System and method for multi-currency transactions

We claim:

1. A system for determining approval of a transaction between a merchant and a customer over a network, wherein the system comprises:

a network;

a customer computer associated with a customer and connected to the network, wherein the customer computer further comprises a first set of data including an amount the customer agrees to pay a merchant for a product in a first currency;

a merchant computer associated with the merchant and connected to the network, wherein the merchant computer further comprises a second set of data including a product price at which the merchant agrees to sell the product in a second currency; and

a server connected to both the customer computer via the network and the merchant computer via the network for receiving the first set of data and the second set of data, for converting the amount in the first currency into a converted amount in the second currency, and for approving the transaction when the converted amount in the second currency is within a risk range of the product price in the second currency in accordance with current exchange rates.

2. The system of claim 1, wherein the server further comprises a customer balance account associated with the customer, wherein the customer balance account comprises a customer balance in the first currency and wherein the server deducts the amount in the first currency from the balance in the customer balance account.

3. The system of claim 1, wherein the server further comprises a merchant balance account associated with the merchant, wherein the merchant balance account comprises a balance in the second currency and wherein the server adds the converted amount in the second currency to the balance in the merchant balance account.

4. The system of claim 1, wherein the first set of data further comprises a plurality of currencies, wherein the server selects a selected currency from the plurality of currencies, which when converted to the converted amount in the second currency, the merchant price is the least expensive.

5. The system of claim 1, wherein the network is selected from the group consisting of the Internet, an intranet, and a Local Area Network (LAN).

6. A system for determining approval of a transaction between a customer and a merchant over a network, wherein the system comprises:

a network;

a customer computer associated with a customer and connected to the network, wherein the customer computer further comprises a first set of data including an amount the customer agrees to pay to a merchant in a first currency;

a merchant computer associated with a merchant and connected to the network, wherein the merchant computer further comprises a second set of data including a product price at which the merchant is willing to sell the product to the customer in a second currency; and

a server connected to both the customer computer via the network and the merchant computer via the network for receiving the first set of data and the second set of data, for converting the amount in the first currency into a converted amount in the second currency, for approving the transaction when the converted amount in the second currency is within a risk range of the product price in the second currency in accordance with current exchange rates, and for recording an insufficiency when the product price in the second currency exceeds the converted amount in the second currency.

7. The system of claim 6, wherein the server further comprises a customer balance account associated with the customer, wherein the customer balance account comprises a balance in the first currency and wherein the server deducts the amount in the first currency from the balance in the consumer balance account.

8. The system of claim 6, wherein the server further comprises a merchant balance account associated with the merchant, wherein the merchant balance account comprises a balance in the second currency and wherein the server adds the converted amount in the second currency to the balance in the merchant balance account.

9. The system of claim 6, wherein the first set of data further comprises a plurality of currencies, wherein the server selects a selected currency from the plurality of currencies, which when converted to the converted amount in the second currency, the product price is the least expensive.

10. The system of claim 6, wherein the network is selected from the group consisting of the Internet, an intranet, and a Local Area Network (LAN).

11. A system for determining approval of a transaction between a customer and a merchant over a network, wherein the transaction includes the merchant providing a product to the customer at a product price in a second currency, wherein the product price in the second currency is known by the customer, wherein the system comprises:

a network;

a customer computer associated with a customer and connected to the network, wherein the customer computer comprises a first set of data including an amount in a first currency; and

a server connected to the customer computer via the network and having the product price in the second currency, for receiving the first set of data, converting the amount in a first currency into a converted amount in the second currency, and for approving the transaction when the amount in the first currency is within a risk range of the product price in the second currency in accordance with current exchange rates.

12. The system of claim 11, wherein the server further comprises a customer balance account associated with the customer, wherein the customer balance account comprises a balance in the first currency and wherein the server deducts the amount in the first currency from the balance in the consumer balance account.

13. The system of claim 11, wherein the server further comprises a merchant balance account associated with the merchant, wherein the merchant balance account comprises a balance in the second currency and wherein the server adds the converted amount in the second currency to the balance in the merchant balance account.

14. The system of claim 11, wherein the first set of data further comprises a plurality of customer currencies, wherein the server selects a customer currency from the plurality of customer currencies, which when converted to the converted amount in the merchant currency, the merchant price is the least expensive.

15. The system of claim 11, wherein the network is selected from the group consisting of the Internet, an intranet, and a Local Area Network (LAN).

16. A system for determining approval of a transaction between a customer and a merchant over a network, wherein the transaction includes the merchant providing a product to the customer at a product price in a second currency, wherein the product price in the second currency is known by the customer, wherein the system comprises:

a network;

a customer computer associated with a customer and connected to the network, wherein the customer computer comprises a first set of data including an amount in a first currency; and

a server connected to the customer computer via the network and having the product price in the second currency, for receiving the first set of data, and for approving the transaction when the amount in the first currency is within a risk range of the product price in the second currency in accordance with current exchange rates.

17. The system of claim 16, wherein the server further comprises a customer balance account associated with the customer, wherein the customer balance account comprises a balance in the first currency and wherein the server deducts the amount in the first currency from the balance in the consumer balance account.

18. The system of claim 16, wherein the server further comprises a merchant balance account associated with the merchant, wherein the merchant balance account comprises a balance in the second currency and wherein the server adds the converted amount in the second currency to the balance in the merchant balance account.

19. The system of claim 16, wherein the first set of data further comprises a plurality of customer currencies, wherein the server selects a customer currency from the plurality of customer currencies, which when converted to the converted amount in the merchant currency, the merchant price is the least expensive.

20. The system of claim 16, wherein when the product price in the second currency exceeds the converted amount in the second currency, the server records the insufficiency.

21. The system of claim 16, wherein the network is selected from the group consisting of the Internet, an intranet, and a Local Area Network (LAN).

22. A method for determining approval of a transaction over a network between a customer having a customer computer connected to the network and a merchant having a merchant computer connected to the network, wherein the customer computer and the merchant computer are connected to a server via the network, wherein the method comprises:

transmitting a first set of data from a customer computer to a server, wherein the first set of data includes an amount in a first currency;

transmitting a second set of data by a merchant computer to the server; wherein the second set of data includes a product price in a second currency;

receiving the first set of data and the second set of data by the server; and

approving the transaction by the server when the amount in the first currency is within a risk range of the product price in the second currency in accordance with current exchange rates.

23. A method for determining approval of a transaction over a network between a customer having a customer computer connected to the network and a merchant having a merchant computer connected to the network, wherein the customer computer and the merchant computer are connected to a server via the network, wherein the method comprises:

transmitting a second set of data from a merchant computer to a customer computer, wherein the second set of data includes a product price in a second currency;

receiving the second set of data by the customer computer, wherein the customer computer has a first set of data including an amount in a first currency;

transmitting the first set of data and the second set of data by the customer computer to a server; and

approving the transaction when the server determines if the amount in the first currency is within a risk range of the product price in the second currency in accordance with current exchange rates.

24. A method for determining approval of a transaction over a network between a customer having a customer computer connected to the network and a merchant having a merchant computer connected to the network, wherein the customer computer and the merchant computer are connected to a server via the network, wherein the method comprises:

transmitting a first set of data from a customer computer to a merchant computer, wherein the first set of data includes an amount in a first currency;

receiving the first set of data by the merchant computer, wherein the merchant computer has a second set of data including a product price in a second currency;

transmitting the first set of data and second set of data by the merchant computer to a server; and

approving the transaction by the server when the amount in the first currency is within a risk range of the product price in the second currency in accordance with current exchange rates.

Description Submit all comments and votes

BACKGROUND OF THE INVENTION

1. Field of Invention

The present invention generally relates to a system and method for approving a transaction over a communications network between a merchant and a customer. More specifically, the present invention is directed to a system and method for approving a transaction between a merchant and a customer, wherein the transaction occurs over an electronic network (such as the Internet) and wherein the customer pays for a product using electronic cash in one currency and the merchant receives electronic cash for the product in a different currency.

2. Description of the Prior Art

Soon, international commerce may be a common experience for almost everyone. This is due, in large measure, to computer networks, including the Internet, which link individuals, consumers, businesses, financial institutions, educational institutions, and government facilities. In fact, the growth in international commerce appears limitless, given the forecasts relating to the commercial use of the Internet and the like.

There is a problem, however, inherent in international commerce, electronic or otherwise. The problem exists, for the most part, because monetary systems differ from country to country. That is, money is generally expressed in different currencies in different countries and the value of the different currencies vary greatly. Currency conversion is widely used to convert money from one currency into money of a different currency.

As used herein, the term "currency" includes, but is not limited to, denominations of script and coin that are issued by government authorities as a medium of exchange. A "currency" also may include a privately issued token that can be exchanged for another privately issued token or government script. For example, a company might create tokens in various denominations. This company issued "money" could be used by employees to purchase goods from merchants. In this case, an exchange rate might be provided to convert the company currency into currencies which are acceptable to merchants.

In each instance, currency conversion represents a significant economic risk to both buyers and sellers in international commerce. For example, assume a customer desires to buy a product from a merchant. Further consider the scenario where the customer pays his credit card bills in United States dollars and the merchant only accepts French francs for the products he sells. The customer uses his credit card to pay the merchant for the product. The merchant receives French francs.

Typically, at an undetermined later date, the company issuing the credit card would bill an amount to the customer in United States dollars. The amount billed to the customer is determined by an exchange rate used at the time the credit card company settles the transaction. This settlement is often at an indeterminate time and could be on the date of purchase or several days or weeks later. The time of this settlement is at the credit card company's discretion. The risk to the credit card company is minimal--it can settle the transaction when exchange rates are favorable. Thus, in this case, it is the customer who bears the risk that the value of the customer's currency will decline prior to this settlement.

As another example, consider a cash transaction where a merchant accepts a currency other than that of his country's currency. In this case, the merchant sells the currency to a currency trader, usually at a discount. The price the merchant charges to the customer who pays cash reflects both the cost of currency conversion (the discount) and the risk that the rate used to establish the price of the product in a particular currency may have changed. This results in the customer paying a higher price for the product and the merchant incurring risk due to a possible change in currency exchange rates.

Thus, the described post sale methods of currency exchange may impart significant risk upon the customer and the merchant. Risk is typically on the side of whoever commits to the currency conversion. Specifically, in a cash transaction, the customer bears the risk when currency is converted prior to purchasing a product. The merchant sustains the risk when he converts the customer's currency into his own currency. Also, in the case of transactions on the scale of a few cents, the cost of currency conversion may be greater than the currency is worth.

As yet another example, consider the risks that an individual assumes when he converts from the currency of his country ("native currency") to a different second currency. In this case, the individual can purchase goods at a price in the second currency, but cannot be certain of the value of the second currency relative to his native currency. In this case, the currency exchange has occurred pre-sale. Thus, the individual assumes the risk of devaluation of the second currency against the first. Further, the customer bears the risk that the second currency may cease to be convertible into his native currency.

It is noted that if the individual desires to purchase an item in a third currency which differs from the native and second currencies, he must undertake at least one additional currency conversion (converting either his native currency to the third currency, the second currency to the third currency, or a combination of both). In this case, the customer assumes an additional risk.

The present invention recognizes that international commerce over electronic networks, such as the Internet, cannot reach potential unless customer and merchant obligations relating to transactions are fixed at the time of the transaction so that risk to these parties associated with currency exchange is minimized. Thus, what is needed to encourage the development of international commerce over such networks is a system and method that offers a means of eliminating the uncertainty associated with multi-currency transactions. One aspect of the invention disclosed herein shifts the risk associated with currency exchange from both the merchant and customer to a third party (e.g., a server) in real time. This server may assume the risk itself or may choose to subsequently pass on the risk to a fourth party (e.g., a bank or other financial institution).

SUMMARY OF INVENTION

The present invention is directed to a system for determining approval of a transaction between a merchant and a customer. The system comprises a merchant device associated with the merchant. The merchant device has a first set of data including a product price in a first currency The system also has a customer device associated with the customer. The customer device has a second set of data including a first amount in a second currency. The system further has a server device connected to both the customer device and the merchant device for receiving the first and second sets of data and for approving the transaction when the first amount in the second currency is within a risk range of the price in the first currency in accordance with current exchange rates.

Another aspect of the present invention is directed to a system for determining approval of a transaction between a merchant and a customer. The transaction includes the merchant providing a product to the customer at a price in a first merchant currency. The price in the first merchant currency is known by the customer. The system comprises a customer device associated with the customer. The customer device has a first set of data including a customer amount in a customer currency. The system also includes a server connected to the customer device having the merchant price in the first merchant currency for receiving the first set of data, and for approving the transaction when the customer amount in the customer currency is within a risk range of the price in the merchant currency in accordance with current exchange rates.

Still another aspect of the present invention is directed to a method for determining approval of a transaction between a merchant having a merchant device and a customer having a customer device. The merchant device and the customer device are connected to a server. The method comprises transmitting a first set of data from the merchant device to the customer device. The first set of data includes a merchant price in a first merchant currency. The method includes receiving the first set of data by the customer device, wherein the customer device has a second set of data including a customer amount in a first customer currency. The method further includes transmitting the first and the second sets of data by the customer device to the server and transmitting the first and second sets of data by the customer device to the server. The server is for approving the transaction when the customer amount in the first customer currency is within a risk range of the merchant amount in the merchant currency in accordance with current exchange rates.

BRIEF DESCRIPTION OF DRAWINGS

Representative embodiments of the present invention will be described with reference to the following drawings:

FIG. 1 is a diagrammatic representation of one aspect of the present invention.

FIG. 2 is a diagrammatic representation of another aspect of the present invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

Reference is now made to FIGS. 1-2 for the purpose of describing, in detail, the preferred embodiments of the present invention. The Figures and accompanying detailed description are not intended to limit the scope of the claims appended hereto.

The preferred architecture of the present invention is generally depicted in FIG. 1. FIG. 1 shows three entities: a server 100, a customer computer 200, and a merchant computer 300, connected to each other via a network 50. The network 50 may be a private, public, secure, or an insecure network. The preferred embodiments of the present invention contemplate use of an insecure network, for example, the Internet. The connections to the network 50 are identified by lines 105, 205, and 305, respectively, and are well known in the art.

The merchant computer 300 represents the computer of an individual, for example, a merchant user 303, who sells products via the network 50. A "product" may include goods, services, information, data, and the like. The customer computer 200 represents the computer of an individual, for example, a customer user 203, who wants to buy a product (or products) from the merchant user 303 over the network 50. The mechanism of delivery of the product is not a part of this patent. Product delivery could be coincident with payment, before payment, or after payment.

The server 100 represents a computer of an entity who processes transactions between the customer user 203 and the merchant user 303. The server 100 has a database including at least one customer account in a first currency associated with the customer user 203 and one merchant account in a second currency associated with the merchant user 303. The first currency differs from the second currency. The accounts preferably store electronic funds of the parties, for example, electronic cash. The electronic funds are a representation of funds (real cash, credit, etc.).

The server 100 also has its own server accounts. The server accounts are in currencies corresponding to the currencies of the customer and merchant accounts. The server accounts represent real cash, credit, etc. corresponding to the electronic funds stored in the customer and merchant accounts.

We prefer to maintain local accounts at the merchant computer 300 and the customer computer 200. The local accounts represent the electronic funds in the merchant account and the customer account maintained at the server 100, respectively. The local accounts of the customer and the merchant are sometimes referred in the art as "wallets" and "cash registers", respectively. The server accounts may be arranged with a bank or other financial institution.

To illustrate how these accounts might be set up, consider the situation where a customer user 203 lives in the United States and purchases products using U.S. dollars. Further assume that a merchant user 303 located in France conducts his operations in French francs. In this case, the server 100 may have a customer account in United States dollars and a merchant account in French francs. The server 100 processing transactions between these parties may have two electronic accounts representing all user accounts whose currencies are in dollars and all user accounts whose currencies are in francs as well as two real accounts in a bank. One server account would be in United States dollars and the other server account in French francs.

When the network 50 is insecure, we prefer to take measures to assure that the server 100, customer computer 200, and the merchant computer 300 can communicate securely over the network 50. Of course, secure communication is not required for the present invention, but is only a preferred form of such communication.

Central to achieving such security while maintaining a high performance payment system is the use of "sessions". A session is an opportunity (or window) in which the customer user 203 may purchase a product from the merchant user 303 over the network 50 or which the merchant user 303 may sell a product to the customer user 203 over the network 50. By using a session, a merchant can securely communicate with a customer over an insecure network. The customer user 203 and the merchant user 303 have their own independent sessions. Sessions are of limited duration. This duration is governed by predetermined parameters. These parameters are preferably set by the customer user 203 and the merchant user 303. However, the server 100 may set or limit values of such parameters.

We prefer that the parameters relating to the session of customer user 203 limit an amount of electronic funds (the "session amount"), a maximum amount of time that the customer's session may last, and a maximum number of transactions that the customer user 203 may conduct. The session amount is the maximum amount of electronic funds that the customer user 203 may spend during the customer's session. Also, we prefer that the session of merchant user 303 is limited by a maximum amount of time that the merchant's session may last and a maximum number of transactions that the merchant user 303 may conduct.

To accomplish such secure communication over the insecure network, a first session associated with the customer user 203 is created. The first session has first use parameters for limiting the duration that the first session can be used and a set of customer data. The first use parameters and the set of customer data are identifiable by the server 100. A second session associated with the merchant user 303 is also created. The second session has second use parameters for limiting the duration that the second session can be used and a set of merchant data. The second use parameters and the set of merchant data are identifiable by the server 100. Over the insecure network, a portion of the first session and a portion of the second session are linked. The portion of the first session includes the set of customer data and the first use parameters. The set of customer data may include a customer identification string which identifies the customer user 203. The portion of the second set of data includes the set of merchant data and the second use parameters. The set of merchant data may include a merchant identification string which identifies the merchant user 303. The server 100 verifies the customer user 203 and the merchant user 303 based upon at least portions of the set of customer data and the set of merchant data and determines that the first and second sessions can be used. In this manner, confidential details of the payment between the customer user 203 and the merchant user 303 are assured of being communicated securely. This procedure of establishing secure communication is more fully set forth in our copending U.S. patent application Ser. No. 08/572,425, filed on Dec. 14, 1995, and entitled "Electronic Transfer System And Method" which is incorporated herein by reference. Of course, other methods and systems for establishing secure communication over an insecure network may be used to use the invention set forth herein.

The merchant user 303 and the customer user 203 endeavor ultimately to effect a "transaction", that is, the purchase of a product by the customer user 203 from the merchant user 303. The merchant user 303 and the customer user 203 need not have any prior existing relationship to transact business. This is so because the merchant user 303 and the customer user 203 each have a pre-established relationship with the server 100 prior to transacting business.

How the parties form this relationship is not part of the present invention. Rather, what is important is that the customer and merchant accounts, described above, exist with the server 100. To form the relationship, we prefer that the customer user 203 provide information using customer computer 200 to the server 100. Such information may include the name of customer user 203 and the currency in which he intends to purchase products. In the case of the merchant user 303, this information may include the name of the merchant user 303 and the currency in which he intends to ultimately receive for providing products. Other information can be provided as deemed necessary by the server 100.

This relationship may be either direct or indirect. An indirect relationship, for example, would include the situation where one or more entities, previously known to the server 100, vouch for the merchant user 303 and/or the customer user 203. Public key crypto systems are generally used in this type of vouching process and are well known to those skilled in the art. The process of using public key crypto systems as such is known in the art as "certificate management". In this case, vouching entities are known as "certificate authorities". Certificates, certificate management, and certificate authorities are well known in the art and are not the subject of the present invention.

The present invention is directed toward "approval" of a multi-currency transaction in which the customer user 203 pays in a first currency and the merchant user 303 accepts the payment in a second currency which differs from the first currency, rather than the completed transaction itself. As will be described below, approval commits the customer user 203 and the merchant user 303 to the terms of the transaction and commits the server 100 to perform virtual settlement of the transaction.

As used herein, "virtual settlement" of the transaction represents at least the movement of electronic funds to a merchant account of merchant user 303 held by the server 100. It may also represent the movement of electronic funds from a customer account of the customer user 203 held by the server 100. This is to be distinguished from actual settlement of the transaction. As used herein, "actual settlement" of the transaction includes at least converting real funds in an amount equa