WO1999018715A1

WO1999018715A1 - Method and apparatus for processing monthly installment payments utilizing facsimile transmission of credit card account information

Info

Publication number: WO1999018715A1
Application number: PCT/US1998/021145
Authority: WO
Inventors: W. Bradley Wilkes
Original assignee: Propay Usa, Inc.
Priority date: 1997-10-07
Filing date: 1998-10-07
Publication date: 1999-04-15
Also published as: AU9688598A

Abstract

A method and apparatus for making residual monthly payments or monthly installment payments via credit card transactions which includes utilizing a facsimile machine for transmitting credit card information, purchase amount and an indication of the months (40) and the day (42) during each month when the credit card account is to be charged. This information is transmitted via facsimile to an information processing center. The information processing center receives and converts the received information into an electronic format, and then accesses credit card account information via the Internet. A final disposition of the purchase is then transmitted to the merchant via facsimile which is either approval or disapproval of the transaction. Thereafter, during each month indicated (40) and on the specified date (42), a transaction is submitted from the information processing center on behalf of the merchant.

Description

METHOD AND APPARATUS FOR PROCESSING MONTHLY

INSTALLMENT PAYMENTS UTILIZING FACSIMILE TRANSMISSION

OF CREDIT CARD ACCOUNT INFORMATION

BACKGROUND

CONTINUATION-IN-PART

This application is a continuation-in-part of co- pending U.S. Patent No. , U.S. Patent Application Serial No. 08/835,404, filed 07/17/96.

1- The Field Of The Invention.

This invention relates generally to financial transactions via telephone. More specifically, the present invention provides a method and apparatus for accomplishing a credit card purchase utilizing facsimile technology and internet access. The invention also provides a method and apparatus for making residual monthly payments or monthly installment payments utilizing a single transmittal form for the submission of information.

2. The State Of The Art

The state of the art process for making credit card transactions is efficient but costly. It is costly in that to process credit card transactions requires purchasing or renting the equipment necessary for making the transactions. Furthermore, there are additional charges involved. Specifically, there is a transaction fee charged to those who want to approve a credit card transaction or accept credit cards as a form of payment.

The amount of the fee depends on several factors including transaction method and type, anticipated transaction volume and the type of business. The apparatus described above is typically arranged as shown in prior art figure 1. Figure 1 shows a credit card magnetic reader machine 10. The magnetic reader 10 is also known as and will be referred to hereinafter as a "swipe" machine which describes the motion of placing a credit card along a track or channel 12 in the swipe machine 10, and then pulling the credit card through the channel. As the credit card is pulled through the channel 12, information stored on a magnetic strip on the credit card is "read" and transmitted to a credit card processing center 14. To transmit the information from the credit card to the processing center 14 typically requires the use of a dedicated telephone line 16. The swipe machine 10 is electrically coupled to a telephone 18 or directly to the dedicated telephone line 16. The process of transacting a purchase utilizing the swipe machine 10 can be as follows. First, a customer provides the credit card to a merchant. The merchant initializes the swipe machine 10 by activating a connection between the swipe machine 10 and the processing center 14. Activating the connection can be as simple as swiping the credit card through the swipe machine 10, or pressing a button which causes the swipe machine to make a call to the processing center 14. After the connection is established, the credit card is swiped through the channel 12, or if already swiped, the information which typically includes the unique credit card number is transmitted to the processing center 14. Along with the unique credit card number, the merchant also transmits a purchase amount which is to be transferred electronically. As the name implies, the transfer is typically a crediting of a merchant's account by debiting of the customer' s credit card account by posting a charge against the account.

At this stage of the process, the merchant typically returns the credit card to the customer because it will probably not be needed again. The processing center 14 is now typically using the unique credit card number to locate an account which is associated therewith. After the account is located, the processing center 14 determines whether the purchase amount entered by the merchant exceeds the credit limit of the credit card account. If the credit limit is not exceeded, the processing center 14 transmits an approval code back to the merchant. If the transaction is approved, the customer then leaves with the purchase.

The process described above can vary slightly for many reasons. For instance, the process can vary according to the type of credit card account which is being utilized for the transaction. For example, even if a credit limit is exceeded, the transaction might still be approved, within certain limits. Other variations include automating the process so that the credit card is swiped by the machinery, and only the purchase price has to be manually entered. However, none of these variations are particularly relevant to the present invention. What is important to learn from the information above is that typically no transaction takes place without having a swipe machine 10 which can read the credit card number from the credit card. Furthermore, the swipe machine 10 functions as a dedicated link to the processing center 14, supplying the necessary information for the processing center 14 to determine whether the transaction is allowable in light of a credit limit and present debt associated with the credit card number.

A description of the state of the art is not complete without also describing a paper processing technique. A merchant accepts the credit card and places the card on a credit card sales slip imprinting device. Once placed on the imprinter, the information from both the credit card and the merchant plate are transferred to paper. A transaction authorization is then obtained by either a phone call or by swiping the credit card through the electronic swipe device. If authorization is obtained by phone call, the merchant accepting the card provides to the system or operator on the other end the card number, card expiration, and an amount of the transaction. On an authorized transaction, the caller receives back an authorization number which is then written on the embossed credit card sales slip. If obtained using a swipe terminal, the merchant swipes the card through the swipe machine and enters the amount of the transaction. After a short period of time, a number is displayed for the merchant on a swipe terminal display. This number is then written on the embossed paper.

The authorized credit card sales slips as well as any returns for a day are then summarized on a deposit summary slip. The merchant then deposits the slip with a bank and a checking account is credited, less the amount of the transaction discount rate. It is interesting to note that in some cases, the banks will not accept the credit card sales slips in which case the merchant is required to send them directly to the processing center. When the merchant is required to send them to the processing center, the merchant can typically wait for 3 weeks before the funds are deposited to the account.

After the merchant deposits the slip with the bank, the bank and any other branches then take the credit card sales slips and deposit summaries collected from all merchants that day and send them to a processing facility. At the processing facility, operators are employed to hand-key the information from the deposit summaries and credit card sales and return slips to create a computer readable file. Once the file is created, it is submitted through the financial services network to move the money to the appropriate accounts. One disadvantage is that the current process is prone to error because of the manual hand-keying used to create the computer readable file. In addition, the current process is prone to fraud because of the lag time between transaction authorization, fund capture and customer billing, and because merchants advance funds on the deposit of a credit card sales slip with an authorization number.

In summary, the current process is costly for the following reasons. First, there is a high cost of human labor used during the transformation from paper format to computer readable information. Second, there is a high cost of capital equipment utilized by the individuals performing the manual keying function including computers, telephones, and office space. Third, there is the cost of physically transporting the paper from branches to central processing facilities where manual keying takes place. Fourth, many banks advance merchants funds based on receipt of pre- authorized credit card sales slips. These advanced funds are like a loan to the merchant and cost the bank money to advance.

It would therefore be an improvement over the prior art to provide a method and apparatus for making credit card transactions which did not require the use of a credit card swipe machine It would be a more substantial improvement to also provide a method and apparatus for making monthly installment payments via a credit card. It would also be an improvement to eliminate the hand-keying of transactional information by using OCR techniques. OBJECTS AND SUMMARY OF THE INVENTION

It is an object of the present invention to provide a method and apparatus for making credit card transactions involving monthly installment payments with essentially no investment in dedicated transaction equipment.

It is another object to provide a method and apparatus for a merchant to provide a customer service of making monthly payments via a credit card, but without having to repeat the transaction process each month.

It is another object to provide a method and apparatus for making residual or monthly installment credit card transactions which utilizes facsimile transmission technology, image character recognition software, and Internet access equipment.

It is another object to provide a method and apparatus for making affordable residual or monthly installment credit card transactions to merchants who would not otherwise perform enough transactions to justify the initial costs of conventional credit card transaction equipment.

It is another object to provide a method and apparatus for providing fraud detection before funds are captured from a bank, thereby preventing loss of money to the lending bank which owns the credit card account or merchant account .

The present invention is realized in a method and apparatus for making residual monthly payments or monthly installment payments via credit card transactions which includes utilizing a facsimile machine for transmitting credit card information, purchase amount and an indication of the months and the day during each month when the credit card account is to be charged. This information is transmitted via facsimile to an information processing center. The information processing center receives and converts the received information into an electronic format, and then accesses credit card account information via the Internet. A final disposition of the purchase is then transmitted to the merchant via facsimile which is either approval or disapproval of the transaction. Thereafter, during each month indicated on the specified date, a transaction is submitted from the information processing center on behalf of the merchant .

In a first aspect of the invention, it is a method and apparatus for using a credit card like a check, where instead of reading account information from a magnetic strip, the information is filled out on a paper form much like a check, and a designated amount is charged against the account. The essence of the invention is thus to provide a way to transfer credit card information by paper, without having to use the actual credit card or the typical ways of transferring credit card information to complete a credit card transaction.

In another aspect of the invention, the merchant only needs to have a facsimile machine for transmitting credit card and purchase amount information. This eliminates the need for a dedicated credit card swipe machine.

In another aspect of the invention, optical or image character recognition software converts the credit card and purchase amount information to an electronic format, a format which is therefore suitable for transmission to a credit card processing center.

In another aspect of the invention, the total cost of a credit card transaction is substantially reduced to a relatively small access fee for credit card account information, thereby making the process affordable for merchants who make limited and even insignificant credit card transactions. In another aspect of the invention, a confirmation of the transaction is faxed to the merchant indicating success of failure during each month when the transaction occurs .

In another aspect of the invention, a confirmation of the transaction is faxed to the merchant indicating success of failure of an individual transaction or daily batch, where the daily batch consists of any transaction that occurred during that day, and for which authorization has been received.

In another aspect of the invention, a residual or monthly payment transaction can be initiated by supplying only the number of months the transaction is to cover, and a total amount to be charged against the credit card account.

In another aspect of the invention, the customer' s signature is also included on the form and then digitized to serve as memorialization of the authorization to charge the credit card account monthly for the agreed number of payments.

Another aspect the credit card becomes a financing option for a low-volume merchant who otherwise does not have financing options for larger ticket items, thus providing a form of in-store financing on the customer's credit card.

In another aspect, a facsimile machine becomes a in-home or small business financial transaction device.

These and other objects, features, advantages and alternative aspects of the present invention will become apparent to those skilled in the art from a consideration of the following detailed description taken in combination with the accompanying drawings .

BRIEF DESCRIPTION OF THE DRAWINGS

Figure 1 is a block diagram of the basic prior art elements involved in a credit card transaction utilizing dedicated transaction equipment, including a credit card swipe machine. Figure 2 is a block diagram of a presently preferred embodiment of the present invention, including the facsimile machines and Internet access for reducing costs of credit card verification. Figure 3 is a close-up block diagram of the elements of the pre-processing center of the present invention.

Figure 4A is top view of a preferred embodiment of a transmittal form utilized in conjunction with the apparatus of figure 2, which includes spaces for handwritten or typed block letters and numbers. Figure 4B is a top view of an alternative embodiment of a transmittal form utilized in conjunction with the apparatus of figure 2, which includes bubbles for darkening instead of spaces for block characters.

Figure 4C is a top view of an alternative embodiment of a transmittal form utilized in conjunction with the apparatus of figure 2 which combines block characters and bubbles for darkening. Figure 5 is a preferred embodiment of a transmittal form for use in a periodic or installment type of credit card transaction, including a field for the months the transaction is to occur, and a date within each month. Figure 6 is an alternative embodiment of a transmittal form for use in a periodic or installment type of transaction which charges against a credit card account . Figure 7 is a flowchart of a method for using a technique of the present invention which enables a conventional credit-card swipe machine to initiate a periodic or installment type of transaction using the information which is retrieved from the magnetic strip of a credit card.

DETAILED DESCRIPTION OF THE INVENTION

Reference will now be made to the drawings in which the various elements of the present invention will be given numerical designations and in which the invention will be discussed so as to enable one skilled in the art to make and use the invention. It is to be understood that the following description is only exemplary of the principles of the present invention, and should not be viewed as narrowing the claims which follow.

The preferred embodiment of the present invention comprises both a method and apparatus for making residual monthly payments or monthly installment payments via a credit card transaction which is advantageously more cost effective than the prior art. In a first aspect, the cost of a credit card swipe machine 10 (see figure 1) is avoided by utilizing an alternative method of sending credit card information to a credit card processing or information center 14. By not using a credit card swipe machine, the high initial purchase price or relatively high rental fee is avoided. In a second aspect, the credit card information is submitted only once to the information processing center, along with an indication of which months the transaction is to be repeated. The date during the months that the transaction is to be repeated is also included. Typically, this date will be the same date on which the first transaction is completed. However, the date on which the transaction is to be repeated can be different than the original transaction date.

A brief summary of the method and apparatus of the present invention is therefore as follows.

Instead of using the swipe machine 10, figure 2 shows that the presently preferred embodiment of the present invention contemplates utilizing a first facsimile machine 20 at the site of the transaction 28. Accordingly, a merchant or a customer fills out a transmittal form 22 by handwriting or typing relevant information. The relevant information required for the process is the amount of the purchase, information which can identify the credit card account, and information regarding how often the credit card transaction is to be repeated. It may also be necessary to provide a name and signature of the customer as well. It should also be observed that if address verification of the card holder is submitted, including the ZIP code, that the lower rate maybe obtained for verification of account information. Therefore, it should be understood that the amount and type of information which is submitted via the transmittal form 22 can vary substantially, depending upon the interests of the merchant and the card holder.

Once a transmittal form 22 has been completed, the merchant transmits it via the first facsimile machine 20. To avoid the cost of typical long distance telephone rates, the merchant advantageously dials a toll free number of a pre-processing center 24. The pre-processing center 24 is an intermediate location between the credit card processing center 14 and the location 28 of the merchant. A second facsimile machine 26 at the pre-processing center 24 receives a facsimile of the transmittal form 22 which was sent from the merchant via the first facsimile machine 20.

The next step is to process the transmittal form 22. Processing typically includes converting the information into a format which is required by the credit card processing information center 14. In the most basic sense, this means preparing the information to be transmitted in an electronic format which is different from the electronic format of the facsimile transmission. This typically means a digital data format. Once converted, the data is then transmitted to the credit card processing information center 14. The credit card processing information center 14 determines whether the credit card transaction is approved or disapproved based upon criteria which are not relevant to the present invention. What is important is that the approval status, either positive or negative, is then transmitted back to the pre- processing center 24. From there, the approval status is transmitted to the merchant's location 28 via facsimile from the second facsimile machine 26 to the first facsimile machine 20.

It should be understood that an entire purchase amount, which is the sum of all the monthly credit card transactions to take place, is not being approved or disapproved at this time. It is only possible to verify a transaction amount for an actual amount that is being charged against the credit card account. Submission for authorization of the credit card transaction will have to occur each month on or before the monthly installment payment is due. If unable to receive authorization prior to payment due date merchant will be notified via fax. Subsequently, this information is then relayed to the merchant, preferably via facsimile.

These surprisingly simple steps not only result in a substantial savings to merchants in processing a credit card transaction, they also enable businesses to accept credit cards for purchases which would otherwise be turned away because of the prohibitively high initial costs of using typical credit card access methods and apparatus. Most advantageously, monthly, residual or recurring installment payments can now be submitted via facsimile.

The advantages of being able to provide for monthly installment payments via credit card are substantial. This is because the number of purchases which are being made over time are increasing in importance. It should not be surprising that when a customer is presented with the option of making "low monthly payments of $X, " the shock of the full sticker price is avoided. This is because the customer is immediately provided with an alternative method for purchasing something whose full purchase price would otherwise perhaps exceed a customer's savings or monthly budget. The present invention thus provides a merchant with the ability to take advantage of installment payments through the convenience of credit cards.

It should also be realized that the present invention enables a merchant to more easily collect on a recurring transaction other than by having to send out monthly bills and wait for a payment to be returned. Once authorization is obtained from a customer to charge a total amount against a credit card account, the merchant only has to submit a form once as described herein to initiate the process of monthly credit card charges. Although the preferred embodiment in itself offers surprising advantages in cost reduction, there are many details of the process and alternatives which bear explanation. First, processing of the transmittal form is preferably automated to make the overall process not only more free from human error, but also less labor intensive. Consequently, figure 3 shows that the transmittal form 22 is preferably delivered automatically from the second facsimile machine 26 to a document reader 30. The document reader 30 scans the transmittal form 22 for the relevant information. When the information is retrieved, it is then transmitted via a general purpose computer 32 which has access to the Internet 38. The document reader 30 can operate in various ways depending upon the format by which the information is recorded on the transmittal form 22. For example, figure 4A shows that the transmittal form 22 can have predefined spaces 34 for letters and numbers to be written in block format. Alternatively, figure 4B shows that the predefined spaces can consist of bubbles 36 which are darkened by pencil or pen as is commonly known in the art. Another option as shown in figure 4C is to combine the block letters and numbers 34 with the darkening of bubbles 36 to provide more accuracy. What is important to realize from the embodiments of the transmittal form 22 is that many different types of forms which encode data in different ways can all be utilized by the present invention. However, it is an advantageous concept that the transmittal form can be submitted via facsimile.

While it has been suggested that the only information contained in the transmittal form 22 is purchase amount, card holder identification, account information and the number of months and the date during the month in which the transaction is to be repeated, it is another advantageous concept to include more information. For example, it is possible that a portion of the transmittal form 22 be standardized purchase amount and identification information as previously described. The remaining portion of the transmittal form 22 is dedicated to product information. For example, the product information might also include order information. In this way, a card holder could submit the transmittal form 22 which specifically identifies a product (s) that is to be purchased, along with the accompanying purchase amount, card holder and account identification information. Consequently, a complete credit card transaction can take place when the transmittal form 22 is submitted to the pre-processing center 24.

While the purpose of the transmittal form 22 is to make it as simple as possible to obtain credit card account information and purchase information, it must be remembered that the nature of the information is sensitive financial data, the possession of which would enable anyone to make credit card purchases. Therefore, it is possible to enable encryption of information through the use of an encryption key. In this way, the facsimile machines can be ordinary machines, and not costly machines which have specialized hardware, software or firmware. Because of the nature of the information being transmitted, it is also possible that the transmitting merchant will desire to receive confirmation that the credit card information was received by the intended recipient. In other words, the merchant will feel more confident in the process if after transmitting the information, the second facsimile machine 26 at the pre-processing center 24 sends back confirmation of the information received. This confirmation could be a simple acknowledgment that information was received without going into specifics. Alternatively, the confirmation could include all the information which was transmitted and read electronically. In this way, the confirmation could not only assure the sender that the information was received, but that it was correctly understood by the document reader 30 of the automated pre-processing center 24. However, it must be remembered that the approval information is only relevant to the installment amount, and not the entire amount to eventually be charged against the credit card account .

In an alternative aspect of the invention, no transaction is actually completed when a transaction form is submitted via facsimile to the information processing center. The transaction form instead indicates a first date and month when the transaction is to first occur, and the subsequent months during which the transaction is to be repeated.

In another aspect of the confirmation process, it is envisioned that the pre-processing center 24 might be able to identify the source of an error when one occurs, or at least provide some helpful information to the merchant about why the error as occurred. Once the credit card, purchase amount and installment information is received at the pre- processing center 24, the information is converted into an electronic format. In other words, the information is digitized because that is what the credit card processing information center 14 expects to receive, whether from an interface to the credit card swipe machines, or via the Internet 38. Another reason for digitizing the information is so that it can be recalled if necessary for the monthly installment transaction to occur. A first aspect of the digitization process concerns the specific method and apparatus used to actually "read" the transmittal form 22 and digitize the information. In the preferred embodiment, the document reader 30 accomplishes its function by way of optical and/or image character recognition software being run on a general purpose computer. Of course, this assumes that the transmittal form 22 has handwritten or typed block letters and numbers, and not just the darkened bubbles which would not require as sophisticated a system. However, in the interests of ease of use and to make the process as fast as possible (and thus still convenient for the customer) , the preferred method of filling out the transmittal form 22 is to exclusively use block characters. Those skilled in the art of optical character recognition software and hardware understand how the system is able to function as desired.

In an issue relating back to the confirmation notification, it is a part of the method and apparatus that after the information has been digitized by the optical character recognition software and hardware, that the information should be checked for errors. Although it is understandably impossible to determine whether the merchant has transmitted all of the correct information unless it is sent back to the merchant, it might be possible to determine whether a number is missing in the credit card account, or if the expiration date of the card is valid.

In another aspect of the digitization process, it should be apparent that there is more than one way to digitize the information. For example, digitizing includes not only replacing numbers and letters with a computer equivalent such as in a binary or hexadecimal based format, it also includes the ability to encode the data before it is transmitted to the credit card processing information center 14. In this way, security of the information is more assured than if no encoding is carried out. Again, the likely method is to use encryption keys which are automatically used in the automated process.

Once the information is digitized and ready for transmission to the credit card processing information center 14, access thereto is provided by utilizing the Internet 38 as shown in figure 3. Specifically, a general purpose computer 32 located at the preprocessing center 24 connects to the Internet 38 via any Internet service provider, or through a dedicated connection thereto. Accessing the credit card processing information center 14 via the Internet 38 avoids the more proprietary access path of the swipe machines. Furthermore, whereas a swipe machine 10 must access the credit card processing information center 14 through a toll call via a publicly switched telephone network, the present invention utilizes the Internet 38, and thus avoids any long distance calling charges. By placing a plurality of pre-processing centers 24 in major cities, interstate telephone calls can be eliminated from the entire system. Only intra- state local and long distance calls are then required to access the pre-processing center 24. By obtaining bulk calling rates utilizing a toll free number and by further reducing the cost by making all calls local, the present invention obtains even more savings.

Utilizing the Internet 38 for transmission of digital data raises more issues about the format of the digital data. For example, transmission of data via the Internet 38 requires that the data be properly prepared for transmission. This means that the data is encapsulated within packets of information. The packets are prepared in accordance with standard

Internet protocols. For example, the transmission control protocol/internet protocol (TCP/IP) is a common Internet format. Even the encoded data can be packeted for transmission utilizing a selected Internet protocol.

Once the credit card processing information center 14 has determined whether the credit card transaction is approved or rejected, an approval status code is typically transmitted to the merchant. In the present invention, the approval status code is first transmitted to the pre-processing center 24. The approval status code is first un-encapsulated from its Internet protocol. If the approval status code was also encoded, it is then un-encoded. Finally, the second facsimile machine 26 transmits the approval status code, whether it is positive or negative, to the merchant.

It is an important and an advantageous principle of the present invention to realize that the first facsimile machine 20 being used by the merchant can be replaced with a general purpose computer which is capable of facsimile transmissions. Such a general purpose computer would include an electronic form of the transmittal form 22. The merchant will type in the information, and then transmit the transmittal form via a facsimile transmission utilizing facsimile software and a modem to the pre-processing center 24. Likewise, it is an inventive principle that the second facsimile machine 26 could be replaced by a general purpose computer which has the capability of sending facsimile transmissions without having to "read" a hardcopy of what is to be transmitted. In other words, the general purpose computer can transmit to and receive information from another facsimile machine, or a general purpose computer which can transmit facsimiles.

While very little specific examples of the cost reductions have been provided, it is now useful to consider some of the fees involved. Specifically, it is the case that accessing the credit card processing information center 14 to determine approval of a credit card transaction generally requires no more than seven or eight cents per transaction. Consequently, the entire fee structure for approving credit card transactions utilizing the method and apparatus of the present invention can be quite reasonable on a per transaction basis, as compared to the high initial start-up costs, and probably larger access fees via a toll free but out-of-state long distance access charges to the credit card processing information center 14 which are likely to be passed to the merchant.

Another important issue to address in an alternative embodiment is the utilization of a transmission medium other than the Internet 38 (see figure 3) for the pre-processing center 24 to utilize when communicating with the credit card processing information center 14. While communication via the Internet is the preferred embodiment because of the ubiquitous and expanding access thereto, it is another important principle of the present invention to include a direct link. In other words, a dedicated communications link such as a privately leased line can also be utilized to provide access between the pre-processing center 24 and the credit card processing information center 14. This arrangement can result in other advantages such as enhanced security and faster access rates. The reason for access which is not Internet-based is simply owing to the changing nature of the Internet as it evolves as a communications medium.

In another aspect of the invention, it should be apparent that in order for monthly installment payments to occur via credit card, a database must be utilized to organize this information. Preferably, a general purpose computer located at the information processing center performs the functions of 1) storing the months (and the date during the month) for which the credit card transaction is to be repeated, 2) storing the purchase amount to be charged against the credit card account, 3) accessing the credit card account and obtaining approval or disapproval of the transaction on the installment payment due date, and 4) transmitting the transaction status information to the merchant, preferably via facsimile.

The installment information to be stored will at least consist of the number of months for which the transaction will be repeated, and the date that the transaction is to take place. Advantageously, this is an automated process controlled by a program which has access to the installment information. The program might consist of a database and some type of tickler (automatic reminder) program which automatically processes the credit card transactions on the day they are due, without supervisory intervention. Preferably, a database or related tickler program includes a means for organizing information in a calendar-type of format. Whenever an installment transaction is first received, the installment information is distributed to the appropriate dates within the database or tickler. For example, if an installment credit card transaction is to take place for $X on the 5th of October, November and December, the calendar would have transaction amounts and credit card information associated with a reminder that is stored relative to each of those months on the 5th day thereof. At any desired interval, the tickler program then compares the current day, according to an internal date, to the database to find all installment transaction which are to take place. When the current date is the 5th of October, the credit card information is accessed in the database. The credit card account is then accessed, and approval is sought for a charge in the amount of $X. The status (approved/denied) of the transaction is received by the information processing center which then prepares and transmits the transaction status via facsimile to the merchant .

It should be apparent that the method and apparatus for implementing a database and tickler system which automatically completes the credit card transaction can be implemented in many different ways. This is because the database and tickler can be implemented in numerous ways. What is important is that the system automatically repeat the credit card transaction on the designated payment due date, and provide information to the merchant about the transaction.

A simple example of where the method and apparatus above can be utilized advantageously is during a fund-raiser. Suppose a radio station accepts donations in monthly installments that the donor can make with a credit card. When the donor calls, the amount that the donor wishes to pledge is recorded on a transmittal form, along with the specific months that the donor specifies that the card is to be charged. Obviously, the credit card account number and expiration date are also recorded. The transmittal form is then transmitted via facsimile by the radio station to an information processing facility. The credit card transaction for the first installment amount is then verified and the verification transmitted back to the radio station. While installment payment periods are typically monthly, it should also be apparent that the transmittal form can specify payment periods which are not monthly. Furthermore, the payment periods do not even have to be spaced evenly. For example, a second, third and sixth month following an initial credit card installment payment can be specified as the months during which the installment transaction is to be processed. Although it is obviously conceivable that the date of the transaction could change for each of the months, a standard transmittal form would become much longer and more complicated.

A preferable embodiment of a transmittal form for use in conjunction with the invention described is shown in figure 5. Notice that the merchant is to indicate the months in which payment is to be made at item 40, as well as the day of the month on which payment is to be made at item 42. What should be recognized is that this form is only suitable for up to twelve payments . There is no way to indicate that the payments are to continue beyond that. Therefore, an alternative embodiment is to provide some way of indicating more than twelve payments.

Figure 6 is an alternative embodiment to the form shown in figure 5. If a credit card account is to be charged against in consecutive months and on a same date, then all that is required in this alternative embodiment is that a total purchase amount 44 be provided on the form, as well as the number of months 46 during which payments will be made until the total payments are equal to the total purchase amount which was provided on the form. Therefore, the processing center divides the number of months into the total purchase amount to reach the installment amount which will be charged against the credit card account. The present invention also provides a method and apparatus which enables the existing card swipe system to take advantage of at least one of the concepts described herein. As shown in the flowchart of figure 7, the programming of a conventional credit card swipe machine takes the path 48. This path describes the steps of swiping the card in step 50 and inputting the last four digits of the card in step 52. The new step in the process occurs in that a question is raised as to which approval mode should be executed in step 54. Following the conventional path, the expiration date of the card is input in step 56, a single payment mode is executed which requires inputting an amount of the purchase in step 58, awaiting for and receiving confirmation in step 60, and having the customer sign a receipt in step 62.

In the new method of the present invention, steps 50 and 52 are performed the same. However, the method diverges at the new step 54 where an approval mode is requested. Instead of selecting the single payment approval mode, a reoccurring or installment approval mode is input. A new step 64 is to input the number of months over which the credit card account is to be charged. This steps thus requires the information processing center to divide the total purchase price input in step 58 by the number of months input in step 64, and charge the credit card account this new amount for the prescribed number of months.

The process described above can be implemented in different ways. In other words, the exact order in which information is entered can be modified.

Furthermore, the information that is required to be manually entered might also be included in a magnetic stripe on the card. What is important to the invention is that a merchant be given an option as to which approval mode should be entered so that the credit card processing center knows whether to make a single charge against an account, or to docket the transaction so that periodic charges against the account can be scheduled. Therefore, the information processing center must be given enough information about a periodic charge to determine how much is to be charged against a credit card account at each transaction, on which date, and for how many months the transaction is to be repeated. It should be apparent that one advantage of the present invention is that imaging of information takes place at the location where it is most advantageous, the merchant's. This is advantageous because the transactional costs are for the most part incurred by a bank which must manually enter the information. If the merchant has already put the transaction information into a computer readable form, then processing of credit card information is made much for efficient. Furthermore, it is not a burden on the merchant to send the information via facsimile to initiate the transaction process.

A final inventive concept which is to be described is providing a method and apparatus for providing fraud detection before funds are captured from a bank, thereby preventing loss of money to the lending bank which owns the credit card account. A typical scenario would be as follows. An inbound facsimile is received from a merchant. The facsimile is sent through processing to identify and translate characters on the facsimile into computer readable notation. At this point, instead of transmitting the computer readable information to a location which makes a charge against the credit card account, a fraud detection process is executed.

The fraud detection process in a preferred embodiment uses a rules and history based (learned) pattern detection system. In other words, transactions which seem out of the ordinary for that credit card account or the merchant are flagged. The transaction can then either be disapproved, or researched further. For example, a fraud specialist might call the card owner to verify that the transaction by the merchant is at the card owner's request before giving authorization. If the fraud detection process denies approval, additional steps might be taken such as deactivation of the merchant's account, or notification provided to the merchant's bank. It is to be understood that the above-described arrangements are only illustrative of the application of the principles of the present invention. Numerous modifications and alternative arrangements may be devised by those skilled in the art without departing from the spirit and scope of the present invention. The appended claims are intended to cover such modifications and arrangements.

Claims

1. A method for making a periodic credit card transaction utilizing a facsimile machine to transmit information to a credit card processing center, wherein the periodic credit card transaction is to occur for a period of at least two months, said method comprising the steps of:

(1) imprinting information relevant to the credit card transaction on a transmittal form including each month, and a day within each month, that the periodic credit card transaction is to occur, and an installment amount;

(2) transmitting the information on the transmittal form to a first processing location via facsimile;

(3) converting the information on the transmittal form to an electronic format which is suitable for delivery to a credit card processing information center; (4) accessing the credit card processing information center and transmitting the electronic format of the information thereto for determination of whether the credit card transaction for the installment amount is allowable; (5) receiving an approval status from the credit card processing information center at a first processing center;

(6) transmitting the approval status of the credit card transaction; and (7) repeating steps (4), (5) and (6) on the date within each designated month that the periodic credit card transaction is to occur.

2. The method as defined in claim 1 wherein the method further comprises the step of transmitting the information on the transmittal form from a first facsimile transmission/reception capable machine to a second facsimile transmission/reception capable machine at the first processing location.

3. The method as defined in claim 2 wherein the method further comprises the step of placing the installment amount, a credit card number for identifying a credit card account, the date on which the installment payment is due, and all of the months during which the installment payment is to be paid on the transmittal form.

4. The method as defined in claim 2 wherein the method further comprises the step of confirming receipt of the information by transmitting a received message from the second facsimile machine to the first facsimile machine.

5. The method as defined in claim 2 wherein the method further comprises the step of utilizing optical character recognition software to convert the information placed on the transmittal form to the electronic format.

6. The method as defined in claim 5 wherein the method further comprises the step of utilizing optical character recognition hardware to convert the information placed on the transmittal form to the electronic format.

7. The method as defined in claim 6 wherein the method further comprises the step of transmitting an error message from the second facsimile machine to the first facsimile machine if not all required information was received.

8. The method as defined in claim 7 wherein the method further comprises the step of identifying a source of error for all of the required information not being received, and then transmitting an error message from the second facsimile machine to the first facsimile machine which identifies the source of error.

9. The method as defined in claim 6 wherein the step of converting the information placed on the transmittal form to the electronic format further comprises the step of digitizing the information.

10. The method as defined in claim 1 wherein the method further comprises the step of encoding the electronic format of the information which is suitable for delivery to a credit card processing information center.

11. The method as defined in claim 1 wherein the method further comprises the step of accessing the credit card processing information center via the Internet .

12. The method as defined in claim 11 wherein the method further comprises the step of encapsulating the electronic format of the information, which is suitable for delivery to the credit card processing information center, within at least one packet of information which is suitable for delivery via the Internet .

13. The method as defined in claim 12 wherein the method further comprises the step of utilizing an Internet protocol for communicating with the credit card processing information center.

14. The method as defined in claim 1 wherein the method further comprises the step of accessing the credit card processing information center via a dedicated access line.

15. The method as defined in claim 2 wherein the method further comprises the step of accessing the first processing center via a call to a toll free number to thereby decrease a total cost of the credit card transaction while minimizing long distance telephone fees charged to the toll free number.

16. The method as defined in claim 2 wherein the method further comprises the steps of: (1) receiving a positive or a negative approval status for the credit card transaction from the credit card processing information center at the first processing center; and

(2) transmitting the positive or the negative status to the first facsimile machine from the second facsimile machine.

17. The method as defined in claim 2 wherein the method further comprises the step of charging a fee for accessing the first processing center, and for accessing the credit card processing information center, regardless of a positive or a negative approval status of the credit card transaction.

18. The method as defined in claim 2 wherein the method further comprises the step of writing by hand or typing the information on the transmittal form, and wherein the transmittal form has designated areas for specific types of information required to approve the credit card transaction process.

19. The method as defined in claim 2 wherein the method further comprises the step of including product information on the transmittal form, to thereby enable a specific product to be identified as a subject of the credit card transaction, and to enable purchasing of the specific product after approval of the credit card transaction.

20. The method as defined in claim 1 wherein the method further comprises the step of making a periodic installment payment which does not occur in every month between a first month and a last month that the periodic installment payments are due.

21. The method as defined in claim 1 wherein the method further comprises the step of indicating a periodic period of more than twelve months.

22. The method as defined in claim 1 wherein the method further comprises the steps of;

(1) providing a database which at least associates the credit card account, the installment payment amount and a the date of the month that the transaction is to occur to a calendar; and

(2) providing a means for automatically accessing the database to thereby process the credit card transaction when a date of the periodic installment transaction occurs.

23. A method for making a periodic credit card transaction utilizing a facsimile machine to transmit information to a credit card processing center, said method comprising the steps of: (1) transmitting via facsimile from a merchant to an information extraction center all information which is relevant to the credit card transaction including each month, and a day within each month, that the periodic credit card transaction is to occur, and an installment amount;

(2) accessing the credit card processing information center via the information extraction center for determination of whether the credit card transaction for the installment amount is allowable; (3) receiving an approval status from the credit card processing information center at the information extraction center;

(4) transmitting the approval status of the credit card transaction to the merchant; and (5) repeating steps (2), (3) and (4) on the date within each month that the periodic credit card transaction is to occur.

24. A system for making a credit card transaction utilizing a facsimile machine to transmit information to a credit card processing center, and thereby enable a small volume of credit card transactions to be affordable, said system comprising: means for having recorded thereon information relevant to the credit card transaction at a transaction location; means for transmitting the information from the transaction location to a first processing location; means for receiving the information at the first processing location; means for converting the information to an electronic format which is suitable for delivery to a credit card processing information center; means for accessing the credit card processing information center and transmitting the electronic format of the information thereto for determination of whether the credit card transaction can be approved, and for receiving an approval status from the credit card processing information center at the first processing center; and means for storing the information in a database capable of repeating the process of accessing the credit card processing information center a predetermined number of times to enable a periodic installment payment utilizing the credit card transaction process.

25. The system as defined in claim 24 wherein the means for converting the information to an electronic format which is suitable for delivery to a credit card processing information center is comprised of optical character recognition software running on a general purpose computer.

26. The system as defined in claim 24 wherein the means for accessing the credit card processing information center and transmitting the electronic format of the information thereto, and for receiving an approval status from the credit card processing information center is comprised of a general purpose computer which has an Internet access connection, and wherein the general purpose computer is capable of executing Internet protocols which enable it to communicate bi-directionally with the credit card processing information center.

27. The system as defined in claim 24 wherein the means for having recorded thereon information relevant to the credit card transaction at a transaction location is comprised of a general purpose computer which is capable of transmitting facsimile information which is stored as digital information within the general purpose computer.

28. A method for making a periodic credit card transaction utilizing a facsimile machine to transmit information to a credit card processing center, said method comprising the steps of:

(1) imprinting information relevant to the credit card transaction on a transmittal form including a total number of months over which an installment payment is to be paid, and a total amount to be paid;

(2) transmitting the information on the transmittal form to a first processing location via facsimile; (3) converting the information on the transmittal form to an electronic format;

(4) calculating the installment payment by dividing the total amount to be paid by the total number of months over which the installment payment is to be paid;

(5) accessing the credit card processing information center and transmitting the electronic format of the information thereto for determination of whether the credit card transaction for the installment payment is allowable;

(6) receiving an approval status from the credit card processing information center at a first processing center;

(7) transmitting the approval status of the credit card transaction; and (8) repeating steps (4), (5) and (6) on the date within each designated month that the periodic credit card transaction is to occur.

29. The method as defined in claim 28 wherein the method further comprises the steps of:

(1) determining whether the transaction is fraudulent before accessing the credit card processing information center; and (2) alerting the credit card processing information center if the transaction is fraudulent, or continuing the transaction if the transaction is not fraudulent .

30. The method as defined in claim 29 wherein the method further comprises the step of applying a fraudulent activity pattern detection system which utilizes a rules and learned history-based algorithm to detect fraudulent activity.

31. A method for using a credit card reading device to make a single credit card transaction or an installment credit card transaction, said method comprising the steps of: (1) reading credit card account information from a card utilizing the credit card reading device;

(2) selecting an approval mode consisting of a single payment mode or an installment payment mode;

(3) entering credit card specific information that is required to obtain approval of the credit card transaction; and

(4) receiving confirmation of the transaction if approved.