AU2005100221A4 - Credit card transaction processing - Google Patents
Credit card transaction processing Download PDFInfo
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- AU2005100221A4 AU2005100221A4 AU2005100221A AU2005100221A AU2005100221A4 AU 2005100221 A4 AU2005100221 A4 AU 2005100221A4 AU 2005100221 A AU2005100221 A AU 2005100221A AU 2005100221 A AU2005100221 A AU 2005100221A AU 2005100221 A4 AU2005100221 A4 AU 2005100221A4
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- AU
- Australia
- Prior art keywords
- transaction
- credit card
- merchant
- card holder
- financial institution
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Description
P/00/009 Regulation 3.2
AUSTRALIA
Patents Act 1990 INNOVATION PATENT SPECIFICATION Invention Title: CREDIT CARD TRANSACTION PROCESSING Applicant: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED The invention is described in the following statement: 1 W:\SASKIA\Patents\im740553-fORM.doc Credit Card Transaction Processing Field of the Invention The present invention relates generally to processing credit card transactions. More particularly, the invention relates to a method of processing credit card transactions to facilitate charging the cost of processing the transaction directly to the credit card holder.
Background of the Invention Credit cards offer credit card holders an easy means of paying for purchases and a convenient alternative to carrying large amounts of cash.
Credit cards provide credit card holders with access to a line of credit established by the credit card issuing institution.
When a credit card holder makes payment using a credit card, the credit card data and transaction amount are transmitted from a merchant to an acquiring institution which processes any credit card payments made to the merchant together with a request for authorization. The acquiring financial institution routes the request to the credit card issuing financial institution for approval. If the credit card holder has sufficient credit to cover the transaction amount and passes the cardholder authentication process, the transaction is approved by the credit card issuing institution and an authorization code is routed back to the acquiring institution. The acquiring institution then sends the authorization code to the merchant. The credit card issuing institution transfers the transaction amount to be deposited into the merchant's account.
The credit card issuing institution charges the acquiring institution an interchange fee for processing the credit card transaction. This interchange fee is passed on to the merchant requesting the transaction in the form of a merchant service fee (MSF). The MSF is based on the transaction amount and is usually more than the interchange fee. The acquiring institution debits the accumulated MSFs from the merchant's account on a regular basis.
In Australia, merchants typically incorporate the overall cost of accepting credit card payments in the price of goods and/or services charged to all customers irrespective of the customer's preferred means of payment. This means that customers who pay for goods and/or services by cash, cheque or W:SAsKIAPatentSpeC\lutiPaY Innovaion Patent (As Filed).doc 1 debit card, subsidise the cost of accepting credit card payments to the merchant. Until recently, Australian merchants have not been permitted to recover the cost of processing credit card transactions directly from customers choosing to pay by credit card. The recovery of the cost of processing credit card transaction is particularly relevant to e-commerce transactions where credit card payments are particularly prevalent. At present, the cost of processing credit card transactions to merchants is in many cases prohibitive.
The discussion of the background to the invention included herein is included to explain the context of the invention. This is not to be taken as an admission that any of the material referred to were published, known or part of the common general knowledge as at the priority date of the claims.
Summary of the Invention According to a first aspect of the present invention, there is provided a method for processing a credit card transaction in payment for a purchase made by a credit card holder from a merchant, the method including the steps of: the merchant receiving credit card data from the card holder; determining a first transaction request including a purchase value and a second transaction request including a transaction levy; transmitting the credit card data and the first and second transaction requests from the merchant to a financial institution; and the merchant receiving a response either granting approval of or declining the first and second transaction requests; wherein approval of both the first and the second transaction requests is required in order for the credit card transaction to proceed resulting in the financial institution transferring sufficient funds to cover both the first and second transaction requests from a card holder's account to a merchant's account.
According to a preferred embodiment of the invention, the second transaction request is not transmitted from the merchant to the financial institution until the financial institution has issued a response approving the first transaction request to the merchant. This results in two discrete electronic transactions taking place, a first transaction recovers the purchase price of the W:SASKIAMPatentSpecWuiPay Innvation Patent (As Filed).doc goods and/or services from the card holder, and a second transaction recovers the cost of processing the credit card transaction from the card holder.
The first transaction request may include a merchant identifier. The second transaction request may include a transaction levy merchant identifier.
In another preferred form of the invention, the method is preceded by the following steps: the card holder is notified that payment for the purchase by credit card incurs a transaction levy; and if the card holder agrees to pay the transaction levy, the transaction is processed; or if the card holder declines to pay the transaction levy, the card holder is offered an alternative payment method.
The alternative payment method may be selected from any suitable payment method or combination of payment methods but is preferably selected from one or more of the following: cash; personal cheque; or debit card.
In one form of the invention, the response approving or declining the first and second transaction requests is determined on the basis of one or more of the following: available credit; primary account number; expiry date; or CCV2/CVC2 security code.
In one arrangement, the merchant receives the credit card data from the card holder over a communications network. The communications network may be the Internet.
In an alternative embodiment, the merchant receives the credit card data from the card holder at the point of sale.
Preferably, the method further includes the step of the financial institution issuing a statement to the card holder and the merchant respectively, each statement detailing the purchase value and the transaction levy for each credit card transaction processed.
WASASKIA\PatentSpec\MultiPay Inwvation Patent (As Filed).doc According to a second aspect of the present invention, there is provided a system for processing a credit card transaction for a purchase made by a card holder from a merchant, the system including: a credit card data reader for receiving credit card data from the card holder; a processor for determining a first transaction request including a purchase value and a second transaction request including a transaction levy; a transmitter for transmitting the credit card data and the first and second transaction requests from the merchant to a financial institution; and a response receiver for notifying the merchant of approval or decline of the first and second transaction requests; and a transfer component for the financial institution to transfer sufficient funds to cover both the first and second transaction requests from a card holder's account to a merchant's account, in the event that both the first and the second transaction requests are approved.
According to a preferred embodiment of the invention, the transmitter transmits the second transaction request from the merchant to the financial institution after a response approving the first transaction request has been issued by the financial institution to the merchant.
In another preferred form of the invention, the system further includes: a notification component for notifying the card holder that payment for the purchase by credit card incurs a transaction levy; and a payment method selector by which the card holder can select an alternative payment method if the card holder declines to pay the transaction levy; and a statement generating component which issues a statement from the financial institution to the card holder and the merchant respectively, each statement detailing the purchase value and the transaction levy for each credit card transaction processed.
The credit card reader may be part of a payment interface accessed over a communications network. Preferably, the communications network is the Internet. More preferably, the processor includes a payment gateway.
In an alternative embodiment, the credit card reader is part of a point of sale terminal.
W:\SASKIAPatentSpecWultiPay Innovation Patent (As Filed).doc Brief Description of the Drawings The invention will now be described in further detail by reference to the attached drawings illustrating example forms of the invention. It is to be understood that the particularity of the drawings does not supersede the generality of the preceding description of the invention. In the drawings: Figure 1 is a schematic overview of the method of processing a credit card transaction according to an embodiment of the present invention.
Figure 2 is a simplified flow chart of the method of processing a credit card transaction according to an embodiment of the present invention.
Detailed Description of the Preferred Embodiment The method of the present invention will be described by reference to Figure 1 showing the components involved in processing a credit card transaction according to an embodiment of the invention. A credit card holder purchases goods and/or services from a merchant 102 for a purchase value.
The merchant 102 typically offers a range of payment options including payment by credit card. If the card holder elects to pay for the purchase via credit card, the merchant 102 notifies the card holder that a transaction levy is applied to all purchases paid for via credit card and charged to the card holder.
The card holder may therefore make an informed decision to proceed with the credit card transaction or may decline to pay the transaction levy and be prompted to select an alternative means of payment. The manner in which the merchant 102 informs the card holder of the transaction levy will vary depending on the configuration of the payment system. In the case of an unattended system, such as an e-commerce transaction, the card holder is clearly notified of the surcharge via a printed message. In the case of an attended system, such as a card reader terminal provided at the point of sale, the merchant 102 may verbally notify the card holder of the surcharge.
In the event that the card holder declines to pay the transaction levy, the card holder is prompted to select an alternative means of payment. The alternative means of payment may be selected from any suitable payment method or combination of payment methods including cash, personal cheque, or debit card. If the card holder agrees to pay the transaction levy, the transaction will be processed in accordance with the method herein described.
W:SASKIA\PatentSpecVuuItiPay Innovaton Patent (AS Filed).doc The merchant 102 receives the credit card data from the card holder.
The credit card data may be obtained by any suitable means including manually, via a card reading terminal or manually entering credit card data for transmission over a telecommunications network such as the Internet.
Once the merchant 102 has obtained the credit card data, a first transaction request 104 is generated. The first transaction request 104 includes the purchase value of the goods and/or services to be purchased by the card holder, a merchant identifier and an authorisation request. The first transaction request 104 is then transmitted to a financial institution hereinafter referred to as the acquiring institution 106. The acquiring institution 106 processes the merchant's credit card transactions and holds the merchant's account.
In the event that the acquiring institution 106 and the financial institution which issued the credit card to the card holder, are not the same, the acquiring institution 106 must route the first transaction request 104 to the issuing institution 108 for authentification and authorisation.
The issuing institution 108 approves or declines the credit card transaction on the basis of factors including available credit; primary account number; expiry date; or a CCV2/CVC2 security code. The issuing institution 108 generates a response 110 which either approves or declines the credit card transaction and routes it back to the acquiring institution 106 which forwards the response to the merchant 102.
In the event that the first transaction request 104 is declined, the credit card transaction is terminated. The merchant 102 may offer the credit card holder alternate means of payment or the card holder may withdraw the offer to purchase.
If the first transaction request 104 is approved, a second transaction request 112 is generated. The second transaction request 112 includes a transaction levy, a transaction levy merchant identifier and an authorisation request. The transaction levy may be a fixed charge or a variable charge. In one embodiment, the transaction levy is determined as a percentage of the purchase value. Preferably, determination of the transaction levy is configured within the payment system, for example, within the payment gateway or pin pad.
WASASKIAMPatentSpecWultiPay Innovation Patent (AS Filed).doc Once the second transaction request 112 has been generated, it is transmitted to the issuing institution 108 via the acquiring institution 106 for authorisation. The issuing institution 108 approves or declines the second transaction request 112 on the basis of the factors employed in approval or denial of the first transaction request 104 associated with the same transaction.
As with the first transaction request 104, the response 114 is routed back to the merchant 102 via the acquiring institution 106.
If the second transaction request 112 is denied, the credit card transaction is terminated. The merchant 102 may offer the credit card holder alternate means of payment or the card holder may withdraw the offer to purchase.
If the second transaction request 112 is approved, the credit card transaction proceeds. It is to be understood that the credit card transaction proceeds only when both the first transaction request 104 and the second transaction request 112 are approved.
Following approval of both the first transaction request 104 and the second transaction request 112, the issuing institution 108 transfers sufficient funds to the merchant's account 116 at the acquiring institution 106 to cover the amount of the both the first transaction request 104 and the second transaction request 112 and charges the total amount to the card holder's account. The issuing institution 108 charges the acquiring institution 106 an interchange fee for processing the transaction.
The advantage of the method of processing a credit card transaction described is that it facilitates recovery of the cost of processing the credit card transaction to the merchant 102, from the credit card holder. The cost of the transaction is passed directly on to the credit card holder via the transaction levy. Therefore, if the credit card holder has insufficient credit available to cover both the purchase value and the cost of processing the transaction, the credit card transaction will not proceed.
It should be evident from the above description that the method of the present invention results in two discrete electronic transactions. That is, a single purchase is split into two separate transactions, the first 104 covering the purchase value of the goods and/or services, and the second 112 covering the cost of processing the transaction.
W:\SASKIAPatentSpec.MultiPay Innovation Patent (AS Filed).doc 9 For example, if a card holder pays an electricity bill online at the website of the electricity supplier, and the electricity bill is for services to the value of AUD1000, at the point where the card holder is prompted to enter the credit card details, the card holder is informed that a 1% transaction levy will be charged to the credit card for the cost of processing the transaction. If the card holder agrees to pay the transaction levy, the transaction proceeds in two stages, charging AUD1000 to the credit card for payment of the electricity bill and AUD10 for the cost of processing the transaction.
The issuing institution 108 issues a statement to the credit card holder detailing the purchase value and the corresponding transaction levy charged for each credit card transaction processed. Similarly, the acquiring institution 106 issues the merchant 102 with a statement detailing the purchase value and the corresponding transaction levy for each credit card transaction processed.
It is to be understood that the method of processing credit card transactions described is potentially applicable to all credit card transactions including credit card transactions occurring a the point of sale via a card reading terminal and those occurring over a telecommunications network such as via the telephone or the Internet.
Figure 2 shows a simplified flow chart of the method of. processing a credit card transaction according to an embodiment of the present invention.
The credit card holder purchasing goods and/or services from a merchant 202.
The merchant receives the credit card data from the card holder 204. A first transaction request including a purchase value of the goods and/or services is generated 206. The credit card data and first transaction request are transmitted from the merchant to the credit card issuing financial institution for approval 208. The financial institution either approves or declines the first transaction request on the basis of factors including available credit.
If the first transaction request is declined 210, the credit card transaction is terminated 212. If the credit card transaction is approved 214, a second transaction request including a transaction levy is generated 216. The second transaction request is transmitted from the merchant to the financial institution for approval 218.
If the second transaction request is declined 210, the credit card transaction is terminated 212. If the credit card transaction is approved 214, the W:SASKIWPatentSpeMufiPay Innovation Patent (As Filed).doc financial institution transfers funds to the merchant's account to cover the value of both the first and second transaction requests 220.
Also provided is a system for processing a credit card transaction for a purchase made by a card holder from a merchant. The system includes a credit card data reader for receiving credit card data from the card holder. The credit card reader may be part of a payment interface accessed over a communications network such as the Internet, or may be part of a point of sale terminal. The system further includes a processor for generating a first transaction request including a purchase value and a second transaction request including a transaction levy. The system has a transmitter for transmitting the credit card data and the first and second transaction requests from the merchant to a financial institution and a response receiver for notifying the merchant of approval or decline of the first and second transaction request.
Finally, the system includes a transfer component for the financial institution to transfer sufficient funds to cover both the first and second transaction requests from a card holder's account to a merchant's account, in the event that both the first and the second transaction requests are approved.
It is to be understood that various additions, alterations and/or modifications may be made to the parts previously described without departing from the ambit of the invention.
WASASKIAMPatentSpecultiPay Innovation Patent (As Filed).doc
Claims (5)
1. A method for processing a credit card transaction in payment for a purchase made by a credit card holder from a merchant, the method including the steps of: the merchant receiving credit card data from the card holder; determining a first transaction request including a purchase value and a second transaction request including a transaction levy; transmitting the credit card data and the first and second transaction requests from the merchant to a financial institution; and the merchant receiving a response either granting approval of or declining the first and second transaction requests; wherein approval of both the first and the second transaction requests is required in order for the credit card transaction to proceed resulting in the financial institution transferring sufficient funds to cover both the first and second transaction requests from a card holder's account to a merchant's account.
2. A method according to claim 1, wherein the second transaction request is not transmitted from the merchant to the financial institution until the financial institution has issued a response approving the first transaction request to the merchant.
3. A method according to claim 1 or 2, further including the step of the financial institution issuing a statement to the card holder and the merchant respectively, each statement detailing the purchase value and the transaction levy for each credit card transaction processed.
4. A system for processing a credit card transaction for a purchase made by a card holder from a merchant, the system including: a credit card data reader for receiving credit card data from the card holder; a processor for determining a first transaction request including a purchase value and a second transaction request including a transaction levy; W:SASKIAMPatentSpedMutiPay Innovation Patent (As Filed).doc 12 a transmitter for transmitting the credit card data and the first and second transaction requests from the merchant to a financial institution; and a response receiver for notifying the merchant of approval or decline of the first and second transaction requests; a transfer component for the financial institution to transfer sufficient funds to cover both the first and second transaction requests from a card holder's account to a merchant's account, in the event that both the first and the second transaction requests are approved.
5. A system according to claim 4, wherein the system further includes: a notification component for notifying the card holder that payment for the purchase by credit card incurs a transaction levy; a payment method selector by which the card holder can select an alternative payment method if the card holder declines to pay the transaction levy; and a statement generating component which issues a statement from the financial institution to the card holder and the merchant respectively, each statement detailing the purchase value and the transaction levy for each credit card transaction processed. Dated: 9 March 2005 Phillips Ormonde Fitzpatrick Patent Attorneys for: Australia and New Zealand Banking Group Limited d W:ASASKIAPatervtSpectustUPay Innovation Patent (As Filed).doc
Priority Applications (1)
| Application Number | Priority Date | Filing Date | Title |
|---|---|---|---|
| AU2005100221A AU2005100221A4 (en) | 2004-03-10 | 2005-03-09 | Credit card transaction processing |
Applications Claiming Priority (3)
| Application Number | Priority Date | Filing Date | Title |
|---|---|---|---|
| AU2004901260 | 2004-03-10 | ||
| AU2004901260A AU2004901260A0 (en) | 2004-03-10 | Credit card transaction processing | |
| AU2005100221A AU2005100221A4 (en) | 2004-03-10 | 2005-03-09 | Credit card transaction processing |
Publications (1)
| Publication Number | Publication Date |
|---|---|
| AU2005100221A4 true AU2005100221A4 (en) | 2005-04-21 |
Family
ID=34553071
Family Applications (1)
| Application Number | Title | Priority Date | Filing Date |
|---|---|---|---|
| AU2005100221A Ceased AU2005100221A4 (en) | 2004-03-10 | 2005-03-09 | Credit card transaction processing |
Country Status (1)
| Country | Link |
|---|---|
| AU (1) | AU2005100221A4 (en) |
-
2005
- 2005-03-09 AU AU2005100221A patent/AU2005100221A4/en not_active Ceased
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Legal Events
| Date | Code | Title | Description |
|---|---|---|---|
| MK22 | Patent ceased section 143a(d), or expired - non payment of renewal fee or expiry |