IES20040398A2 - Co-ordinated card transaction processing with inter-computer communication - Google Patents

Abstract

A method of co-ordinated card transaction processing utilises inter-computer communication and a co-ordinated processing means. The method comprises the steps of capturing a card transaction directly or indirectly on a sales terminal of a merchant, string the transaction in the merchant's transaction table and forwarding the transaction table in a file to the co-ordinated processing means. The processing means then parses the transactions against a Bank Identification Number (BIN) reference table to identify the issuing ban from the unique identification number on each card. The transaction s are grouped for the issuing banks into batches. Each batch is connected to the indicated issuing bank for debiting each card holder's account directly. The settlement funds are forwarded back to the co-ordinated processing means and merchant settlement funds and lodged to designated bank accounts from the co-ordinated processing means. <Figure 2>

Description

CO-ORDINATED CARD TRANSACTION PROCESSING WITH INTER-COMPUTER COMMUNICATION The invention relates to a co-ordinated card transaction processing system, and more 5 particularly to co-ordinated charge, credit and debit card transaction processing system with an inter-computer communications apparatus and especially to a method for improving the coordination and transparency of communications between computer systems in relation to card transaction processing. The term “inter-computer communication” refers to a communication between a number of data processing entities.

To describe and characterize the invention as it applies to card transaction processing, certain terms used in the card transaction processing industry have acquired a particular definition which may be of benefit to outline before describing the invention.

Term Acquiring Bank Authorisation Cardholder Definition The institution or organization where a merchant has an account to process transactions and credit payment.

This is the process where permission is granted by the card issuer (usually a bank) allowing the payment transaction to proceed. During this process the issuing bank checks that the available credit on the card is not exceeded.

A cardholder is an individual or business that has established an account with a credit card issuer. A cardholder is eligible to initiate a payment card transaction.

Issuing Bank «τα —r aold MecrT-ov A financial institution that issues payment cards, such as credit or debit cards.

OPEN TO PUBLIC INSPECTION UNDER SECTION 28 AND RULE 22 JNL /p 0 4 0 3 9 8 Merchant 2 Term applied to retailers who provide a facility to accept credit or debit card payments Treasury Management Treasury management is the adjustment of currency exchange rates to protect client customers against exposure to losses from fluctuations. Debit Cards Using such cards, payments are made from a current or savings account, subject only to the delays involved in clearing and settlement. There are sometimes referred to as “pay now” cards. Charge Cards With charge cards, the customer pays the card issuer in full for all transactions made in a fixed period - usually once a month - at the end of that period. These are sometimes called “deferred debit” cards. Credit Cards Here the customer pays off some or all of the bill at the end of a fixed period - usually once a month - and has the option of taking out longer term credit with the card issuer. They are sometimes called “pay later” cards.

Card transaction processing requires the communication of data from a number of disparate and often geographically remote point 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. Proprietary systems, operating in a strictly controlled environment such as a store charge card present little difficulties to operators as the points of sale and account rationalisation can be strictly controlled and changed if necessary. However, to process transactions from magnetic card readers located in merchant outlets throughout the world, far more processing power is required. This processing demand is further increased by the variety of cards that must be accommodated and by the number of currencies being presented. * 040398 These remote point of sale 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 retransferred to the source. Such transfers have become extremely common with the emergence of many types of remote card reading and processing devices. 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.

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. The variety of cards that must be accommodated and the number of currencies being presented 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. ΙΕ θ 4 0 3 go An example of the problems associated with the current method for processing card transactions is exemplified in relation to the current method with reference to Figure 1 of the accompanying drawings which is a schematic representation of the current method of card transaction processing.

The transaction commences with a customer deciding to buy some goods from a retailer at a given price. The customer wishes to pay using a card issued under a particular scheme and the retailer has agreed to accept the scheme’s cards. The customer gives his card details to the retailer and confirms his identity, for example with a signature. For some transactions the retailer may be required to seek authorisation from the card issuer, for example to check that the card is not stolen or that the transaction would not make the customer breach an agreed credit limit.

The retailer then sends the transaction details to the merchant’s acquiring bank. Transaction details may either be sent in batch at the end of the trading day or online. The acquiring bank in turn forwards transaction and cardholder details to the relevant card issuing bank - usually through a telecommunication network under the control of the scheme. The merchant’s acquiring bank pays the retailer the price less a fee, known as a merchant service charge (or MSC). The issuing bank in turn pays the merchant acquirer the retail price less a further fee known as an interchange fee. The timing of the payment from the issuing bank to the acquiring bank is typically determined by the rules of the payment scheme. The timing of the payment by the merchant acquirer to the retailer is determined by agreement between these two participants.

The final stage is for the issuing bank to debit the customer’s account - this might be a credit card account or savings account, in the case of a debit card. The issuing bank will typically provide the customer with transaction details through a regular statement. The customer will be debited the retail price, plus any fees specified in the terms of the account.

Once the transaction is completed, the customer ends up with the goods for which he has paid the retail price plus any fees levied by the issuer. The merchant receives the retail price less the merchant service charge, and no longer holds the goods. The merchant’s £ 0 4 0 3 9 8 acquiring bank receives the merchant service charge less the interchange fee. The issuing bank has two sources of revenue for card transactions: revenue from the customer, such as annual fees and interest payments; and interchange fees paid by the merchant’s acquiring bank.

The generation and collection of these fees is correctly justified because the retailer’s acquiring bank and issuing bank perform a number of technical operations at each stage and transfer data over inter-computer communication apparatus between the key operations. This processing method is then replicated for each issuing bank for which the merchant conducts a transaction for that bank’s customer.

The object of the invention is to provide a method of card transaction processing in which the number of technical steps is reduced so as to decrease the number and range of processing required, thereby reducing the costs of the entire operation.

The present invention provides a method of co-ordinated card transaction processing utilising inter-computer communication and a co-ordinated processing means, the method comprising the steps of capturing a card transaction directly or indirectly on a sales terminal of a merchant, storing the transaction in the merchant’s transaction table; forwarding the transaction table in a file to the co-ordinated processing means; parsing the transactions against a Bank Identification Number (BIN) reference table to identify the issuing bank from the unique identification number on each card; grouping the transactions for the issuing banks into batches; communicating each batch to the indicated issuing bank for debiting each card holder’s account directly; forwarding the settlement funds back to the co-ordinated processing means and forwarding merchant settlement funds to designated bank accounts from the co-ordinated processing means.

The present invention also provides an apparatus for co-ordinated card transaction processing utilising inter-computer communication means comprising a co-ordinated processing means having means for parsing a card transaction against a Bank Identification Number (BIN) reference table to identify the issuing bank from the unique identification number on each card; means for grouping the transactions for all issuing banks into IE 040398 batches; means for communicating each batch to the particular issuing bank for debiting each card holder’s account; means for forwarding the settlement funds back to the coordinated processing means and means for forwarding merchant settlement funds to designated bank accounts from the co-ordinated processing means.

Accordingly, the apparatus for co-ordinated card transaction processing includes means for capturing a card transaction directly or indirectly on a merchant’s sales terminal, means for storing the transaction with other transactions of the merchant and means for forwarding the merchant’s transactions to the co-ordinated processing means.

Apparatus for co-ordinated card processing substantially as herein described with reference to and as shown in Figure 2 of the accompanying drawings.

The invention will now be more particularly described with reference to the accompanying drawing; which shows, by way of example only, one embodiment of a co-ordinated card transaction processing method according to the invention.

The drawing, Figure 2, is a schematic representation of the method outlining the key steps involved.

Referring to Figure 2, the transaction starts with a customer deciding to buy some goods from a retailer at a given price. The customer wishes to pay using a card issued under a particular scheme and the retailer has agreed to accept the scheme’s card. The customer gives his card details to the retailer and confirms his identity, for example with a signature. For some transactions the retailer may be required to seek authorisation from the card issuing bank, for example to check that the card is not stolen or that the transaction would not make the customer breach an agreed credit limit.

The retailer then submits the transactions to the co-ordinated system for each transaction for processing. In the traditional system the retailer would have sent the transactions to the acquiring bank for settlement. The co-ordinated processing system of the invention processes the file and depending on the content of the file prepare several files for IE 0 4 0 3 9 8 settlement to different issuing banks. The issuing banks debit the customers account - this might be a credit card account or a current or savings account, in the case of a debit card. The issuing bank will provide the customer with monthly statements of transactions. The customer will be debited the retail price, plus any fees specified in the terms of the account.

The co-ordinated processing system of the invention reconciles all statements from the issuing bank on behalf of the retailer. Once the transaction is completed, the customer ends up with the goods for which he has paid the retail price plus any fees levied by the issuing bank. The retailer receives the retail price less fixed fee, and no longer holds the goods. The issuing bank has two sources of revenue for card transactions: revenue from the customer, such as annual fees and interest payments; and a fixed fee, collected during settlement. The fixed fee is preferably the same as the fee associated with debit cards.

Within the co-ordinated processing system is a treasury and reconciliation system for the management of the money transfers. Also an inter computer communication apparatus with extensive telecommunication architecture is included to allow the transmission of information to the various issuing banks.

Utilizing the co-ordinated card transaction processing system of the invention communication directly with issuing banks improves the process for dealing with fraud, chargebacks and queries from customers. In the prior-art systems there, is an excessive amount of time taken to resolve any of these issues. The procedure involves writing to the acquiring bank, who in turn communicate to the card scheme controller who then contacts the issuing bank.

The co-ordinated card transaction system of the invention improves file processing speeds as the file is immediately transferred to the issuing bank, not resulting in the time delay in routing through the card scheme controller.

With this invention immediate funds transfer occurs from the issuing bank on receipt of the file.

IE 0 4 0 3 98 The system of the invention dramatically improves the handling of fraudulent and charge back transactions as the issuing bank has a direct relationship with the cardholder.

The Interchange fee is now removed thus introducing a cost saving to the retailer as the 5 technical step of routing each and every transaction through the acquiring bank is eliminated.

It is to be understood that the invention is not limited to the specific details described herein which are given by way of example only and that various modifications and alternations are possible within departing from the scope of the invention as defined in the appended claims.

Claims (5)

CLAIMS:

1. A method of co-ordinated card transaction processing utilising inter-computer communication and a co-ordinated processing means, the method comprising the steps of capturing a card transaction directly or indirectly on a sales terminal of a merchant, storing the transaction in the merchant’s transaction table; forwarding the transaction table in a file to the co-ordinated processing means; parsing the transactions against a Bank Identification Number (BIN) reference table to identify the issuing bank from the unique identification number on each card; grouping the transactions for the issuing banks into batches; communicating each batch to the indicated issuing bank for debiting each card holder’s account directly; forwarding the settlement funds back to the co-ordinated processing means and forwarding merchant settlement funds to designated bank accounts from the co-ordinated processing means.

2. A method of co-ordinated card transaction processing as claimed in Claim 1 substantially as herein described with reference to Figure 2 of the accompanying drawings.

3. An apparatus for co-ordinated card transaction processing utilising inter-computer communication means comprising a co-ordinated processing means having means for parsing a card transaction against a Bank Identification Number (BIN) reference table to identify the issuing bank from the unique identification number on each card; means for grouping the transactions for all issuing banks into batches; means for communicating each batch to the particular issuing bank for debiting each card holder’s account; means for forwarding the settlement funds back to the coordinated processing means and means for forwarding merchant settlement funds to designated bank accounts from the co-ordinated processing means.

4. Apparatus for co-ordinated card transaction processing as claimed in Claim 3, including means for capturing a card transaction directly or indirectly on a merchant’s sales terminal; means for storing the transaction with other transactions IE 0 4 0 3 98 of the merchant; and means for forwarding the merchant’s transactions to the coordinated processing means.

5. Apparatus for co-ordinated card processing substantially as herein described with 5 reference to and as shown in Figure 2 of the accompanying drawings.