GB2373879A

GB2373879A - Apparatus and method for exchange rate conversion in card transactions

Info

Publication number: GB2373879A
Application number: GB0028083A
Authority: GB
Inventors: Edward Murphy; Francis Enda Murphy
Original assignee: Individual
Current assignee: Individual
Priority date: 2000-11-17
Filing date: 2000-11-17
Publication date: 2002-10-02
Anticipated expiration: 2020-11-17
Also published as: GB0028083D0; GB2373879B

Abstract

The present invention relates to processing of credit card transactions where conversion to the cardholder currency is securely and efficiently processed at a merchant site into a cardholder currency. The number of currency exchanges is reduced thereby benefiting cardholders and eliminating merchant foreign exchange exposure. Competitive merchant service charges (MCS) are also possible in addition to enhancing the trust and confidence of cardholders.

Description

AN INTER-COMPUTER COMMUNICATIONS APPARATUS The present invention relates to an inter-computer communications apparatus and more particularly to a method for improving the efficiency and transparency of communications between computer systems.

The term"inter-computer communications"refers to communication between a number of data processing entities.

In many data processing systems, it is common to transfer data from between a number of disparate and often geographically remote sources to a local or target computer system.

These sources frequently use different hardware and software platforms to comparable data sources and to the local target computer. The data may be transferred for storage, used to obtain information or for processing to provide a result, which is then re-transferred to the source. Such transfers have become extremely common with the emergence of both Internet and Intranet applications. When the hardware and software platforms of the remote sources are configured for this purpose or are identical this is relatively simple and error free. As the numbers of different hardware and software platforms increase, so too do the problems increase. When there are a large number of variations in such platforms it becomes virtually impossible to transfer data in a transparent manner, in that the data must be converted at each source, into a format suitable for use by the local target computer. Even this is not suitable in all situations, for example when the source is not designed or configured for this type of operation having been developed over a long period of time. Such legacy systems contain large quantities of information, which may be required for the purposes outlined by the local system. Obviously owners of such source systems wish to unlock the information stored to enable users to fully exploit the new technologies. However, as the systems were not designed to operate in this manner this is problematic. This is particularly the case when it is necessary to connect to application processing elements on the legacy system.

One example of a situation where transparent and efficient communication of information between disparate and geographically remote processing entities is required occurs in the processing of credit card transactions. Card transaction processing requires the

communication of data from a number of disparate and often geographically remote points of sale sources to a local or target processing computer system. This communication is required for authentication and validation as well as for account reconciliation purposes. Systems, operating in a well controlled environment such as a store charge card system present little difficulty to system operators as the points of sale and account rationalisation functions can be easily controlled and modified as required. Similarly, the range of formats of magnetic card readers in merchant outlets throughout the world while large is limited in the extent that certain internationally imposed standards must be complied with. Processing of credit card transactions in a"card not present"CNP environment is not forced to comply with such standards and a broad proliferation of mechanisms have developed. The variety of cards that must be accommodated and the number of currencies being presented, for example to a merchant operating on the internet means that the merchant is normally compelled to outsource development of these processing functions. In order to make such developments cost effective, it is necessary for the developers to conduct the processing of the transaction at a central site. This imposes certain limits on both the merchant and on the merchant's customers. Merchants are effectively bound to the developer selected for processing of all credit card transactions as the inter computer communications between the merchant system and the developer system is usually proprietary for exactly this reason to protect the developer investment.

Additionally, the cardholder is forced to accept a large number of conversions on a given transaction, all of which cost money. A clarifying example of this is now described. A cardholder in Japan, billed in Japanese Yen, wishing to purchase goods or services from a Website in the United Kingdom, transmits the necessary credit card data to the site. This information is combined with the purchase details and presented to an acquiring bank as a Sterling pound total. Files for each merchant are amalgamated from each bank and introduced into a global credit card scheme such as the Visa" system. As the international settlement currency for these schemes is the United States Dollar (USD), the transaction is converted from Sterling to USD. This settlement currency amount is then transmitted to the Japanese bank that issued the card to the cardholder for conversion into the user currency, namely Japanese Yen. The transaction has thus been converted from Sterling to Dollars and from dollars to Yen and it may be some time before the cardholder is informed

of the actual price paid for the goods or services. As well as the costs of these transactions to the customer known systems have inherent delays. These delays and conversions adversely affect the cardholder.

There is therefore a need for a communication apparatus, which will provide communications between disparate data sources, which will overcome the aforementioned problems.

Accordingly, there is provided an inter computer communications apparatus for use in an electronic commerce environment, the apparatus having a processor and associated datastore for connection to a remote merchant system of the type having a processor and datastore, and means for connection to a remote client system, wherein the remote merchant system is configured to perform the steps of :- receiving card information associated with a transaction request as a bitstream; routing the received bitstream to a parsing register; parsing register contents to extract an originating country identification word; comparing an extracted identification word with a predefined index stack of identification words resident on the datastore in response to a match condition retrieving a conversion multiplier from the datastore; and applying the multiplier to a transaction value to produce a final billing value for transmission to the cardholder and the client system.

Preferably the apparatus incorporating means for performing the further steps of :-

generating a quotation currency selection requests ; transmitting the generated request to the cardholder ; receiving a currency selection dataword and storing the dataword in a temporary security buffer; and comparing the contents of the temporary security buffer with the indexed stack contents in response to a matched condition and generating an authorisation signal or request for validation signal.

According to one aspect of the invention there is provided a method for processing transactions in an electronic commerce environment comprising the steps of :- receiving card information associated with a transaction request as a bitstream; routing the received bitstream to a parsing register; parsing register contents to extract an originating country identification word; generating a quotation currency selection request; transmitting the generated request to the cardholder; receiving a currency selection dataword and storing the dataword in a temporary security buffer; comparing an extracted identification word with a predefined index stack of identification words resident on the datastore in response to a match condition retrieving a conversion multiplier from the datastore; comparing the contents of the temporary security buffer with the indexed stack

contents in response to a matched condition and generating an authorisation signal or request for validation signal ; applying the multiplier to a transaction value in response to an authorization signal to produce a final billing value for transmission to a cardholder and a client system; Ideally, the datastore contents are periodically updated from a remote server The invention will be more clearly understood from the following description of an embodiment thereof with reference to the accompanying drawing, given by way of example only, in which: Fig. 1 is a block diagram illustrating operation of an inter-computer communications apparatus formed in accordance with the invention.

For the purposes of this description, specific system architectures, processors, memory devices, timing and performance details have been omitted in order not to unnecessarily obscure the present invention. Thus, the constituent components of the invention have been described in terms of functionality, as many ways of achieving said functionality will be readily apparent to those skilled in the art.

An inter-computer communications apparatus according to the invention indicated generally by the reference numeral 1 is connected between a number of merchant systems 2 each having an associated processor and datastore and a client system 3 to facilitate communications using Transmission Control Protocol/Internet Protocol. (TCP/IP) or similar connection protocols. The apparatus 1 connects to the merchant systems 2 using a server 4, which processes Hypertext Transport Protocol (HTTP) requests received from the systems 2.

HTTP is the protocol that is used to submit these requests from the systems 2 to the server 4, which in turn uses the same protocol to return the results of that request to the system 2 or merchant. HTTP is the foundation of the World Wide Web (WWW) where the simplest through to the most complex of browsers use HTTP to issue requests to WWW servers and

to receive and to display the response to those requests.

When a cardholder wishes to make a purchase at a merchant site the card information is transmitted to the merchant system 2. The merchant system 2 then responds and requests the cardholder to select a quotation currency selection. The cardholder selects from a predefined list of billing currencies and transmits this request to the merchant system 2, this dataword is stored in a temporary security buffer. The merchant system 2 receives the card information and routes the bit stream received on an appropriate channel with a correctly authorised protocol to a parsing register. The bitstream is then parsed to extract an originating country identification word from the bitstream. The extracted identification word is then passed to a comparator for comparison with a predefined index stack of identification words resident of the datastore. When a match is detected a conversion multiplier associated with the matched word is retrieved from the datastore. Before the multiplier is applied to the currency amount of the transaction the matched word is compared with the contents of the temporary security buffer. In the event of a no match condition, further authentication of the transaction request maybe sought. Alternatively, in the event of such a mismatch a user warning may be generated and routed to the cardholder to seek verification from the user that billing of the transaction is not in the same currency as the card issued and request authorisation to proceed. With the necessary authentication complete, the multiplier is applied to the transaction value and is quoted to the cardholder in the currency of choice. Subject to the process described above this will generally be in the cardholder's native currency. By the relatively simple expedient of providing country identifiers and associated multipliers to the merchant, the cardholder is immediately aware of the final billing amount at the time of making the purchase and is not required to await a statement from a card-issuing bank which of involves a considerable delay. Furthermore the risk of disputed transactions and associated chargeback to the merchant is eliminated where such disputes arise from the application of a disputed conversion rate.

The charge for the transaction in the currency of the merchant is then transmitted to the merchant acquirer together with the amount in all relevant currencies for processing through the normal credit card transaction processing system namely proceeding to a credit card debit acquirer and from that acquirer through the various credit card issuing schemes back to the

issuing bank. This issuing bank is the bank, which issued the card to the cardholder in the cardholder currency. The card holders account has an amount equivalent to the authorisation sought removed from the available card credit and authorisation for the request is returned through the credit card issuing bank, through the card schemes and though the debit acquirer to the remote server. A record of the amount of the transaction in cardholder currency and in merchant currency is stored merchant site. Once authorisation has been received by the merchant the transaction can be processed in the normal way.

At a preset interval or on request from the merchant site transaction details are transferred from the merchant to the server 4. When the transaction data is received from a given merchant, a file is created for transaction details, this file contains a conversion rate for each transaction into each and every currency operated by the server 4. This record is then transmitted, including details of the card issuer and card-issuing bank, to the acquiring bank. From the acquiring bank, the data is directed automatically onto the various credit card issuing banks. These amounts are then reconciled against the cardholder's accounts and payment is returned through the issuing bank and acquirer to server. When the server 4 receives the transaction, the value of the transaction is returned to the server 4 in cardholder currency and is then converted at the appropriate rate to the merchant currency.

The merchant currency amount is then settled to the merchants account in payment of the transaction. This amount maybe net of merchant service charge (MSC) or maybe a gross figure.

When the transaction is originally processed the rate of conversion from the merchant currency to the cardholder currency is obtained on a three-day basis, this is the figure used plus a foreign exchange margin to convert from the merchant currency to the cardholder currency. When reconciling the account, the local processor, extracts details of this transaction and obtains a daily spot rate for conversion. In the event of such a transaction operated on the spot daily rate would yield a net benefit in conversion values then this excess is credited to a local account.

Settlement of the account with the merchant may have an additional component in that the profit margin on a given transaction may be stored in a foreign exchange profit holding

account. This profit holding account may issue a dividend on each transaction in relation to the parties involved namely the remote server and the merchant operating the system. In addition to the process described above it will be understood that the server may store locally, information relating to the currency of the card presented for a given transaction.

In this situation as the transaction is being processed by the merchant, it is routed to the server and details relating to the currency of the card account are retrieved from a datastore associated with the remote server.

The remainder of the operation is similar to that described above with the exception that the conversion from the merchant currency to the cardholder currency is performed at the server 4. Obviously in this situation, the details relating to the transaction can be stored locally on the remote server and there is no requirement for an upload from the merchant point of sale apparatus.

In addition to the method for processing of credit card transactions described, it will be understood that in certain environments such as in the rental of motor cars it will be possible for the electronic point of sale to process the transaction and transfer the currency in merchant currency in both in a batch process to the remote server for processing, conversion and onward processing of the transactions. The system may also work for Card Present, where the card issuing authorities permits local conversion of the currency.

Details relating to transaction to be processed maybe downloaded periodically or contemporaneously with a batch process to transfer information relating to country identification codes and exchange rates to be transferred from the server 4 to the merchant site 2. Additionally, details relating to fraudulent use of credit cards maybe also be transferred from the local server to the point of sale apparatus if required. Such details may include lists of stolen credit card numbers so that detection of the cards is immediate at the point of sale without reference to the server 4.

The information updated on the merchant system 2 includes details on currency identification datawords associated with particular credit card numbers, conversion rates

for range of currencies for which transactions are processed and details relating to stolen or fraudulently used credit cards. The details relating to the conversion rates to be applied may equally be applied on the merchant site may equally be dynamically presented to the merchant site by the server 4 as required or requested by the vendor site. Obviously, this represents a significant improvement over known systems in that the event of a sudden fluctuation in exchange markets significantly affecting a conversion rate between currencies the remote server may deliver exchange rate information. It is anticipated that the delivery of such information will be prioritised so that the greatest volume of transactions being processed in a given time frame are service first.

It will be appreciated that the systems described, both relating to the exchange rates being supplied on spot and fixed term basis may be applied in an M-Commerce environment. In this situation, the provision of near instantaneous exchange rate data may be supplied.

The invention is not limited to the embodiment hereinbefore described, but may be varied in both construction and detail within the scope of the appended claims.

Claims

CLAIMS : 1. An inter computer communications apparatus for use in an electronic commerce environment, the apparatus having a processor and associated datastore for connection to a remote merchant system of the type having a processor and datastore, and means for connection to a remote client system, wherein the remote merchant system is configured to perform the steps of :- receiving card information associated with a transaction request as a bitstream;

routing the received bitstream to a parsing register ; parsing register contents to extract an originating country identification word; comparing an extracted identification word with a predefined index stack of identification words resident on the datastore in response to a match condition retrieving a conversion multiplier from the datastore; and applying the multiplier to a transaction value to produce a final billing value for transmission to the cardholder and the client system.
2. An inter computer communications apparatus as claimed in claim 1 incorporating means for performing the further steps of :- generating a quotation currency selection requests; transmitting the generated request to the cardholder;

receiving a currency selection dataword and storing the dataword in a temporary security buffer ; and comparing the contents of the temporary security buffer with the indexed stack contents in response to a matched condition and generating an authorisation signal or request for validation signal.
3. A method for processing transactions in an electronic commerce environment comprising the steps of :- receiving card information associated with a transaction request as a bitstream ; routing the received bitstream to a parsing register; parsing register contents to extract an originating country identification word; generating a quotation currency selection request; transmitting the generated request to the cardholder; receiving a currency selection dataword and storing the dataword in a temporary security buffer; comparing an extracted identification word with a predefined index stack of identification words resident on the datastore in response to a match condition retrieving a conversion multiplier from the datastore; comparing the contents of the temporary security buffer with the indexed stack contents in response to a matched condition and generating an authorisation signal or request for validation signal; applying the multiplier to a transaction value in response to an authorization signal to produce a final billing value for transmission to a cardholder and a client system;
4. A method as claimed in claim 1 wherein datastore contents are periodically updated from a remote server
5. A method and apparatus substantially as herein described with reference to and as shown in the accompanying drawing.