AU761150B2 - Electronic transaction processing - Google Patents

Description

Australia Patents Act 1990 Complete Specification Standard Patent Anonymous Secure Electronic Transaction (ASET) Management Global Payments Solution The following statement is a full description of this invention, including the best method of performing it known to me.

This invention relates to providing a solution to the OEDC Global Payments charter and providing an anonymous managed secure solution to manage Global electronic transactions.

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6 -1- ELECTRONIC TRANSACTION PROCESSING FIELD OF THE INVENTION The present invention relates generally to electronic commerce and more specifically to processing of electronic transactions between a customer and a merchant.

BACKGROUND

A substantial amount of electronic commerce (e-commerce) is conducted online, particularly via the Internet, and involves credit card transactions as a mode of payment.

1o According to the Boston Consulting Group, the projected annual worldwide volume of electronic credit card transactions is US$61.1 billion and 2.4% thereof (US$1.464 billion) is lost through fraudulent transactions. According to the Wall Street Journal, 33% of fraudulent transactions occur as a result of stolen cards, another 33% due to customerrelated fraud, and a further 33% due to customer victimisation. Customer victimisation is i the appropriation and misuse of credit card recorded details, which can be due to exposure at the merchant-end through rogue staff activity. Other examples include over-billing or revolving re-billing without customer notification and/or approval. Theft of credit cards constitutes a physical act of fraud that enables both physical and metaphysical fraud.

:":Customer victimisation is a metaphysical act of credit card fraud as such can occur 20 without a stolen card and can be initiated with a metaphysical representation of credit o :card details.

A significant number of merchants and consumers alike have reservations regarding online credit card transactions. 18% of electronic retailers (e-tailers) in the United Kingdom refuse to participate in global e-commerce due to credit card fraud.

.ooo Table 1, contained hereinafter in this document, provides an overview of current credit card fraud comrnbating techniques employed by certain organisations.

The Organisation for Economic Co-operation and Development (OECD) Council has directives/guidelines in place for addressing credit card fraud by 2002 or sooner. The guidelines address consumer privacy and secure transactions that are capable of being cancelled by the consumer before final conclusion. The WATCH Payments processing project is being engineered to facilitate transaction volumes internationally and could provide a back-end tool for use with an improved solution to the foregoing problems.

597078 22/07/02 I:\DayLib\LIBQ\01I 374.doc 'iI -2- While Internet (electronic) fraud is a global ill, the strong desire in Europe to protect privacy in conjunction with advanced wireless communications has prompted some fraud-busting action. A recent European Union directive instructs each of the member states to set standards by which "digital Signatures" are treated with the same weight as actual signatures by the end of the year (2000). This allows credit and delivery data to be encrypted and submitted to a specific site, while allowing only the consumer to use the data for purchases. Disadvantageously, stolen cards can be used with other online retailers so the problem of charge-backs may continue in spite of the European Union directive. In spite of the United Kingdom having implemented digital signatures, the credit rating company Experian Ltd say that 5% of UK retailers report that up to 2% of their sales are wiped-out by charge-back costs (source: The Wall Street Journal).

Consequently, a need clearly exists for a method and a system that facilitate processing of electronic transactions in an anonymous and secure manner.

SUMMARY

According to an aspect of the present invention, there is provided an online method for processing secure electronic transactions between a merchant and a customer by an independent intermediary. The method includes the steps of the intermediary obtaining and recording information relating to the customer, wherein at oee* least a portion of the information is withheld from the merchant to facilitate secure transactions between the merchant and the customer, the intermediary receiving notification of the transaction details from the merchant, the intermediary obtaining approval for the transaction from the customer via a communications network and the intermediary processing the transaction to effect payment, upon obtaining the approval, on behalf of the customer.

e Preferably, the independent intermediary comprises an interactive transaction processing system and the communications network comprises the Internet.

eoeeo o .e oThe method can include the further step of the intermediary cancelling the transaction, if customer approval of the transaction is not obtained within a predetermined time period.

[R:\LIBT]68853.docjzb 2a- In a preferred embodiment, the transaction comprises a credit card transaction and the customer's credit card details are withheld from the merchant.

Optionally, the identity of the customer can be withheld from the merchant.

The transaction details can include a predetermined customer identification number and the step of obtaining approval can include the sub-step of the intermediary validating a Personal Identification Number (PIN) received from the customer.

The method can further include the intermediary generating a unique customer number for each customer, storing the information relating to a customer in a customer database, and/or maintaining a database of cancelled customers.

*ooeo ee' *o *ee e* *e *eee [R:\LIBT]68853.doc:jzb Other aspects of the present invention provide a system and computer program product for implementing the steps of the foregoing method.

BRIEF DESCRIPTION OF THE DRAWINGS Features and preferred embodiments of the present invention are described hereinafter with reference to the accompanying drawings in which: Fig. 1 is a block diagram of a system infrastructure for processing electronic transactions according to an embodiment of the present invention; Fig. 2 is a flow chart of a method for processing electronic transactions 1o according to an embodiment of the present invention; Fig. 3 is a block diagram of a system for processing electronic transactions according to an embodiment of the present invention; and Fig. 4 is a flow chart of an initial customer registration process.

DETAILED DESCRIPTION OF PREFERRED EMBODIMENTS The principles of the preferred method and system described herein have general applicability to electronic transaction processing. For ease of explanation, the steps of the preferred method and the preferred apparatus are described with reference to credit card transactions processed via the Intemrnet. However, it is not intended that the present 20 invention be limited to the described method and/or apparatus. For example, the invention has application to alternative forms of payment including direct debit, secure electronic auctions, business-to-government taxation payments and utilities (eg. Power, gas, water, telecommunications, etc). Embodiments of the invention can be implemented by banks, credit card companies, financial institutions and various other intermediaries. The invention may be embodied in voice and/or data communication networks, including the V Public Switched Telephone Network (PSTN), cellular radio networks and proprietary landline and radio-based communication networks. Accordingly, embodiments of the present invention can rely on voice communication, as opposed to data communication, such as telephone or even "over the counter" conversations. Additionally, embodiments of the present invention have application to television apparatus and set-top boxes.

Fig. 1 is a block diagram of a system infrastructure 100 for processing credit card transactions via the Internet.

597078 22/07/02 I:\DayLib\LIBQ\ I 374.doc The customer infrastructure 110 typically comprises a Personal Computer (PC) linked to an Internet Service Provider 120 by a communications link 112, as is commonly known. However, the customer infrastructure 110 is not intended to be limited to a PC and can include a range of equipment suitable for such purpose, including various computer systems and terminals such as mobile telephones and Personal Digital Assistants (PDA's).

Merchant sites 140 are accessible by customers via the ISP 120.

The Anonymous Secure Electronic Transaction (ASET) System 130 can be accessed by customers via the customer infrastructure 110 and the ISP 120. The ASET system 130 is accessible by the merchant sites 140 via communications link 134, which can also be via the Internet.

Is The ASET system 130 can access various credit card vendors 150 via a communications link 132, which can also be via the Internet.

Fig. 2 is a flow chart of a method for processing electronic transactions via the o Intemrnet.

At step 210, a customer accesses a merchant site to browse or view items for sale. Such items may include goods and/or services. Once the customer has selected one or more items for purchase, the customer inputs the purchase details at step 212.

l Then, at step 214, the customer submits an ASET customer identification V number and an address for delivery of the goods and/or services intended to be purchased.

The merchant notifies the ASET system 130 of the details of the proposed transaction, at step 216, and provides the customer with the order details for approval at step 218.

At selection step 220, the customer reviews the order details and either approves or declines the purchase transaction. If the customer declines the purchase transaction (No) the ASET system 130 cancels the transaction on behalf of the customer by notifying 597078 22/07/02 I:\DayLib\LIBQ\ 1374.doc the merchant accordingly, at step 230. The ASET system 130 further notifies or confirms cancellation or closure of the transaction to the customer at step 232.

If the customer approves the purchase transaction (Yes), at selection step 220, s the ASET system 130 processes the credit card transaction on behalf of the customer at step 222. Approval of the credit card expenditure is requested of a relevant credit card vendor at step 224. If approval is not forthcoming the ASET system 130 cancels the transaction on the customer's behalf, at step 230, and notifies the customer of closure or cancellation of the transaction, at step 232.

If the credit card expenditure is approved (Yes), at step 224, the ASET system 130 approves the transaction, notifies and pays the merchant, and notifies the customer, at step 226. Thereafter, the merchant delivers the goods and/or services purchased by the customer to the delivery address, at step 228.

Approval of a purchase transaction requires entry of a customer's Personal Identification Number (PIN). Moreover, a purchase transaction must be approved by a customer within a predetermined cooling-off period, typically 72 hours. During such :period, the order or transaction remains in a pending state. Failure to approve a 20 transaction within the cooling off period results in cancellation of the order by the ASET system.

Fig. 3 is a block diagram of the ASET system 300, which corresponds to the ASET system 130 of Fig. 1.

The Interactive Transaction Processing System (ITPS) 310 is the processing engine of the ASET system 300 and employs both data interrogation and email services to perform primary functions of the ASET system 300. The ITPS 310 processes purchase transactions from merchant receipt through to customer/credit card vendor acceptance and payment of the merchant on behalf of the customer. The ITPS 310 allocates ASET transaction numbers initially, interrogates the customer database 330, awaits formal customer approval of each transaction, processes transactions with credit card vendors on behalf of customers, and notifies the customers and merchants of order status by way of email messages.

597078 22/07/02 I:\DayLib\LIBQ\O 1 374.doc The ASET system 300 includes a Customer Number Generation Utility (CNGU) 320 for creating customer identification numbers in response to registration requests by customers and generating corresponding entries in the customer database 330 and customer transaction database 350. The CNGU 320 attaches a customer identification number to each completed registration request. Confirmation of the ASET customer details are emailed to the customer by the ITPS 310, including the customer identification number.

The customer database 330 contains the master records of customer information relating to all active customer accounts. Specifically, the customer database 310 contains data entered at registration by a customer and the corresponding customer identification number. The customer database 330 can be interrogated or have information written thereto by the ITPS 310.

The cancelled customer database (CCD) 340 contains information relating to inactive customers that has been deleted from the customer database 330. Customer details and transaction logs relating to inactive customers are copied to the CCD 340.

Typically, inactive customers include customers with expired credit cards and customers who fail to confirm three or more purchase orders within a limited cooling-off period.

eooo The customer transaction database 350 contains records of all customer transactions, whether successful or unsuccessful. The master customer record is created in the customer transaction database by'the CNGU 320. This facility is archival in nature and provides an audit trail of previous transactions.

°oo The vendor credit card interface 360 is a secure transaction processing facility that is activated by the ITPS 310 to process credit payments in respect of customer purchases. The credit card vendor approves or declines transactions requested by the ITPS 310 on behalf of customers and returns results via the vendor credit card interface 360.

Fig. 4 is a flow chart of the initial customer registration process. At step 410, a customer accesses the Internet website of the ASET system 310. Then, at step 420, the customer completes an online registration form, typically provided in the form of an HTML-based web page. All of the fields are required to be completed by the customer 597078 22/07/02 I:\DayLib\LIBQ\0 I 374.doc before processing of the registration request can occur. The information to be provided by a customer in a registration request typically includes, but is not limited to: customer name (as per credit card) customer and/or delivery address card type card number card expiry date customer email address customer defined PIN number (encrypted) I0 At step 430, the CNGU 320 generates a unique customer number and adds corresponding data entries to the customer database 330 and the transaction database 350.

Finally, at step 440, the ITPS 310 emails the customer identification number and associated details to the customer, thus enabling the service.

S.:

Suinmiary of Service Outline SA customer accesses a merchant site and inputs an ASET customer number, a o0• 20o delivery address and product order information.

The merchant electronically notifies ASET of the transaction details.

ASET applies the transaction reference number and electronically notifies the customer of the order details and requests approval/refusal.

The customer approves the purchase, whereupon ASET bills the customer's credit card account.

ASET notifies the customer and/or merchant of transaction acceptance and pays the merchant.

99*9 The merchant dispatches the goods to the customer.

9.

In the foregoing, a method, an apparatus, and a computer program product for processing electronic transactions between a customer and a merchant by an intermediary are disclosed. Advantageously, the customer's name, email address and credit card details are withheld from the merchant.

597078 22/07/02 I:\DayLib\LIBQ\ I 374.doc While only a small number of arrangements or embodiments are described, it will be apparent to those skilled in the art in view of this disclosure that numerous changes and/or modifications can be made without departing from the scope and spirit of the invention.

o* go 22/07/02 I:\DayLib\LIBQ\01374.doc Table 1 ORGANISATION FRAUD COMBAT PROBLEM CHARGEBACK% INITIATIVES ONLINE OFFLINE E.Functional.com 2/7 employees spend day No solution in place. 2.4% N/A sorting through orders for Relying on human clues of fraud. detection. Ineffective.

Comparing shipping/ billing Increased operating address, costs.

Call each client that orders more than $100.

C.B.S Entertainment Check customer details, No solution in place. 2% N/A Group. geographical location. Cannot guarantee (X-rated web) delivery or no purchase signature. Have vendor add new delivery address to avoid financial responsibility and hand responsibility to credit card vendor.

Expedia Inc. (Travel Two methods: No solution in place. 5/2000 N/A website). Check last minute expensive Too late if no one US$4.1M Microsoft startup. ticket bookings. notices.

List of warning signs Hit and miss approach.

employees must know.

American Express Temp cards, "private No end-to-end solution 2.64% 1.24% payments" and free service, in place.

Repetitive/cumbersome Free service.

Amex liable for unauthorised purchases.

Bluefly.com.inc Software that computes No solution in place. 2% Online apparel probability of fraud. Hit and miss software New York Fraud cut from 4% in 1999 solution.

to Increased operating Manual detection for large costs.

orders.

Capital One/ Cards that protect against Credit card providers 2% Citibank liability if charges run up in and clients are exposed.

client's name by another party.

Visa Built Secure Electronic Too cumbersome. 2.4% 1.24% Transaction (SET) System Never took off. Does utilising digital signatures in not protect customer _1995. identity.

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Claims (19)

1. An online method for processing a secure electronic transaction between a merchant and a customer by an independent intermediary, said method including the steps of: said intermediary obtaining and recording information relating to the customer, wherein at least a portion of said information is withheld from the merchant to facilitate secure transactions between the merchant and the customer; said intermediary receiving notification from the merchant via a communications network of details relating to the transaction; said intermediary obtaining approval from the customer via a communications network for the transaction; and said intermediary processing the transaction, upon obtaining said approval, to effect payment of the merchant on behalf of the customer.

2. A method according to claim 1, wherein said independent intermediary comprises an interactive transaction processing system and said communications network comprises the Internet.

3. A method according to claim 1 or claim 2, including the further step of said oeooo intermediary cancelling the transaction if said approval is not obtained within a predefined time period.

4. A method according to claim 1 or claim 2, wherein said step of obtaining approval from the customer includes the sub-steps of: obtaining a Personal Identification Number (PIN) from the customer; and validating said PIN. A method according to claim 1 or claim 2, wherein said details relating to the transaction includes a predefined customer identification number. :i 6. A method according to any one of claims 1 to 3, wherein said transaction comprises a credit card payment and the customer's credit card details are withheld from the merchant. [R:\LIBT]68853.doc :jzb -11-

7. A method according to any one of claims 1 to 3, wherein the identity of the customer is withheld from the merchant.

8. A system for processing secure online electronic transactions between a merchant and a customer by an independent intermediary, including: means for said intermediary to obtain and record information relating to the customer, wherein at least a portion of said information is withheld from the merchant by said intermediary to facilitate secure transactions between the merchant and the customer; communication means for said intermediary to receive notification of details relating to a transaction from the merchant; communication means for said intermediary to obtain approval of said transaction from the customer; and means for said intermediary to process said transaction, upon obtaining said approval, to effect payment of the merchant on behalf of the customer.

9. A system according to claim 8, wherein said independent intermediary comprises an interactive transaction processing system and said communications network comprises the Internet.

10. A system according to claim 8 or claim 9, further including means for said intermediary to cancel the transaction if said approval is not obtained within a predefined time period.

11. A system according to claim 8 or claim 9, wherein said approval includes a Personal Identification Number (PIN) and said system further includes means for said intermediary to validate said PIN. oooo

12. A system according to claim 8 or claim 9, wherein said details relating to the S transaction includes a predefined customer identification number. i [R:\LIBT]68853. docjzb 12-

13. A system according to any one of claims 8 to 10, wherein said transaction comprises a credit card payment and the customer's credit card details are withheld from the merchant.

14. A system according to any one of claims 8 to 10, wherein the identity of the customer is withheld from the merchant. A computer program product having a computer readable medium having a computer program recorded therein for processing secure online electronic transactions between a merchant and a customer by an independent intermediary, said computer program including: computer program code means for said intermediary to obtain and record information relating to the customer, wherein at least a portion of said information is withheld from the merchant to facilitate secure transactions between the merchant and the customer; computer program code means for said intermediary to receive notification of details relating to a transaction from the merchant; computer program code means for said intermediary to obtain approval of said transaction from the customer; and oooo :computer program code means for said intermediary to process said transaction, upon obtaining said approval, to effect payment of the merchant on behalf of the customer.

16. A computer program product according to claim 15, wherein said independent intermediary comprises an interactive transaction processing system and said communications network comprises the Internet. *o .o

17. A computer program product according to claim 15 or claim 16, further oooo including computer program code means for said intermediary to cancel the transaction if said approval is not obtained within a predefined time period.

18. A computer program product according to claim 15 or claim 16, wherein said approval includes a Personal Identification Number (PIN) and said computer [R:\LIBT]68853.docjzb 13 program product further includes computer program code means for said intermediary to validate said PIN.

19. A computer program product according to claim 15 or claim 16, wherein said details relating to the transaction include a predefined customer identification number. A computer program product according to any one of claims 15 to 17, wherein said transaction comprises a credit card payment and the customer's credit card details are withheld from the merchant by the intermediary.

21. A computer program product according to any one of claims 15 to 17, wherein the identity of the customer is withheld from the merchant by the intermediary.

22. A method according to any one of claims 1 to 3, further including one or more steps selected from the group consisting of: said intermediary generating a unique customer number for each customer; said intermediary storing said information relating to a customer in a customer database; and o: said intermediary maintaining a database of cancelled customers. oO o o 23. A system according to any one of claims 8 to 10, further including one or more selected from the group consisting of: processing means for said intermediary to generate a unique customer number for each customer; database means for said intermediary to store said information relating to a customer; and database means for said intermediary to store a list of cancelled customers. •go* S 24. A computer program product according to any one of claims 15 to 17, oo: •further including one or more computer program code means selected from the group S consisting of: computer program code means for said intermediary to generate a unique customer number for each customer; [R:\LIBT]68853.doc jzb -14- computer program code means for said intermediary to store said information relating to a customer; and computer program code means for said intermediary to store a list of cancelled customers. An online method for processing a secure electronic transaction between a merchant and a customer by an independent intermediary, said method substantially as herein described with reference to Fig. 2 of the accompanying drawings.

26. A system for processing secure online electronic transactions between a merchant and a customer by an interactive transaction processing system substantially as herein described with reference to Fig. 3 of the accompanying drawings. DATED this nineteenth Day of March, 2003 Miles Dion Jon Walden Patent Attorneys for the Applicant SPRUSON FERGUSON 0 *0 eeo ee e [R:\L1BT]68853.doc:jzb