Smart card system and method for transferring value

United States Patent [w]

Corder et al.

US005936221A [ii] Patent Number: 5,936,221 [45] Date of Patent: Aug. 10,1999

[54] SMART CARD SYSTEM AND METHOD FOR TRANSFERRING VALUE

[75] Inventors: Thomas E. Corder, San Ramon; Gary Sturm, Walnut Creek, both of Calif.

[73] Assignee: Bridgepoint Systems, Inc., San Ramon, Calif.

[21] Appl. No.: 08/942,748 [22] Filed: Oct. 2, 1997

[51] Int. CI. G06K 5/00

[52] U.S. CI 235/380; 235/379; 340/825.33;

705/41

[58] Field of Search 235/375, 379,

235/380, 381, 382, 382.5, 384, 451, 492; 902/26; 340/825.3, 825.31, 825.32, 825.33, 825.34, 825.35; 705/39, 41, 42, 44; 380/24

[56] References Cited

U.S. PATENT DOCUMENTS

4,988,849 1/1991 Sasaki et al 235/379

5,224,046 6/1993 Kim et al 235/375 X

5,461,217 10/1995 Claus 235/380

5,621,796 4/1997 Davis et al 235/379 X

5,650,604 7/1997 Marcous et al 235/379

5,732,136 3/1998 Murphree et al 235/379 X

5,811,771 9/1998 Dethloff 235/380

Primary Examiner—Thien Minh Le

Assistant Examiner—Jared J. Fureman

Attorney, Agent, or Firm—Flehr Hohbach Test Albritton &

Herbert LLP

[57] ABSTRACT

A stored value system and method comprising a central server apparatus (10), one or more value added terminals (12), and one or more money-activated machines (14). The value added terminal (12) is designed to read smart cards (16) and to add cash value to the cards upon customer (18) input of an appropriate authorization code (22). The moneyactivated machine (14) is designed to read smart cards, and reprogram them by deducting a cash value amount corresponding to the customer's use of the machines. The central server apparatus (10) receives calls from customers requesting an authorization code for use with a value added terminal, and in response thereto, verifies funds in a preestablished customer account and provides an active authorization code.

7 Claims, 2 Drawing Sheets

1

SMART CARD SYSTEM AND METHOD FOR
TRANSFERRING VALUE

TECHNICAL FIELD

The present invention relates to smart card-type cash 5 transfer systems that allow customers to use self service machines, such as laundry and vending machines, without requiring cash.

BACKGROUND ART 10

Smart cards are credit card sized devices with on-board computer chips that provide the ability to carry digital cash on the chip and with the card. Smart cards are extremely convenient in certain payment systems, such as self service vending, because they eliminate the need for immediate 15 cash, and they also eliminate associated problems like making change, processing coins, as well as the potential for vandalism and fraud.

To use a smart card in a vending application, a customer inserts the card into a card reader, typically located at or nearby the vending equipment site. The card must be authorized within the particular electronic payment system associated with the card in order to transfer electronic cash. The chip on the smart card and the chip on the reader execute a series of communication protocols to establish card authenticity, card I.D. number, and available stored cash value. Once this verification is completed, the reader removes the appropriate amount of stored value from the card in a single price application, or in a multiple price ^ application, the customer selects a product or service, and the appropriate stored value amount is removed from the chip's memory.

The electronics for removing stored values from a smart card is relatively straightforward, but adding value is more 35 complex because it requires a source of available funds from which to draw. In point of service applications, two methods are commonly employed to add funds The first requires a customer to add cash to a smart card reader at a value added terminal. The value added terminal then transfers value onto 4Q the card equivalent to the amount of cash inserted into the terminal. A disadvantage of this system is that it involves cash, which creates the possibility of vandalism, theft and fraud.

A second system utilizes a customer's pre-existing bank 45 account. With this system, a customer uses a bank card or an ATM card, rather than cash, to access funds to be added to the smart card. An internal transaction processing modem, such as those used for retail point of sale check out counters, performs a standard process of gaining approval for the fund 50 transfer. The transaction is completed usually by batching together a number of similar transactions. Once the charge or debit authorization is obtained, the terminal then adds the stored value to the smart card.

While this account-to-card process eliminates cash from 55 the process, it has two drawbacks. One, a transaction processing modem is required, which can be an expensive piece of equipment, usually several hundred dollars, and there is additional telephone line expense, which can be justified for large volume sales operations, but for many small scale 60 retail operations can be cost prohibitive. Second, not all potential customers have bank accounts with associated credit cards or debit cards.

It is an object of the present invention to provide a cashless means for handling self-service transactions that is 65 easy for customers to use and relatively inexpensive for businesses to install and maintain.

2

DISCLOSURE OF INVENTION

Briefly described, the stored value system of the present invention comprises a system for transferring value from an account of a customer to a smart card for use in operating money-activated machines, wherein the system includes a central server apparatus having a storage device with a plurality of active authorization codes each having a cash value associated therewith. The system also includes one or more value added terminals remote to the central server apparatus and preferably adjacent or convenient to nearby money-activated vending-type machines. Each value added terminal includes on-board secure memory for storing the authorization codes and associated cash values of the central server apparatus and an input device responsive to customer input of the authorization code associated with the customer's request. For the system to work effectively, it is necessary that the total number of possible authorization code inputs be substantially greater than the number of authorization codes stored in the secure memory, in order to prevent fraudulent use of the system. Each value added terminal further is adapted to add cash value onto the smart card in an amount equal to the cash value associated with the inputted authorization code and then deactivate the inputted authorization code from its memory so that subsequent input of the deactivated authorization code will not cause cash value to be added onto the smart card.

In operation, a customer can telephone the central server apparatus and obtain an authorization code that corresponds with a requested cash value transfer, which authorization code the central server apparatus provides upon verifying the availability of funds in the customer's account, and the customer can then input the authorization code into the input device of the value added terminal. The value added terminal then adds the cash value associated with the inputted authorization card onto the smart card and dispenses the programmed smart card to the customer, whereafter the customer can use the smart card to operate a moneyactivated machine.

The central server apparatus can be fully automated, wherein the central server apparatus includes a communications device for receiving a communication from a customer requesting transfer of value and for verifying the availability of funds in the account of the customer. Upon verification, the central server apparatus provides an authorization code with a cash value corresponding to the customer's request and deactivates the provided authorization code from its memory.

According to an aspect of the invention, portable means are included for transferring active authorization codes with associated cash values from the central service center to each value added terminal. Such means can take the form of portable computer disks programmed with new active authorization codes. Periodically, new active authorization codes are required to replenish codes deactivated through customer requests.

Each smart card has an onboard memory device for storing a screening code for verifying that the smart card is associated with the system. The screening code is unique to the money-activated machine of the system. The value added terminal is adapted to read the screening code prior to adding cash value onto the smart card, in order to verify that the smart card is authorized for use with the system. This prevents the system from allowing other smart cards access to the machines.

The present invention also includes a method for transferring value from an account of a customer to a smart card