and then signature 175 of the beneficiary in the electronic check. The endorsement function of the electronic checkbook does not need to be as secure as in the case of originally signing an electronic check. However, a higher level of security is necessary if the same signature card is used by the beneficiary both to write and to endorse the check. The endorsed check is then sent to the beneficiary's bank to be deposited or cashed, with the funds to be deposited in the beneficiary's account. Payments or deposits consisting of electronic checks are collected by banks via email or other protocols and compensated through conventional banking channels, such as bilateral agreement, ACH or ECP, automatically following the routing code of bank 146. Upon receipt the check endorsed after the compensation, the payer's bank verifies that the check has been appropriately endorsed using the beneficiary's public signature key. It also verifies the signature of the payer, and optionally the account and bank certificates. The amount of the check is charged from the payer's account, assuming funds are available, and then stored for archival purposes. Finally, an ACH credit transaction is originated for payment to the beneficiary's bank (or multiple transactions can be paid with the beneficiary's bank in an accumulated group), which credits the income of the check cashed to the beneficiary's account in the beneficiary's bank . If the amount of the check justifies it, the beneficiary's account can be credited by transfer or another expedited process. For example, the payer's bank may send notification by email to the beneficiary's bank to be credited before receiving the actual funds by other means.

The payer's bank will return the electronic check endorsed to the beneficiary if it can not be cashed, for example due to insufficient funds, or if the deposit transaction fails, for example the beneficiary's account is closed. For example, if the deposit transaction fails, the payer's account can be credited with the amount of the check returned in some cases. The payer and beneficiary banks provide account statements or reports to the payer and the beneficiary, respectively, relating to their electronic check transactions. These account statements can be generated electronically or on paper. The payer's bank may include a copy of the electronic check with the payer's account statement. The beneficiary bank can identify the beneficiary's deposit transaction in the beneficiary's statement of account, including the deposit number, so that the beneficiary can reconcile an electronic check sent electronically to the bank for payment with the transactions actually credited to the beneficiary. beneficiary account. The primary security element of electronic checks is the use of an electronic checkbook in the form of a PCMCIA card, which generates an electronic check and stores a record of it in a secure check record. Possible PCMCIA cards are the Tessera, National Semiconductor 's iPower and Telequip CryptaPlus cards. Alternatively, the electronic checkbook can be implemented in a smart card with IC chip ISO format or smart disk (perhaps without check registration due to memory limitations), or it can be implemented in cryptographic hardware processors for use by systems that process large volumes of checks or maintain several electronic checkbooks. The PCMCIA card is ideal for a transaction between two personal computers, but the smaller and more portable smart card is better suited for a POS transaction in a merchant's facility (if an appropriate smart card reader has been implemented). A PCMCIA card is an electronic device that provides greater security for a financial transaction. A PCMCIA card, or in the case of accounting systems in mainframe systems, a secure black box, for example Racal's Guardata, protects transaction systems against unauthorized access. The PCMCIA card is a secure electronic environment, defined in a narrow, separate way, used in conjunction with a terminal such as a personal computer. The information passes back and forth between the PCMCIA card and the terminal or work station. The tamper resistant PCMCIA card contains a mechanism for generating or storing unique check identifiers and calculates and verifies digital signatures and certificates using public key cryptography. The PCMCIA card securely stores the user's private cryptographic key, which is used to digitally sign electronic checks when they are written and endorsed. The PCMCIA card is preferably initialized by deriving its own random private key using an internal hardware random number generator. The certificates are provided and supported by a certificate issuing system (CIS). The PCMCIA card is also protected by providing access to a personal identification number (PIN). The PIN and the private signature key must be stored in the electronic checkbook in such a way that they can not be read through the electronic interface of the electronic checkbook. Some mechanical action of the payer may be required for each new check, either re-insertion of the PCMCIA card into its port at the payer's workstation or activation by a push button on the card itself, to protect against use fraudulent card once it is attached to the payer's computer. Additionally, a time-out mechanism can be used. The PCMCIA card also keeps a record of signed and issued checks. The electronic check register must be kept on the PCMCIA card for security reasons, and must be read only from the PCMCIA interface. The record can be read, but not overwritten. As seen in Figure 9, a PCMCIA card 200 must contain the minor serial number 202 of the PCMCIA card, the PIN 204, the cryptographic function 199, the private signature key 206 of the signer, and the check and record records. endorse 224 and 226 in a register 222. The public keys for the federal reserve 220, the account certificate 208 and the bank certificate 210 can be kept on the PCMCIA card, but storing them in the workstation allows verification using the public key of the federal reserve in the case of the suspected alteration of the certificates. The electronic checkbook must be accessed using a standard API 228. The entry and exit of the electronic checkbook must be compatible with mail user agents, file editors and other types of software for general purposes, as well as specialized financial applications, on a variety of platforms, including personal computers and workstations . The electronic checkbook contains a register 222 that works like a conventional checkbook record, but without account balances. When an electronic check is created, the number, date, amount, beneficiary, signature and shredded check are recorded in a check register 224. For every deposit made in the electronic checking account endorsed by the electronic checkbook , the number, date and amount of the deposit are stored in an endorsement record 226. If the electronic checkbook has the capacity, there may also be fields for bank fees and interest earned on the account. Integrating the electronic checkbook with other software applications would allow the electronic checking account to balance automatically. Since the registry can only have a limited memory space, the oldest transaction items are automatically removed when the memory is exhausted. The PCMCIA card 200 acts as an electronic checkbook in conjunction with various application functions 221. For example, an interface with the Internet is established in a browser and a server of the so-called World Wide Web. There is also a generator of forms for electronic checks and other forms. In particular, a merchant will have applications such as a sales catalog, accounts receivable and order processing. There are also communication functions and other personal financial applications. The exit 223 of the PCMCIA card is an electronic check, either signed by the payer or endorsed by the beneficiary. A formatted QIF file or an application interface file is generated in software outside the electronic checkbook. The electronic checkbook 200 must also be compatible with a screen-based telephone 250 connected to a 252 call server, as seen in figure 10. In this case, most of the content of the electronic check would be assembled by the videophone 250 and server 252 using information stored by each of them. The variable information, such as the beneficiary and the amount, would be sent from the videophone to the server as part of the online transaction. To complete the electronic check, the videophone would enable the electronic checkbook 200 using the payer's PIN 204, and the videophone would send the signature to the server. The server would verify the signature and assemble the complete and valid electronic check to send it to the beneficiary 14. The PCMCIA card pre-sets each electronic check with its serial number, which is attached to the processor of the card during its manufacture. This number helps determine if the electronic check was signed by a legitimate electronic checkbook in case of fraud investigations. The PCMCIA card also automatically increases the numbers of electronic checks. How the check numbers for each PCMCIA card will be sequential and how each PCMCIA card will have its own public signature key, each check will be unique. Another aspect of the PCMCIA card is the use of a secure shredding algorithm (SHA), such as a secure NIST shredding algorithm, with respect to documents or information associated with or attached to an electronic check. This feature seals the associated information and links it to the signed electronic check. The beneficiary can then verify that the associated information belongs to the electronic check and has not been changed after the electronic check was signed. The only function that must be carried out by the PCMCIA card is to create the signature, since the payer's private signature key can never be left out of the PCMCIA card, for security reasons. However, better security is achieved if the SHA of the electronic check is also carried out by the PCMCIA card, so that the PCMCIA card can be sure that the number, date, beneficiary and quantity recorded on the PCMCIA card are those used in the calculation of SHA. The electronic checkbook is issued by the bank that maintains the electronic checking account. The initialized electronic checkbooks can be sent to the account holder, in which case the PIN must be sent separately for security reasons. Alternatively, uninitialized cards can be distributed to bank branches. The bank officer can then use a reliable initialization terminal and a special smart card that identifies the bank officer to establish a secure connection to a centralized CIS. The new card is inserted in the terminal to be initialized. This method has the advantage of making electronic checkbooks immediately available to new customers, accounts can be added to electronic checkbooks that are already being used by the customer, and certificates can be refreshed before their expiration dates without issuing new electronic checkbooks. The bank, or its agent, is also acting as the certification authority as it is responsible for authenticating the identity of the electronic checkbook holder and ensuring that the electronic checkbook and the PIN are delivered to the correct person. The electronic check can also support correspondent bank relationships, and allow another bank or authorized third party to act as a temporary electronic check processor for banks that are unable to directly support the processing requirements for electronic checks. This will facilitate the establishment of electronic checks in a secure manner without affecting the traditional bank-client relationship. Functions similar to those of the PCMCIA card can be served by large-scale cryptographic processors, such as Atalla or Racal Guardata boxes, for large operations where individual signature cards are impractical. For servers or mainframe computers that issue or endorse a large volume of checks, or that issue or endorse checks in the name of several account holders, the processing and key storage capabilities of the signature cards may be exceeded. In this case, special cryptographic hardware must be used. Although the primary use of electronic checks is to make electronic payments on public networks, it can be used in any situation where a paper check would be issued. For example, banks will use electronic checks to collect electronic deposits from public network users, providing an opportunity for electronic, remote, complete banking services, wherever the client is connected. POS and ATM implementations are also possible. The electronic check also provides a generic model for all electronic financial instruments, digitally signed and authenticated. The check provides a well understood way of payment, and its electronic analog is necessary for electronic commerce, even if there are other forms of electronic payment. The electronic check will tie other forms of payment in the financial infrastructure, as the terminal checks involved at some point in most payment mechanisms. By specifying parameters of user-defined attributes and routing information, the electronic check, unlike a paper check, can be made similar to other instruments for financial payments. The flexibility of the parametric approach allows multiple electronic payment instruments to meet current needs, while providing new financial instruments. The electronic check can encompass a wide variety of functions of charge and transfer of funds found in current banking services, as well as other functions still to be introduced. The provision of new parameters would allow for a variety of simple and combined transactions, such as cashier's checks and certificates, drafts on a savings account or lines of credit, traveler's checks, debits and credit to credit cards, foreign currency drafts or multiple currencies, and split or limit checks that can be endorsed up to a pre-defined limit. These possible instruments will present new processing options. For example, an electronic check can be made such that it is valid up to a certain amount, for example a hotel room deposit. When it is endorsed, the electronic check can then be endorsed by the actual amount of the expense, up to the previously defined limit. Other examples may include letters of credit, loan agreements and loan applications. In some cases, changing the type of instrument can change the conceptual flow, or routing information; In other cases, the flow may remain unchanged. For example, as seen in Figure 11, a certified electronic check involves a payer 12 that creates an electronic check in the usual manner, as described above. Certified checks are endorsed and cashed in a manner similar to normal checks, unless the beneficiary 14 is guaranteed of the availability of funds. The payer 12 e-mails the electronic check to the bank 36 of the payer for certification. The bank may require the use of mail with enhanced private and that communication with the payer is confidential. The bank will then attach a certification signature to the check and send it by email back to the payer. Upon receipt of the certified electronic check, the beneficiary can verify the bank's certification signature as part of the validation of the check. As seen in Figures 12-15, there are multiple scenarios for the functional flow of electronic checks. In the deposit and charge scenario (figure 12), the payer 12 receives an account or invoice from the beneficiary, issues an electronic check and sends it to the beneficiary. The beneficiary 14 endorses the electronic check and submits it to his bank 46, which, in turn, will charge it in bank 36 of the payer. This is the usual format, as described above in detail. In the charge and transfer or Z scenario (Figure 13), the payer 12 receives an account or invoice from the beneficiary, issues an electronic check, and sends it to the beneficiary. The beneficiary 14 endorses the electronic check and presents it directly to the bank 36 of the payer, which sends the payment to the beneficiary's account in his bank 46. For the security box scenario (figure 14), the payer 12 receives an account or bill of beneficiary 14, issues an electronic check and sends it to beneficiary bank 46, either directly or via a safe deposit box 260 or other secure intermediary. Bank 46 of the beneficiary then sends information of accounts receivable to the beneficiary and compensates the payment with the bank 36 of the payer. In this scenario, there may be no endorsement of the beneficiary. Finally, in the funds transfer scenario (figure 15), the payer 12 receives an account or invoice from his bank 36 (assuming that the presentation of the electronic account allows the capture of the accounts of the beneficiary by the payer's bank), issues an electronic check and sends it to your bank. The bank 36 of the payer, in turn, transfers funds to the beneficiary's account in bank 46 of the beneficiary, which sends a record of the transaction to the beneficiary 14, with information of accounts receivable. It is clear that electronic checks can be used directly between individual parties, or through third party service providers. Electronic checks can be exchanged from client to client, client to business, business to client, and business to business. If the payer is a business, then the requirements for signing capacity and registration in the electronic checkbook may be greater, due to volume requirements. The formats of an electronic check and the entire electronic check system will be uniform, so that the electronic check system can be interconnected and used in conjunction with standard application programming interfaces (APIs), such as standard electronic checkbook interfaces. electronic check screen interfaces. The APIs are applied at the level of the processing of individual checks as well as the integration of the entire system. For example, C language can be used to define an electronic check with field, such as date, amount and beneficiary. In addition, the Internet World Wide Web browser interacts with the electronic checkbook using an API to create the complete electronic check. The electronic check APIs do not change, so the system can be placed in interface with any system rewriting the particular API of the system and the link to the system of electronic checks. For example, as seen in Figure 16, an electronic checkbook 200 sends an electronic check over the network 65 after being in interface with an exciter 201 at a connector interface 205. The driver 201 operates under a driver API 203, which it is connected to the application software of signer 207. Through a mail API 209, the complete electronic check is sent by network 65. The electronic check system can be considered a module that provides services to other modules and APIs. The flow of an electronic check through the system is governed by a series of protocols. The APIs provide electronic check services to user interface applications, financial applications such as bill payments, and third-party applications. The modular design of electronic checks also allows the separation of cryptographic functions from applications that write and endorse checks, both physically and logically, to facilitate application of the cryptographic infrastructure to secure other financial instruments or documents; that is, two cards can be used. The five primary applications and APIs required for the electronic check system are administration, writing checks, acceptance of checks and endorsement, collection and reconciliation of checks. The administration functions allow for issuance, inactivation, card re-activation and signature key administration functions. It is assumed that the writing of checks is carried out by the payer, acceptance and endorsement by the beneficiary, compensation by the banks, and reconciliation by the payer. Most users and organizations will assume the roles of both payer and beneficiary, but at different times. A base set of support modules is provided. These basic modules provide the creation, destruction and manipulation of an electronic financial instrument, with parameters (the electronic check), the interpretation of such instruments as electronic checks, the generation and verification of digital signatures in the payment instruments, and the interaction with electronic checkbook hardware devices. The API functions to support the described application needs include a write function, to create an electronic check, link it to an attached document (if present), and sign the electronic check; a co-signature function, or joint signature, to attach a second signature to the electronic check; a verification function, to verify signatures on a check and validate the binding to an associated document (if present); an endorsement function, to verify the signatures on the check and, if they are valid, attach an endorsement and sign the check to be deposited or cashed; a record reading function, to read the content of the check register contained in the electronic checkbook; and a record capture function, to attach an item to the check register. For example, an electronic check can be attached to electronic remittance information provided by a remote beneficiary. This allows payment to be made, routed correctly and automatically placed in the accounting systems of both parties. The integration with micro-payment accounting systems for high volume, small value financial transactions will allow such systems to pay bills using electronic checks. The standardization of electronic checkbook interfaces and APIs to access electronic checkbook functions simplifies integration with a variety of accounting software packages for small business and home and communications. By defining the layout of the electronic check, the information it contains (for example, account number and amount) can be easily extracted from the electronic check and used in other applications through APIs. Additional API functions are used to process auxiliary electronic messages such as deposit acknowledgment, returned checks, and electronic account statements. The parametric financial instrument approach allows the reuse of the cryptographic infrastructure, especially the verification function, to safeguard the integrity of these messages. For example, the verification function can be used by the beneficiary to verify the signature of the payer, as well as by the beneficiary's bank and the payer's bank to verify the signatures of the check and endorsements before performing additional processing to collect or compensate the electronic check. The API functions will be implemented by a combination of software that operates on the user's personal computer and electronic checkbook hardware. In the case of a PC card, using the PCMCIA interface and standard card and plug services, most of the functions can be implemented in the PC card as it can support substantial processing, memory and interface bit rate. . This approach maximizes the portability of electronic check information because the electronic checkbook registration function is physically coupled to the signature function. The electronic check works in an environment of programmatic tools, including interacting APIs, modules and protocols. As seen in Figure 17, an electronic check is generated at the payer's workstation using APIs 300 of signature cards and 302 electronic checkbook APIs. The electronic check is transmitted by the beneficiary using email and transport APIs 304. The beneficiary's work station also receives the electronic check via its email and 306 transport APIs. The electronic check is integrated into the workstation software of the beneficiary using an electronic check translator module and is powered by the software in application modules 308. The electronic check modules 310 include extraction of the transmission check, validation of the electronic check, and extraction of the remittance originally sent from the beneficiary to the payer. After applying endorsement APIs 312 to endorse the electronic check, the beneficiary's workstation transmits the endorsed electronic check to the beneficiary's bank for deposit using their email and transport APIs 306. The beneficiary's bank receives the electronic check endorsed via its email and transport APIs 314, in accordance with a defined transport and storage protocol 316. Modules applied by the beneficiary's bank include an electronic check translator 318, electronic check validation modules and 320 application integration. of the bank compensation, the electronic check with the beneficiary's bank endorsement is sent electronically to the payer's bank, which receives the electronic check processed through its email and transport APIs 322. The payer's bank also has such modules as a 324 electronic check translator, and mod Electronic check validation and application integration 326. The electronic check infrastructure is governed by a computer in the payer's bank or its agents, which contains 328 protocols for the key server, public keys and CRL. The electronic processing scheme can also be applied to exceptional cases, such as electronic checks returned due to insufficient funds in the payer's account. As exception processing provides dealing with a problem in the normal flow of electronic check through the system, the conventional procedure for paper checks may be necessary, although aspects of the electronic procedure may be used as support for more hasty processing of exceptions. The solutions to the problem of potential fraudulent use of electronic checks must be built into the system, at every stage of processing an electronic check to ensure the integrity of the entire system. The security measures discussed above will eliminate most of the causes of losses due to bad checks, including falsification, alteration, duplication and fraudulent deposits. Counterfeiting is prevented by ensuring that digital signature keys are stored in secure hardware devices and by appropriate controls over the validity of electronic check certificates. The alteration is impeded by the application of digital signatures to the electronic check and by the use of the SHA function, which creates a unique compendium of the electronic document. Duplication is a somewhat more difficult problem to prevent, because by its very nature, a totally electronic document can be easily reproduced. Although both the beneficiary and the payee and payee banks verify that there are no recent duplicate checks, the problem of duplication is addressed in several additional ways. First, electronic checks must be dated and expire more quickly than paper checks. Second, electronic check certificates will also expire, preventing its use after a given period of time. This ensures that the accounts are refreshed periodically, and that the bank has an opportunity to ensure the integrity of the secure key storage device. Third, the issuing bank maintains a file of electronic checks that have been previously submitted. In addition, an active check file will be used, against which checks can be compared. This file only needs to store checks for valid dates, as mentioned above, and the serial number of the electronic check and shred information to identify a duplicate. In addition, the payer may send details of the check such as the number, date, signature, beneficiary and amount of the check to the payer's bank at the same time the electronic check is sent, so that the issuing bank can maintain a file of used electronic checks. This file can be used to determine if a duplicate electronic check was issued and if it was paid by the payer's bank. The combination of these efforts must effectively minimize the risk that a duplicate electronic check will flow successfully through the payment system. Fraudulent deposit is another significant aspect, since electronic checks that are sent without encryption can be possibly deposited or cashed by someone other than the intended recipient. The electronic check provides the application of the intended recipient's cryptographic keys to minimize this problem. In case an electronic checkbook is compromised, ie lost, stolen or rejected by a client, then the certificates for that electronic checkbook can be revoked. Ensuring the confidentiality of critical customer information is a priority for any online payment instrument. For this purpose, the electronic check does not need to contain existing checking account numbers that can be intercepted and then used to commit fraud by means of paper checks. The digital account numbers can be linked to non-electronic account numbers so that both types of transactions can take place with respect to the same account. Encryption of an electronic check is not required to prevent fraud due to the use of private key cryptographic signatures. However, electronic checks and other parameterized payment instruments can be encrypted, where possible, during transmission between the parties, to ensure confidentiality. Resistance to alterations of the PCMCIA card is also necessary to the extent necessary to make economically unattractive to crooks steal signature cards, extract the private key, and pass fake checks using the private signature key before the card is reported as stolen and disabled. Any attempt to extract the private signature key should result in an obvious alteration of the card and should take at least a few days to succeed. However, an extremely high degree of protection against alterations is not necessary, since the card only contains private information for one or several accounts (instead of secrets at the system level) and how the card owner has an incentive to report the theft or alteration (it is time to extract a secret to be used for frauds and forgeries). More importantly, account and bank certificates may have expiration dates in order to limit the time during which electronic checks may be written. An account can be closed before the expiration of the account certificate for other security reasons, preventing the verifiers from knowing that the signature on the electronic check is good until paid. If the account is closed, its associated certificates are revoked. This is no different from the current situation in which someone continues to issue checks using check stubs from a canceled account. The quick compensation of electronic checks will prevent this behavior, and banks can offer automated check verification services that verify signatures, the status of the account and the availability of funds. Other embodiments are within the scope of the following claims.

Claims (51)

1. RE-INVINATIONS 1. A computer-based method, comprising: creating an electronic instrument to effect a transfer of funds from a payer's account in an institution that maintains funds to a beneficiary, the instrument including an electronic signature of the payer, and append, to the electronic instrument, digital representations of a verifiable certificate by the institution about the authenticity of the account or the account holder.
2. 2. A computer-based method, which comprises: transferring funds from a payer's account in an institution that maintains funds to a beneficiary in accordance with the payer's instructions, by creating an electronic instrument that includes digital representations of (a) the instructions, (b) the identity of the payer, (c) the identity of the beneficiary, and (d) the identity of the institution that maintains funds, include with the electronic instrument digital representations of (a) a verifiable signature of the payer, and (b) a verifiable certificate of the payer's authenticity and a payer's public signature verification key, electronically delivering the electronic instrument to the institution at least in part via a publicly accessible data communications medium, and in the institution, verify the signature of the payer and the certificate in relation to the transfer of funds to the beneficiary.
3. 3. The method of claim 2, further comprising including an account number in the electronic instrument.
4. 4. The method of claim 1, wherein the account comprises a deposit account in the institution.
5. 5. The method of claim 1, wherein the account comprises a credit account in the institution.
6. 6. The method of claim 1, wherein the electronic instrument comprises an electronic surrogate of a check.
7. The method of claim 1, wherein the electronic instrument comprises an electronic substitute of a credit card transaction format.
8. The method of claim 1, wherein the publicly accessible data communications medium is not secured.
9. 9. The method of claim 1, wherein the institution comprises a bank.
10. The method of claim 1, further comprising attaching to the electronic instrument digital representations of a verifiable signature of the beneficiary.
11. The method of claim 1, further comprising attaching to the electronic instrument digital representations of a certificate verifiable by an institution having a beneficiary account.
12. The method of claim 11, further comprising attaching to the electronic instrument digital representations of a certificate verifiable by a central banking authority with respect to the institution maintaining the beneficiary's account.
13. The method of claim 1, further comprising delivering the electronic instrument in part via a secure, controlled, private communications medium.
14. The method of claim 1, further comprising delivering the electronic instrument to the beneficiary at least in part via a publicly accessible data communications medium.
15. The method of claim 1, further comprising delivering the electronic instrument to an institution that maintains a beneficiary account at least in part via a publicly accessible data communications medium.
16. 16. The method of claim 1, further comprising delivering the electronic instrument from an institution that maintains a beneficiary account to the institution that maintains funds via an electronic compensation house.
17. 17. The method of claim 1, further comprising the beneficiary, verifying the signature of the payer and the certificate of the institution.
18. 18. The method of claim 1, further comprising at the institution maintaining a beneficiary account, verify the signature of the payer and the certificate of the institution that maintains funds.
19. 19. The method of claim 1, wherein the signature is generated by public-key cryptography.
20. The method of claim 1, wherein the step of attaching is performed by a signature device separated from the device that performs the creation of the electronic instrument.
21. The method of claim 1, wherein the electronic instrument comprises an electronic surrogate of a traveler's check.
22. 22. The method of claim 1, wherein the electronic instrument comprises an electronic surrogate of a certified check.
23. 23. The method of claim 1, wherein the electronic instrument comprises an electronic surrogate of a cashier's check.
24. The method of claim 1, further comprising sending from the payee, at least in part via a publicly accessible communication means, digital representations of (a) a proposed transaction, and (b) a verifiable signature of the payee.
25. 25. The method of claim 1, further comprising automatically transferring information from the electronic instrument to a computer-based accounting system that tracks accounts receivable or processes orders.
26. 26. The method of claim 1, further comprising maintaining a register of created electronic instruments.
27. 27. Apparatus, comprising: a chip that has a memory, a processor, and a port for communication with a computer, and in which the memory contains a private encryption key associated with an account in an institution that maintains funds and that it can be used to attach a verifiable, secure signature to an electronic payment instrument drawn on the account.
28. The apparatus of claim 27, wherein the memory also contains certification information provided by the institution and which can be used to attach verifiable, secure certificates to electronic payment instruments to certify a relationship between a signature owner and a public key of the owner.
29. 29. The apparatus of claim 27, further comprising means for assigning a unique identifier to each electronic payment instrument.
30. 30. The apparatus of claim 27, wherein the portable token comprises a compatible PCMCIA card.
31. 31. The apparatus of claim 27, wherein the portable card comprises a smart card.
32. 32. The apparatus of claim 27, wherein the token comprises a computer card being added or a black box crypto-processor.
33. 33. The apparatus of claim 27, wherein the certification information has a limited useful life.
34. The apparatus of claim 27, wherein the memory also contains certification information provided by a central banking authority and which can be used to attach verifiable, secure certificates to electronic payment instruments to certify the authenticity of the institution that maintains money.
35. 35. The apparatus of claim 34, wherein the certification information provided by the central banking authority has a limited useful life.
36. 36. The apparatus of claim 34, wherein the central banking authority comprises a bank of the federal reserve of the United States.
37. 37. The apparatus of claim 27, wherein the memory also contains a register of electronic payment instruments to which signatures have been attached.
38. 38. The apparatus of claim 27, wherein the appended signature comprises a signature of a payer that maintains the account in the institution.
39. 39. The apparatus of claim 27, wherein the appended signature comprises an endorsement signature of a beneficiary.
40. 40. The apparatus of claim 27, wherein the memory also contains a personal identification number to control access to the memory.
41. 41. A computer-based method of creating an electronic payment instrument, comprising: forming digital payment data representing the identity of the payer, the identity of the beneficiary, and the amount to be paid, in a secure hardware file, attaching a digital signature to the data.
42. 42. A computer-based method of endorsing a payment instrument, comprising: capturing information included in the payment instrument in digital form in a secure hardware file, and on the card, attaching a digital signature to digital information.
43. 43. A computer-based method for regulating the use of account numbers with respect to accounts in an institution that maintains accounts, which includes: assigning digital account numbers for use by the account holders in the creation of electronic instruments; digital account numbers being different from non-electronic account numbers used by account holders in respect of non-electronic instruments, in the institution that holds funds, accepting electronic instruments from account holders only if electronic instruments include one of the digital account numbers.
44. 44. The method of claim 43, wherein each digital account number is linked to a non-electronic account number, and the two numbers are linked to a common account in the institution, so that electronic instruments and non-electronic instruments can be turned against the same account.
45. 45. A computer-based method of linking a document to a related electronic payment instrument, comprising: forming a cryptographic shredding of the document, and attaching the shredded to the electronic payment instrument.
46. 46. A computer-based method to reduce fraud with respect to the deposit of an electronic instrument in an institution that maintains funds, which includes: including with the electronic instrument an encrypted signature of the beneficiary and a public key of the beneficiary, and in the institution, automatically verify the routing code and the account number before accepting the electronic instrument.
47. 47. A computer-based method for reducing fraud associated with an electronic payment instrument, including: attaching to the electronic payment instrument a cryptographic signature associated with a part of the instrument, and upon receipt of the electronic payment instrument, automatically verify the cryptographic signature against the cryptographic signature information of other electronic payment instruments previously received.
48. 48. A computer-based method for use with an electronic payment instrument, comprising: including in the electronic payment instrument a serial number, a payment amount, a payer, a beneficiary, and a date, transmitting the electronic instrument payment via a communications network from a party that asks an institution that maintains funds having an account associated with the payer, in the institution that maintains funds, determine if another electronic payment instrument having the same payer and the same serial number has been previously issued, electronically inform the party that asks based on the determination.
49. 49. A computer-based method for use with an electronic payment instrument, comprising: printing a paper version of the electronic payment instrument with digital signatures and digital certificates, passing the paper version through the check cashing system to an issuing bank, at the issuing bank, to scan the paper version to derive a digital version, and at the issuing bank, electronically verify the electronic version based on the signatures and certificates.
50. 50. Apparatus for electronically maintaining bank account information, comprising: a portable card that maintains information to allow a user to add signatures and certificates to an electronic banking instrument drawn on the account, and a separate portable card that keeps a record of transactions associated with the account.
51. 51. A method to regulate the use of an electronic financial document, which includes: including in the document an electronic signature and an electronic certification of the validity of an account to which the document refers, accepting the electronic financial document as valid only if the signature and certification are determined electronically as valid.