WO2000033227A2

WO2000033227A2 - Payment schedule for electronic bill payment system

Info

Publication number: WO2000033227A2
Application number: PCT/US1999/028450
Authority: WO
Inventors: Bert Speelpenning; Kyle S. Young
Original assignee: Microsoft Corporation
Priority date: 1998-11-30
Filing date: 1999-11-30
Publication date: 2000-06-08
Also published as: AU1839200A; WO2000033227A8

Abstract

This invention concerns an electronic bill payment system that implements a payment timing mechanism that flexibly accommodates different payment methods, yet offers consumers a reliable way to ensure timely payment regardless of the underlying payment method. The billing system is a distributed computing system that includes computing systems at a centralized service center, multiple consumers (and/or their banks), and multiple billers/payees (and/or their banks). In paying their bills electronically, consumers designate an effective payment date. The service center system stores the payment authorization in a payment record and permits the consumer to cancel or modify the payment authorization at any time prior to a cutoff deadline before the effective payment deadline. After the cutoff deadline, the service center enters into a loock down period during which the consumer can no longer change the payment instruction. The service center groups all payments with the same effective payment date into one batch. The service center collects funds that have been authorized by consumers toward payment of their bills sometime after the cutoff deadline. After the funds are collected, the service center system sends to each biller/payee a single remittance file listing all payments that are funded from the various consumers. The remittance file is sent on or before a predetermined time on the effective payment date. In addition, the funds disbursement system transfers a lump sum payment from the service center account to the biller's account.

Description

PAYMENT SCHEDULE FOR ELECTRONIC BILL PAYMENT SYSTEM

TECHNICAL FIELD

This invention relates to electronic bill payment systems.

BACKGROUND OF THE INVENTION

Essentially everyone is familiar with receiving bills. Every month, like clockwork, millions of consumers receive bills for goods and services they have purchased. Consumers typically pay their bills by writing checks that draw against the consumer's bank account and direct the funds to the biller. Today, the vast majority of bills are paper bills delivered through the U.S. mail, and most checks are paper drafts sent back to the biller through U.S. mail.

With the growing popularity and use of personal finance computer software, it would be beneficial for billers to distribute their billing statements electronically to the consumers and to receive payments electronically. Unfortunately, this is not as easy as it sounds, since there are a number of processes that need to be coordinated among the biller, the consumer, the biller 's bank, the consumer's bank, any third party banks, and clearance networks. One prior art solution to reduce the amount of paper handling are so-called

"direct debit" payment systems in which routine payment amounts are automatically debited from the consumer's bank account and credited to the biller 's bank account on agreed transaction dates. These systems are used for routine payments, such as monthly home mortgage payments, and can be used for payment of fixed or variable amounts. Billers prefer the direct debit system because both the payment processing and remittance processing costs are very low, the error rate is very low, and the cash flow is predictable as payments are automatically made at the same time each period.

Unfortunately, many consumers do not like the direct debit system. Complaints registered by these consumers include a lack of control over their own bank accounts and the difficulty of correcting mistakes made by the direct debit system, due to a consumer changing bank accounts or biller accounts. More specifically, the consumers are concerned with loss of control over the payment date and amount of the debit. In some businesses (such as credit card companies), it might be inappropriate to impose certain payment amounts in which significant revenues would be lost if consumers paid the full amount of the bill every month.

Another solution is to employ an electronic bill payment service provider

(BPSP), such as those operated by companies like CheckFree Corporation, Intuit

Services Corporation, and VISA Interactive. In this situation, the consumer sends payment instructions to the payment service provider. At this point, the payment service provider has several choices:

1. Laser Draft. Print a laser demand check drawn on the consumer's account at the consumer bank and send the laser demand check to the biller.

2. Partial Electronic. With this choice, the consumer account is debited via the ACH (Automated Clearing House) network, but payment is remitted using a check— either a bunch of payments lumped together as a check and list or a single payment drawn on the bill payment service provider bank account for the amount the consumer owes the biller.

3. Full Electronic. The consumer account is debited via the ACH network and payment is made via the ACH network or other network, such as the RPS network. U.S. Patent No. 5,383,113 to Kight et al., which is assigned to CheckFree Corporation, describes a system and method for determining which of the three choices to select for different situations.

Assuming that a choice for partial or full electronic payment is made, the BPSP prepares ACH-ready and other payment instructions to its bank. Using the

ACH instructions, an ACH debit transaction from the consumer bank account is performed through the ACH network. This ACH debit transaction effectively moves the authorized funds from the consumer bank account to the service provider's bank. At this point, a number of different options can be taken to transfer payment from the BPSP's bank to the biller bank. One possibility is to perform an ACH credit transaction through the ACH network from the BPSP account at bank to the biller bank account. Another possibility is to perform an

RPS credit transfer from the BPSP account at bank to the biller bank account. A third option is for the BPSP bank to produce a single aggregated check drawn on the BPSP account and a list of all consumers making payments, and to send the check and list to the biller.

Another proposal for an electronic bill payment system is described in U.S. Patent No. 5,465,206, entitled "Electronic Bill Pay System", which issued November 7, 1995 and is assigned to Visa International. With the Visa bill pay system, the consumer transmits to its bank a transaction indicating an amount to pay, the source of funds, a date on which to make the payment, the consumer's account number with biller, and the biller 's BRN (biller reference number).

The consumer bank submits an electronic payment message to biller bank via the NisaNet® payment network. The payment message includes a bank identification number for consumer bank, a bank identification number for biller bank, the biller 's BRN, the consumer's account number with biller, an amount to be paid, and an implicit guarantee of consumer bank to provide funds to cover payment.

Settlement is achieved using the standard processes over the payment network, and particularly, via the NisaNet® network for Visa sponsoring banks and the RPS network for non-Visa sponsoring banks. After settlement, the biller bank passes an accounts receivable (A/R) file to the biller to indicate which payments were received by the biller bank on behalf of the biller. The A/R file lists individual payments received in correlation to the consumer accounts numbers.

These prior art systems have a drawback in that they are not flexible to accommodate different types of payment schemes. In addition, each of the above systems is restrictive and proprietary in their approach, and hence may not integrate well with a broad range of banks and billers. As a result, there remains a need to devise an electronic bill payment system that integrates well with banks and billers, and enables consumers to pay their bills electronically and conveniently using any one of several different payment methods.

Another issue facing electronic billing systems is the need for an easy and reliable payment timing mechanism. From the consumer perspective, consumers want to be in control of the payment date. Consumers also need to know with certainty that payment of a particular bill will be made on a date they designate. This gives the consumers flexibility in timing payments according to their financial situation, while avoiding being charged additional interest that might otherwise be assessed by the biller after the designated payment date.

Billers, on the other hand, do not want to reflect that a bill is paid until they receive funds from the consumer (or the consumer bank). The billers want assurances that payment will be forthcoming. Accordingly, there is a need to develop a payment timing mechanism that gives assurances to the billers while accommodating the needs of the consumers. The timing mechanism needs to be flexible to accommodate the different payment methods preferred by the billers. At the same time, the timing mechanism needs to transparently offer a unified payment concept to the consumer, regardless of which underlying payment method is employed.

SUMMARY OF THE INVENTION

This invention concerns an electronic bill payment system that implements a payment timing mechanism that flexibly accommodates different payment methods, yet offers consumers a reliable way to ensure timely payment regardless of the underlying payment method. The billing system is a distributed computing system that includes computing systems at a centralized service center, multiple consumers (and/or their banks), and multiple billers/payees (and/or their banks). Consumers receive their bills either directly from the service center system, in the form of email or a notice, or by logging onto their banks' Web sites. For each bill, a consumer designates a payment amount and specifies an effective payment date. The consumer sends the payment authorization with the effective payment date to the service center computing system. The service center system stores the payment authorization in a payment record that correlates such data as the consumer's ID, a consumer bank ID, a biller/payee, a payee bank ID, an amount due, an amount paid, the effective payment date, and so forth. The service center system permits the consumer to access the payment records and cancel or modify the stored payment authorization at any time prior to a cutoff deadline before the effective payment deadline. As an example, the cutoff deadline might be some time within a twenty-four hour period prior to the effective payment date, such as 4:00 PM on the day preceding the effective payment date.

After the cutoff deadline, the service center enters into a lock down period in which the consumer can no longer change the payment instruction. The service center groups all payments with the same effective payment date into one batch.

The service center has a funds collection system to collect funds that have been authorized by consumers toward payment of their bills. At a time and frequency defined by a funds collection schedule and after the cutoff deadline (e.g., 5:00 PM on the day before the effective payment date), the service center system begins the payment collection portion for all funds that consumers have authorized payment. The funds collection system groups the payment records in the database according to consumer bank ID. In this manner, funds requests for all consumer- authorized payments that are destined for the same consumer bank can be sent in a batch to the bank. This process is repeated for each consumer bank. Alternatively, the funds collection system employs traditional collection mechanisms supported by the ACH network.

The service center system also has a disbursement system to distribute the funds to the appropriate billers or their designated banks. After the funds are collected, the disbursement system sends to each biller/payee a remittance file listing all payments that are funded from the various consumers. The remittance file is sent on or before a predetermined time on the effective payment date (e.g., 12:00 PM). The remittance file contains data on each payment that was successfully funded, such as consumer's name, consumer's account with the payee, payment amount, designated effective payment date, and so forth. In addition, the funds disbursement system transfers a lump sum payment from the service center account to the biller 's account. According to the above structure, the service center system implements a timing mechanism that guarantees for the consumer that a bill will be considered paid by the biller as of the effective payment date that the consumer designates. The consumer is guaranteed this date, at the expense of being unable to stop the payment process after the cutoff deadline preceding the effective payment date. Thus, the consumer is afforded the convenience of only worrying about an effective payment date, without any regard to the underlying payment method or settlement transaction.

The biller is guaranteed to receive a remittance file containing data about who paid what bills by a specified time on the effective payment date. In exchange, the biller agrees to consider the bill as paid on the effective payment date (i.e., the date the remittance file is received) regardless of whether the biller actually recognizes payment on that date in its own computer system. That is, the biller considers the bill paid on the effective payment date, even if that date falls on a weekend or on a holiday and the biller does not itself recognize payment until a subsequent date. This means that the biller will not deem the payment as overdue, or charge any additional interest, in the interim between the effective payment date and the date when the biller actually recognizes payment in their accounts.

BRIEF DESCRIPTION OF THE DRAWINGS

The same reference numbers are used throughout the drawings to reference like components and features.

Fig. 1 shows a block diagram of an electronic billing system for use over the Internet, or other network. Fig. 1 shows the billing system in a bill distribution and presentment phase. Fig. 2 shows a block diagram of the electronic billing system in a payment collection and disbursement phase.

Fig. 3 is a flow diagram of a method for paying bills and settling accounts within a predetermined time frame. Fig. 4 is a timeline illustrating different dates involved in the payment and settlement processes.

Fig. 5 is a flow diagram of a method for collecting authorized payments. Fig. 6 is a flow diagram of a method for remitting collected payments. Fig. 7 is a block diagram having functional components in the electronic billing system and illustrating data flow paths according to a first payment method. Fig. 8 is a block diagram having functional components in the electronic billing system and illustrating data flow paths according to a fourth payment method.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT

Bill Distribution and Presentment Phase

Fig. 1 shows an electronic billing system 20 during a bill distribution and presentment phase that enables multiple billers to electronically distribute their billing statements to consumers over a network, such as the Internet. The electronic billing system 20 has multiple participating billers 22(1), 22(2),..., 22(M), a service center 24 resident at a third party billing service, multiple participating banks 26(1), 26(2),..., 22(N), and multiple bank consumers as represented by consumers 28(1) and 28(2).

The billing system 20 is an electronic, computerized system having computing units at the billers 22, the service center 24, the banks 26, and the consumers 28. For convenience, the respective pairs of terms "biller" and "biller computing system", "service center" and "service center system", "bank" and "bank computing system", and "consumer" and "consumer computing unit," are used interchangeably throughout this disclosure and referenced by the same numbers. The computer systems implemented at the billers, service center, and banks are server computers, are preferably standalone or clustered personal computers configured to run server operating systems, such as Windows NT from Microsoft Corporation. Alternatively, the server computers might be implemented as UNIX- based computers or as mainframe computers. The consumer computing unit can be embodied as any one of many different types of computers, including a personal computer, such as one configured to run Windows 95 (or other version of Windows) from Microsoft Corporation. Other possible computer types include a laptop computer, network computer, notebook computer, handheld computer, and so forth. In addition, the consumer may authorize payment in ways other than by personal computer, such as by using an ATM (automatic teller machine) or telephone voice response system.

The electronic billing system 20 facilitates distribution of bills over a data network. In Fig. 1, a data network 30 interconnects the billers 22(1)-22(M) with the service center system 24 and a second data network 32 interconnects the service center system 24 with the banks 26(1)-26(N). One or both of the networks 30 and 32 may be embodied as the Internet. The Internet is a network formed by the cooperative interconnection of computing networks, including local and wide area networks. It interconnects computers from around the world with existing and even incompatible technologies by employing common protocols that smoothly integrate the individual and diverse components. Alternatively, one or both of the networks 30 and 32 may be implemented as other types of data networks, such as a proprietary WAN (wide area network) or cable. The billers 22(1)-22(M) are equipped with biller integration systems (BIS) 34(1), 34(2),..., 34(M) that facilitate the design of templates for electronically renderable billing statements. The template and billing information are sent to the service center system 24 for electronic distribution of the billing statements. Each biller integration system 34(1)-34(M) integrates with the billers' existing billing system 36(1), 36(2),..., 36(M). These billing systems are assumed to be computerized accounting systems that track consumer accounts and generate periodic billing statements.

Each biller integration system 34(1)-34(M) is implemented with a translator 38(1), 38(2),..., 38(M), respectively, to integrate with the legacy billing systems 36(1)-36(M). Each translator 38(1)-38(M) is preferably a software component that is uniquely configured to translate billing data from a format used by the existing billing systems 36(1)-36(M) to a format compatible with the biller integration systems 34(1)-34(M). Since the billing systems 36(1)-36(M) are specialized to each particular biller, the translators 38(1)-38(M) are uniquely written for the corresponding legacy billing system of the biller.

The biller integration systems 34 enable the associated billers 22 to create a statement template for an electronically renderable customized billing statement. In a preferred implementation, the BIS 34 is a set of software tools that assist the biller in designing the template. The statement template specifies how the statement will present billing information to a consumer. For instance, the statement template includes various fields in which information will be inserted when the electronic billing statement is generated. As an example, one type of field in the template is a data field that holds billing data, such as the account number, the consumer's name and address, transaction items, amount due, interest amount, minimum payments, due date, and so forth. Each biller integration system 34(1)-34(M) packages the statement template together with other billing information in a standardized file. More particularly, the file contains the statement template, the account data for the consumers whom the biller wants to receive statements, a set of rules defining the conditions for the conditional fields, and non-billing resources, such as phone numbers for service information, advertisements, biller logos, regulatory messages, give-aways, and so forth. The file format is standardized in the sense that the service center system 24 expects to receive the same formats from each biller.

The biller integration system 34 is described in more detail in co-pending U.S. Patent Application Serial No. 08/880,125, entitled "System and Method for Designing and Distributing Customized Electronic Billing Statements". This application was filed June 19, 1997 in the names of Howard Campbell, Warren T. Dent, Eric Jakstadt, Darren B. Remington, Bassam Saliba, Bert Speelpenning, George Webb, and is assigned to Microsoft Corporation. The service center system 24 has an electronic bill distribution system that electronically distributes the billing statements on behalf of the billers 22. The service center 24 receives the standardized files from the billers 22 and unpackages the statement template, rules, and resources. The service center 24 then generates the customized billing statements for each biller 22 from the statement template and the billing information received from that biller. The billing statements are stored in a bills database 40 and electronically distributed to the consumers over the Internet.

The service center delivers the billing statements in one of two ways. One way is to directly distribute the billing statements to the consumers over the network 32 (i.e., Internet). This direct distribution is illustrated by communication path 42. The billing statements can be embedded in an email message or a notice. A direct distribution system is described in U.S. Patent Application No. 08/734,518, entitled "Electronic Bill Presentment and Payment System", which was filed October 18, 1996 in the names of Darren Remington and Warren Dent, and is assigned to Microsoft Corporation. This application is incorporated by reference. A second way is to indirectly make the billing statements available through the consumer's bank. The banks 26 support their own Web sites, as represented by Web site 44 at bank 26(1). The bank 26(1) has at least one server computer to support a Web site on the Internet. The bank's consumers 28(1) and 28(2) access the bank's Web server via a universal resource locator (URL) that is assigned to the bank's Web site. Additionally, the service center system 24 at the third party provider has at least one server to supports its own Web site 46.

Bill Payment and Settlement Phase

Fig. 2 shows the electronic billing system 20 in a bill payment and settlement phase in which consumers 28 authorize payments and those payments are collected and disbursed to the appropriate biller/payee 22. In the payment and settlement phase, billers can also be referred to as "payees" because they are the recipients of payments from the consumers. The term "payee" may further include other parties to be paid by the consumer who were not billers. Examples of non-billing payees include charities, personal friends, and family members.

The three primary parties — consumer, service center, and biller/payee — enter into agreements that govern the payment and collection tasks within a short, prearranged time frame. According to one implementation, there are two agreements: (1) a service center/consumer agreement Al and (2) a service center/biller agreement A2. In the service center/consumer agreement Al, the consumer is permitted to elect an effective date of payment ("effective payment date") on which a bill is to be paid. Absent consumer election, the effective payment date defaults to the due date of the bill, but the consumer can move the effective date as desired. Per agreement Al, the consumer is guaranteed that the bill will be paid on the designated effective payment date.

In exchange for this guarantee, the consumer agrees that after some predefined period before the effective payment date ("cutoff deadline"), he/she can no longer change or cancel the payment as the service center begins processing the payment to ensure payment by stipulated effective payment date. The cutoff deadline is set to a time before the effective payment date that is mandated by the consumer/service center agreement Al. The cutoff deadline is preferably within twenty-four hours before the effective payment date. As an example, assume the service center sets the cutoff deadline uniformly at 4:00 PM, and assume the consumer decides to set the effective payment date for a bill to Nov. 1^st. The cutoff deadline would then be 4:00 PM on the preceding day, or Oct. 31^st.

In the service center/biller agreement A2, the service center agrees to send a remittance file containing data about who paid what bills to the biller/payee by a specified time on the effective payment date. For instance, the service center guarantees delivery of the remittance file by 12:00 PM on the effective payment date. In exchange, the biller/payee agrees to consider the bill as paid on the effective payment date (i.e., the date the remittance file is received) regardless of whether the biller actually recognizes payment on that date in its own computer system. That is, the biller/payee considers the bill paid on the effective payment date, even if that date falls on a weekend or on a holiday and the biller/payee 's internal accounting system has not yet recognized payment. This means that the biller/payee will not deem the payment as overdue, or charge any additional interest, in the interim between the effective payment date and the date when the biller/payee actually recognizes payment in their accounts.

Payment timing is governed by the two agreements Al and A2. Additionally, collection and settlement are also affected by these agreements.

The service center 24 employs two separate systems: a funds collection system 50 and a disbursement system 52. The collection and disbursement systems 50 and 52 are preferably implemented as software modules executing on the servers located at the service center 24. The two systems may be executed on the same computer or computer cluster, or on separate computers or clusters. The systems run programs that implement the timing scheme defined in the two agreements Al and A2.

The service center 24 also has a database 54 to hold payment records 56 that correlate the payment information received from consumers for individual transactions. The funds collection system 50 and the disbursement system 52 are operatively coupled to access the payment records 56 on database 54. The database 54 is preferably implemented using a relational database program, such as SQL Server from Microsoft Corporation. The payment records 56 are data structures formed by the database program to correlate billing transaction data, such as the consumer's ID (e.g., name, serial number, account number), consumer bank ID, biller or payee, payee bank ID, amount due, amount paid, effective payment date, and so forth.

Fig. 3 shows general steps in a method for paying bills and settling accounts according to the timing constraints imposed by the agreements Al and A2. The general steps include: Step 1 : Authorization by the consumer to pay a bill on a specified effective payment date.

Step 2: Service Center imposes a lock down period during which the consumer cannot withdraw the payment authorization. Step 3: Collect funds authorized by the consumers.

Step 4: Send remittance data to biller/payee that identifies which consumers paid what bills.

Step 5: Disburse collected funs to biller/payee.

These steps are described in detail below, with additional reference to Figs. 2 and 4-6.

STEP 1; Authorize Payment on Effective Date

Consumers 28 receive their bills either directly from the service center system 24, in the form of email or a notice, or by logging onto their banks Web site. Each consumer has several options when taking action on an individual bill, including paying the bill in full, paying part of the bill, or registering a challenge of the billing amount. Consumers 28 can designate payment of funds to biller/payees by sending an authorization to the service center 24 through their bank's interface, as represented by consumer 28(1), or directly to the service center system 24 as represented by consumer 28(3). In this manner, the funds collection system 50 accommodates different payment methods to better service the consumers.

For discussion purposes, assume the consumer decides to pay the bill in full or in part and that the current date that the consumer enters the payment information is the 1^st of the month ("payment authorization date"). The consumer specifies an amount to be paid and the method of payment (e.g., draw on bank checking account). Per agreement Al, the consumer also specifies an effective payment date that the bill is to be paid. Suppose, for example, that the bill is due on the l^x of the month and the consumer specifies an effective payment date of the 4^th of the month. Furthermore, suppose that agreement Al specifies that the cutoff deadline is 4:00 PM on the day preceding the effective payment date, or 4:00 PM on the 3^r of the month. Fig. 4 shows a timeline with the payment authorization date, the cutoff deadline, the effective payment date, and the bill due date.

After the consumer reviews the bill, presses a "Pay" icon, and accepts or changes the presented amount and effective payment date, the consumer authorizes payment by an affirmative action, such as clicking an "Authorize Payment" icon or some other action. In response, the payment instructions are sent to the service center. The payment instructions include a biller ID, biller bank ID, a consumer ID, consumer bank ID, an amount due, an amount paid, and the effective payment date. The data from the payment instructions are entered into the appropriate fields of the payment records 56 stored in database 54 at the service center system.

STEP 2: Lock Down

Once the consumer sends payment authorization to the service center system 24, the consumer has until the cutoff deadline to cancel, change, or otherwise access the pending payment authorization. In the example timeline of Fig. 4, the consumer could cancel or modify the payment instructions up to 4:00 PM on the 3^rd of the month, as represented by the "modification period". After the cutoff deadline, however, the service center 24 enters a "lock down period" in which the consumer is no longer permitted to cancel, change, or otherwise take action on a pending payment authorization per the service center/consumer agreement Al. Sometime during the lock down period, the service center system 24 runs a lock down process that freezes all payment authorizations for a period of time for processing. For example, the service center system 24 might run the lock down process every day from 4:10 PM to 5:00 PM. The service center system 24 processes all of the payment authorizations that specify an effective payment date of that business day. For instance, in the lock down occurring between the 3^rd and 4^th of the month, the system 24 processes all payment instructions that stipulate the 4¹'¹ as the effective payment date. The service center system 24 groups all payments with the same effective payment date into a batch. This is accomplished by running a "group by" query or other similar function on the payment records 56 in database 54 to identify all consumer authorized payments for a given effective payment date.

STEP 3; Funds Collection

The funds collection system 50 collects funds that have been authorized by consumers 28 toward payment of bills. The service center 24 maintains a general clearing account 58 at the service center's bank 59 to temporarily hold funds in transition between collection and disbursement. A corresponding account or an account summary reflecting the funds in the clearing account at the service center's bank 59 may also be kept in the database 54.

The service center has two different options for collecting the payment from the consumer's bank. One option is to use the traditional ACH (Automated Clearing House) network to collect funds. The ACH network is a nationwide system that processes electronic payments on behalf of depository financial institutions. The ACH network represents approximately 15,000 of the 20,000 financial institutions in the United States. Although best thought of as a single network, the ACH network actually consists of four interconnected networks owned and operated by four ACH operators: the Federal Reserve, NISA, New York ACH (which provides regional coverage in New York), and Arizona Clearing House in conjunction with Deluxe Data (which provides regional coverage in Arizona). The ACH network is well known in the art.

With the ACH, the service center initiates the funds transfers by sending an ACH file to its own ACH originating bank. On receiving the funds transfer requests through the ACH network, the consumer bank will debit its consumer's accounts 58, with the stipulation that if the funds are not available in the consumer's account, the consumer bank will expect a return of the funds. Well known rules and processes govern the funds transfer and situations where funds are insufficient.

A second collection option involves a situation where the service center and consumer bank have entered into affiliation agreements to settle accounts outside of the traditional ACH network. Fig. 5 shows exemplary steps in a method for collecting funds that have been authorized by the consumers using nontraditional network transactions. The funds collection system 50 maintains a payment scheduler that is responsible for identifying the payment records in the database that have been authorized for payment, and hence are ready to be processed. At a time and frequency defined by a funds collection schedule, the funds collection system 50 begins the payment collection portion to collect all funds that consumers have authorized for payment. The funds are collected from the consumers' bank accounts at their respective banks. This collection period is illustrated in the timeline of Fig. 4.

The funds collection system 50 groups all authorized payments to be gathered from the same bank into one batch. This is accomplished by running a "group by" query or other similar function on the payment records 56 in database 54 to identify all consumer authorized payments for a given bank (step 60 in Fig. 5). Thus, for each consumer bank i that holds a consumer account ready for payment collection (step 62 in Fig. 5), the funds collection system 50 sends a batch of funds requests to the bank (step 64 in Fig. 5). As an example, the collection system 50 might send a batch of 1000 funds requests, each request seeking funds for payment of an outstanding bill identified in a corresponding payment record. The funds collection system 50 repeats this process for every consumer bank i (step 66 in Fig. 5). The consumer bank processes the batch of funds requests, funding those requests for consumers who have solvent accounts (i.e., funded requests) and not funding other requests for consumers who have non-sufficient funds (NSF) or overdrawn accounts (i.e., non-funded requests). The consumer bank returns a funds response to the service center system 24, identifying funded and non-funded requests. For example, suppose the bank may have determined that only 990 funds requests can be acted on, and the remaining 10 funds requests are directed to NSF accounts and hence cannot be funded. The funds response identifies the 990 funded requests and the 10 non-funded requests. The funds response may be implemented on an exception basis (e.g. the bank identifies only the 10 accounts that failed).

The funds collection system 50 processes the funds response to update the payment records 56 in database 54 (step 68 in Fig. 5). Each funds request, funded or non-funded, is matched against a corresponding payment record to thereby update the status of the corresponding payment record. The funds collection system

50 repeats this step 68 for every consumer bank i (step 70 in Fig. 5).

The collection system 50 may then issue a settlement request to the bank to settle the funded requests (e.g., the 990 requests). The settlement requests asks the bank to transfer the net total of all funds for the accepted accounts in a given accounting period into an account owned by the service center. Such a settlement request may also be left implicit as part of a pre-arranged agreement between the service center and the participating bank. The bank performs the transactions for its accounts locally (i.e., withdrawing monies from the consumers accounts) and transfers a net amount to the service center's account. In the illustrated example, the funds are transferred to the clearing account 58 at the service center's bank 59. However, the service center may also maintain an account at the consumer's bank itself. The bank returns a settlement confirmation reflecting the funds transfer. The funds collection system 50 processes the settlement confirmation to update the payment records 56 and records the transfer of the funds in the clearing account register.

STEP 4: Remittance File Transfer Once the funds are collected, the service center system 24 prepares a remittance file that identifies all bills for which collection of some or all payment was successful. The service center system 24 transfers the remittance file to the biller/payee by a predefined time on the effective payment date, as specified in the service center/biller agreement A2. Fig. 4 shows the remittance time period as extending from the collection process up to the prescribed 12:00 PM deadline on the effective payment date of the 4^th of the month.

The remittance file is a data structure that lists all bills being paid by various consumers on the effective payment date. The remittance file data structure holds data on each payment, such as the consumer's ID, payment amount, effective payment date, and data identifying the bill being paid. The remittance file further includes batch totals indicating the total amount of money to be transferred to the biller/payee and any remittance information being returned by the consumers as part of their responses to the billing statements.

STEP 5: Disbursement

After the funds are collected and the remittance file is sent to the biller, the service center's disbursement system 52 distributes the funds to the appropriate billers 22 (i.e., payees), or their designated banks. The funds are preferably transferred on the effective payment date after the prescribed remittance file delivery time (e.g., 12:00 PM) or during the evening hours bridging the effective payment date and the next day. If the effective payment date lands on a weekend or bank holiday, the funds may be disbursed one or more days subsequent to the effective payment date. Fig. 6 shows exemplary steps in a method for disbursing collected funds to the biller/payees. The disbursement system 52 groups the payment records 56 by biller ID to establish a set of payments destined for each biller (step 76 in Fig. 6). This is accomplished by running a "group by" command or other similar function on the payment records 56 in database 54 to identify all billers or biller banks for which payments are to be disbursed. For each biller j to receive funds (step 78 in Fig. 6), the funds disbursement system 52 transfers a lump sum payment to the biller's account (step 80 in Fig. 6). The funds are disbursed according to a disbursement schedule that is separate and distinct from the funds collection schedule, such as once per day (or perhaps more often). The funds disbursement system 52 repeats this process for every consumer billerj (step 82 in Fig. 6).

Funds are disbursed to payees using either the ACH network or direct wire transfers. Appropriate accounting entries are made in the clearing account 58.

Some billers may prefer to receive non-funded payments. In such cases, the funding information is delivered to the biller and serves as the authorization for the biller to initiate funding for the payment. The biller will likely, in these cases, fund payments via the ACH network.

System Flexibility

The billing system 20 is advantageous because it efficiently collects and disburses monies in a short, predefined time period. By separating collection from distribution, the collection system can collect funds at the best times for banks (e.g., overnight), and the disbursement system 52 can remit funds at the best times for payees (e.g., during business day). Moreover, the collection process can overlap with the disbursement system to shorten the time of payment. That is, while the funds collection system 50 is collecting funds during one cycle, the disbursement system 52 is distributing funds collected during the previous cycle. As a result, funds can be collected and disbursed within a 24-hour period from the effective payment date.

The billing system 20 also offers tremendous flexibility in adapting to different types of billing practices. For instance, the system 20 enables consumers to direct payment via their banks, or directly by accessing the service center's Web site. Within the bank sponsored approach, the billing system 20 may also support a pay anyone feature that allows the consumers to write checks to any third party.

With respect to payment timing, the billing system offers tremendous flexibility for biller/payees, meeting their schedules for funds disbursements. To the consumer, the system offers an integrated timing concept in that the consumer need only designate one effective payment date, without having to worry about how the underlying collection and settlement process works. All other timing mechanisms are handled by the service center on behalf of the consumer, given the designated effective payment date. To demonstrate the flexibility and adaptability of the billing system 20, examples of various payment methods that it can support are described below. For purposes of continuing discussion, assume that the consumer is at the point of reviewing his/her bills and deciding to authorize payment. The following scenarios begin at this point, and proceed to the payment and settlement phase.

Payment Method 1

Fig. 7 shows functional components in the electronic bill payment system and data flow process steps according to a first payment method. The steps are performed in software executing at various computing systems, including the consumer bank computing system, the service center computing system, and the biller or biller bank computing system(s). The consumer is logged onto the bank's web site 44 and upon reviewing his/her bills, authorizes payment of the bills (step 100). The bank's web server passes the payment authorization to the service center web server 46 (step 102). This authorization includes such data as the consumer ID, bank ID, account information, amount being paid, effective payment date, payee, payee bank, transaction or bill reference number, and so on.

At this point, the payment data is passed to the funds collection system 50, where it is stored until the lock down occurs for the designated effective payment date (step 104). By setting the effective payment date, the funds collection system 50 schedules the cutoff deadline according to the time defined in the service center/consumer agreement Al. Until this cutoff deadline, the consumer can cancel or modify the payment instructions.

Once the cutoff deadline arrives, the funds collection office begins its lock down period to process the payments to occur on the effective payment date. At a scheduled time and frequency (e.g., once daily at 2:00 AM), the funds collection system 50 groups all authorized payments having the same effective payment day for all consumers of the particular bank into a batch of funds requests. The funds collection system 50 sends the batch to the bank's accounts computer system 86 (step 106). The bank's accounts computer system 86 processes the batch, determining whether the individual consumer accounts can fund their corresponding funds request. The bank's accounts system 86 returns a funds response to the collection system 50, identifying which requests can be funded and which cannot (step 108). The funds collection system 50 processes the funds response and issues a settlement request to the bank to settle those accounts that can be funded (step 110). The settlement requests asks the bank to transfer the net total of all funds for the accepted accounts in a given accounting period into an account of the service center. The bank's accounts system 86 transfers funds from the consumers accounts

88 to the clearing account 58 at the service center 24 (step 112). The bank system

86 then sends a confirmation to the funds collection system 50. The funds collection system 50 updates the payment records 56 in the database 54 to reflect that the funds have been collected from the consumer bank.

The funds collection system 50 informs the disbursement system 52 that funds have been collected for certain payment records 56 in database 54 (step 114).

The disbursement system 52 bundles together all outgoing payments in a single remittance file on a per biller/payee basis. One way the disbursement system 52 groups the payments is to query the database 54 according to biller/payee IDs to locate payment records for each biller/payee. At the appointed time in the service center/biller agreement A2 (e.g., 12:00 PM on the effective payment date), the funds disbursement system 52 forwards the settlement transaction to the appropriate biller/payee 22 (step 116).

The disbursement system 52 transfers a lump sum payment from the clearing account 58 to the biller's bank 90 (step 118). This transfer may occur on or after the effective payment date. Funds are disbursed to the biller's bank 90 using either wire transfers or the ACH network. The biller's bank 90 makes an entry in the biller's account 92 reflecting the lump sum payment and that payment was made as of the effective payment date, regardless of when the funds were actually transferred (step 120).

Payment Method 2: Consumer Direct — ACH Network Fig. 8 shows functional components in the electronic bill payment system and data flow process steps according to a fourth payment method. In this implementation, the system is configured to accommodate direct authorization from the consumer, as opposed to receiving authorization via a bank Web site interface. In this configuration, the bill payment system interfaces with the conventional and widely used ACH network for settlement procedures. The consumer logs onto the service center's web site 46 and, upon reviewing his/her bills, authorizes payment (step 150). The service center's web server 46 passes the payment authorization data — consumer ID, bank ID, account information, amount being paid, effective payment date, payee, payee bank, transaction or bill reference number, etc. — to the funds collection system 50 (step 152).

The funds collection system 50 holds the payment data until the cutoff deadline for the effective payment date, upon which the system enters the lock down period to process all payments designating the current date as the effective payment date. Following lockdown, the funds collection system 50 submits an ACH file representing a funds request to its ACH origination bank, which in turn will access the ACH network 98 for the funds that the consumer authorized for payment (step 154). The ACH network 98 attempts to collect the funds from the consumer account 88 through conventional means (step 156). The ACH network will transfer funds to the service center's clearing account in anticipation of successful debit of the consumer's account. If the consumer's account did not have sufficient funds, the ACH network 98 informs the collection center 50 of the NSF condition within a prescribed number of days and the service center's clearing account will be debited automatically. Also in anticipation of successful funds transfer, the funds collection system

50 moves the payment record to the disbursement system 52 (step 162). The disbursement system 52 bundles this payment record together with all other payment records going to the biller/payee 22 into a single remittance file. At the appointed time in the distribution schedule, the funds disbursement system 52 forwards the remittance file to the biller/payee 22 (step 164). The disbursement system 52 also transfers a lump sum payment from the clearing account 58 to the biller's account 92 in the biller's bank 90 (steps 166 and 168). Disbursing money to the biller prior to having certainty that the consumer has funds to cover the payment is possible by virtue of the agreement A2 executed with the biller which allows the service center to recover money from the biller in case of a consumer NSF. This is explained in more detail in the following section.

Reversal

The payment scenarios assumed for the most part that funding was successful. However, there may be cases in which the consumer does not have funds to cover the transaction or the consumer disputes that he/she authorized payment.

The service center 24 can be structured as a no-risk intermediary, meaning that it does not assume any risk of non-payment from a consumer to a biller. The service center 24, as part of agreement A2, reserves the right to reverse payment under one of the following conditions:

1. For guaranteed funds or non-guaranteed funds, the payment may be reversed based on an unresolved Regulation E dispute.

2. For non-guaranteed funds, the payment may be reversed based on an NSF or account closed received from the ACH network. Guaranteed funds are available through directly settling with each bank or through and electronic network that provides positive, timely funds response. Non- guaranteed funds occur as a consequence of using the ACH network for settlement. One advantage of the system is that payment records for both guaranteed funds and non-guaranteed funds can be batched and disbursed to the biller/payee in a single remittance file. The individual payment records contain information identifying whether the funds for that payment are guaranteed or non-guaranteed. Moreover, the remittance file may include a ratio of the guaranteed funds and the non- guaranteed funds. Funds that are pulled back due to insufficient funds, or other conditions, are registered in the remittance file as a negative amount to thereby reduce the overall lump sum being transferred to the biller. The negative amount offsets a prior positive amount that was credited to the biller in a previous remittance file and included in a prior lump sum payment. The cost of reversal, if any, is borne by the biller (or biller bank). In addition, of course, the consumer's bank may charge the consumer a fee for all NSF payments, whether these payments were initiated by the service center or not.

Although the invention has been described in language specific to structural features and/or methodological steps, it is to be understood that the invention defined in the appended claims is not necessarily limited to the specific features or steps described. Rather, the specific features and steps are disclosed as preferred forms of implementing the claimed invention.

Claims

1. A method for processing payments authorized by consumers to be paid to participating payees, comprising the following steps: enabling a consumer to designate, as part of a payment authorization, an effective payment date on which a bill from a payee is to be paid; scheduling a cutoff deadline at a predetermined time prior to the effective payment date; storing the payment authorization; after the cutoff deadline, collecting funds to satisfy the payment authorization; and informing the payee on the effective payment date that funds for payment of the bill have been collected.

2. A method as recited in claim 1 , further comprising the step of enabling the consumer to cancel or change the payment authorization up until the cutoff deadline, but not allowing the consumer to cancel or change the payment authorization after the cutoff deadline.

3. A method as recited in claim 1, wherein the scheduling step comprises the step of scheduling the cutoff deadline within twenty-four hours before the effective payment date.

4. A method as recited in claim 1, further comprising the step of disbursing the funds to the payee on or after the effective payment date.

5. A method as recited in claim 4, further comprising the step of recording, at the payee, that the bill is paid as of the effective payment date regardless of whether the funds are disbursed on the effective payment date.

6. A method for settling payments that are authorized by consumers to be paid to designated payees, comprising the following steps: maintaining payment records that identify the consumers, consumer banks that hold the consumers' accounts, the payees, payment amounts, and effective payment dates designated by the consumers; grouping the payment records for a particular effective payment date according to the consumer banks; sending to each participating consumer bank a batch of funds requests for funding the payment amounts in corresponding ones of the payment records that are grouped together for that consumer bank and which are designated to be paid on the particular effective payment date; collecting funds from said each consumer bank; grouping the payment records according to the payees; and sending each payee on the effective date a remittance file listing the payment records grouped together for that payee for which funds have been collected.

7. A method as recited in claim 0, further comprising the step of disbursing to said each payee an aggregate funds amount that satisfies the payment amounts in the payment records listed in the remittance file on or after the effective payment date.

8. A method as recited in claim 0, further comprising the step of collecting funds from consumers of non-participating banks through an automated clearinghouse system.

9. A method as recited in claim 0, further comprising the step of enabling the consumer to cancel or modify data in the payment records up until a predetermined cutoff period prior to the effective payment date associated with the payment records.

10. In an electronic billing system, a method comprising the following steps: receiving a payment authorization from a consumer, the payment authorization authorizing payment of a bill on an effective payment date designated by the consumer; scheduling a cutoff deadline at a predetermined time prior to the effective payment date; storing payment records for bill payment transactions, each payment record containing a payment amount and an effective payment date; after the cutoff deadline lapses, collecting funds to satisfy the payment authorization; informing the payee on the effective date that funds toward payment of the bill have been collected; and disbursing the funds to the payee on or after the effective payment date.

11. A method as recited in claim 10, further comprising the step of permitting the consumer to cancel or modify the payment authorization until the cutoff deadline, but not allowing the consumer to cancel or change the payment authorization after the cutoff deadline.

12. A method as recited in claim 10, wherein the scheduling step comprises the step of scheduling the cutoff deadline within twenty-four hours before the effective payment date.

13. A method as recited in claim 10, further comprising the step of recording, at the payee, that the bill is paid as of the effective payment date regardless of whether the funds are disbursed on the effective payment date.

14. A computer-readable medium having computer-executable instructions for performing the steps of the method as recited in claim 10.

15. In an electronic billing system, a method comprising the following steps: enabling a consumer to designate, as part of a payment authorization being made on a payment authorization date, an effective payment date on which a bill from a payee is to be paid, the effective payment date being subsequent to the payment authorization date; scheduling a cutoff deadline at a predetermined time prior to the effective payment date; storing the payment authorization for a duration between the payment authorization date and the cutoff deadline; enabling the consumer to cancel or modify the payment authorization until the cutoff deadline, but not allowing the consumer to cancel or change the payment authorization after the cutoff deadline; after the cutoff deadline, collecting funds to satisfy the payment authorization; and informing the payee on the effective date that funds toward payment of the bill have been collected.

16. An electronic billing system, comprising: a database to store payment records that identify the consumers, various consumer banks that hold the consumers' accounts, payees, payment amounts, and effective payment dates designated by the consumer on which to pay corresponding bills; a funds collection system coupled to the database to group the payment records according to the consumer banks for a particular effective payment date, the funds collection system sending to each consumer bank a batch of funds requests for funding the payment amounts in corresponding ones of the payment records that are grouped together for that consumer bank and which are designated to be paid on the particular effective payment date; and a disbursement system coupled to the database to group the payment records according to the payees, the disbursement system sending to each payee on the effective payment date a remittance file listing the payment records grouped together for that payee for which funds have been collected.

17. An electronic billing system as recited in claim 16, wherein the disbursement system disburses to said each payee, on or after the effective payment date, an aggregate funds amount satisfying the payment amounts in the payment records listed in the remittance file for said each payee.

18. An electronic billing system, comprising: consumer interface to enable a consumer to authorize payment of a bill from a payee, the consumer interface being configured to permit the consumer to designate an effective payment date on which the bill is to be paid; a service center system coupled to receive the payment authorization from the consumer interface and to store the payment authorization, the service center system permitting consumer access to the stored payment authorization via the consumer interface to cancel or modify the payment authorization until a cutoff deadline prior to the effective payment date; the service center system being configured to collect, after the cutoff deadline, funds to satisfy the payment authorization and to send information to the payee on the effective date indicating that funds toward payment of the bill have been collected; and a payee system coupled to receive the information from the service center system and to reflect that the bill has been paid as of the effective payment date.

19. An electronic billing system as recited in claim 18, wherein the service center system disburses the funds to the payee system on or after the effective payment date,

20. An electronic billing system as recited in claim 18, wherein the cutoff deadline is within twenty- four hours of the effective payment date.

21. A computer readable medium having computer-executable instructions for performing steps comprising: receiving a payment authorization from a consumer, the payment authorization authorizing payment of a bill on an effective payment date designated by the consumer; scheduling a cutoff deadline at a predetermined time prior to the effective payment date; storing payment records for bill payment transactions, each payment record containing a payment amount and an effective payment date; after the cutoff deadline lapses, collecting funds to satisfy the payment authorization; informing the payee on the effective date that funds toward payment of the bill have been collected; and disbursing the funds to the payee on or after the effective payment date.

22. A computer readable medium having computer-executable instructions for performing steps comprising: enabling a consumer to designate, as part of a payment authorization being made on a payment authorization date, an effective payment date on which a bill from a payee is to be paid, the effective payment date being subsequent to the payment authorization date; scheduling a cutoff deadline at a predetermined time prior to the effective payment date; storing the payment authorization for a duration between the payment authorization date and the cutoff deadline; enabling the consumer to cancel or modify the payment authorization until the cutoff deadline, but not allowing the consumer to cancel or change the payment authorization after the cutoff deadline; after the cutoff deadline, collecting funds to satisfy the payment authorization; and informing the payee on the effective date that funds toward payment of the bill have been collected.