Method and apparatus for conducting on-line commerce for goods across Customs Unions and Data Protection Unions
The invention relates to networked computer systems and more particularly to on-line commerce involving equipment for use in the ordering and purchasing of goods across Customs Unions and Data Protection Unions by personal importers (that is to say citizens who are not trading in goods but who are purchasing goods for their own personal use).
With the advent of digital networks, such as the Internet, it has become common place to conduct commerce electronically and to be able to access electronic shopping sites to order goods from any vendor's site regardless of physical location. However, when goods are ordered from an on-line shopping site located in a different Customs Union to that in which the customer resides, serious practical difficulties arise which hinder the offer by the vendor and the purchase by the customer. Any importation is subject to the rules of the Customs Union in which the customer is resident. All goods have to be supplied with an accurate custom declaration from the vendor. The customs officials of the Customs Union in which the customer is resident are entitled to examine the goods as they are imported, compare them with the customs declaration supplied and are required by the rules of their Customs Union to levy a complex series of tariffs and taxes upon each and every import. Further enquiries are possible if customs officials reasonably suspect tax and duty evasion by the customer which can lead to prosecution, fines and imprisonment. The process by which imports pass through Customs Union procedures is called "Customs Clearance".
Furthermore the Data Protection laws of particular jurisdictions debar the export of personal data concerning their citizens to countries which do not have equivalent data protection laws. Where a group of countries share equivalent data protection laws they are termed a "Data Protection Union". An inability for citizens to lawfully supply
vendors outside of their Data Protection Union with personal data concerning themselves is a barrier to conducting on-line commerce between Data Protection Unions.
It is the object of the present invention to eliminate Customs Clearance problems for personally imported goods thereby making it possible for customers:
To know exactly how much they will have to pay inclusive of all costs for goods offered by vendors in different Customs Unions to be supplied and delivered to them;
It is a further object of the invention to eliminate Data Protection problems so that a customer can enter into personal contracts for the purchase of goods from countries which do not have equivalent Data Protection laws to those of their Data Protection Union;
Additionally it is a further object of the invention to provide appropriately tailored and regulated financial services to customers in association with the said sales, anonymised statistical information to governments to enable governments to properly manage national economies and data interrogation facilities for Customs Unions to protect national economies from systematic tax evasion.
According to the invention there is provided a method of conducting on-line commerce for the purchase of goods across Customs Unions comprising the steps of:
• Creating an electronic shopping* basket of goods to be the subject of cross Customs Union transactions between a vendor and a customer, identifying the goods and vendor's price for each of the goods to be purchased by a customer together with the country of residence of the customer, and transferring the electronic shopping
basket to a CyberShopping site having a Customs Union database in which is stored information on the tariff and duties applied to goods to be imported by the customer;
• Addressing the Customs Union database with an address derived from the data defining and describing a physical product, and its original country of origin in an electronic shopping basket, together with the identity of the customer's Customs Union;
• Reading the appropriate classification code from the Customs Union database for each product in the electronic shopping basket;
• Calculating the purchase price of each of the goods in the electronic shopping basket by adjusting the vendor's price in accordance with the rules of the Customs Union and the said derived classification code;
• Communicating the said purchase price of each of the goods to the customer for acceptance or rejection;
• Establishing (or confirming existing) financial service arrangements between a CyberShopping Financial Services Provider and the customer both of whom are within the Data Protection Union of the customer;
• If the purchase price is accepted by the customer and the customer has concluded a CyberShopping Financial Services arrangement with a CyberShopping Financial Services Provider, placing an order as agent of the customer, with the vendor for the goods in the electronic shopping basket;
• Debiting the customer's account with the CyberShopping Financial Services Provider and making the appropriate payments to the Vendor and the tariff and tax authorities of the Customs Union;
• Preparing a Customs Label for communication to the vendor, to be associated with goods destined for the customer.
According to a feature of the invention the method also includes the steps of-
• Preparing an anonymised version of the transaction records for a government's statistical database and
• Providing facilities to the customs officials of the Customs Union to enable them to audit or spot check the completeness, reliability, accuracy and t thfulness of the Customs Labels and all CyberShopping transactions including the detection of attempted evasion of duty by vendors and citizens while maintaining the privacy of legitimate citizens
The method according to one embodiment of the invention also includes the step of computing the cost of shipping and extended warranties for each of the goods in the electronic shopping basket.
It is a further object of the present invention to provide apparatus for use in the on-line purchase of goods across Customs Unions and Data Protection Unions.
According to the invention there is provided a networked computer system for effecting on-line commerce for the purchase of goods across Customs Unions comprising:
means for creating an electronic shopping basket of goods to be the subject of cross Customs Union transactions between a vendor and a customer, identifying the goods and vendor's price for each of the goods to be purchased by a customer together with the country of residence of the customer, and transferring the electronic shopping basket to a CyberShopping site having a Customs Union database in which is stored information on the tariff and duties applied to goods to be imported by the customer; means for addressing the Customs Union database with an address derived from the data defining and describing a physical product, and its original country of
origin in an electronic shopping basket, together with the identity of the customer's
Customs Union; means for reading the appropriate classification code from the Customs Union database for each product in the electronic shopping basket; means for calculating the purchase price of each of the goods in the electronic shopping basket by adjusting the vendor's price in accordance with the rules of the
Customs Union and the said derived classification code; means for communicating the said purchase price of each of the goods to the customer for acceptance or rejection; means for establishing (or confirming existing) financial service arrangements between a CyberShopping Financial Services Provider and the customer both of whom are within the Data Protection Union of the customer;
If the purchase price is accepted by the customer and the customer has concluded a
CyberShopping Financial Services arrangement with a CyberShopping Financial
Services Provider, means for placing an order as agent of the customer, with the vendor for the goods in the electronic shopping basket; means debiting the customer's account with the CyberShopping Financial Services
Provider and means for making the appropriate payments to the Vendor and the tariff and tax authorities of the Customs Union; means for preparing a Customs Label for communication to the vendor, to be associated with goods destined for the customer.
The invention together with its various features will be more readily understood from the following description which should be read in conjunction with the accompanying drawings.
Of the drawings :-
Figure 1 shows a high level block diagram of an on-line electronic commerce system arrangement according to the invention;
Figures 2 and 3 show a flow diagram of the operations of the system of Figure
1 ; while
Figure 4 shows an example of a format for Custom Union label.
Figure 1 shows an on-line electronic commerce arrangement in block diagram form according to one embodiment of the invention. The system includes a CyberShopping System CSS a Consumer System CS and a Vendor System VS all interconnected by a Network NT such as the Internet. All of the systems shown in Figure 1 are computer based systems of well known type. For clarity of presentation Figure 1 shows a single Consumer System CS, Vendor System VS and CyberShopping System CSS. In practice any number of Vendor, Consumer and CyberShopping Systems can be interconnected by the Network NT.
The electronic commerce arrangement is based upon the existing internet shopping arrangements where a consumer such as Cl is able to access, by way of the Consumer System he/she is connected to, a Vendor System VS and thence a Vendor's Web site such as VI using the network NT for interconnection purposes.
The CyberShopping System CSS, which is the essence of the present invention, provides access to a Custom Union Database CUD as well as to a Financial Services Provider FSP. In addition the CyberShopping System CSS allows access through a Compliance with Due Processes Restrictions ingress arrangement CDPR to information stored on transactions performed by the CyberShopping System CSS for Customs compliance investigators' CUCI as well as compiling statistical information SSG from the transactions performed by the CyberShopping System CSS after processing by an Identity Protector and Anonymiser EPA for analysis by Governments in the Customs Union.
Before considering how the electronic commerce arrangement functions it is important to consider the implications for a Customer such as Cl, resident in the country which is party to a Customs Union, wanting to purchase goods from a Vendor such as VI located outside the Customs Union (typically residents of the European Union wanting to purchase goods from a Vendor in the United States of America).
The Customer needs to know the basic price of goods in the currency of the country in which the customer resides together with the import duties, Value added tax and shipping charges. It is the function of the CyberShopping System CSS of the invention to provide information to a customer so that the true price of the goods is identified, the necessary tariff and tax is levied and the vendor is provided with an appropriate customs paid label CLAB for attachment to or association with the goods for use by the vendor.
The functioning of the invention will be described with reference to Figures. 2 and 3 which in flow diagram form show the steps performed by the electronic commerce arrangement of Figure 1 in executing the process necessary to permit customers from one Customs Union to purchase goods from a Vendor located outside the Customs Union.
Figure 2 shows two entry ports into the electronic commerce arrangement where (i) a customer accesses an on-line shopping Vendor's site (Step SI) or (ii) where a surfer comes from a site where he has sought quotations on goods (Step S5A) and requires to find out how much they will actually cost to buy.
Steps SI, S2, S3 and S4 represent the usual on-line shopping process and will be traversed without entering the CyberShopping System CSS of Figure 1 if the goods to be purchased are to be delivered to the customer without being exported to a different
customs union from that in which the vendor resides. It should be noted that during the on-line shopping process defined in Steps S 1 to S4 an Electronic Shopping Basket
(ESB) is created in Step S3. This Electronic Shopping Basket takes the form of a list of products the shopper identifies as wanting to purchase extracted from the Vendor's database of products for sale.
When the Vendor System detects that the goods are to be sent to a country in a different Customs Union from that in which the Vendor resides Step S4 will produce a 'yes' output and the Vendor system accesses the CyberShopping System CSS entering it with the Electronic Shopping Basket ESB holding information on the goods and the basic price of those goods which the Customer Cl wants to purchase.
The entry into the CyberShopping System CSS is made at Step S6 in Figure 2 and the CyberShopping System CSS compares the Database of the Country of Origin DOC of all the Customer's selected goods with the Database of rules CUD for the selected Customs Union in Step S6.
Typically the Database of Rules CUD of a Customs Union is created within the CyberShopping System. The European Community for example operates with an Integrated Tariff of the Community, given the acronym of TARIC which stands for the "Tariff ϊntegre de la Communaute. This is a legal instrument which was created at the time as the Combined Nomenclature by Regulation 2658/87 (Article 2). The TARIC contains a nomenclature in all eleven official languages of the European Union with a large number (in excess of 15,000) tariff lines. It shows all third country and preferential duty rates actually applicable as well as all commercial policy measures. The TARIC database provides for each of the goods in an electronic shopping basket a TARIC code which is typically a 15 digit code including the eight digit Combined Nomenclature code. The TARIC database contains for each classification of goods information on the tariff to be applied together with all third party and preferential duty
rates applicable as well as all commercial policy measures, such as limits on the number of specific goods that can be imported into a specific country. Step 6 of Figure 2, the entry step into the CyberShopping System CSS, prepares the appropriate TARIC information for each of the goods in the electronic shopping basket.
Step 7 compares the Customer's selected goods with a database GW&PD, provided by the vendor, of the weight and packing characteristics of all the Vendor's goods so that the shipping charges for the goods in the ESB can be calculated in Step S8 in Figure 3. The shipping costs together with the Tariff's and local taxes for the goods in the electronic shopping basket ESB have now been computed. At this stage the CyberShopping System CSS may also compute warranty charges based up one, two or more years of warranty for the products in the ESB.
Step S8 calculates the real cost of the goods in the ESB which will include Tariffs, Local Tax, shipping costs and Warranty costs if necessary. Although warranty costs are optional they are of some significance to the customer when buying goods from a vendor outside of the country of residence of the customer. The CyberShopping System proprietor can arrange to provide replacement or repair warranties for the goods ordered by the customer using the CyberShopping System and the charge for these warranties accordingly. Step 8 will also include the operation of returning to the customer the calculated real cost of the goods. The real cost calculation operations performed in Step 8 will be as follows:-
Calculate the purchase price abroad (PPA) (i.e. the basic price of the goods plus freight and transport costs). Look up the good's duty rate percentage and VAT. Multiply the PPA by the duty rate. Store the duty to be paid value in location A. Add location A contents to the PPA and multiply the result by the VAT percentage. Store VAT value in location B. Add location A contents to location B contents to produce the customs charges.
Step 9 will be exited on the 'no' branch, exiting from the CyberShopping System CSS, if the Customer decides not to purchase the goods.
Step 10 will be performed if the customer decides to continue with the transaction. At this stage the customer will be signed up for CyberShopping finance or if he/she is an existing CyberShopping customer with an appropriate CyberShopping account to which the transactions can be charged in Step Sl l using the Customer Accounts Database CAD.
Step S12 completes the transaction as far as the Vendor is concerned by returning the ESB to the Vendor System thereby ordering the goods. The order is accompanied by a data file from which the customs label CLAB may be generated by the Vendor. Typically the customs label will identify the registration number of the personal importer (i.e. the CyberShopping customer) and a CyberShopping shipment reference. In addition the customs label may include a bar-code identifying the personal importer and the shipment reference so that customs checks can be performed on the imported package bearing the customs label. A typical physical customs label is shown in Figure 4. It should be noted that a dematerialised label could be associated with a product, such as music or computer software, which is delivered on-line rather than physically.
Step S12 also transfers to the Vendor the payment in the appropriate currency to the vendor.
Step S13 calculates the customs Duty and Tax paid and places the charges in a file for transfer to the Customs authority.
Finally Step S14 prepares anonymised data for government statistics to ensure the system integrity Steps S6 to S14 will be performed in a secure manner using firewall technology and encryption.
It should be noted that the CyberShopping System of the invention is ideally suited to maintaining the highest Data Protection Standards, as is required for example within the European Union. The CyberShopping System provides for the full and immediate implementation of such Instruments as the European Distance Selling Directive for example on all sales linked to warranty and extended warranties. The CyberShopping System also protects tax revenue incomes for the Customs Union through on-line sales of goods being accurately declared and duties and taxes always being paid on consumer imports in an efficient manner.
The CyberShopping System of the invention also eases the problem created when physical goods are rejected by the customer as current Customs and Excise practices do not permit refunds of import duty and VAT on personal imports. Because the CyberShopping System of the invention levies import duty and VAT on personal imports upon the placing of the order the revenues will be available immediately allowing the CyberShopping company to come to an arrangement with the Customs and Excise Authority whereby the Authority will permit deductions of genuine refunds to CyberShopping customers.
In the above description reference has been made to goods generally. It should be understood that this is not restricted to physical goods and can be applied to on-line delivered products which are subject to tariff and local taxation issues.