WO2009107102A2

WO2009107102A2 - Near-real-time payment transaction facilitation system

Info

Publication number: WO2009107102A2
Application number: PCT/IB2009/050803
Authority: WO
Inventors: Tilak Bandara Dissanayake; Sunil Charita Wijesinghe
Original assignee: Transact Global (Private) Limited
Priority date: 2008-02-29
Filing date: 2009-02-27
Publication date: 2009-09-03
Also published as: WO2009107102A3

Abstract

A near real time payment transaction facilitation system designed for mobile phone or other communication devices. The participant identification is by way of a globally unique code assigned to their communication device with no SIM change at the time of registration with a bank/financial institution. The proposed system enables users to pay for goods or services or cash directly from their existing bank/financial institution accounts with no requirement to open up a new wallet account through a secure payment gateway and the availability of money to the payee in their bank/financial institution account is instant. Settling between banks is performed either via a Central Bank/Monetary Authority in the case of local banks, or via international settlement channels in the case of international banks.

Description

1. TITLE

Near-Real-Time Payment Transaction Facilitation System

2. FIELD OF INVENTION

[0001] The present invention relates to a payment transaction facilitation system.

3. BACKGROUND ART

[0002] Payment systems can be classified according to 1) what financial instrument is presented by payer to the payee at the beginning of the transaction following an agreement between payer and payee to pay an agreed amount of funds in exchange for an amount of goods, services or cash, 2) when the payee's bank account is credited and the payer's bank account is debited, 3) the number of account transactions to complete the "purchase," 4) what advantages are associated with the financial instrument, and 5) what disadvantages are associated with the financial instrument. Note that in Item 2 above, for purposes of a common comparison base across payment methods, we assume that the starting point of the process is funds being in a payer bank account, and the terminating point is the funds being in the payee's and associated party's bank accounts. Even though the words "banks" and "bank accounts" are used throughout this document, they refer to any financial institution and a customer's account at that financial institution.

[0003] Typical financial instruments presented at the beginning of the transaction in common use are cash, cheques, debit cards and credit cards. In addition, many electronic message based payment systems have recently emerged.

[0004] Payment Using Cash:

[0005] The payer presents currency (notes and coins) to the payee for the agreed amount.

[0006] The payee "account crediting" is immediate in the sense that the payee can use those funds immediately, particularly in a face-to-face transaction where cash is physically handed over from the payer to the payee. The payers account debiting occurs at the time of cash withdrawal by the payer from their bank account.

[0007] The number of account transaction for a cash purchase are two: 1) the debiting of the payer's account at cash withdrawal, and 2) the crediting of the payee's account at the time of cash deposit. [0008] There are a few advantages associated with a cash transaction. These include 1) the universal acceptability of cash in any country that uses that currency, and 2) the aforementioned immediacy of good funds in the hands of the payee.

[0009] There are many disadvantages associated with a cash transaction. These include 1) the vulnerability of cash to theft, loss, counterfeiting and destruction, 2) its physical bulk, 3) the limited service points at which the payer can obtain cash (bank branches, Automated Teller Machines, POS terminal enabled merchants) from the payer's bank account(s) or credit card account(s), 4) the limited service points at which the payee can deposit cash (bank branches, Automated Teller Machines, Cash Deposit Machines), 5) the associated costs (reduction of deposits, insurance, security etc.) to banks of maintaining vault cash to service withdrawals, and 6) the associated cost to the Central Banks to print, circulate, retrieve and destroy currency.

[0010] Payment Using a Cheque:

[0011] The payer presents a cheque to the payee for the agreed amount. The payee can be nominated or the cheque can be written to "cash."

[0012] Payee account crediting is delayed by a few days depending on the cheque clearing process of that country. The payer account debiting occurs when the payer bank receives the cheque from the payee bank, and verifies the authenticity of the signature etc. In addition, the overall transaction completes only when the Central Bank/Monitory Authority settles the payer and the payee accounts following a settlement request from a National Clearing House.

[0013] The number of account transaction for a cheque purchase are four: 1) the debiting of the payer's current account, 2) the crediting of the payee's account the cheque is deposited into, 3) debiting the payer bank's Central Bank/Monitory Authority account, and 4) crediting the payee bank's Central Bank/Monitory Authority account.

[0014] There are a few advantages associated with a cheque transaction. These include 1) the payee can be nominated on the cheque, 2) a record of the transaction (when, who, how much, and for what) can be recorded in the cheque register by the payer, 3) a record in the bank statement with a unique reference number, i.e. the cheque number is provided at the end of the month to the payer, and 4) a scanned image of the executed cheque is maintained by the banks.

[0015] There are many disadvantages associated with a cheque transaction. These include 1) growing refusal by payees to accept cheques since they do not represent a guaranteed payment and may "bounce," 2) counterfeit cheques, 3) forged signatures, 4) payment amount adjustments by payees after the cheque is handed over to them, 5) payee reassignment, 6) fear of loss of cheques issued to "cash" since they can be redeemed by the bearer, 7) inability to easily trace who received the payment in case a "cash" cheque is cashed and not deposited into a bank account, 8) loss of cheques, 9) destruction of cheques, 10) cheques expiring after a certain period of time, 11) difficulty for payer to balance account if payee delays the depositing of the cheque, 12) long settlement times, 13) having to physically take cheque to bank in order to cash it, and 14) the issuing of cheques by a party other than the legitimate owner of the cheques.

[0016] Payment Using a Debit Card:

[0017] The payer presents a debit card to the payee, who then uses their Point of Sale (POS) terminal to effect the transaction for the agreed amount.

[0018] Payee account crediting is delayed by a few days depending on the settlement network and process of that country. Payer account debiting is immediate.

[0019] The number of account transaction for a debit card purchase are two: 1) the debiting of the payer's account, and 2) crediting the payee's account,.

[0020] There are a few advantages associated with a debit card transaction. These include 1) assurance that payment is good, and 2) immediate debiting of payer's account

[0021] There are many disadvantages associated with a debit card transaction. These include 1) the lack of universality of POS terminals, 2) the skimming of debit card numbers by unscrupulous merchants, and subsequent fraudulent withdrawals by said merchant or accomplices, 3) the fee that merchants have to pay to the POS terminal owner and the debit card issuing bank, 4) the requirements for merchants to open a merchant account at the POS terminal owning bank 5) the delayed crediting of merchant accounts, 6) the use of paper slips which are prone to loss as the basis for account keeping.

[0022] Payment Using a Credit Card:

[0023] The payer presents a credit card to the payee, who then uses their Point of Sale (POS) terminal to effect the transaction for the agreed amount.

[0024] Payee's merchant account crediting is delayed by a few days depending on the settlement network and process of that country. Payer account debiting occurs when the payer decides to pay the credit card company.

[0025] The number of account transaction for a debit card purchase are two: 1) the crediting of the payee's merchant account, and 2) debiting the payer's account

[0026] There are a few advantages associated with a credit card transaction. These include 1) assurance that payment is good, and 2) extension of credit to the payer by the credit card company, 3) pre-approved option available to the payer to delay payment to the credit card company in exchange for a finance charge.

[0027] There are many disadvantages associated with a credit card transaction. These include 1) the lack of universality of POS terminals, 2) the skimming of credit card numbers by unscrupulous merchants, and subsequent fraudulent withdrawals by said merchant or accomplices, particularly over the Internet, 3) the fee that merchants have to pay to the POS terminal owner and the credit card issuing bank, 4) the requirements for merchants to open a merchant account at the POS terminal owning bank 5) the delayed crediting of merchant accounts, 6) the use of paper slips which are prone to loss as the basis for account keeping.

[0028] Payment Using an Electronic Message:

[0029] Electronic Message-based Payment Systems (EMPS) are based on the concept of a payment gateway that acts as an intermediary between the payer and the payee. EMPS involve a customer (payer), a merchant (payee), a message transport Service Provider(s), a financial institution(s), and in some instances an independent service provider. The EMPS is operated by the message transport provider (typically a telephone company), a bank, an independent operator, or combinations of the above. Therefore it is necessary to look at the following when considering EMPSs: 1) method of communication, 2) request initiation and the method of identifying the user, 3) source of funds, 4) the operator, and 5) Inter-bank settlement.

[0030] Method of Communication for EMPSs:

[0031] The method of communication for EMPSs typically fall into two main categories. First, EMPSs that use telephones as their interface device and the cellular carrier for transport. Second, EMPSs that use computers as their interface device and the Internet for transport. The telephony based EMPSs are suitable for P2P (person-to-person) and C2B (Consumer-to-Business) transactions where the payer is an individual and can uniquely be identified via by their transaction device, i.e. the telephone. The internet based EMPSs are suitable for P2P and C2B transactions as well. Additionally, the internet based EMPSs are suitable for B2B (Business-to-business) transactions where a number of individuals from an organization are authorized to settle a payment request from a payee business.

[0032] Telephony Based EMPSs :

[0033] The telephone based EMPSs initiate transactions typically through; 1) phone key pad entry in response to automated voice requests aka. IVR (Interactive Voice Response), 2) SMS (Short Message Service), and 3) USSD (Unstructured Supplementary Service Data). Each of these means has advantages and disadvantages from the perspective of cost, telephone network resource usage, speed, and security.

[0034] IVR Pros and Cons:

[0035] IVR requires a phone call which is expensive and requires a voice line to be occupied for the duration (i.e. it is synchronous) of the two way (i.e. it is full-duplex) transaction, which can take several minutes. Since the means of user input is restricted to the 12 characters available on the phone keypad, the user is presented with a variety of spoken choices to which they respond by pressing a number or symbol (* or #) on the keypad. This approach which is typically referred to as telebanking is insecure since the user 1) can initiate the transaction from any phone, i.e. no Caller Line Identification (CLI) authentication, 2) is required to call a published phone number which can be known by a thief, and 3) is required to input their account number and PIN (Personal Identification Number) in response to the system queries which can be listened to by a thief who is tapping the inbound phone lines to the telebanking centre. Additionally, since the duration of the call can take several minutes while the user navigates through a variety of spoken menus, the bank is obliged to make available many phone lines to prevent the user from getting a busy signal. Therefore, telebanking is an expensive service for a bank to offer its customers.

[0036] SMS Pros and Cons:

[0037] SMS is inexpensive since it is restricted to 160 characters and is sent as a discrete one way message (i.e. it is half duplex), which is stored and forwarded (i.e. it is asynchronous) over the telephone network. It is a rich medium for communication since the full Roman character set (English alphabet), numbers and additional symbols are available to compose a message. However, it can be slow to reach its destination during heavy traffic, unless it is allocated priority delivery based on the number it is sent to. Since SMS is a "store-and-forward" transmission scheme that uses clear text, a thief who taps into the network can download and read SMS messages at their leisure, thus making SMS unsecure if you transmit sensitive information such as an account number, a phone number or a PIN.

[0038] USSD Pros and Cons:

[0039] USSD, which is relatively unknown to the public, uses a one way (i.e. it is half duplex) session based approach (i.e. it is synchronous) on a separate free service line, of which there are 200 per cellular base station. USSD messages from the user is restricted to the 12 keypad numeric and symbol (* or #) character set, and in most of the current EMPSs use a three numeric short code to initiate a request. When the user initiates a request, a session is opened on one of the 200 base station channels (as soon as it is available), and the message is forwarded to the EMPS, and the session is terminated. The EMPS will then open a session for the response, and respond back with a USSD message, which can use the full character set such as that used in an SMS, and can be up to 256 characters long, and close the session. This message can be formatted so that it appears as a series of numbered menu choices on the user's phone, which is equivalent to the textual version of the IVR menu used in telebanking. The user would respond back with a selection from the phone keypad, and during a session may enter only numbers such as phone numbers, account numbers and PINs. USSD is secure since its communication is encrypted. However, it may take several minutes to complete since several menus would need to be presented and responded to by the user to complete the transaction. The time taken is further exacerbated since USSD is a session-based, half-duplex interaction. It is similar to a phone conversation between two people, where Party A calls Party B and says "hello," and then hangs up. Then Party B calls Party A, and responds with their "hello," and then hangs up. The conversation proceeds on in this call, say a phrase, and hang up basis. Furthermore, since each cellular base station is restricted to 200 USSD channels, session start delays (i.e. the equivalent of a busy signal in a voice call) occur during heavy traffic.

[0040] Internet Based EMPSs :

[0041] The computer based EMPSs initiate transactions typically through a user visiting a merchant site and deciding to buy an item. The user selects items to buy by adding them to a shopping cart, and checking out, where they are requested to enter payment method. Typically, these merchant sites accept credit cards, debit cards or "wallet account" based payment schemes such as PayPal. Wallet accounts are non-interest bearing accounts that can be held by the EMPS operator or a bank that participates with the operator. This transaction is used typically for a C2B transaction, in that the funds flow from the customer's wallet account to the business' wallet account.

[0042] For P2P transactions the "wallet account" based transaction schemes are used for transacting within the membership base of an operator where the funds flow from the payer's personal wallet account to the payee's personal wallet account.

[0043] Where a B2B transaction occurs, an invoice is presented by the payee business to the payer business. However, the source of funds is not the individual payer's personal account, but the payer business' account. The destination of funds is not an individual in the payee business, but to a payee business' account. However, authorized individuals from each side of the transaction, present the invoice, make payment, and acknowledge the payment on behalf of the establishments they represent.

[0044] Internet Based EMPS Pros and Cons:

[0045] Internet based EMPSs typically have rich user interfaces for browsing product catalogs. However, every merchant will require the consumer to input information and register themselves with that merchant. This will include the giving of payment information with sensitive credit card data to a myriad of merchants. Internet EMPSs take several minutes to complete a transaction. Most importantly, since computer penetration in developing countries is low, this method of interaction is of limited use to those in developing countries.

[0046] Internet based EMPSs suffer from vulnerability to "man-in-the- middle" attacks. A hacker, using spyware can pick up the user identification and password (which is typically used as the method of identification for internet based transactions), and all the credit card information that a consumer may input from their keyboard during the payment phase of the transaction. Then the hacker may visit a merchant site and execute a transaction pretending to be the user. A high degree of fraud exists in internet based transactions amounting to billions of dollars per year.

[0047] Request Initiation and Method of Identification [0048] The prior art uses either payee initiated requests or payer initiated requests. The payer initiated request is particularly desirable in the case of P2P transactions, since the payer will never have to respond to nuisance payment requests that they have not initiated.

[0049] In face-to-face C2B situations (such as a supermarket check out line), it is advantageous to have the payee initiate the request since it relieves the payer of having to specifically identify the cash register of the check out line as the account to be credited. Similarly, in remote C2B situations (such as ordering goods on the internet) or a B2B situation (such as one company paying another company for goods received), it is advantageous to have the payee initiate the request since the request (i.e. the "invoice") may need to be reviewed prior to payment initiation.

[0050] A variety of methods are currently used to identify the user of an EMPS in order to effect a transaction. For P2P and C2B transactions, the payer's telephone number (nine or ten numeric characters) is most commonly used. One operator allows their users to use a phone number like pseudonym consisting of nine numeric characters.

[0051] Using a phone number for a financial transaction represents a loss of privacy since the payee is now in possession of a piece of information that most persons consider to be private information. Additionally, nine numeric characters are easy to confuse and errors can be introduced into the transactions of EMPSs using this method of identification.

[0052] Source of Funds:

[0053] All the current operational EMPSs in wide usage use a "wallet account" approach as the source of funds for their user's transactions as shown in Figure 8- 1. In order to transact with other members of an EMPS, a customer has to take money out of their bank account [step 1] and deposit it [step 2] into their EMPS wallet account at the bank that provides the EMPS service as shown in Figure 8-1. When members of the EMPS transact with each other [step 3] their respective accounts are debited and credited [step 4] within the EMPS wallet accounts. Wallet accounts have advantages and disadvantages to the user, the bank and the operator. Outlined below are the pros and cons of the wallet account to each of the participants:

[0054] Wallet Account - User Pros and Cons:

[0055] A user has to register with the operator and open a wallet account which is then linked to their phone number. In many instances, the phone SIM chip may have to be changed as well to facilitate the EMPS service. Subsequently, the user is then required to transfer funds from their existing bank accounts to the wallet account. This transfer has to be effected by the user using any of the traditional means such as cheque, cash or electronic banking. Once the wallet account is "topped up," then the user may conduct financial transactions with other registered members of the EMPS. [0056] First, if the operator is neither the user's telephone company nor the user's bank, the user is inconvenienced at the very outset in that a relationship has to be established with a new entity, i.e. the independent operator (e.g. PayPal, Obopay). Second, the user has to move funds from an established, secure, and interest bearing bank account (if it is a savings account), to a non-interest bearing account which may be with an untrusted, unfamiliar party, i.e. the independent operator, or into another bank. Finally, the user has to monitor the balance in their wallet account and top it up in order to transact via the EMPS. Typically, the user would have to physically go to a location during its restricted operating hours to top up their wallet account. Those users, who have access to the internet, may be able to effect the top up via their bank's internet banking service depending whether their wallet account is linked to such a service. In summary, the wallet account approach, which is used by all current EMPSs, imposes an operational burden on the user.

[0057] Wallet Account - Bank Pros and Cons:

[0058] Wallet accounts take money out of the banking system. From the banks perspective, a wallet account is no different than their customer taking cash out at an ATM or teller and putting it in their wallet. Banks view money out of the banking system negatively since this leads to a reduction in the average account balances and subsequently to a reduction in the excess reserve available to them to lend out which is the raison d'etre of banks.

[0059] In many of the current EMPS implementations, a single country telecommunications SP appoints a single bank as the depository for the funds in the wallet accounts. In this approach, the telecommunications SP only provides the customer with access to the bank, and thus this approach is known as the 'Access' model¹. The one bank benefits from the cash float of the wallet accounts resident within it, while the other banks experience a negative effect of depositors withdrawing money from their accounts and depositing it in the single bank that holds the wallet accounts. As shown in Figure 8-1, Bank 3 benefits from holding the funds of Customer A of Bank 1 and Customer B of Bank 2.

[0060] The bank that holds the wallet accounts, is at liberty to set up a separate system from their Core Banking System (CBS) for their wallet accounts. The wallet account system is a self contained universe with one door for cash deposits and another door for cash withdrawals. All inter-member transactions are contained within the wallet account system with no requirement for settling with other banks etc. since the movement of funds is between registered members who have deposited money in their wallet accounts.

[0061] Wallet Account - EMPS Operator Pros and Cons:

[0062] Wallet accounts are advantageous to the operator since they are not required to interface to the each customer's bank system to enable their service. The operator has to only interface to the single wallet account holding bank's system. If the operator holds the wallet accounts, then there is no requirement to interface into a bank system. [0063] If the operator becomes the holder of the wallet accounts, the operator has at their disposal a large deposit base of funds. However, operators will have to seek monetary authority approval for their operations, since they will usually fall under the ambit of "money services" or "payment systems" since they actually will hold a user's money in an operator account. Additionally, on the con side, the operator will have to invest to provide registration facilities for users, or in cases where a SIM chip change is required in the phone to enable the service, the operator will work with the telecommunications SP. This is one of the reasons that many telephone companies have decided to become the operators of EMPSs.

[0064] EMPS Operator

[0065] There are three potential parties that can become the operator of the EMPS. They are the telephone company, the bank, an independent operator or a combination of the above as shown in Figure 8-2. The numbered ellipses show the prior art along with the proposed invention, nominally referred to as cellCash (Figure 8-2:ellipse #9). To date, most EMPS in operational use are led by a single telephone company in a country. A few independent operator led EMPS are in operation such as PayPal (Figure 8-2:#7) and Obopay (Figure 8-2:#6). To date, no bank led EMPSs are in place, but banks team up with telephone company led EMPSs such as NDB bank in Sri Lanka teaming up with Dialog Telekom (Figure 8-2:#3), and Banco De Oro in Philippines teaming up with Smart Communications (Figure 8-2:#2). This approach with the telephone company in the lead is referred to as the 'Access' model, where the telephone company provides access to the service while the bank holds the wallet accounts. In some instances the telephone company not only provides the access, but also holds the wallet accounts and this approach is referred to as the 'Hybrid' model. Globe Telecom's G-Cash (Figure 8-2:#l) service in the Philippines is an example of a 'hybrid' model operator.

[0066] Figure 8-2 also illustrates the operator models employed contrasted with the source of funds. What is significant to note is that telephone company centric and the bank centric operators are inherently limited to their current customer base as a source of EMPS customers. Most telephone company centric models require the user to change their SIM chip to register for the service, creating an additional barrier to adoption. Additionally, using a wallet account imposes an operational burden on the user, takes money out of the banking system, and most importantly creates an unfair cash float advantage for the holder of the wallet accounts as shown in Figure 8-1. To date the only EMPS (approved granted in November 2007 by the Bulgarian National Bank; there is no clear indication that this system is actually operational) that directly accesses a customer's bank accounts directly is the SEP (System for Electronic Payments) Bulgaria system (Figure 8-2:#8). However, even SEP requires a SIM change as shown in Figure 8-3.

[0067] Inter-Bank Settlement

[0068] If wallet accounts are used, inter-banks settlement is not an issue since the EMPS customers transfer money from their bank accounts into the wallet account of the EMPS which is held by one bank or the EMPS operator. All transaction, other than the above mentioned cash deposit and the, and cash withdrawal occur, between the EMPS member wallet accounts and thus no inter- banks settlement is required.

[0069] If the EMPS customer's bank accounts are directly accessed (such as in proposed for SEP Bulgaria), then inter-bank settlement is required. Here, currently two alternative schemes exist to effect inter-bank settlement: 1) One bank is designated as the settling bank, i.e. all participating banks open accounts at the settling bank which then moves money between those accounts to settle, and 2) an independent operator does the settling on behalf of the banks (proposed SEP Bulgaria approach shown on Figure 8-3). There are pros and cons to each of the approaches.

[0070] Settling Bank Pros and Cons

[0071] When one bank is designated as the settling bank, the other banks have to have funds at that bank to settle. This causes the settling bank to have the advantage of holding the funds of other banks creating a "non-level playing field." However, the advantage of this approach is that one bank, i.e. the settling bank, performs the settling function on behalf of all the participating banks, and no access is required to the Central Bank/Monetary Authority.

[0072] Proxy Settling Pros and Cons

[0073] Settlement by an independent proxy addresses some of the fund concentration imbalance issues the settling bank approach creates, and enables settlement directly at the Central Bank/Monetary Authority. When the bank group nominates an independent operator to perform the settling, that operator has to obtain the Central Bank/Monetary Authority approval to perform the settling function which is normally restricted to banks that have a seat at the Central Bank/Monetary Authority. This approval process can be lengthy and complicated since in essence a national clearing house is being set up on behalf of the banks with Central Bank/Monetary Authority approval. SEP Bulgaria had to go through a multi-year approval process before it was granted the license to operate as an independent settlement operator.

[0074] Summary Conclusions

[0075] The prior art EMPS all have shortcomings in various areas.

[0076] The method of communication used in the prior art has the shortcomings of requiring a SIM change to operate in most instances

[0077] The method of identification used in the prior art is predominantly a phone number resulting in the loss of privacy and the opportunity for introducing errors since the payee has to deal with a nine numeric identification number.

[0078] The source of funds used in the prior art is predominantly wallet account based. This causes inconvenience for the user who has to establish a wallet account and then "top-up" the wallet account from other bank accounts or using cash. The wallet account takes money out of the banking system, and gives one party (i.e. the holder of the wallet accounts) an unfair advantage of holding large amounts of cash of the EMPS members.

[0079] The predominant operator of prior art EMPSs are telephone companies. Thus, the EMPS user based is naturally restricted to users of those phones only. In some instances, the telephone company has linked up with one bank to be the holder of the wallet account. This necessitates customers to open up an account at that wallet account holding bank.

[0080] Wallet accounts, which dominate prior art EMPSs, do not require inter-banks settlement. The only prior art direct bank account linked EMPS (the proposed SEP Bulgaria) uses a proxy (SEP Bulgaria) as the national settlement clearing house. This has resulted in a lengthy review and approval cycle by the Bulgarian National Bank.

[0081] As discussed above, it can be concluded that the prior art EMPSs have a variety of convenience, cost, fairness, ease of use, speed of transaction and security issues that restricts their wide acceptability.

DESCRIPTION OF THE INVENTION

[0082] In the interest of clarity, not all of the routine features of the implementations described herein are shown and described. It will, of course, be appreciated that in the development of any such actual implementation, numerous implementation-specific decisions must be made in order to achieve the developer's specific goals, such as compliance with application- and/or business- related, and/or regulatory constraints of various countries, or different design specifications, and that these specific goals will vary from one implementation to another. Moreover, it will be appreciated that such a development effort might be complex and time-consuming, but would nevertheless be a routine undertaking of implementation for those of ordinary skill in the art having the benefit of this disclosure.

[0083] The invention is designed to overcome the limitations of the prior art EMPSs. Whereas the prior art enabled a user's mobile phone to become their wallet, the proposed invention enables a user's mobile phone to become their bank. Additionally, the proposed invention creates a "level playing field" for banks (Figure 8-2) by allowing any of them to participate in the service, and enriches the telecommunications SP by providing increased message and voice traffic.

[0084] This goal is achieved by: 1) enabling any participating bank customer with an SMS enabled phone from any carrier to participate in the service with no SIM change; T) linking the user's existing bank accounts to their phone via a simple registration process at their bank without having to open up a new wallet account; 3), using a simple message format and pseudonyms to eliminate the transmission of sensitive phone number and account number data in payment request messages; 4) providing two-factor (phone and PIN) authentication for the transaction using a multi-channel messaging approach for payment request submission and the customer challenge/response for added security; 5) offering an instant account debiting and crediting methodology with all participating banks as peers ; 6) having banks settle with each other via currently established means; and 7) being a payment transaction facilitation system, rather than a payment system by holding neither the customer's nor the bank's funds within the accounts of the proposed invention.

[0085] Figure 8-4 shows the proposed invention. When one members transacts with another member [step 1], the gateway sends instructions to the payer bank [step 2] to debit the customer's account and credit an intra-day suspense account with the payment amount. The gateway then sends instructions to the payee bank [step 3] to debit an intra-day suspense account and credit the payee's account with the payment amount. At the end-of-the day, or at an agreed to trigger event such as a negative balance threshold being exceeded in an intra- day suspense account, the position positive banks issue instruction [step 4] to the Central Bank/Monetary Authority to settle [step 5]. [0086] The invention is a national and international, multi-currency, near-realtime payment facilitation system that enables one party to: pay for goods, services or cash provided by another party; in near real-time (approximately 30-60 seconds); in a secure manner via a payment gateway.

[0087] No confidential information, such as phone numbers, bank account numbers or PINs (Personal Identification Numbers) are contained in the messages. No confidential information is present in neither the request initiated by the payer nor the subsequent messages sent to the payer and the payee confirming debit and credit, respectively.

[0088] Authentication of the payment request is performed via an automated voice phone call to the payer's phone, which requests a PIN that is entered via their phone keypad or a keyboard if the interaction device is a computer.

[0089] A customer activates the service at their bank via a simple registration process taking approximately 15 minutes, which links their communication devices to their local bank accounts and their local utility accounts.

[0090] A globally unique pseudonym is issued and linked to each communication device registered for security and convenience purposes. For individual customers the globally unique pseudonym is a seven character string, of which the first three characters are alpha, and the last four characters are numeric, much like a car license number (e.g. DWM 5029). The seven alpha numeric string will preserve privacy, and minimize the effort and errors associated with using a nine numeric character phone numbers as the prior art does.

[0091] A globally unique identifier name is issued and linked to each business establishment that presents invoices to customers remotely (e.g. a utility company, a merchant website) for convenience purposes. The identifier used for business establishments will be an alpha-numeric abbreviation of the establishment's name with a minimum character length of three and a maximum character length of ten starting with an alpha character.

[0092] The globally unique identifier names referred to above will have a three character suffix to indicate the country of registration. The first character will be a ".", followed by two alpha characters (e.g. Sri Lanka will be ".LK"). The country of registration suffix is used only in the case of international transactions, and is not used for transaction between payers and payees registered in the same country.

[0093] A customer is permitted to have multiple communication devices — each of which will have their own unique license number — with a single sign-on PIN used across all of their communication devices. A customer is also permitted to have accounts at multiple local banks and still use the same license number. Multiple trusted parties are permitted to register for the same communication device. If multiple trusted parties are registered on the same communication device, they are not permitted to have the same PIN. [0094] If multiple trusted parties register for the same communication device a party identifier will be suffixed to the license number. The party identifier will be two characters wide with the first character being "P", and the second character being a numeric with a value between 2 and 9. This will permit a total of nine trusted parties to be registered to the same communication device, since the first registrant is assumed to be "Pl." The party identifier precedes the country identifier.

[0095] Settlement between participating banks is initiated by the 'positive-net- position' banks multi-laterally. This aspect of the proposed invention eliminates the unfairness of the "non-level playing field" created by a single settling bank, and obviates the need for establishing a new "clearing house" (as had to be done for SEP Bulgaria) for the proposed service. Settlement is performed either at the "end-of-day" or at an intra-day negative net position threshold. A multi-lateral netting algorithm calculates the minimum number of moves required by the 'positive-net-position' bank(s) to settle with the 'negative-net-position' bank(s). The requests are submitted to 1) the Central Bank/Monitory Authority in cases of local participating bank settlement, or 2) a PvP (Payment versus Payment) or CLS (Continuously Linked Settlement) network in the case of international settlement, for processing using a real-time or a next day method to complete the transaction cycle.

[0096] The invention enables P2P, C2B, B2B, G2G, C2G, B2G and G2B transactions embodiments, either face-to-face or remotely.

[0097] Figure 8-5 depicts a face-to-face P2P transaction embodiment of the proposed invention. Figure 8-5 depicts the "happy path," or successful usage process where the communication device embodiment is a non-3 G mobile phone and where the payee identification embodiment is a "license number", and the bank settlement process embodiment is via a Central Bank/Monitory Authority since the banks are located in the same country. The process is illustrated without showing the potential failure conditions that could occur at various process steps in this particular transaction embodiment. In addition, for purposes of clarity, it is assumed that the "source" account of the payer and the "sink" account of the payee are denominated in the same currency that will be used for the transaction. The numbered circles shown on Figure 8-5 represent process steps and are referred to within square brackets "[step x]" in the text below.

[0098] A payer 100 and a payee 105 agree to transact where the payer 100 agrees to pay the payee 105 an amount in a specified currency in exchange for goods, services or even cash [step I]. The payee 105 provides or displays their payee license number 110 to the payer, which is a pseudo name associated with an SMS enabled phone that is linked to the payee 105's bank accounts (through a previously executed simple registration process the payee 105 performs at their bank) and is in the physical presence of the payee 105 in this embodiment [step 2].

[0099] The payer 100 composes a payment request SMS [step 3] on the payer phone 115 (which is linked to the payer 100's bank accounts through a previously executed simple registration process the payer 100 performs at their bank), which contains the agreed payment amount followed by the payee license number 110, and submits the SMS to a payment gateway 120 via a short code phone number such as 1111 [step 4].

[0100] The payment gateway 120 makes an automated phone call [step 5] to the payer phone 115 based on the CLI (Caller Line Identification) that arrives with the SMS, requesting payer 100 to authenticate the payment request by entering a PIN (Personal Identification Number) known only to the payer 100 and to the payment gateway 120 (via the payer registration process at payer 100's bank) on their phone keypad [step 6]. The payment gateway 120 verifies the payer 100 entered PIN keypad tones against its database and approves the payment request to proceed [step 7].

[0101] The payment gateway 120 looks up the payer 100's bank account information based on the CLI and the PIN entered, and also looks up the payee 105's bank account information based on the payee license number 110 transmitted in the payment request SMS [step 8].

[0102] The payment gateway 120 forms an ISO (International Standards Organization) intra-bank, inter-account funds transfer request [step 9] based on the information retrieved in step 8.

[0103] The payment gateway 120 transmits the ISO message to the payer bank switch 125 via a secure data line [step 10]

[0104] The payer bank switch 125 routes the ISO message to the payer bank Core Banking System (CBS) 130, which debits payer account 135 with the payment amount (provided sufficient funds are available) and credits that same amount to the payer bank intra-day suspense account 140 [step 11]. Additionally, in the same step, the payer bank CBS 130 also debits the payer account 135 with any fees that the payer bank may charge payer 100 for services provided.

[0105] The payer bank CBS 130 routes the debit confirmations to the payer bank switch 125 [step 12].

[0106] The payer bank switch 125 routes the debit confirmations to the payment gateway 120 [step 13].

[0107] The payment gateway 120 forms an SMS debit confirmation message [step 14] and then sends it to payer phone 115 [ step 15].

[0108] The payment gateway 120 forms an ISO (International Standards Organization) intra-bank, inter-account funds transfer request to the payee 105's bank [step 16] based on the information retrieved in step 8.

[0109] The payment gateway 120 transmits the ISO message to the payee bank switch 150 via a secure data line [step 17]

[0110] The payee bank switch 150 routes the ISO message to the payee bank CBS 155, which debits (overdraws) the payee bank intra-day suspense account 160 with the payment amount and credits that same amount to the payee account 165 [step 18]. Additionally, in the same step, the payee bank CBS 155 also debits the payee account 165 with any fees that the payee bank may charge payee 105 for services provided.

[0111] The payee bank CBS 155 routes the debit confirmations to the payee bank switch 150 [step 19].

[0112] The payee bank switch 150 routes the debit confirmations to the payment gateway 120 [step 20].

[0113] The payment gateway 120 forms an SMS credit confirmation message [step 21] and then sends it to payee phone 175 [step 22].

[0114] Upon completion of the customer facing transaction with the credit confirmation message in step 22, the payment gateway 120 updates the intra-day suspense account net position displays at the payer bank terminal 185 and the payee bank terminal 195 [step 23].

[0115] At an agreed to trigger event (e.g. designated end-of-day time, net position reaching a negative value threshold), the net position positive bank representative will initiate a same day or next day settlement request to the Central Bank/Monitory Authority CBS 200 [step 24].

[0116] The payment transaction is brought to a conclusion when the Central Bank/Monitory Authority CBS 200 debits the net position positive bank's Central Bank/Monitory Authority account (the payer bank account 205 in this example) and credits the net position negative bank's Central Bank/Monitory Authority account (the payee bank account 210) [step 25].

[0117] In a face-to-face C2B or C2G embodiment of the transaction shown in Figure 8-5, the payee device can be a POS (Point of Sale) terminal instead of a payee phone 175. The request is initiated from the POS by the payee 105 using the amount to be paid and the payer's license number. An NFC (Near Field Communication) device can be linked to the POS terminal in this embodiment.

[0118] In a remote C2B or C2G embodiment of the transaction shown in Figure 8-5, the payee would have been presented with an invoice for goods or services by other means such as a utility bill. In response to the invoice, the payer 100 would initiate a payment request as in Figure 8-5, but using the business establishment identifier rather than the payee license number 110. The payer 100 would be provided a two step confirmation where the first step would be the acknowledgement of the debit of his bank account, and the second step would be the acknowledgement of the crediting of this account with the payee, e.g. the settling of a utility bill. The payee 105 would also be provided a two step confirmation where the first step would be the acknowledgement of the credit of the payee's merchant account, and the second step would be the acknowledgement of the settling of the accounts payable entry owed by the payer.

[0119] In a B2B, G2G, B2G or G2B embodiment of the transaction shown in Figure 8-5, the payer phone 115 and the payee phone 175 are replaced with computer terminals that are connected via the Internet. The process is initiated by the payee 105 presenting an invoice to the payer 100 via a website, email or other means. The payee 105 and payer 100 in this embodiment are not identified by the license numbers of their phones, but by their "establishment" identifiers.

[0120] While embodiments and applications of this invention have been shown and described, it would be apparent to those skilled in the art having the benefits of this disclosure that many more modifications than mentioned above are possible without departing from the inventive concepts herein. The invention, therefore, is not to be restricted except in the spirit of appended claims.

A BRIEF DESCRIPTION OF THE FIGURES OF THE DRAWINGS

[0121] In the drawings:

[0122] Figure 8-1 show a prior art EMPS wallet account approach to transacting.

[0123] Figure 8-2 shows a product positioning matrix of the prior art. The X-axis depicts the operator of the service against the source of funds on the Y-axis.

[0124] Figure 8-3 shows a product positioning matrix of the proposed invention versus SEP Bulgaria.

[0125] Figure 8-4 shows the proposed invention with the direct bank account access approach to transacting. gj

[0126] Figure 8-5 shows the overall process of a face-to-face P2P transaction with both parties using SMS enabled phones.

Claims

1. A payment transaction facilitation system — which holds neither the customer's nor the bank's funds — that permits a payer located in one country to make a payment to a payee located in the same or another country in near- real-time, wherein the payers link their existing SMS-enabled communications devices, where in the case of mobile phones requires no SIM change, to existing funds source accounts within their bank/financial institutions — with no requirement to open up a new wallet account — and to institutional payee accounts comprising of a globally unique pseudonym or identifier, a license- number having a country and a party extension and two- factor (CLI and PIN) authentication for the transaction using a multi-channel messaging approach for payment request submission and the customer challenge/response, performing administrative functions associated with their gateway services for the transaction. A settlement process, performed through an intra-day settlement account at the "end-of-day" or at an intra-day negative net position threshold. A multi-lateral netting algorithm calculates the minimum number of moves required by the 'positive-net-position' bank(s) to settle with the 'negative-net-position' bank(s). The said inter-bank settlement process computes and displays the net positions of the settlement account of the payer and payee, and settles the said sums when the settlement account is positive at a trigger event between the banks based upon the net positions of the intra-day settlement account;

2. The payment transaction facilitation system of claim 1 wherein said means for identifying the devices through which the payers and the payees communicate with the payment gateway consists of a globally unique pseudonym.

3. The pseudonym of claim 2 is selected from a seven character "license number" consisting of three alpha and four numeric characters, or a three to twelve character abbreviation of an establishment name.

4. The pseudonym of claim 2 has a country extension.

5. The pseudonym of claim 2 has a party extension if more than one person is registered for the communication device of claim 2.

6. The payment transaction facilitation system of claim 1 wherein said means for the gateway to authenticate the payer and approve the payment request is selected from a PIN request via an IVR phone call from the gateway to the payer.

7. The payment transaction facilitation system of claim 1 wherein said means for the payer to reject the payment request is selected during an IVR phone call from the gateway to the payer

8. The payment transaction facilitation system of claim 1 wherein said means for payers and payees to perform administrative functions associated with their gateway services is selected from transactions to change PIN, lock/unlock phone, add/delete institutional payees, create/update/delete payee nicknames, modify daily transaction limit, modify individual transaction limit, hide/unhide account balance display in confirmation messages, change IVR phone call language, change IVR phone call voice, change SMS message language, request SMS statement, request printed statement, request email statement, inquire balance of a plurality of accounts at a plurality of bank/financial institutions, and obtain a profile of current administrative function settings.

The payment transaction facilitation system of claim 1 wherein the process of settlement is performed through an intra-day suspense account at the "end-of- day" or at an intra-day negative net position threshold. A multi-lateral netting algorithm calculates the minimum number of moves required by the 'positive- net-position' bank(s) to settle with the 'negative-net-position' bank(s). the said inter bank settlement process computes and displays the net positions of the settlement account of the payer and payee, and settles the said sums when the settlement account is positive at a trigger event between the banks based upon the net positions of the intra-day settlement account