Classifications

• • G—PHYSICS
  • G06—COMPUTING; CALCULATING OR COUNTING
  • G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
  • G06Q20/00—Payment architectures, schemes or protocols
  • G06Q20/04—Payment circuits
• • G—PHYSICS
  • G06—COMPUTING; CALCULATING OR COUNTING
  • G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
  • G06Q20/00—Payment architectures, schemes or protocols
  • G06Q20/02—Payment architectures, schemes or protocols involving a neutral party, e.g. certification authority, notary or trusted third party [TTP]
• • G—PHYSICS
  • G06—COMPUTING; CALCULATING OR COUNTING
  • G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
  • G06Q30/00—Commerce
  • G06Q30/06—Buying, selling or leasing transactions
  • G06Q30/08—Auctions

Definitions

• the present invention relates generally to the field of electronic commerce and more particularly to a method and system for managing auction transactions over a network, such as the Internet.
• a buyer participating in an auction does not really know if the purported seller actually exists, and neither does a seller in such an auction know whether the purported buyer actually exists. Therefore, a buyer who enters the winning bid takes a chance on the existence of the purported seller, as well as whether he or she will ever get the merchandise on which the bid was entered. Likewise, a seller who accepts the winning bid takes a chance on the existence of the buyer who purported to enter the winning bid.
• a user at a terminal such as the user's personal computer (PC) accesses an auction page on the Internet, such as E-BAY and goes through a registration process.
• PC personal computer
• Registering basically means that the user at the user's PC enters the user's address, such as an e-mail address, and an e-mail is sent to the user, for example, at the user's PC, which tells the user that he or she is allowed to bid.
• the user is also given, for example, a bidding name, and the user sets up a password on the system.
• the user When the user registers on the auction page with the user's e-mail address and receives a bidding name, the user is ready to bid or list with the auction site.
• auction sites as with auction houses, at least one of the seller and buyer pays a fee for the opportunity to use the auction site.
• the seller pays for the ability to list and sometimes pays an additional fee in the form of a percentage of the eventual selling price.
• SOTHEBY'S in which the buyer pays the fees.
• it is the seller who pays the fees, and the auction house generally bills or invoices the seller once a month.
• the seller Upon receipt of the invoice, the seller generally pays, for example, by writing a check, although sometimes sellers can pay by credit card
• most people selling at auction over the Internet are not what we typically think of as merchants. Rather, they are simply individuals, and when they sell something, they are not usually equipped to receive payment by any means (e.g.. credit card) other than by check, money order, or the like. This causes inconveniences for both parties, since the buyer must actually write a check or obtain a money order and then the buyer must wait until the seller is satisfied that the check will clear, etc., before the good(s) are transferred.
• any means e.g. credit card
• Internet auctions include, for example, normal auctions in which people enter bids and the bid price goes up as people bid higher and higher, as well as what are called Dutch auctions.
• a Dutch auction the process begins at a certain price, and the price goes down until somebody makes an offer at the current price.
• a Dutch auction effectively, someone wins the bid, because there are time frames. In other words, the bids are scheduled to end at a certain time, so they do not go continuously.
• the seller notifies the buyer via e-mail that the buyer has won the bid and asks the buyer to send the seller payment, such as a check or a money order, for the purchase price plus, for example, a certain amount for shipping and handling.
• the risk is a seller's risk, as well as a buyer's risk.
• the buyer risks not receiving the merchandise for which the buyer paid.
• the seller's risk lies, for example, in putting the seller's merchandise up for auction and receiving a winning bid, and waiting a month or more to discover that the buyer does not exist or sent bad funds for payment.
• an embodiment of the present invention provides a method and system for managing Internet auction transactions by creating an auction website by, for example, a financial institution.
• the auction website is accessible by the financial institution's account holders (e.g.. holders of checking, savings, credit card, and investment accounts).
• account holders e.g.. holders of checking, savings, credit card, and investment accounts.
• Figure 1 is a schematic of the parties to an auction transaction according to an embodiment of the present invention
• Figure 2 is a registration process according to an embodiment of the present invention.
• Figure 3 is a registration process according to an embodiment of the present invention
• Figure 4 is an auction payment process according to an embodiment of the present invention
• Figure 5 is an auction payment process according to an embodiment of the present invention
• Figure 6 is an auction payment process according to an embodiment of the present invention.
• Figure 7 is an auction payment process according to an embodiment of the present invention.
• an embodiment of the present invention enables authentication of counterparties to an Internet auction transaction wherein both parties hold financial accounts with the provider of the auction website.
• An Internet auction transaction for an embodiment of the present invention involves, for example, a seller 10 at the seller's PC 12 and a buyer 14 at the buyer's PC 16, each accessing the auction page of the website server 18, for example, of a financial institution, over the Internet 20 or any other public or private network.
• the seller is known to the financial institution as the holder of an account with the financial institution, and the buyer is likewise known to the financial institution as the holder of an account with the financial institution.
• the financial institution knows that both the seller and the buyer actually exist.
• the payment is very simple, because the payment is made by the financial institution debiting the account of the buyer who bought the item at auction and crediting the account of the seller who sold it through a settlement system 22. Therefore, it is known that the parties are dealing with actual people, or at the very least, viable accounts and that once the transaction occurs, the seller will receive his or her funds.
• the funds transfer is virtually instantaneous, allowing the seller to have the benefit of the payment almost immediately. While in a second preferred embodiment of the present invention, the funds are held in escrow until the good(s) are received by the buyer, as discussed below.
• a process for participating in the Internet auction website of the current invention begins with the potential seller and the potential buyer each registering with the financial institution's auction website S2, S12 by providing at least an e-mail address and payment account information.
• the financial institution queries whether or not the seller or buyer holds an account with the financial institution S4, S14.
• the financial institution verifies that the seller and buyer are in fact financial institution account holders, that the account numbers for each are valid, and that each is in good standing S6, S16. If the selected account is not found or is not in good standing, registration is denied under that selected account S8, S18.
• the financial institution confirms, for example, that the credit cards are not stolen, that the cards are good, that the credit card accounts are paid on time or that the selected accounts (e.g.. checking, savings, brokerage) are in good standing.
• the selected accounts e.g.. checking, savings, brokerage
• the buyer or seller may be prompted to select an alternate account under which to register.
• the system will again check the viability of the selected account prior to allowing registration.
• account numbers are sent securely using, for example, encryption. Data transmission encryption techniques are well known in the Internet art and will not be discussed further within this application.
• the website issues the buyer or seller a registration ID S10, S20.
• This ID may take many forms, including a username/password combination selected by the buyer and seller or it may be an alphanumeric code/personal identification number (PLN) assigned randomly by the financial institution, wherein the financial institution associates the selected user/password combination or the assigned code with the buyer or seller's selected account number.
• PPN personal identification number
• the seller and buyer may gain access to the auction portion of the website and sell or bid on good(s).
• a seller lists good(s) on the website under his/her registration ID S22.
• a buyer bids on listed good(s) using his/her registration ED S24.
• a buyer will win the bidding for a listed good(s) S26.
• both the buyer and seller hold accounts with the financial institution running the auction website. This need not necessarily be the case.
• non-account holders may also participate in the auction website if they hold credit cards from member associations or have other approved accounts with member financial institutions. Member associations and member financial institutions are pre-approved by the auction sponsoring financial institution. Similar to the registration process for the account holders, non-account holder sellers and buyers are prompted for payment account information and the financial institution queries whether or not the seller or buyer holds an account with a member association or member financial institution S30, S40. If no such account is held, then the buyer or seller is denied registration S32, S42.
• the sponsoring financial institution verifies that the seller and buyer are in fact account holders with the member association or member financial institution, that the account numbers for each are valid, and that each is in good standing S34, S44. If the selected account is not found or is not in good standing, registration is denied under the selected account S36, S46.
• the website issues the buyer or seller a registration ID S38, S48 wherein the sponsoring financial institution associates the assigned code with the buyer's or seller's selected account number held through a member association or member financial institution.
• the seller and buyer may access the auction portion of the website and sell or bid on good(s).
• a seller lists good(s) on the website under his/her registration ID S50.
• a buyer bids on listed good(s) using his/her registration ED S52.
• a single buyer will win the bidding for a listed good(s) S56 assuming the bid requirements, if any, set by the seller are met (e.g.. minimum acceptable bid is met).
• the procedure for finalizing the auction transaction is the embodiment where both the buyer and the seller have registration EDs under accounts of the sponsoring financial institution. These steps are similarly applicable, in most instances, to embodiments wherein either the buyer or seller or both have registered with the Internet auction website using accounts from other than the sponsoring financial institution i.e., from a member association or member financial institution. Differences in the process due to non-sponsoring financial institution account holders are addressed below.
• the auction site has a data packet which includes the good(s) associated with the seller's registration ED which is in turn associated with an account that the seller used to register with the auction website. Further, the data packet includes the buyer's registration ID which is in turn associated with an account that the buyer used to register with the auction website. Finally, the data packet includes the final price bid for the good(s). At this point, settlement of the transaction may begin. Referring to Figure 4, in an embodiment of the present invention, the buyers and sellers having accounts with the sponsoring financial institution are prompted to select which account with the financial institution they wish to access for settling the transaction S60, S62.
• the buyer and seller in this embodiment are not required to settle the transaction with the same account under which they registered with the auction website. For any number of reasons (e.g.. amount of funds, newly opened account), the buyer or seller may wish to debit or credit an account separate from the registering account.
• there are at least two payment scenarios the first is an immediate transferal of the payment from buyer to seller, the second is a transferal of the payment into an escrow account wherein the money is only transferred to the seller upon the occurrence of certain events (e.g.. buyer communicates receipt of good(s) to the financial institution).
• the methods and systems of the embodiments of the current invention may utilize one or both of these payment scenarios.
• the system internally queries the bid price and compares it to the pre-determined threshold of $500 S64. If the final bid price is less than or equal to $500 than the buyer's selected account is immediately debited and the seller's selected account is immediately credited S66. Both parties are notified immediately via, for example, e-mail, that this transaction has been completed S68.
• a first time period is set for the seller to deliver the purchased good(s) to the buyer S80.
• the system queries whether or not the seller has delivered the good(s) within the first time period S82 (e.g.. buyer notifies of receipt or lack of receipt). If the seller has not delivered the good(s) within the first time period, the financial institution performs a charge-back or similar transaction, wherein the bid price is taken back from the seller's selected account and credited to the buyer's selected account S84.
• This type of transaction is well known in the financial arts.
• the auction system may be structured such that the financial institution may charge-back the payment from an alternate account of the seller should the selected account not having the required funds.
• a second time period may be set for the buyer to inspect the good(s) to determine if they are conforming S86.
• the system queries whether or not the buyer responds within the second time period S88. If there is no response, then the transaction is considered to be complete S90. If the buyer does respond within the second time period regarding the good(s), the system queries whether or not the good(s) are in acceptable condition S92. If the good(s) are acceptable, the transaction is complete S94. If the good(s) are not acceptable, the auction system of the current embodiment offers the buyer one of two choice for completion of the transaction.
• the buyer may return the good(s) to the seller or the buyer may request a bargaining session with the seller via the auction system S96. If the buyer chooses to return the good(s), a third time period is set for the buyer to return the good(s) to the seller S98. The system queries whether or not the good(s) have been returned within the third time period S100. If the good(s) are not returned within the third time period, the transaction is considered to be complete, since the payment has been made to the seller and the buyer presumably has the good(s) S102. If the good(s) are returned to the seller within the third time period, a fourth time period is set for the seller to inspect the returned good(s) to make sure they are in the original condition S104.
• the transaction is considered complete if the financial institution does not hear from the seller in the fourth time period or the seller notifies the financial institution that the good(s) are acceptable S106. Alternately, if the seller notifies the financial institution within the fourth time period that the good(s) are not acceptable S108, the financial institution may refer the seller to legal services to consider the sellers options at his point S109. As a service to the client, the financial institution may offer to reimburse the seller for the nonconformance, up to a set amount. The financial institution may also offer insurance for this sort of occurrence at a reasonable price as an option during the registration process.
• the buyer may elect to request a bargaining session with the seller due to the fact, for example, that although the good(s) are not in conformance, the buyer wishes to keep the good(s) but at a reduced price SI 10.
• a message is sent from the financial institution to the seller, notifying the seller that the good(s) were non-conforming, but that the buyer would like to request a bargaining session with the seller to further discuss the price.
• the seller may choose to engage in the bargaining session or the seller may request that the good(s) be returned SI 12.
• the buyer may choose to keep the good(s) in which case the transaction is complete or the buyer may return the good(s) to the seller, in which case the steps S98-S109 are applicable.
• the buyer is notified of the sellers agreement to participate in a bargaining session and a time period is set within which a new price must be agreed upon or the good(s) must be returned to the seller in order to qualify for a charge-back S150.
• the Internet auction website provides a page for "BARGAINING SESSIONS," wherein the buyer and seller enter their respective registration EDs into the ID box and they are linked to a page containing the details of their original transaction S152.
• a space is provided for a recitation as to the status of the good(s) as received and the reason for the request to lower the initially agreed upon price, as well as a new suggested payment price S154.
• This bargaining session may be limited to x number of messages between buyer and seller, or there may be an unlimited number of messages allowed between the buyer and seller.
• a page is provided to the buyer and seller for submitting the newly agreed upon price S156.
• the financial institution must receive the same price quote from both the buyer and the seller before, in this particular embodiment, a charge-back is performed, debiting the seller's account for the difference between the original bid price and the newly agreed upon price, and crediting the buyer's account for the difference S168.
• the system in this embodiment does not automatically transfer funds from a buyers account to a sellers account.
• the buyer has a chance to inspect and accept the good(s) before the seller is credited from the buyer's account or accounts.
• the bid amount is deducted from the buyer's selected account and entered into an escrow account S70.
• This escrow account may take on various forms, but should be managed such that if the good(s) fail to meet the necessary requirements, the buyer is at the very least reimbursed for the original amount debited from his/her account.
• escrow account there are other management scenarios for the financial institutions escrow account, such as where the buyer actually receives interest back on the principle, in addition to the principle, in the case of non- conforming good(s) from the seller.
• This escrow account may take on various forms, but should be managed such that if the good(s) fail to meet the necessary requirements, the buyer is at the very least reimbursed for the original amount debited from his/her account.
• management scenarios for the financial institution's escrow account such as where the buyer actually receives interest back on the principle, in addition to the principle, in the case of non- conforming good(s) from the seller.
• This escrow system may be a requirement of the financial institution's Internet auction system, it may be instituted on a transaction by transaction basis (e.g.. all transactions over a pre-defined price as in Figure 4), or it may be instituted at the request of either the buyer or seller as a prerequisite to engaging in business with a particular buyer or seller.
• a transaction by transaction basis e.g.. all transactions over a pre-defined price as in Figure 4
• the buyer and seller are notified of this transaction by the financial institution and the seller transfers the purchased good(s) to the buyer through an appropriate medium S72.
• This notification may be through any suitable means, such as e-mail, telephone, or mail, to name a few examples.
• the financial institution may start a time period for completion of the transaction (e.g., 5, 10, 15 days). If the seller does not deliver the good(s) within the first time period S74, the buyer's payment is returned to the buyer's account S76.
• a second time period may be set for the buyer to inspect the good(s) to determine if they are conforming S120. The system queries whether or not the buyer responds within the second time period S122. If there is no response, then the seller is credited with the buyer's payment from the escrow account S124.
• the system queries whether or not the good(s) are in acceptable condition S126. If the good(s) are acceptable, then the seller is credited with the buyer's payment from the escrow account S128. If the good(s) are not acceptable, the auction system of the current embodiment offers the buyer one of two choice for completion of the transaction. The buyer may return the good(s) to the seller or the buyer may request a bargaining session with the seller via the auction system S130.
• a third time period is set for the buyer to return the good(s) to the seller S132.
• the system queries whether or not the good(s) have been returned within the third time period S134. If the good(s) are not returned within the third time period, then the seller is credited with the buyer's payment from the escrow account since the buyer presumably has the good(s) S136. If the good(s) are returned to the seller within the third time period, a fourth time period is set for the seller to inspect the returned good(s) to make sure they are in the original condition S138.
• the seller is credited with the buyer's payment from the escrow account if the financial institution does not hear from the seller in the fourth time period or the seller notifies the financial institution that the good(s) are acceptable S140. Alternately, if the seller notifies the financial institution within the fourth time period that the good(s) are not acceptable S142, the financial institution may refer the seller to legal services to consider the sellers options at his point S143. As a service to the client, the financial institution may offer to reimburse the seller for the nonconformance, up to a set amount. The financial institution may also offer insurance for this sort of occurrence at a reasonable price as an option during the registration process.
• the buyer may elect to request a bargaining session with the seller due to the fact, for example, that although the good(s) are not in conformance, the buyer wishes to keep the good(s) but at a reduced price S144.
• a message is sent from the financial institution to the seller, notifying the seller that the good(s) were non-conforming, but that the buyer would like to request a bargaining session with the seller to further discuss the price.
• the seller may choose to engage in the bargaining session or the seller may request that the good(s) be returned S146.
• the buyer may choose to keep the good(s) in which case the seller is credited with the buyer's payment from the escrow account or the buyer may return the good(s) to the seller, in which case the steps S132-S143 may be applicable.
• the Internet auction website provides a page for "BARGAINING SESSIONS," wherein the buyer and seller enter their respective registration EDs into the ID box and they are linked to a page containing the details of their original transaction S152. Additionally, a space is provided for a recitation as to the status of the good(s) as received and the reason for the request to lower the initially agreed upon price, as well as a new suggested payment price S154.
• This bargaining session may be limited to x number of messages between buyer and seller, or there may be an unlimited number of messages allowed between the buyer and seller. If the buyer and seller agree on a new price for the good(s), a page is provided to the buyer and seller for submitting the newly agreed upon price S156. The financial institution must receive the same price quote from both the buyer and the seller before, in this particular embodiment, the seller's account is credited with the new price from the escrow account and the buyer's account is credited from the escrow account for the difference S170.
• a further advantage of the preferred embodiment is the ability of the seller to apply the payment from the buyer to any account or bill currently available for payment through the financial institution.
• many financial institutions offer services, on-line or otherwise, for automatically paying bills for their customer's from the accounts of the customer's managed by the financial institution.
• the seller may specifically request that the profit from the on-line auction be directed to, for example, their mortgage payment, car loan, student loan, etc. instead of first going to the seller's checking account and then later being debited therefrom to pay these types of bills.
• another aspect of an embodiment of the present invention relates to verification in an Internet auction transaction for a financial account holder who is not a sponsoring financial institution account holder.
• Such an aspect involves, for example, an arrangement with the certain credit card associations (e.g.. Visa®, MasterCard®) or non-sponsoring financial institutions (e.g.. Chase, First Union) in connection with authentication of non-sponsoring financial institution account holders.
• non-sponsoring financial institution account holders are allowed to participate in the auction system in an embodiment of the present invention and are allowed to buy on the system and to use their non- sponsoring financial institution accounts to charge the bid price of the good(s).
• non-sponsoring financial institution account holders and/or the non- sponsoring financial institutions or associations may be charged a fee.
• non-sponsoring financial institutions or associations may become member associations and member financial institutions through arrangements with the sponsoring financial institution.
• account holders with these member associations and/or member financial institutions may use the auction website, subject to the registration and verification processes described above.
• the sponsoring financial institution for a buyer who is an account holder with a member association and/or member financial institution, charges the member association and/or member financial institution account holder for the bid price and issues a check to the seller.
• the sponsoring financial institution basically guarantees that the buyer is real, and the sponsoring financial institution looks to the buyer for payment of the money charged on the member association and/or member financial institution account. In other words, the sponsoring financial institution takes the collection risk like it does on any other transaction.
• the sponsoring institution may check on the available credit of the member association account holders through conventional credit card authorization lines. Further, the sponsoring institution may, for example, check the availability of funds through the pre-established ATM lines, prior to allowing sellers and buyers to register with the Internet auction website. The sponsoring financial institution may also use the ATM lines to check the availability of a buyer's funds at the member financial institution, prior to releasing funds to a seller after a bid price has been reached. The sponsoring financial institution would then release the funds to the seller and begin external settlement proceedings with the member financial institution.
• a further feature of the Internet auction website is the ability of the sponsoring financial institution to track auction performance histories of buyers and sellers who utilize the system. These performance histories include payment and delivery histories of the buyers and sellers as well as purchasing histories of particular buyers and product conformance histories of particular sellers. Using this information, the financial institution may provide information on the reputation of a particular buyer or seller to other prospective buyers and sellers to help facilitate use of the system by trustworthy individuals. Further, by tracking the purchasing habits of buyers, the financial institution may offer as a service to its buyers, notification that certain types of goods have been listed on the auction website. For example, if the financial institution establishes through tracking that a particular buyer frequently purchases antiques, when an antique is listed on the auction website, the financial institution would notify the particular buyer of this new antique listing.
• This notification could be in the form of, for example, an e-mail, or even a page depending on the arrangement between the buyer and the financial institution.
• the financial institution may offer a service to potential buyers, wherein the potential buyers specifically request to be alerted when a particular type of good is listed on the website. For example, a potential buyer may be interested in purchasing a computer. The potential buyer requests that the financial institution alert the buyer whenever a computer is listed on the auction website. The alert may be provided through any available media, i.e., e- mail, pager, etc.

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Cited By (63)

Citations (6)

• 2000
  • 2000-07-07 EP EP20000947096 patent/EP1208505A4/de not_active Withdrawn
  • 2000-07-07 CA CA002378546A patent/CA2378546A1/en not_active Abandoned
  • 2000-07-07 AU AU60761/00A patent/AU6076100A/en not_active Abandoned
  • 2000-07-07 WO PCT/US2000/018582 patent/WO2001004816A1/en not_active Application Discontinuation
  • 2000-07-10 AR ARP000103516A patent/AR024692A1/es unknown
• 2002
  • 2002-11-25 HK HK02108522.8A patent/HK1048529A1/zh unknown

Patent Citations (6)

Non-Patent Citations (1)

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