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Description  |
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BACKGROUND AND SUMMARY OF THE INVENTION
The present invention relates generally to a payment system for and method
of paying bills. More particularly, the present invention is a
computerized system for paying bills or making other payments whereby a
consumer may contact a single source from a remote location via a
telephone, a computer terminal with modem, or other electronic means, to
direct the single source to pay the consumer's bills instead of the
consumer writing checks for each bill. An appendix is submitted with this
specification which contains the program code of the present invention.
It has been common for many years for consumers to pay bills by way of a
personal check written by the consumer and sent by mail to the entity from
which the bill or invoice was received. Consumers have used other ways to
pay bills, including personally visiting the billing entity to make a cash
payment. In today's economy, it is not unusual for a consumer to have
several regular monthly invoices to pay. Writing individual checks to pay
each invoice can be time-consuming and costly due to postage and other
related expense.
A need exists for a method whereby a consumer can contact a single source
and inform the source to pay various bills of the consumer, to have the
source adjust the consumer's account with the consumer's financial
institution (i.e., bank, credit union, savings and loan association, etc.)
to reflect a bill payment, and to actually pay the billing entity a
specified amount by a particular time. The system should be efficient and
not unreasonably expensive and relatively simple for a consumer to
interact with. Some banks have attempted to provide a service for making
payment to a few billing entities to which the banks have established
relations. The banks that do provide that type of service are limited in
that they provide the service only for their own customers since the banks
have not developed a system for accurately acquiring and processing
account numbers and balances of customers of all other banking
institutions and coordinating that information with bill payment.
Furthermore, banks have not developed a system for managing the risks
involved in providing such a service and the inherent complexities of
providing the service to consumers other than the bank's own customers.
Therefore, a need exists for a single source bill payment system that
would be available to any consumer, regardless of where the consumer banks
and regardless of what bills are to be paid.
The present invention is designed to fulfill the above listed needs. The
invention provides a universal bill payment system that works regardless
of the consumer's financial institution and the bill to be paid. The
present invention provides a computerized system by which a consumer may
pay bills utilizing the telephone, a computer terminal, or other
electronic data transmission means. Transactions are recorded against the
consumer's account wherever he or she banks. The consumer may be an
individual or a business, large or small.
The method of the present invention includes: gathering consumer
information and creating a master file with banking information and
routing codes; the generation of payment instructions by the consumer at a
convenient location, typically remote from the payment service provider
(e.g., at home), through an input terminal such as a personal computer, a
push-button telephone or other like communication means; applying the
payment instructions to the consumer's file; using computer software of
the present invention to examine various files to determine the
appropriate form of payment based on variables involving banking
institutions and merchants; validating each transaction against a dynamic
credit file and routing based on set parameters; and, if after processing
no flags are encountered, adjusting the consumer's account (usually by
debiting) and making payment directly to the payee in accordance with the
consumer instructions.
The single source service provider for consumer bill payment may be any
entity with the capability to practice the invention as described
hereinafter. The foregoing and other objects and advantages will become
more apparent when viewed in light of the accompanying drawings and
following detailed description.
BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1 is a system overview;
FIG. 2 is a diagramatical representation of the establishment of a consumer
database;
FIG. 3 is a diagramatical representation of the creation of a
merchant/payee database;
FIGS. 4a and its continuation 4B and 4C are flow chart representations of a
payment processing cycle; and
FIG. 5 depicts a payment draft specially adopted for use with the invention
.
DESCRIPTION OF PREFERRED EMBODIMENT(S)
Referring now to the drawings, FIG. 2 illustrates the steps in the creation
of a consumer database for use with the present invention. The first step
in the process is to establish a consumer's data records on the system.
This may be accomplished by the consumer completing an authorization form
20 which would contain the needed information to be put into the system
concerning the consumer. This information may include the consumer's name,
address, telephone number and other applicable information. The consumer
would also provide a voided check from the consumer's personal checking
account. The consumer's information may then be input via a keyboard 52 or
other input means such as a scanner into the consumer database record 22.
Default amounts may be set for an individual credit line parameter and for
a total month-to-date parameter. These amounts establish the maximum
unqualified credit risk exposure the service provider is willing to accept
for an individual transaction and for the collective month-to-date
transactions of a consumer. As explained hereinafter, the service provider
may be at risk when paying a consumer's bill by a check written on the
service provider's account. In short, the service provider takes a risk
whenever paying consumer's bills on the service provider's account since
there is a slight chance the consumer may not reimburse the service
provider after the provider has already made payment.
From the voided check, the consumer's bank routing transit and individual
account numbers at an institution are input into the computer system. This
information may be edited against an internal financial institutions file
(FIF) database 24 of the present invention. FIF 24 is a database of
financial institutions' identification codes and financial institution
account information for the consumer. This file also edits the accuracy of
the financial institution's routing transit number and the bank account
number supplied by the consumer. If the numbers do not correspond with the
correct routing and bank numbers, they are rejected and the data entry is
corrected and repeated. FIF 24 in conjunction with the software of the
present invention also updates the consumer database 22 for both
electronic and paper draft routing and account information. The needed
information may be obtained from each banking institution and each
consumer.
The consumer is notified by the service provider of his or her local phone
number access and personal security code for informing the service
provider that a bill is to be paid. This information may be stored in a
phone access table 26. The personal security code may be much like an ATM
machine four digit code. In addition, an electronic pre-note 28 will be
created to be sent to the consumer's bank to inform the bank that the
service provider is authorized to debit the consumer's account. For
further security to the service provider, a consumer credit record 30 may
be obtained. The default credit limit amount over which the service
provider may be unwilling to assume financial risk may be modified based
on the information obtained from the credit report 30.
In FIG. 3 the steps are shown for establishing merchants to be paid and the
service provider making a payment. The consumer must inform the service
provider or processor of a merchant's name, address, phone number and the
consumer's account number with the merchant 32. This information is put
into a merchant master file database 42 (MMF). MMF 42 also includes
settlement information on each merchant to indicate the form of payment
the merchant will accept. MMF 42 also acts as an editor ensuring proper
payment format. The term "merchant" as used herein is intended to pertain
to any person or entity that the consumer wishes to pay and is not to be
limited to the usual men, chants most consumers pay, such as department
stores, the electric company, a home mortgage lender, etc. The consumer
may also indicate whether the merchant is a variable or fixed merchant. A
variable merchant is one in which the date and amount of payment will vary
each month. A fixed merchant is one in which the date and amount remain
the same each month. If the merchant is fixed, the frequency of payment
may be other than monthly, such as weekly, quarterly, etc. The consumer
should inform the service provider of the date on which the merchant is to
be paid and the amount to be paid.
Through a telecommunications terminal 34 (e.g., a push-button telephone or
computer terminal), a consumer may initiate payment of bills. Through the
terminal, the consumer may access his merchant list and input the payment
date and amount. The system may be provided with a payment date editor 36
to insure that the date is valid and logical (i.e., payment dates already
in the past or possibly a year or more into the future, would be
questioned). On a personal computer as payments are initiated, a consumer
"checkbook register" may be created and automatically updated to reflect
this activity. The merchant list may be visible on the consumer's personal
computer screen. A consumer may enter merchant payment amounts and
pavement dates on the computer screen then transmit this information to
the service provider.
By telephone, the list may be presented by programmed voice. The voice may
be programmed to ask the consumer if a particular merchant (selected from
the consumer's MMF, which may be updated from time to time) is to be paid
and to tell the consumer to press 1 if yes, or press 2 if no. If yes, the
voice may instruct the consumer to enter the amount to be paid by pressing
the numbers on a touch tone phone in accordance with a predetermined code.
For example, the digits 0-9 may represent corresponding numerical digits
in the amount of dollars to be paid. The asterisk button could be used as
a decimal point or represent an entry of cents. Once the amount is
entered, the voice may ask the consumer to enter the date on which payment
is to be made to the merchant. This may be accomplished by assigning each
month a number, such as January being month 01; February being month 02;
etc. The consumer may then enter month, day and year for payment. For
example, Jul. 9, 1991 may be entered as 070991. The programmed voice may
be accomplished with a VRU (voice response unit) available from AT&T or
other vendors. It may communicate with a data processor to obtain consumer
information from the individual consumer's database file. At the end of
the consumer's session on the terminal a confirmation number may be sent
to the consumer, providing a record of the transaction.
In FIG. 2 the steps are shown for the creation of the consumer pay table 38
and making updates to it. The consumer's files may be received at the
service provider on a front end processor 40 that interfaces with the
telecommunications network. The consumer's records may be edited 44 for
validity by comparing to the merchants' account scheme. Any new merchant
records and account numbers are added to the consumer's pay table 38. New
merchants are compared to the MMF 42 and appropriately cross-referenced by
the software of the present invention to the pay table to check if a
merchant record already exists. If no merchant record exists, a merchant
record will be created on the MMF 42.
Payment records may also be received on the service provider's processor.
The payment may first go through a validation process against the pay
table 38. The validation process checks for duplicate pavements and if
duplicates are found they are sent to a reject file. The validation
process also verifies that merchants are set up and may check for multiple
payments to be paid to a particular merchant. Orders for payment go to the
consumer pay table 38 to determine when the payment should be released and
how it will be released for payment.
The service provider may pay merchants by a draft or check (paper) or by
electronic funds transfer. To create a draft that will pass through the
banking system, it must be specially inked. This may be accomplished by a
Troy printer which puts a micr code on drafts, comparable to the manner in
which the code is included on standard personal checks.
In FIG. 1, the front end processor 40 may be a DEC VAX which is connected
to an IBM main frame 46 Model 4381. Consumers may call by telephone 35, a
number that passes through the private branch exchange 39 and contacts a
voice response unit 41 in association with the front end processor 40.
After the consumer's payment instructions are received an analysis is
performed by the software to determine the most cost effective and least
risk mode of payment for the service provider to use. One preferred mode
of payment is electronic funds transfer through the Federal Reserve
Automated Clearing House (ACH) Network 47. If the service provider is not
a bank, a bank intermediary may be needed, to be connected to the Federal
Reserve Network. Another payment mode is a charge to the consumer's credit
card through the RPS Network 49. Additionally, an IBM Laser Printer
attached to a micr post processor 48 may be used by the service provider
to send drafts 76 or consolidated checks 78 (checks made payable to a
single merchant to cover payments for a number of consumers who all owe
the same merchant) to merchants. The main frame 46 has data storage means
50 and runs the FIF 24 and MMF 42 programs. It may also have a tape drive
or telecommunication interface for accomplishing electronic funds
transfer. It should be recognized that various other hardware arrangements
could be used to accomplish the present invention. Alternatively, when the
consumer uses a personal computer 37 to instruct the service provider, the
personal computer may access the front end processor 40 through the
standard X.25 Network 43.
Referring now to FIGS. 4a, 4b and 4c, the payment process is shown. The
payment process cycle 56 may be initiated each day, or more or less
frequently. The first step is to establish when payment items are to be
processed. This may be accomplished through a processing calendar 58. A
processing calendar means 58 such as a clock may be built into the system.
The calendar 58 enables the system to consider each date, including
weekends and the Federal Reserve holidays. Payments are released from the
consumer pay table 38 using the due date input by the consumer and
maintained in the consumer database. Any bank date, payments, or payments
within a period such as four business days may be released the same day.
All future payment dates would be stored in the consumer pay table 38.
On-line inquiry may be made on the consumer pay table 38. The service
provider has on-line capability to make changes to the consumer payment
upon request until the day the payment is released. A consumer's merchant
change may also affect the consumer's payment on the Day table 38.
The method of payment to the merchant may be either paper (draft or check)
or electstonic. Assigned factors determine if a payment will be released
as a paper item, or an ACH electronic transaction service provider is a
party to transaction). Each consumer may be assigned a status such as:
active=good; inactive=bad; and, pending=uncertain, risky. If a consumer's
status is pending 60 when the payment processing cycle is initiated by the
processing calendar 58, the payment should go out as a draft paper to
protect the service provider. When payment is made by draft, the service
provider is not a contractual party to the transaction. The consumer's
bank account codes are actually encoded onto the draft (as shown in FIG.
5) prepared by the service provider, much like the consumer's personal
check. The draft has been specially designed for this process. The draft
is payable to either the service provider or the particular merchant. This
allows the draft to be delivered to the merchant for payment and
depositing, but allows the draft to be legally payable by the bank, with
proper authorization. Additionally, posting information for the merchant
is contained on the body of the draft. To the applicant's knowledge, it is
the first time a draft has been used in such a manner and with this unique
design to accomplish this. If the consumer's bank transit number does not
indicate an electronic bank 62 (i.e. a banking institution that will
accept electronic funds transfer), the program associated with FIF 24
sends the payment as a draft. A pre-note 28 is required any time 64 new
banking information is entered on a consumer and the bank shows on FIF 24
as an electronic receiving bank. The present pre-note period under federal
Law is ten (10) days. Any payments released during this period are sent as
paper.
The third manner in which the service provider may pay bills is by a check
written on the service provider's account. A consolidated check may be
written if many consumers have asked the service provider to pay the same
merchant. Under this method of payment the service provider assumes some
risk since the service provider writes the check on its own account. The
service provider is later reimbursed by the (consumer's) banking
institution(s).
As a means of minimizing risk to the service provider, any transaction may
be compared to the MMF 42 credit limit. For example, if the credit limit
is greater than zero and the payment is $50.00 or less 66, the item may be
released as an electronic payment 74 or by service provider check 78. If
the payment is greater than $50.00 but less than or equal to the merchant
credit limit 68, the payment may be released as an electronic payment 74
or check 78. Any payments within the merchant's credit limit 70 are added
to the consumer's monthly ACH balance 72. This provides a monthly total
billing day to billing day summary of the consumer's electronic payment
activity. Any transaction may be compared to the consumer's database
credit limit parameters. If a payment amount is greater than the
consumer's credit limit, the item is released as a draft 76 which is
written on the consumer's account. If the payment amount plus the total of
electronic payments in a particular month is greater than the consumer's
credit limit, the item is released as a draft 76. Items not released as
paper are initiated as an ACH debit against the consumer's account.
The consumer database may be reviewed for proper electronic funds transfer
(EFT) routing. Payment to the merchant may be accomplished one of three
ways, depending on the merchant's settlement code. Various merchant's
settlement codes may be established. For example, a merchant set up with a
settlement code "01" results in a check and remittance list 78 being
mailed to the merchant. Merchants with a settlement code such as "10"
produce an ACH customer initiated entry (CIE). Merchants with a settlement
code such as "13" produce a remittance processing system (RPS) credit.
In the consumer pay table, for fixed payments, a payment date gets rolled
to the next scheduled payment date on the pay table. The number of
remaining payments counter is decreased by one for each fixed payment
made. For variable payments, once made the payment date is deleted from
the consumer pay table. The schedule date and amount on the consumer pay
table roll to zero. A consumer payment history may also be provided which
show items such as princess date as well as collection date, settlement
method, and check number in addition to merchant name and amount.
The software of the present invention makes several decisions related to
particular transactions for consumers as shown in FIGS. 4A, B, C. The
following example is provided to more fully describe the software. This
example is not intended to limit the application to the details described
in the example and is only provided to further enhance the description of
the invention already stated above.
For this example, assume that a consumer has five transactions of varying
amounts to different merchants for which the consumer has asked the
service provider to arrange payment. For simplicity, assume that the five
payments are to be made on the same day. First, the consumer database 22
is edited to validate the status, banking institution, and pre-note flags
associated with the consumer's requested payments. The account numbers
provided by the consumer for the merchants to be paid are also checked to
determine if they are valid. Assuming the merchant account numbers are
valid, the program begins with the first dollar analysis.
For purposes of this example, the five payments the consumer has requested
are in the amounts of: $25.00; $75.00; $150.00; $250.00; and $1000.00. The
program will consider each dollar amount individually as it goes through
the various edit modes. The first edit may be called a $50.01 edit. In
this example, any transaction that is less than $50.01 is automatically
sent as an ACH debit to the consumer's account. This means that the
service provider uses ACH to electronically transfer funds from the
consumer's account to the service provider's clearing account.
In this example, the initial payment of $25.00 falls within the $50.01 edit
and will be said without any further edits being conducted for this
particular payment. Continuing with the example, the next edit may be a
merchant dollar edit that is established for the specific merchant to
which the transaction is being sent. For purposes of this example, this
edit is set at $100.00 for all merchants. Different dollar edits can be
incorporated for different merchants. In the example, the second payment
request of the consumer, for $75.00, meets the $100.00 merchant edit
parameter and is sent as an ACH debit to the consumer's account. Note that
the $75.00 payment would not have satisfied the $50.01 edit and therefore
would have passed on to the second edit which in this case is the merchant
dollar edit.
The remaining three payments in the example exceed both the $50.01 edit and
the merchant $100.00 edit and therefore, go to the next edit. In the
example, the next edit is for a consumer individual transaction limit set
at $200.00. The $150.00 payment is less than the $200.00 consumer
individual transaction limit and is, therefore, sent as an ACH debit to
the consumer's account and paid. The other two remaining payments yet to
be made exceed the $200.00 limit in this example and pass to the next
edit.
In the next edit, which happens to be the last edit in the example, the
consumer's month-to-date "unqualified" risk limit is checked. In the
example, the month-to-date limit is set at $1,500. Assume that for this
particular consumer $400.00 of month-to-date payments have already been
made on the consumer's behalf. Added to the $400.00 would be the three
payments made above for $25.00, $75.00 and $150.00. So an additional
$250.00 is added to the $400.00 month-to-date for a total of $650.00
"unqualified" risk for the current month-to-date amount. The next payment
to be made is for $250.00 and would fall within the $1,500 month-to-date
limit when added to the current $650.00 risk amount. Therefore, the
$250.00 payment is made and an ACH debit is sent to the consumer's
account. This brings the total month-to-date "unqualified" risk amount to
$900.00. The final $1,000 payment has not been paid and would send the
"unqualified" risk amount over $1,500 when added to the $900.00. Since
the final payment of $1,000 in the example, fails the consumer
month-to-date limit edit, the $1,000 payment would be sent as a paper
draft directly drawn on the consumer's account, and for which the service
provider has no liability. In the example, the final step would be
updating the consumer month-to-date current total to $900.00.
The apparatus for and method of bill payment of the present invention and
many of its attendant advantages will be understood from the foregoing
description. It will be apparent that various changes may be made in the
form and steps thereof without departing from the spirit and scope of the
invention or sacrificing all of its advantages.
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