WO2008101271A2

WO2008101271A2 - Making payments through transfer of reusable credit

Info

Publication number: WO2008101271A2
Application number: PCT/AU2007/000198
Authority: WO
Inventors: Yasas Jayasuriya
Original assignee: Yasas Jayasuriya
Priority date: 2007-02-23
Filing date: 2007-02-23
Publication date: 2008-08-28
Also published as: WO2008101273A1

Description

Making payments through transfer of reusable credit

Objective:

The objective of this invention is to introduce a payment concept, which will enable credit card holders to make payments by transferring available credit from one credit card account to another. Through this invention, the recipient credit card holders will receive reusable credit that can be used to purchase goods and services. This concept will enable credit card holders to make payments to other third party credit card holders who do not have credit card payment acceptance systems (merchant accounts). One of the primary objectives of this invention is to minimize transaction costs which are enforced currently upon card holders.

This invention will facilitate an increase in the buying capacity of the recipient credit card holders. Therefore the transferred credit will be accounted separately and such credit will not be available to be set-off against any outstanding balances in the recipient card holder's account. The recipient credit card holder will have access to the reusable credit, to purchase goods and services through their own existing credit card. This invention will only cover the transfer of reusable credit between credit card accounts and will not include other forms of fund transfers.

Current Credit Card Payment Environment

Currently a credit card holder, through the use of his/her credit card, can make payments to a third party who do not have a credit card payment acceptance system by:

1 paying cash to the third party after obtaining the necessary funds through an automated teller machine (ATM) as a cash advance.

2 Making a payment using credit card cheque.

3 Transferring money electronically (using Internet) by accessing their credit card accounts.

All the above payment methods incur high interest, withdrawal fees and other transaction fees.

At present to receive a credit card payment, the recipient generally needs to have a merchant account. Entities who sell goods and services generally maintain merchant accounts. Through maintaining merchant accounts, merchants who sell goods and services can offer credit card holders to make payments using their credit cards, without incurring high fees and charges. However, a merchant has to bear considerable costs to operate a merchant account. These costs are in the form of annual charges, transaction fees and merchant discounts charged by the acquiring and card issuing banks. With such charges, small scale merchants will encounter difficulties to operate merchant accounts due to their small volume of transactions.

The proposed invention will enable payers to make payments and payees to receive payments at a minimal cost using their existing credit cards. Proposed Concept

This invention enables credit card holders to transfer available credit to third party credit card holders, who do not have credit card payment acceptance systems without incurring high fees and charges. Through this invention, a credit card holder can make payments to third party credit card accounts, by transferring available credit (refer diagram 1). Therefore through this proposed concept the credit card holders can settle outstanding debts, which have arisen by purchasing goods/services from third parties who do not maintain merchant accounts. This payment process can also be used by cardholders who require to make payments in kind, to a third-party. Therefore, as an outcome of the transfer of reusable credit, the recipient will be able to buy goods/services required, otherwise purchased by their own cash. Diagram 1 elaborates the method by which the proposed concept of "making payment through reusable credit" operate (Refer Diagram 1).

Diagram 1 illustrates that, Credit card holder 1 can be a recipient of good of services from credit card holder 2. Credit card holder 1 could also transfer credit in kind, as a gift to credit card holder 2. Credit card holder 2 is the recipient who receives credit from credit card holder 1, although credit card holder 2 does not maintain a merchant account. Credit card holder 2 can use the credit received to purchase goods and services or even transfer such credit to another credit card holder.

This invention is based on a concept, which permits the issuing bank of credit card holder 1 to retain the interchange fees and transfer only the balance amount of credit, to the issuing bank of credit card holder 2. Therefore the transferred credit from one credit card to another is categorised as prepaid reusable credit. Should the above process be followed, when transferring funds between credit card accounts, such transfers will not fall into the category of cash advances.

Current Credit Card Payment Processing Environment

At present, when a credit card transaction is processed, by a merchant with a credit card payment acceptance system, the transaction processing involves mainly four parties.

1. Card Holder

2. Merchant (sells goods and services)

3. Acquiring Bank (provides the credit card payment acceptance system- merchant account).

4. Card Issuing Bank (issues credit card to the credit card holder)

Once the credit card holder buys goods and services from a merchant, the merchant will process a credit card transaction related to the purchased goods or services. Such transactions will generally be processed through the acquiring bank, to the card holder's card issuing bank for approval. If approved, the acquiring bank will contact the card holder's issuing bank to request for the settlement of the outstanding debt made by the credit card holder. Once the transaction is validated, the card issuing bank will remit funds to settle the outstanding balance. However, the card issuing bank will deduct an interchange fee (generally an agreed percentage with credit card network providers such as Visa, MasterCard, AMEX, Diners etc). Therefore, the acquiring bank will not receive the total amount required to settle the credit card holder's transaction. Once the funds are received by the acquiring bank, such funds will then be utilised to settle the outstanding debt made by the credit card transaction, lήe acquiring oanκ wm maυ retain bank charges for remitting the funds and such charges are referred as Merchant Discounts. Therefore, if a card holder purchases goods or services worth $100 from a merchant, the merchant will not receive a total of $100 at settlement. The merchant will only receive the transaction value of goods and services, less interchange fees and bank fees charged by acquiring banks for settlement. Diagram 2 outlines the current credit card payment processing system (Refer Diagram 2).

Proposed Credit Card Payment Processing System

Under the proposed system which is outlined by this invention, there will be six main parties involved in processing transactions.

1. Card Holder who transfers credit

2. Card Holder who receives the transferred credit

3. Merchant (sells good and services to card holder 2)

4. Acquiring Bank

5. Transferring Card Holder's Card Issuing Bank

6. Recipient Card Holder's Card Issuing Bank

The process begins whereby a credit card holder instructs his/her credit card issuing bank to transfer a value of credit to another credit card holder. When a credit transfer has been initiated using the proposed concept, by one credit card account to another, such transfers are considered as a receipt of prepaid merchant settlement value, received by the recipient's card issuing bank. Once a credit transfer has been completed, the recipient's card issuing bank will receive the corresponding cleared funds, equivalent, to enable the recipient card holder to make any credit transaction, up to the value of transfer. However, the actual cleared funds received by the recipient's card issuing bank will be less than the value of the requested credit transfer. The transferor's card issuing bank will only remit requested funds less interchange fees charged to the recipient's card issuing bank. Though the value of cleared funds received by the recipient's card issuing bank is less than the credit value actually requested to be transferred by the transferor, the recipient will still be able to use the full extent of the total requested credit, due to the operative of merchant discounts. Due to the merchant discount system, the cleared funds which are net of interchange fees held by the recipient's card issuing bank, will be sufficient to settle any transaction made by the recipient up to the value of the reusable credit. The operations of the proposed card processing system, is outlined in Diagram 3 (Refer Diagram 3).

This concept treats the initial request of the transfer of credit as an "advance of credit" given to make future credit purchases rather than a cash advance. The Card issuing bank of the card holder who requested the transfer will treat the transfer as a settlement of a merchant sale, which will only be expedited in the future.

Example: If the requested credit transfer is $100, the cleared funds transferred by the transferor's issuing bank to the recipient's card issuing bank, where the transferor's card issuing bank charges $1.00 for every $100.00 as interchange fees, will only be $99.00. If a recipient purchases goods and services from a merchant, worth $100.00, the merchant only expects a settlement value, to be less than $100.00, due to tne operauve of merchant discount. As the merchant discount comprises of two elements, which are; interchange fees and bank fees charged by the acquiring bank, the merchant will only receive a lesser value than the value of cleared funds received by the recipient card holder's card issuing bank. Given that an acquiring bank charges 50cents for a $100.00 worth transaction and the interchange fee charged by the transferring card holder's card issuing bank is $1.00 per every $100.00 transaction; for a $100.00 credit sale made by a merchant, the actual settlement value received into the merchant's bank account will be $98.50,. i.e. $100.00 (Sales value) less $1.00 (Interchange fees) less 0.50 (Acquiring bank fess). This illustrates that if the recipient's card issuing bank receives $99.00, cleared funds for $100.00 credit transfer, the card holder who received $100.00 worth of credit, can still be able to purchase goods and services worth $100.00.

Based on the innovative proposed concept, card issuing bank of the card holder who initiates a transfer, will earn the interchange fees income based on the value transferred. Card issuing bank of the recipient card holder will only be acting as a settlement agency, holding the cleared funds to settle any transactions made by the recipient cardholder. However, once a value of reusable credit has been transferred and cleared funds have been received by the recipient's card issuing bank, the funds will be governed by the regulations applicable to the recipient cardholder's card issuing bank that are imposed by the network that it belongs to.

The card issuing bank of the recipient card holder will have the advantage of holding cleared funds, until the recipient card holder exhausts full value of the credit transfer. Once a requested transfer is made to the recipient card holder's credit card account, the account will reflect the total amount of credit transferred, although the cleared funds received by the issuing bank is lesser than that amount. Therefore, it is most appropriate to name this payment concept as "transfer of reusable credit" than categorising it as an ordinary fund transfer. If the proposed process is followed, a credit card holder can successfully initiate payments through their credit card accounts to non merchant beneficiaries (parties who do not have credit card payment acceptance systems), without incurring high fees, otherwise incurred through different payment options.

Card issuing banks will use different networks to operate their credit cards. There are few major networks that are prominent in the industry. They are; MasterCard, VISA, American Express, Diners Club and Citibank. Different credit card networks charge different interchange fees. Therefore transferring credit between card issuing banks, which belong to differing networks, can suffice some difficulties. When credit is transferred from the requesting card holder's card issuing bank, which uses a different network to the recipient card holder's card issuing bank, there would be a possibility that cleared funds received by the recipient card issuing bank not being sufficient to settle the merchant.

A credit transfer which is made between two card issuing banks, which charges similar interchange fees can be processed without any difficulty. For example, when a card holder whose card issuing bank charges 1% interchange fee, transfers $100.00 to a recipient card holder, whose card issuing bank also charges 1% interchange fee, will have no difficulty in purchasing goods or services worth $100.00. The recipient's card issuing bank will receive $99.00 cleared funds and will have remit the same to settle $100.00 worth credit purchases made by the recipient. In a situation where a credit transfer has been made by a card holder whose card issuing bank charges lesser interchange fees, compared to the recipient cardholder's card issuing bank; recipient card holder's card issuing bank will receive a higher value of cleared funds than the amount required to settle any credit purchases made through utilising the reusable credit. Therefore, if the recipient uses the full extent of the credit that is received, the recipient's card issuing bank will still have balance funds even after settling all the credit transactions made. Example: If a card holder whose card issuing bank charges 0.50% interchange fee, transfers $100.00 to a recipient card holder, whose card issuing bank charges 1% interchange fee, the recipient cardholder will have no difficulty to make credit purchases worth $100.00. Though the recipient's card issuing bank will receive $99.50 cleared funds it will only require $99.00 to settle, $100.00 worth credit purchases made by the recipient.

However, if the transfer is made through a card issuing bank which charges higher interchange fees than the recipient's card issuing bank, the recipient card holder will not be able to obtain good and services to the full extent of the credit transfer. For example, if a card holder whose card issuing bank charges 1% interchange fees, transfers reusable credit to a recipient whose card issuing bank charges 0.50% interchange fees; will encounter a deficit of funds amounting to 0.50% when settling the merchant. In this situation, if the amount transferred is $100.00, the recipient's card issuing bank will only receive $99.00. However, as the recipient's card issuing bank charges only 0.5% interchange fees for the $100.00 credit transaction, the recipient's card issuing bank needs to remit $99.50 to settle the transaction. In this situation, as the final settlement is made by a different network, there would be a deficit of 50 cents. Therefore, to enable the recipient card holder to use the full extent of the credit, the transferor should pocket out interchange fee adverse differential. Even in this circumstance, though the card holder whose transferring the reusable credit will have to pay the interchange fees differential, such fees comparatively would be lesser to fees charged for cash advances.

Proposed Operations

A credit card holder, through accessing his/her credit card account, can transfer available credit to another party, who holds a credit card. Such transfers will be facilitated through a web portal or call in service. The transfers will be made to the transferee's (third party) credit card account. Such transferred reusable credit can then be used by the third party (recipient) to purchase goods and services through the usage of the recipient's credit card. When a transfer has been completed by one credit card account to another, the transferred reusable credit will have to be separately accounted, from the already available credit that is in the credit card account. Therefore once the proposed invention is in operation, a credit card will have two types of credit:

Types of Credit

1. Credit allocated to the credit card by the Card issuing bank

2. Transferred reusable credit from other credit card holders

Once an amount of reusable credit has been transferred by one credit card to another, such values will be credited to the recipient's credit card account on the date the transfer is approved. There could be delays in the clearing period, until the credit is actually available to the recipient's credit card. Once such transferred reusable credit is available to the recipient, the recipient will be able to utilise the newly transferred credit to purchase goods and services.

There are two main systems covered by this invention that will facilitate the operations of reusable credit transfer:

Systems to transfer credit

1. Internet online system - Credit card holders will be able to access their own credit card accounts through an internet domain, developed by credit card holder's card issuing bank. Once logged in, using access identification and passwords, the credit card holders will be able to use an option provided by the card issuing bank to request credit transfers to nominated credit card accounts. Through this featured menu, the card holders can enter their transfer/payment details, such as amount, account number, and reference that relates to a particular transfer of reusable credit. Once such transfer requests has been entered, the system will have a facility to submit such requests for approval. Transfers will be approved based on the credit limits and balance credit available on the transferor's credit card account Approved transfers can be printed out consisting of a unique reference number.

2. Phone Requests Systems (call in) -Card issuing banks can offer credit card holders to make transfers by contacting a help desk service, which is also know as Call Centre facility. Credit card holders using their telephones can call a service where customer service staff will assist in ensuring that the requested transfers are processed. This service can only be accessed through allocated client identifications and passwords. Credit card holders, once identified, by the customer service staff can request credit transfers by providing the recipient account details and the value they would like to be transferred. Such requests will also be approved based on the availability of credit limits and balance credit availability.

Usage of Reusable Credit

Once a credit transfer has been completed, the recipient can access the reusable credit transferred through their own credit card. The recipients have the option of further transferring the received reusable credit to other third party credit card accounts. If the recipients wish to purchase goods and services, utilising the reusable credit, they can do so by swiping their credit cards at a point of sale (EFTPOS), at a merchant retail store or making a payment through the internet, where a merchant has provided credit card acceptance facility. Upon receiving an amount of reusable credit, a credit card holder will have two separate sets of credits, in their credit card accounts. Therefore, credit card holders will now have to be offered with a option, of using credit of their choice, at the time of making the payment. Currently, such a facility is not available in credit card payment acceptance systems architecture. This invention will propose an upgrade of the credit card payment acceptance software to enable credit card holders to make a choice of what credit they want to utilise, at the time of making a payment. Once this facility is operational, when a credit card holder swipes their credit card, a new option will be available, providing a selection between the credit offered by the card issuing bank and the separately accounted reusable credit. Similarly when making a credit card payment through the internet, the credit card payment acceptance system should offer a choice between reusable credit and credit offered by card issuing bank. When a payment is made a credit card holder will be able to choose the preferred credit and complete the transaction.

Accounting and Credit Card Statements

Once a credit transfer has been approved, the approved transfer will be accounted under the appropriate credit card account, by both transferor's and recipient's card issuing banks. The recipient's card issuing bank will have to account the received reusable credit separately from the current available credit offered to the card holder. This invention will cover the process of accounting two sets of credits under one credit card. The current accounting system has to be upgraded to accommodate the receipt of reusable credit. The transferor's card issuing bank will account the reusable credit transfer as a normal credit transaction that is used to purchased goods and services.

Transferor's card issuing bank must identify which recipient card issuing bank that it should forward the funds to and which account the funds have to be credited into. Credit card transaction processing systems should facilitate the process of analysing each transaction. At every day-close, credit card issuers will exchange their credit transfer instructions and make necessary fund transfers to one another.

All valid transactions require to be recorded in both transferor's and recipient's credit card account statements with an appropriate value date. Such transactions can be viewed by the card holder by accessing their accounts, via the internet or once they received the periodic credit card statements. The facility should also be given to card holders to access their account transactions by calling a helpdesk service.

Fees and Charges

Once a credit card transfer has been completed, a credit card holder who made the transfer will be credited with the transferred amount on the approved date. This transaction will be considered as a standard credit card payment (will be treated similar to a merchant account purchase) and will not be accounted as a cash advance in transferor's account. General credit terms that are applicable to a particular credit card for a standard purchase of goods and services, will be applied for this transaction. Therefore, such transactions will not attract interest charges from the time of the transaction. These transactions will be reflected in the credit card account and will fall due, based on the credit terms applicable for the credit card.

The standard, annual fees and interest charges, will still continue to apply, based on individual credit cards. However, interest charges can be completely eliminated by using the proposed invention, if the card holders pay their balances in full when they fall due. Cash Advances from Reusable Credit

This invention will also cover a facility to take cash advances by the recipient of reusable credit. The card issuing bank of the recipient can offer the recipient the facility to take cash advances, instead of using the received credit to purchase goods and services. As the funds relating to the transfer will be received by the recipient's card issuing bank, such funds can be used to allow the recipient to take cash advances.

There will be certain charges imposed by the recipient's card issuing bank for such cash advances. The related charges will be deducted from the received credit, which will result in reducing the available received reusable credit balance in the recipient's credit card account.

Why Payments Should Be Made Through Credit Transfer Credit Card Holder's Perspective:

1. Through this invention credit card holders can receive payments from other credit card holders, without having the necessity to maintain, credit card payment acceptance systems (Merchant Accounts) that are costly to operate. Example: payments can be received by any individual with a credit card without maintaining a merchant account. Small scale merchants who cannot afford to maintain merchant accounts will now have the opportunity to receive credit card payments from credit card holders without maintaining merchant accounts. For example, a tradesperson who provided a service to a client, can receive a payment from the client's credit card account, without maintaining a merchant electronic point of sale (EFTPOS) payment acceptance system.

2. Credit card holders with available credit can now make credit payments to third parties, who do not have credit card payment acceptance systems (Merchant Accounts). Through this invention the span of entities that can be paid using credit cards will increase tremendously. The barriers to make payments to non-merchants will now be eliminated.

3. Though a credit transfer has similar characteristics to a cash advance, (obtaining cash using the credit card and making available such funds to a third party), a credit transfer will not attract high interest rates and fees. Therefore credit card holders can now make payments to non-merchants at minimal cost, compared to any alternative method currently available.

4. After a credit transfer has been made, the credit card holder will only have to settle the credit card account once they are due, after the lapse of the interest free period (due date). Interest free periods will vary based on the agreed credit terms. Therefore through this invention credit card holders can make payments without holding a single unit of currency. 5. Credit card holders can now, with convenience, transfer credit and make payments to third parties via internet and call centres, without visiting banks and other financial institutions.

Credit Card Issuer's (card issuing bank's) perspective:

1. With this invention, credit card holders will be motivated to use their available credit to make payments to third parties, as the charges for such payments will be considerably less. Such an increase in credit transfers will rationalise the credit card industry, where excess credit will be transferred to card holders with relatively lesser credit limits. Therefore, available credit in the market which were otherwise not utilised will now be transferred to parties who will utilise such credit. This phenomenon will provide a high growth in the credit card transactions. This concept, if followed by the market participants, will benefit the credit card industry as a whole.

2. When a credit transfer has been completed by a card holder, the settlement for this transaction will be due based on the agreed credit terms. However, the recipient credit card holder's card issuing bank will receive the funds as an advance to facilitate any purchases made by the recipient. As a common rule, it can be mentioned that all the reusable credit received, will not be utilised at a given time. Therefore, the recipient's card issuing bank will have the advantage of physically holding cleared funds at their disposal until such funds will be called in for settlement, and such funds can be invested, giving additional income.

3. Credit card issuers can now charge a minimal fee for facilitating a credit transfer from the transferor's credit card account. As such charges will be comparatively lesser than the charges incurred when making cash advances, an increase in demand can be expected in the usage. With the expected growth in credit transfers due to low charges, card issuing banks of the card holder who initiates a transfer can earn higher additional income, due to the volume.

4. Unlike the operations involved in cash advances, credit transfers do not involve other service providers such as ATM machine operators. As a result, there would be a considerable cost saving to credit card issuing banks.

5. Card issuing banks will now have the opportunity to hold the reusable credit balances as security, to protect against late settlements. Therefore, if a card holder has both reusable credit and outstanding credit which is offered by the card issuing bank that has fallen due, the card issuing banks have the security of freezing the reusable credit until full payment of the outstanding balance is paid.

Implementation

At the first phase of the concept implementation, the implementation process should be focused on the individual credit card networks such as VISA, MasterCard, American Express, Diners Club and Citibank. Each credit card network should be focused in isolation and the members of that network (Card issuing banks) should be given the opportunity to upgrade then- credit card operating software and infrastructure to accommodate the transfer and receipt of reusable credit. Therefore in the first phase of implication, cardholders of one credit card network will be able to transfer and receive reusable credit from other members of the same credit card network. Example: cardholders of VISA, though they are scattered among a large number of card issuing banks (as large number of financial institutions are members of VISA network) will be able to transfer and receive reusable credit from other VISA cardholders.

As a fundamental step to ensure the proposed concept's successful implementation, acquiring banks that offer merchant accounts, are required to upgrade their merchant credit card acceptance software and infrastructure. Acquiring banks need to upgrade their operating systems to accommodate credit cardholders with a choice to select the type of credit that they want to use. In relation to a point of sale (EFTPOS) credit card acceptance systems; such systems need to be upgraded to offer additional menu after selecting the credit card option that will ask the credit card holder whether transaction should be made through reusable credit or card issuing bank offered available credit. With regards to internet "merchant payment acceptance systems", there should also be an additional drop down menu included, which will enable credit card holders to choose whether they want to process the transaction with reusable credit or card issuing bank offered available credit. This upgrade of merchant account payment acceptance system will need to be completed in the first phase to accommodate the recipients of reusable credit to utilise such credit.

The second and final phase of implementation will focus on enabling cross network transfer of reusable credit, where a cardholder of VISA can be able transfer reusable credit to a cardholder who has a credit card issued by American express.

Practical implications of the proposed concept

Though the proposed concept has identified a feasible payment system that is comparatively less costlier, there will still be certain costs imposed by card issuing banks upon cardholders when reusable credit transfers are made. However the important fact remains mat still such costs would be relatively lesser, than costs imposed on cardholders when using alternative options currently. The low fees and charges can be offered to cardholders, as the card issuing banks themselves will not incur high costs if they operate the proposed innovative concept. As costs are driven by market forces, such inventions as the reusable credit transfer concept, will drive the market to bring the costs down in future.

Generally merchant accounts are operated by Acquiring banks. Acquiring banks will need to invest a considerable amount of funds in upgrading their merchant account operating systems to make the proposed invention work. With no immediate tangible return on their investment, the Acquiring banks might not opt to make any investments to upgrade their systems. If the concept of making payments, using reusable credit is widely accepted, the Acquiring banks will have no choice but to follow the market forces and make the necessary upgrades to enable cardholders to utilise the reusable credit. The proposed concept of making payments using reusable credit is found to be within the legal framework of credit card operations. Preliminary research has been conducted to arrive at the above conclusion. However as it is a new concept there could be laws imposed by certain regulatory bodies that might hinder implementation of the proposed system.

Once the second phase of the implementation process has been completed cardholders of different networks will be able to transfer reusable credit among each other. When cross transfers are made, if the transfer is made from a cardholder who belongs to a high merchant discount charging network, to a cardholder who belongs to a network that charges low merchant discount; the cardholders who transfer credit, will be at a loss as he/she will need to incur the merchant discount differential to process the transfer (explained in previous text). Such a disadvantageous environment will persist until the industry rationalisation takes place. However during the last few years the industry has experienced considerable change, and which has impacted on merchant discounts and fess charged by the card issuing banks. Over last few years the merchant discounts charged by the acquiring banks and card issuing banks have reduced considerably. Most importantly this has resulted in narrowing the merchant discount differences, charged by different networks and has also resulted in considerable industry rationalisation. Such positive signs towards industry rationalisation, where there will be no considerable differences in merchant discounts charged by market players, will result in, enabling a smooth operation of the proposed system without disadvantaging any cardholder.

For the implementation and continuous smooth operation of the invention, it is vital that large merchants continue to maintain merchant accounts. Such merchants should offer general public the facility to purchase goods and services in retail outlets through their credit cards using electronic point of sale (EFTPOS) payment acceptance systems and offer internet purchasing, using secured credit card payment systems.

Future Developments

This invention takes the current finance industry one step closer to a cash free environment. With all the benefits explained previously, the proposed concept of making payments using reusable credit, can result in unprecedented growth in the credit card industry.

Once the proposed concept is widely introduced and accepted, general public can receive their income to their credit card accounts by means of reusable credit and use such accumulated credit, to purchase goods and services. The parties who make payments, will have the advantage of making such payments using credit, without having any balances of cash, at the time of making payments.

With such radical changes in the current financial industry environment, the need to carry cash will slowly diminish.

Claims

Making payments through transfer of reusable credit.

Claim 1 - A concept/system enabling credit card holders to make payments by transferring available credit from one credit card account to another, where the recipient credit card holder will receive reusable credit, that can be used to purchase goods and services.

Claim 2 - A concept/system enabling credit card holders to make payments, using their available credit, to third party credit card holders, who do not have credit card payment acceptance systems (EFTPOS/Internet credit card payment system), through the transfer of reusable credit.

Claim 3 - A concept/system that will enable a credit card holder to receive credit that can be reused, which is transferred by another credit card holder to the recipient credit card holder's account. Upon the instructions from a credit card holder, the card issuing bank of that card holder, will transfer credit to a nominated credit card account of a recipient.

Claim 4 - A concept/system where a card issuing bank of a credit card holder who has requested a transfer, will transfer funds to the recipient credit card holder's card issuing bank, after deducting bank charges that is normally charged when settling an outstanding credit transaction (interchange fees). Based on Claim 4, the system architecture of the credit card application systems, of the card issuing bank of a credit card holder who requests a credit transfer, need to be upgraded to facilitate transfer of reusable credit.

Claim 5 - A conceptfsystem where a card issuing bank of a recipient credit card holder, facilitates the newly received reusable credit to be accounted separately, from the line of credit allocated to the credit card by the recipient's card issuing bank. This concept will enable recipient credit card holder to have two sets of credits in their credit card account. Therefore upon the receipt of reusable credit, the recipient credit card holder will have: Credit allocated to the credit card by the Card issuing bank and Transferred reusable credit from other credit card holders. Based on Claim 5, the system architecture of the credit card application system, of the card issuing bank of a recipient credit card holder, needs to be upgraded to account two types of credit in one credit card account.

Claim 6 - A concept/system where the card issuing bank of the recipient credit card holder, will act as a facilitator that would hold cleared funds received, to settle credit purchases made by the recipient. The recipient credit card holder's card issuing bank will act as a collecting agency. Based on Claim 6, the system architecture of the credit card application system, of the card issuing bank of a recipient credit card holder, needs to be upgraded to facilitate to retain and disburse, reusable credit upon the request of the recipient cardholder. Claim 7 - A concept/system that will enable, merchant payment collection system (EFTPOS/Internet credit card payment system) to offer credit card holders, a choice to select the type of credit preferred, when making credit purchases. The credit card holders will be given a new option to select between "Credit allocated to the credit card by the Card issuing bank" or "Transferred reusable credit from other credit card holders" that they want to utilise to make the credit purchases. Based on Claim 7, the Acquiring banks who provide merchant accounts (EFTPOS/Internet credit card payment system) need to upgrade their system architecture, of the credit card application systems to accommodate the approval of two types of credit.