Patent Application
20090234748
Merchants allow customers to purchase goods or services using credit cards or other non-cash electronic payment transactions. The companies that process the credit card transactions generally charge merchants a fee, called an interchange fee, for processing each transaction. The interchange fee charged on any given transaction can vary depending upon a number of criteria, but typically has an expected rate of, for example, 1.75% of the total amount of the transaction. The process of applying the interchange rate schedule to a merchant transaction is known as qualification. However, as the transaction characteristics vary from the anticipated qualification criteria, the interchange fee applied to the transaction can increase. The increase in the interchange fee helps offset the added risk or pay for additional cardholder benefits the company processing the transaction incurs because of the non-standard transaction.
For example, in a retail store, a merchant may consider a standard credit card transaction to be one that requires the customer or the sales associate to swipe the magnetic stripe of the credit card. The credit card number and other information is read from the magnetic stripe and passed through the point of sale equipment to the merchant acquirer. In this case, the capture and use of the magnetic stripe verifies that the credit card was physically present for the transaction and allows the transaction to qualify for a favorable interchange rate. The merchant, whose customers are physically present during a credit card transaction, would consider such a transaction to be their standard transaction and the associated interchange rate to be their standard interchange rate. The interchange rates considered to be standard will vary by merchant type, type of card holders that frequents the merchant (premium reward cards may charge a higher interchange rate) and the amount of information a merchant can gather from their customers in order to minimize transactional risk. A non-standard transaction may include the sales associate manually entering the credit card number rather than swiping the card. In this scenario, the risk that a fraudulent credit card is used for the transaction increases because the credit card is not present to verify the authenticity of the credit card number or the authenticity of the cardholder. As such, the company processing the credit card transaction may require a higher interchange fee to offset the risk of the non-standard transaction.
Increased interchange qualification fees can be the result of a number of factors and broadly fall into two categories: avoidable and unavoidable. If a merchant chooses to accept a particular brand of credit card from an organization, such as VISA or MasterCard, the merchant is often obligated by the association regulations to accept any validly presented consumer card. Unavoidable interchange qualification fee increases could result from the customer belonging to a premium card reward program. The merchant must accept the increased interchange fees on the atypical transactions in order to receive the general benefit of being able to accept credit card payments. On the other hand, for some transactions to which higher interchange fees are applied, the increased interchange rate is avoidable. In these cases, the merchant can act positively to address the issue and return the interchange fees to their expected/standard interchange qualification rates. For example, the magnetic stripe reader incorporated into a payment terminal or point of sale may be broken and unable to accurately read the magnetic stripes of the credit cards that are presented for consumer transactions. Similarly, untrained employees may be unaware that manually entering the number instead of swiping the credit card may cause higher fees. The merchant may be unaware that these situations creating non-standard transactions are occurring and increasing the merchant's costs for processing credit card transactions. In such cases, the merchant may not become aware there are problems with interchange qualification until they receive their monthly processing fee statement. The sooner the merchant identifies irregular and avoidable interchange qualification fees, the quicker they can address the issue and reduce the negative financial impact of these fees.
It is in view of these and other considerations not mentioned herein that the embodiments of the present disclosure were envisioned.
Embodiments presented herein provide for systems and methods that alert a merchant of increased interchange fees. In one embodiment, transaction information is provided to a merchant. The merchant sends the transaction information to an application. If the transaction is non-standard, the application can produce a notification that is sent to the merchant. The merchant may then address the causes of the increased interchange fee. The embodiments provide an active management approach to interchange fees.
This summary is not meant to limit the scope of the disclosure. The disclosure is as defined in the claims.
The embodiments of the present disclosure are described in conjunction with the appended figures:
In the appended figures, similar components and/or features may have the same reference label. Further, various components of the same type may be distinguished by following the reference label by a dash and a second label that distinguishes among the similar components. If only the first reference label is used in the specification, the description is applicable to any one of the similar components having the same first reference label irrespective of the second reference label.
The ensuing description provides exemplary embodiment(s) only and is not intended to limit the scope, applicability or configuration of the possible embodiments. Rather, the ensuing description of the exemplary embodiment(s) will provide those skilled in the art with an enabling description for implementing an exemplary embodiment. It being understood that various changes may be made in the function and arrangement of elements without departing from the spirit and scope of the possible embodiments as set forth in the appended claims.
Embodiments of the present disclosure provide a unique and novel system for determining that an increased interchange fee will be assessed for a transaction and notifying the merchant of the increased interchange fee. As an example, a sales person at a register in a store asks for payment for a good. The customer provides a credit card to complete the purchase. The sales person attempts to swipe the credit card in a credit card reader. If the credit card number does not register through the card reader, the sales person may enter the credit card number manually using a keypad or other interface.
The transaction information, such as the credit card number, an indication that the credit card number was entered manually, the amount of the purchase, etc., is sent to an application. The application evaluates the transaction information. The application determines if the transaction matches the standard interchange qualification for the merchant. The credit card number entered for the transaction was entered manually, which the application recognizes as a non-standard transaction. A non-standard transaction generally incurs an increased interchange fee. As such, the application generates a notice of an increased interchange fee. The notice can be sent to a responsible person at the merchant, such as a store manager. The store manager then has information about the increased interchange fee and can respond to the notice. In embodiments, the store manager receives notices of avoidable interchange fee increases to address those increases but does not receive notices for unavoidable interchange fee increases. For example, the store manager may check if the credit card reader is malfunctioning or if the sales person requires more training on the credit card reader. Especially since the notice can be generated in near real time, the merchants can respond to events that create increased interchange fees before those events create more costs to the merchant.
Specific details are given in the following description to provide a thorough understanding of the embodiments. However, it will be understood by one of ordinary skill in the art that the embodiments may be practiced without these specific details. For example, circuits may be shown in block diagrams in order not to obscure the embodiments in unnecessary detail. In other instances, well-known circuits, processes, algorithms, structures, and techniques may be shown without unnecessary detail in order to avoid obscuring the embodiments. In some embodiments, a computing system may be used to execute any of the tasks or operations described herein. In embodiments, a computing system includes memory and a processor and is operable to execute computer-executable instructions stored on a computer readable medium that define processes or operations describe herein.
Also, it is noted that the embodiments may be described as a process which is depicted as a flowchart, a flow diagram, a data flow diagram, a structure diagram, or a block diagram. Although a flowchart may describe the operations as a sequential process, many of the operations can be performed in parallel or concurrently. In addition, the order of the operations may be re-arranged. A process is terminated when its operations are completed but could have additional steps not included in the figure. A process may correspond to a method, a function, a procedure, a subroutine, a subprogram, etc. When a process corresponds to a function, its termination corresponds to a return of the function to the calling function or the main function.
Moreover, as disclosed herein, the term “storage medium” may represent one or more devices for storing data, including read only memory (ROM), random access memory (RAM), magnetic RAM, core memory, magnetic disk storage mediums, optical storage mediums, flash memory devices and/or other machine readable mediums for storing information. The term “machine-readable medium” includes, but is not limited to, portable or fixed storage devices, optical storage devices, wireless channels and various other mediums capable of storing, containing or carrying instruction(s) and/or data.
Furthermore, embodiments may be implemented by hardware, software, firmware, middleware, microcode, hardware description languages, or any combination thereof. When implemented in software, firmware, middleware or microcode, the program code or code segments to perform the necessary tasks may be stored in a machine-readable medium such as storage medium. A processor(s) may perform the necessary tasks. A code segment may represent a procedure, a function, a subprogram, a program, a routine, a subroutine, a module, an object, a software package, a class, or any combination of instructions, data structures, or program statements. A code segment may be coupled to another code segment or a hardware circuit by passing and/or receiving information, data, arguments, parameters, or memory contents. Information, arguments, parameters, data, etc. may be passed, forwarded, or transmitted via any suitable means including memory sharing, message passing, token passing, network transmission, etc.
An embodiment of a system 100 operable to generate the notices of increased interchange fees is shown in
The merchant 112 can receive transaction information 116. Transaction information 116 is one or more items of information provided by the customer to complete the transaction. In embodiments, the transaction information 116 includes, but is not limited to, a credit card number, a debit card number, a stored value card number, the customer's name, authentication information, such as the customer's address, zip code, phone number, etc., the amount of the purchase, an indication of how the transaction information was received, or the goods or services purchased. The transaction information 116 may be received electronically from a point-of-sale device, online from a customer computer, transmitted from a mobile device, entered manually into a merchant system 100, or by other method or process.
The merchant 112 can send the transaction information 116 to an application 108. In embodiments, the application 108 is the hardware, software, or hardware and software that evaluates the transaction information 116 to determine if an increased interchange fee will be assessed. An embodiment of an application 108 is described in conjunction with
In embodiments, the application 108 interfaces with a database 110. The database 110 can be any hardware, software, or hardware and software used to store information. For example, the database 110 is a collection of information stored in a relational database on a hard drive or other memory described in conjunction with
The merchant acquirer 106, in embodiments, is an entity that processes credit or debit or other financial transaction authorizations on behalf of a merchant 112 desiring to accept payment from network based payment systems such as credit, debit, stored value, etc. The merchant acquirer 106 may communicate authorization requests and receive authorizations or declinations of payment for a merchant over a payment switching network 104 (e.g., VISA® or MASTERCARD®). In other embodiments, the merchant acquirer 106 may be a function of a financial institution, for example, a bank, that processes credit or debit authorization requests without a separate outside entity. The merchant acquirer 106 may have a predefined relationship with the merchant 112 or customer providing the transaction information 116. In embodiments, a merchant acquirer 106 sends an authorization request to a consumer payment issuing bank 102. The issuing bank 102, in embodiments, is a financial institution that approves transactions for a consumer and sends authorizations to the merchant acquirer 106.
The merchant acquirer 106 receives the transaction information 116. In embodiments, the merchant acquirer 106 validates the authenticity of the transaction. The merchant acquirer 106 may then send an authorization request to the issuing bank 102 to approve the transaction by determining if the consumer can pay for the transaction. The issuing bank 102 may then issue an authorization to the merchant acquirer 106. In embodiments, the merchant acquirer 106 sends the authorization to the merchant 112.
In operation, the merchant 112 receives transaction information 116 from a customer. The transaction information 116 is sent to the application 108, which evaluates the transaction information 116 against information in the database 110. If the transaction will create an increased interchange fee, the application 108 generates and sends the interchange fee notification 114. In embodiments, the interchange fee notification 114 is sent to the merchant 112 from which the transaction information 116 was received.
A store manager or other responsible party may receive the interchange fee notification 114. The interchange fee notification 114 may be an email or other electronic alert sent to a computer of a responsible party. The interchange fee notification 114 may have enough information to identify possible problems while protecting the customer's privacy. For example, the cardholder's name, address, and other personal information may not be disclosed in the interchange fee notification 114. One skilled in the art will recognize what information may be disclosed or not disclosed while protecting the cardholder's privacy. In alternative embodiments, the interchange fee notification 114 is sent to a sales person to alert the sales person of the increased interchange fee. In still another embodiment, the interchange fee notification 114 is a report produced periodically for the merchant 112. If the transaction continues, the application 108 sends the transaction information 116 to the merchant acquirer 106. Alternatively, the transaction information 116 is sent to the merchant acquirer 106 and the application 108 substantially at the same time. In embodiments, the notification 114 also includes predicted or possible causes for the increased interchange fees and one or more proposed solutions to eliminate the predicted causes.
Another embodiment of the interchange fee notification system 100 is shown in
In operation, a sales person may enter the credit card information 122 using the user interface 120 of the point-of-sale device 118. The credit card information 122 and any other transaction information is sent from the point-of-sale device 118 to the application 108. The application 108 again analyzes the transaction against information in the database 110. If the transaction is non-standard, the application 108 may generate an interchange fee notification 114 and, in embodiments, sends the interchange fee notification 114 to the point-of-sale device 118 to be displayed at the user interface 120. The sales person may then be provided the notice of the increased interchange fee before the transaction is completed or in “near real time.” Near real time can mean an action that occurs quickly or when a person can react to the action during the transaction. In embodiments, the sales person must acknowledge the notice by using the user interface 120 to accept the increased interchange fee. In other embodiments, the sales person cannot continue the transaction without accepting the increased interchange fee. As such, the merchant 112 can have granular and real time control over whether increased interchange fees are accepted. In embodiments, the application 108 may be resident in the merchant. While the application 108 may report the transaction to a clearing house or other entity to analyze the transaction, no transaction information may be sent to the merchant acquirer 106 until, at least, the transaction and increased interchange fee is approved.
An embodiment of one or more components that may form the application 200 (similar or the same as application 108 in
In embodiments, when a merchant first interfaces with the merchant register 204, one or more items of authentication criteria 206 are stored. The authentication criteria 206 allows the merchant register 204 to maintain the criteria in a secure fashion by having the merchant authenticate itself before changing, adding, or eliminating criteria. The merchant register 204 reads the authentication criteria 206 and evaluates information provided by the merchant to authenticate the merchant before allowing a session.
The merchant register 204 receives one or more items of criteria 202. Criteria 202 are, in embodiments, a set of information for which the application 200 will use to evaluate transactions. In embodiments, the criteria are the information for a standard transaction, for example, magnetic stripe read, card present, card type(s), transaction classifications, zip code entered, etc. The criteria 202 may be associated with an agreement with a merchant acquirer 106 (
An embodiment of the criteria database 600 (similar or same as criteria database 206) includes one or more data records related to a merchant and as shown in
A further data field may include threshold criteria 608. The threshold criteria 608 can include any characteristic of one or more non-standard transactions that will require a notice to be sent to the merchant. For example, if there is any non-standard transaction, a notice is required or if there are three non-standard transactions in a single day, a notification is needed. In another example, if three non-standard transactions occur at the same point-of-sale device, a notification is needed.
Another data field may be the notification procedures 610. The notification procedures 610 can provide requirements for the notification. For example, the notification procedures can include the information the merchant will require in the notification, what medium to use for the notification, e.g., email, fax, etc., to whom the notification is to be sent, etc. This information is provided by the merchant and accessed and used by the application 200.
Referring again to
In embodiments, the transaction qualifying analyzer 214 determines if the transaction associated with the transaction information received by transaction qualifying analyzer 214 will create an increased interchange fee. The transaction qualifying analyzer 214 can read the criteria from the criteria database 208 and compare the criteria with the transaction information 210. If the transaction information 210 does not deviate from the standard transaction profile, the transaction qualifying analyzer 214 can determine the transaction is qualifying, and the transaction will continue as explained in conjunction with
The non-qualifying transaction datastore 216 can be any type of memory that stores information associated with one or more non-qualifying transactions. In an embodiment, the non-qualifying transaction datastore 216 is a log listing the non-qualifying transactions in chronological order. In other embodiments, the non-qualifying transactions are stored in some other format. Each record of a non-qualifying transaction may include one or more portions of the transaction information 210 associated with the transaction.
A threshold analyzer 218, in embodiments, determines if a threshold for generating a notification is passed. A threshold is a criteria 202 received from the merchant and stored in the criteria database 208 for when the merchant wants a notice for one or more non-qualifying transactions. In an embodiment, every non-qualifying transaction generates a notice of an increased interchange fee. In alternative embodiments, two or more non-qualifying transactions that meet predetermined threshold criteria are received before the threshold analyzer 218 determines a notice is needed. For example, if three non-qualifying transactions occur in a single day, a notice may be generated. However, if only a single non-qualifying transaction occurs in a singe day, no notice may be needed. In another example, if three non-qualifying transactions occur on the same point-of-sale device 118 in a week, a notice may be generated to alert the merchant that the point-of-sale device 118 may be malfunctioning. In embodiments, there are two or more threshold criterion 202 that are analyzed for the non-qualifying transactions.
In another embodiment, the threshold analyzer 218 analyzes the non-qualifying transaction 216 using a pattern analysis algorithm or other algorithm. The different algorithms may be stored in the criteria database 208 and specified by the merchant. One skilled in the art will recognize different pattern analysis algorithms that may be used to analyze the transactions. For example, the algorithm may try to match non-standard transactions 216 to dates created or employees involved. This analysis has the advantage of identifying other reasons for increased interchange fees beyond the capabilities of simple threshold criteria comparisons described above.
The threshold analyzer 218, upon receiving indication that a new non-qualifying transaction is stored in the non-qualifying transaction datastore 216, the threshold analyzer 218 can review the record in the non-qualifying transaction datastore 216 to determine if more non-qualifying transactions have occurred over a period of time. If enough non-qualifying transactions have occurred to pass a threshold condition, the threshold analyzer 218, in embodiments, sends an indication to a near real time notifier 224. In other embodiments, the threshold analyzer 218 sends information from the non-qualifying transaction datastore 216 for one or more non-qualifying transactions to a reporter 220.
The reporter 220, in embodiments, generates a summary report 222 for one or more non-qualifying transactions that have occurred and are stored in the non-qualifying transaction datastore 216. For example, every month, the reporter 220 compiles a list of all the non-qualifying transactions stored in the non-qualifying transaction datastore 216. One or more items of transaction information 210 stored in the non-qualifying transaction datastore 216 populates the summary report 222. The reporter 220 can then send the summary report 222 to the merchant. The summary report 222 allows the merchant to receive information about non-qualifying transactions that do not necessarily generate a notice.
In embodiments, the near real time notifier 224 receives a indication that an increased interchange fee notification 226 needs to be sent. The near real time notifier 224 creates the notification 226, which may be an email, other electronic message, a fax, a paper message, or other notice. The threshold analyzer 218, in embodiments, provides one or more items of transaction information 210 for the notice. In other embodiments, the near real time notifier 224 retrieves transaction information from the non-qualifying transaction datastore 216. The near real time notifier 224 writes the transaction information 210 to the notification 226 and sends the notification 226 to the merchant.
The notification 226 may have one or more items of transaction information 210, for example, merchant, transaction identifier, point-of-sale device identifier, sales person identifier, reason for increased interchange fee, etc. The notification 226 can include any transaction information 210 required by the merchant to respond to the reasons for the increased interchange fee. What information is included in the notice may be part of the criteria 202 stored in the criteria database 208 and read by the near real time notifier 224.
A flow diagram of a method 300 for determining that a notice is to be sent because an increased interchange fee is to be assessed is shown in
Receive operation 304 receives transaction information. In embodiments, the merchant 112 (
Determine operation 306 determines if the criteria are met. In embodiments, the application 108 (
Send operation 308 sends a notification of a non-qualifying transaction or an increased interchange fee notification. In embodiments, the application 108 (
A further embodiment of the method 300 is shown in
Receive operation 316 receives a response to the notification. In embodiments, the merchant 112 (
Determine operation 318 determines if the transaction is approved. In embodiments, the merchant 112 (
A flow diagram of a method 400 for determining that a notice is to be sent because an increased interchange fee is to be assessed is shown in
Receive operation 404 receives a threshold. In embodiments, the merchant 112 (
Determine operation 406 determines if the non-qualifying transaction meets the threshold criteria. In embodiments, the application 108 (
Generate operation 408 generates a notification for one or more non-qualifying transactions or one or more increased interchange fee notifications. In embodiments, the application 108 (
Embodiments of the different systems represented in this disclosure, which may include the merchant 112 (
The computer system 500 also comprises memory 504 to hold data or code being executed by processor 502. The memory 504 may permanently or temporarily store the instructions described in conjunction with
The computer system 500 also can comprise software elements, including an operating system and/or other code, such as one or more application programs for generating a notification 114 (
A set of these instructions and/or code might be stored on a computer readable storage medium, such as the storage device(s) 508 or memory 504. In some cases, the storage medium might be incorporated within a computer system. In other embodiments, the storage medium might be separate from a computer system (i.e., a removable medium, such as a compact disc, etc.), and/or provided in an installation package, such that the storage medium can be used to program a general purpose computer with the instructions/code stored thereon. These instructions might take the form of executable code, which is executable by the computer system 500 and/or might take the form of source and/or installable code, which, upon compilation and/or installation on the computer system 500 (e.g., using any of a variety of generally available compilers, installation programs, compression/decompression utilities, etc.) then takes the form of executable code.
Further embodiments of the computer system 500 comprises input/output (I/O) modules or systems 506. I/O systems 506 may include displays such as LCDs, plasma screen, cathode ray tubes, etc. The displays can provide a visual representation of data to a user. I/O system 506 may also include input devices such as mice, keyboards, touch screens, etc. Input devices allow the user to input information into the computer system. I/O systems 506 may also comprise communication systems such as wired, wireless, or other communication systems. Further, communication systems may communicate with peripheral devices, such as printers, modems, or other devices. As an example, the user interface 120 (
In light of the above description, a number of advantages of the present disclosure are readily apparent. For example, the merchant can receive notices that increased interchange fees are being incurred in near real time. As such, the merchant has the opportunity to ameliorate the problem causing the increased interchange fees. The merchant may also receive reports to determine patterns or tendencies in which increased interchange fees occur. In other embodiments, the merchant can approve the increased interchange fee before the fee is assessed. All these advantages help the merchant lower their costs for using credit cards, debit cards, etc.
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, etc.), or both. Further, connection to other computing devices such as network input/output devices may be employed.
While the principles of the disclosure have been described above in connection with specific apparatuses and methods, it is to be clearly understood that this description is made only by way of example and not as limitation on the scope of the invention.
