Patent Application
20070168279
This application relates generally to financial transactions. More specifically, this application relates to methods and systems for implementing a disposable financial account.
It is widely known that the paradigm governing consumer transactions has been evolving in recent years. This has been driven by consistent pressure applied by consumers for increased convenience and simplicity in identifying goods and/or services for purchase and effecting transactions for their purchase. Merchants have responded to this pressure in a number of different ways, the most conspicuous of which has been through the use of the Internet for selling goods and services. The Internet provides a venue by which consumers may review merchandise in the convenience of their homes or offices, find more precisely the products they wish to purchase, and arrange for convenient delivery of those products to their homes or offices. Other similar mechanisms for selling goods and services include catalog-based sales where consumers may make telephone orders for products offered for sale in catalogs, as well as “home shopping” television sales in which consumers initiate telephone orders for products described in television programming.
While these various offerings have greatly increased the convenience by which consumers may shop for goods and services, there has at the same time been a heightened concern among consumers about the dangers of identity theft. Such crimes are often the result of financial information being intercepted by a thief, who then misuses the financial information fraudulently. In the case of sales of goods and/or services, such financial information is often in the form of a credit-card number, a checking-account number, or the like. It has been widely reported that the sophistication by which thieves intercept information is constantly increasing, and it is similarly well known that the overall incidence of identity theft continues to increase. This has led to a certain reticence on the part of many consumers to provide financial information over the Internet or by telephone, impeding their ability to take advantage of the increased convenience provided by various sales channels.
The traditional response to such security concerns has been the development of more secure communications and transaction techniques. Merchants on the one hand respond to information attacks by imposing increased security controls and identity checks; thieves on the other hand seek to identify flaws in those controls that can be exploited and to develop techniques that can circumvent them. The result is a competitive escalation among merchants and thieves to outdo each other, which each side usually having access to bright, capable minds. From the perspective of some users, the result is an essentially static structure thought to be fraught with risk, a view that is exacerbated when the financial exposure to those users is potentially significant.
There accordingly remains a need in the art for techniques that insulate consumers from attempts by thieves to gain access to their financial information through interception of commercial transactions.
Rather than focus on improving security for transactions, embodiments of the invention make use of a disposable financial account. The account is disposable in the sense that it is limited in some way or ways, such as by the number of times it may be accessed, being a single-use account in some embodiments. A consumer may fund the account and use it for a transaction, with the account being closed thereafter. This arrangement insulates the consumers' regular financial accounts even in the event of an interception and is effective at limiting the financial exposure of the consumer in transactions that the consumer judges to have an uncomfortable level of risk.
In a first set of embodiments, a method is thus provided of processing a transaction between a consumer and a merchant with a disposable financial account. The disposable financial account is created automatically at a financial institution upon receipt of information provided by the consumer requesting creation of the account through an interface with the financial institution. The consumer is provided with information identifying the disposable financial account through the interface. An authorization request for the transaction is received from the merchant over a financial processing network. The authorization request includes the information identifying the disposable financial account and a transaction amount. An approval for the authorization request is returned to the merchant over the financial processing network based on financial parameters of the disposable financial account. Funds are transferred from the disposable financial account corresponding to the transaction amount to control of the merchant. The disposable financial account is automatically closed after satisfaction of a predetermined condition.
There are a number of different types of conditions that may be satisfied to initiate automatic closure of the disposable financial account. For instance, in one embodiment, satisfaction of the predetermined condition comprises approval of a predetermined number of transactions, which may in some instances be exactly one transaction. In another embodiment, satisfaction of the predetermined condition comprises passage of a predetermined period of time. In a further embodiment, satisfaction of the predetermined condition comprises approval of transactions totaling a predetermined value. In some instances, the predetermined condition may be defined by the consumer.
The interface with the financial institution may comprise an Internet interface in some embodiments. An example of information identifying the disposable financial account includes an account number and perhaps also a personal identification number (“PIN”).
In some instances, the disposable financial account is funded prior to receiving the authorization request for the transaction, in which case the financial parameters of the disposable financial account may comprise a balance of the disposable financial account. For example, the disposable financial account may be funded by transferring an amount defined by the consumer through the interface with the financial institution from a second financial account identified by the consumer through the interface. By way of example, the second financial account could comprise a demand deposit account maintained on behalf of the consumer at the financial institution or could comprise a credit account.
In other instances, it is verified after receiving the authorization request that a second financial account identified by the consumer through the interface with the financial institution is capable of providing at least the transaction amount. Thereafter, at least the transaction amount is transferred from the second financial account to the disposable financial account. Again, examples of the second financial account include a demand deposit account maintained on behalf of the consumer at the financial institution or could comprise a credit account. Automatically creating the disposable financial account could comprise verifying that the second financial account is capable of supporting a specified financial amount.
In some embodiments, a time period may be set after which the disposable financial account is to be automatically closed if the predetermined number of transactions has not been reached. One example of a merchant comprises an Internet merchant, with the transaction between the consumer and the merchant having been arranged through the Internet.
In a second set of embodiments, methods are also provided for processing a transaction between a consumer and a merchant with a disposable financial account. The disposable financial account is maintained at a financial institution on behalf of the consumer. The disposable financial account is funded with funds identified by the consumer. An authorization request for the transaction is received from the merchant over a financial processing network. The authorization request includes information identifying the disposable financial account and a transaction amount. It is verified that the transaction amount is no greater than a balance of the disposable financial account. An approval for the authorization request is returned to the merchant over the financial processing network. Funds are transferred from the disposable financial account corresponding to the transaction amount to the control of the merchant. The disposable financial account is automatically closed after approval of a predetermined number of transactions.
Similar to the first set of embodiments, the predetermined number of transactions may be exactly one in some embodiments. The information identifying the disposable financial account may comprise an account number and perhaps also a PIN. Excess funds remaining in the disposable financial account after transferring funds to control of the merchant may be refunded back to the consumer.
The disposable financial account may be opened at the financial institution after receipt of information provided by the consumer requesting opening of the disposable financial account. For instance, such information requesting opening of the disposable financial account could be received over the Internet. In some embodiments, a time period may be set after which the disposable financial account is to be automatically closed if the predetermined number of transactions has not been reached. In one embodiment, a card is issued to the consumer; in such an embodiment, information identifying the disposable financial account included in the authorization request comprises information extracted from the card. The disposable financial account could be funded by transferring funds into the disposable financial account from a demand deposit account maintained at the financial institution on behalf of the consumer. In an embodiment where the merchant comprises an Internet merchant, the transaction may have been arranged between the consumer and the merchant through the Internet.
In a third set of embodiments, methods are also provided for processing a transaction between a consumer and a merchant with a disposable financial account. A request is received from the consumer through an Internet interface at the financial institution to create the disposable financial account. The request includes an identification of a second financial account and a funding amount. The disposable financial account is opened automatically upon receipt of the request. The funding amount is transferred from the second financial account into the disposable financial account. The consumer is provided with an account number identifying the disposable financial account and a PIN associated with the disposable financial account is established for the consumer. An authorization request for the transaction is received over a financial processing network. The authorization request includes the account number, the PIN, and a transaction amount. It is verified that the transaction amount is no greater than the funding amount. An approval for the authorization request is returned to the merchant over the financial processing network. Funds corresponding to the transaction amount are transferred from the disposable financial account to control of the merchant. The disposable financial account is automatically closed after returning the approval for the authorization request, ensuring that the disposable financial account can be used only exactly once in support of a transaction.
In different ones of such embodiments, a second financial account comprises a demand deposit account maintained at the financial institution on behalf of the consumer or comprises a credit account. If the transaction amount is less than the funding amount, excess funds remaining in the disposable financial account after transferring funds to control of the merchant may be transferred back to the consumer.
A further understanding of the nature and advantages of the present invention may be realized by reference to the remaining portions of the specification and the drawings wherein like reference numerals are used throughout the several drawings to refer to similar components. In some instances, a sublabel is associated with a reference numeral and follows a hyphen to denote one of multiple similar components. When reference is made to a reference numeral without specification to an existing sublabel, it is intended to refer to all such multiple similar components.
Embodiments of the invention provide a disposable financial account that may be used within a consumer-transaction architecture to support transactions for the purchase of goods and/or services. The disposable account may be funded by any source of funds of a consumer's, with those sources then being insulated from improper discovery during a transaction supported by the disposable account. In different embodiments, the disposable account may be funded before a transaction in a manner similar to the funding of demand deposit accounts (“DDAs”), but in other embodiments, value is associated with the disposable account on a credit basis. Such embodiments may advantageously be simpler for financial institutions to implement in some instances, because the need to execute refunds of value may be avoided, but they may be coupled with the increased risks to the financial institution associated with all credit arrangements. It is generally anticipated that the disposable account will be used without any associated physical device. In some instances, though, a physical device like a card may be issued to a consumer to identify the disposable account.
The disposable account may generally be used in any financial transaction that could traditionally be supported by a consumer account accessible to a merchant. But the risk associated with use of the account is significantly mitigated by the insular nature of the account—even in the event of interception of information regarding the account, a thief would at best gain access to an account whose finds have been consciously earmarked by the consumer. In those instances where the disposable account is a single-use account, the thief would in most instances merely gain access to an account that had already been rendered valueless. Use of the disposable account is thus especially valuable for remote transactions, such as mail-order, Internet, or telephone transactions.
Embodiments of the invention may accordingly be operated within a financial infrastructure like the one shown schematically in
While it is generally anticipated that most interactions between the user 150 and a financial institution 120 or merchant 124 will take place using one of these primary interfaces, i.e. the Internet 104, a telephone interface 108, or a cable interface 112, dashed lines in the drawing indicate that other possibilities for interaction also exist. For instance, a user 150 may visit a financial institution 120 personally in certain implementations of the invention, or may send instructions by mail. Similarly, certain consumer transactions may be made in person or by mail with a merchant 124.
Execution of transactions between the merchants 120 and financial institutions 124 generally takes place through a separate financial transaction network 116. Such a network has greater security because it is a private network, as compared with the public-network character of the Internet 104. Transactions between merchants 120 and financial institutions 124 typically include an exchange of an authorization request and a response that confirms the financial institution 124 will make payment. In different embodiments, the disposable account may be of a character that provides a guaranteed transaction similar to traditional transactions made using debit cards or may provide a nonguaranteed transaction similar to traditional transactions made using credit cards. Such a financial transaction network 116 may also be used in executing financial transactions among different financial institutions 120 in implementing embodiments of the invention. This may be useful, for example, in embodiments where a disposable account is created at one financial institution 120-1 using funds held at a different financial institution 120-2 as a source of funds.
As previously noted, in some embodiments, actual earmarked funds may be deposited within the disposable account. This may be effected in the case of a savings or checking account 204 or 208 by transferring the funds into the account, or by obtaining a cash advance against a credit card in the case of a credit-card account 212. When the funds are provided by another loan arrangement like a personal loan 216 or home-equity loan 220, the deposited funds may be proceeds from the loan. In other embodiments, the account may remain unfunded, but be supported by an identified source of funds that will be accessed after a transaction is approved. Such embodiments may use a risk analysis to evaluate the likelihood that the funds will be available when needed. Irrespective of how the disposable account 200 is funded, it subsequently becomes available for use in a merchant transaction 228.
An overview of how the disposable account may be created and used within the infrastructure shown in
The specific information collected in the request may depend in part on the specific structure to be provided to the disposable financial account. In some embodiments, the financial institution 120 may offer only one type of account, say a funded account, and will therefore always require the same type of information in the request. In other instances, the financial institution 120 may offer a number of different types of accounts, with the consumer providing that information identified as needed for the desired account. Thus, for example, an institution may offer a defined-funds account in which funds are to be deposited into the disposable account or may offer an account that remains unfunded. Creation of the account may thus proceed differently as checked at block 308. An automated interface such as used over the Internet may easily accommodate these types of variations, providing different fields to the consumer for completion as the consumer defines desired characteristics of the account.
If the account is to be a defined-funds account, the consumer arranges for funds to be provided to the financial institution 120 to fund the disposable account at block 312. In many instances, the source of funds will be maintained at the same financial institution 120 where the disposable account is to be created so that specification of an account number by the consumer may be all that is needed. In other instances where the disposable account is to be created at one financial institution, say financial institution 120-1, and the source of funds is located at a different financial institution, say financial institution 120-2, the consumer may provide an identification of the source financial institution 120-2 and an account number. This permits financial institution 120-1 to execute a transaction over the financial transaction network 116 to retrieve the funds. This type of transaction may be a debit transaction, such as when the source of funds comprises a DDA account at financial institution 120-2, or may be a credit transaction, such as when the source of funds comprises a cash advance on a credit-card account. Irrespective of how the funds are obtained, the financial institution creates and funds the disposable account at block 316. A service fee may be charged to the consumer as part of creating the disposable account.
If the account is instead to remain unfunded, the consumer may still need to identify a source of funds at block 320. Rather than obtain funds from this identified source at this time, the existence of the source of funds is verified and a risk analysis performed at block 324. Such an analysis seeks to confirm that the risk that the funds will not be available when a future transaction is executed with the disposable account is low, and is thus similar to risk analyses performed in any extension of credit to a consumer. Techniques for performing such a risk analysis are known to those of skill in the art. If the funds source can be verified and the risk analysis provides a favorable result, the financial institution may create an unfunded disposable account at block 328. Even though the account is unfunded, it may still be limited in the size of a transaction that may be approved. The limit associated with the account may depend on the results of the verification and analysis that were performed at block 324. In some cases, expected to be rare, the results of the analysis may permit the disposable account to be unfunded and without any predetermined limit imposed on the size of transactions it may support.
Use of the disposable account by the consumer proceeds in substantially the same fashion irrespective of whether the account was created as a funded account at block 316 or as an unfunded account at block 328. The account is usually assigned an account number so that it may be identified, and information is maintained by the financial institution 120 identifying the consumer who opened the account. In some embodiments, a signature may have additionally been collected from the consumer and maintained in records of the financial institution 120. In many embodiments, the disposable account will also have time constraints requiring that it be used before a specified date and/or time; if unused by that date and/or time, the account will be closed in a manner similar to that described below in connection with
A transaction may accordingly be arranged by the consumer with a merchant at block 336. The arrangement may be made using any of the mechanisms described in connection with
If the transaction is approved by the financial institution, the merchant receives a transaction approval over the financial transaction network at block 344. Receipt of the approval prompts the merchant to perform on the transaction by providing the goods and/or services to the consumer at block 348. Funds for the transaction are transferred to the control of the merchant from the financial institution at block 352. This transfer is most typically performed as part of a periodic settlement process in which the financial institution makes transfers at the end of a defined period (such as at the end of each day) to give effect to all transactions executed among multiple parties during the period.
Generally, embodiments of the invention embrace use of an account that is disposable in the sense that it is closed automatically upon satisfaction of a predetermined condition or set of conditions. Examples of conditions that may initiate such automatic closure include approving a predetermined number of transactions, which may be exactly one in some instances, having a predetermined period of time pass, approving individual transactions that don't exceed a predetermined value, approving transactions that collectively don't exceed a predetermined value, and the like. In some cases, the predetermined condition may be defined or programmed either statically or dynamically by the consumer. A summary of how transactions using the disposable account may be processed is provided with the flow diagram of
The method begins at block 404 with receipt of a request for approval of a transaction. The request may be received at a financial institution 120 that manages the disposable account, sometimes through an intermediary transaction processor, with the considerations described below being performed by the financial institution 120. In other instances, the different functions may be performed by a combination of an intermediary transaction processor and the financial institution 120 or could even be performed by a transaction processor that acts as a proxy for the financial institution 120. The request received at block 404 generally includes account information that identifies the disposable financial account, such as in the form of an account number, and perhaps including verification information such as a PIN provided by the consumer, a name of the account holder, a signature, or the like. This information is used at block 408 to identify the account and to identify it as being a disposable account limited in having a predetermined number of transactions that may be executed with it. This identification may also determine whether the disposable account is an active account. In instances where the account is created with an expiration date and/or time, this may confirm that the expiration date and/or time have not yet passed. In addition, the transaction request usually includes a total amount for the transaction, and may include more detailed information specifying what products are included in the transaction, the identity of the merchant executing the transaction, and the like.
Subsequent processing may depend on the nature of the account, such as whether it is a funded account or an unfunded account. A check is accordingly made at block 412, with functions on the left side of the page being performed for a funded account and functions on the right side of the page being performed for an unfunded account. For a transaction to be approved when made against a funded account, the disposable account generally must have sufficient funding to cover the transaction. A check is accordingly made at block 416 whether the transaction amount specified in the transaction request is less than the balance of the funded disposable account. If so, the transaction is approved and a transaction approval is returned back to the merchant at block 420 through the communications channels used to receive the initial request. This permits the merchant to proceed with execution of the transaction.
It is generally anticipated that in many instances the disposable account will have been funded with sufficient funds to cover an anticipated transaction, but without being provided with the exact level of funding needed to support the transaction. A check is accordingly made at block 424 whether any funds remain in the account after the transaction has been approved. In embodiments where multiple transactions may be performed, such a check is performed after the predetermined number of transactions has been executed. If a balance is remaining, it may be refunded to the consumer at block 428, usually by effecting a transfer of the remaining funds back to the original source of the funds, although in other embodiments they may be provided to the consumer in a different fashion. In such alternative embodiments, the consumer may have been given an opportunity to specify at the time of creation of the account how excess funds are to be distributed. In addition, while it is generally expected that any service fee imposed on the account will be charged at the time of creation of the account, it is possible for such a fee instead to be imposed at the time excess funds are returned to the consumer at block 428. Certain supplementary service fees may also be imposed at this stage in accordance with policies of the financial institution, such as to account for circumstances where the transaction involves a currency conversion or is executed in a foreign country.
Once any balance has been refunded to the consumer, the account is closed at block 432. Such closure may also take place directly in response to a determination at block 424 that no balance remains in the account after it has been used to support the predetermined number of transactions. Block 452 of the flow diagram indicates that a transaction denial is returned to the merchant in the event that the account initially lacks sufficient funds to support the transaction, as determined at block 416.
In embodiments where the account is an unfunded account, a check may be made at block 436 whether the account has a predetermined limit associated with it. This is expected to be the usual case, and a check is accordingly performed at block 440 whether the transaction amount is less than that limit. A transaction approval is generated at block 444 if the transaction amount is within the limit, or may be generated automatically in those generally rare circumstances where the account has no predetermined limit associated with it. The transaction approval is returned to the merchant along the communications channels over which the approval request was received so that the merchant may proceed with execution of the transaction. Because the account was an unfunded account, a request is also generated at block 448 by the financial institution 120 to request the necessary funds from the funding source identified by the consumer at the time of creation of the account and verified by the financial institution 120. In cases where an unfunded account is used, it may be more common for the service fee to be imposed at the time of executing a transaction rather than during creation of the account. Thus, the request transmitted at block 448 may be for an amount of the transaction augmented by the imposition of any suitable service fees, including a fee for use of the disposable account, and potentially including certain supplementary fees for unusual processing conditions, such as currency conversions, foreign-country transactions, and the like.
Similar to the functions performed with the funded account, the account is closed at block 432 after as many transactions as authorized by the predetermined number of uses associated with the account have been executed. Block 452 again indicates that a transaction denial may be returned to the merchant if the necessary approval conditions for the transaction have not been met, in this instance by a request for a transaction having an amount that exceeds the limit imposed on the disposable account.
The computational device 500 also comprises software elements, shown as being currently located within working memory 520, including an operating system 524 and other code 522, such as a program designed to implement methods of the invention. It will be apparent to those skilled in the art that substantial variations may be made in accordance with specific requirements. For example, customized hardware might also be used and/or particular elements might be implemented in hardware, software (including portable software, such as applets), or both. Further, connection to other computing devices such as network input/output devices may be employed.
Thus, having described several embodiments, it will be recognized by those of skill in the art that various modifications, alternative constructions, and equivalents may be used without departing from the spirit of the invention. Accordingly, the above description should not be taken as limiting the scope of the invention, which is defined in the following claims.
