l|||||||||||||ll||l||||||||l|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| US 20050021455A1 (19) United States (12) Patent Application Publication (10) Pub. No.: US 2005/0021455 A1 Webster (43) Pub. Date: Jan. 27, 2005

(54) ON-LINE PAYMENTS SYSTEM Publication Classi?cation

(76) Inventor: Paul Webster, Hornchurch (GB) (51) Int. Cl.7 ...... G06F 17/60 (52) US. Cl...... 705/39 Correspondence Address: Gregory J Lavorgna Esq (57) ABSTRACT Drinker Biddle & Reath LLP One Logan Square Payments for purchases made from Web sites may be effected by pre-registering customers and merchants. Cus 18th & Cherry Streets Philadelphia, PA 19103-7595 (US) tomers and merchants are assigned at least one virtual account and a public and a private account number. Cus 21 A 1. N .1 10 499 099 tomers de P osit funds into a s Y stem collection account and ( ) pp 0 / ’ their virtual accounts are credited by the same amount. (22) PCT Filed. Dec_ 9, 2002 Purchases are made online by requesting a transfer of the purchase price from the customer virtual account to the (86) PCT No; PCT/GB02/05561 merchant virtual account accompanied by the customer’s private account number. The merchant may access funds in (30) Foreign Application Priority Data their virtual account by transferring the real amount from the system collection account to their oWn accounts on an Dec. 17, 2001 (GB) ...... 01301076 instruction accompanied by their private account number.

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US 2005/0021455 A1 Jan. 27, 2005

ON-LINE PAYMENTS SYSTEM merchant can access these funds using its private account number to transfer funds from the collection account to their [0001] This invention relates to a method and system for . making on-line payments. It is particularly concerned With payments for purchases made on the Internet. [0010] More speci?cally there is provided a method of making payments for on-line purchases, comprising the [0002] Over the past feW years, use of the Internet to steps of: registering at least one merchant subscriber and a purchase goods and services has groWn enormously. Simi plurality of customer subscribers; establishing a virtual larly, there has been a rapid groWth in the concepts and account for each subscriber; assigning a public account delivery of commerce over the Internet. HoWever, the infra reference and a private account reference to each subscriber; structure by Which customers pay for goods and services has crediting funds to the subscriber virtual accounts in accor not kept pace With these developments. Providers of e-com dance With funds deposited by subscribers in a payment merce services (e-tailers) have found that payment processes system collection account; transferring funds from a cus are critical to their operations and that existing payment tomer subscriber virtual account to a merchant subscriber mechanisms are inadequate for supporting e-commerce. account on the instruction of the customer subscriber to [0003] The great majority of on-line payments are made effect payment to the merchant for an on-line purchase made using credit or debit cards. HoWever, credit cards are unsat from the merchant by the customer subscriber; and at the isfactory for tWo main reasons: and cost. Customers request of the merchant subscriber transferring funds from are reluctant to disclose information on-line for the system collection bank account to a nominated merchant fear of fraud. It has been found that the major reason that subscriber bank account and reducing the balance of the customers abandon on-line purchases is a reluctance to enter merchant subscriber virtual account by the amount of the credit card information. Whilst the actual likelihood of credit funds transferred to the merchant subscriber bank account. card information being misappropriated can be limited by [0011] The invention also provides an on-line payment use of secure connections and encoding, the public percep system comprising: means for registering at least one mer tion is such that many potential customers Will not use credit chant subscriber and a plurality of customer subscribers; cards to shop on-line. means for establishing a virtual account for each subscriber; [0004] The suspicion of credit cards is not limited to means for assigning a public account reference and a private customers. In the event of fraudulent transactions, the liabil account reference to each subscriber; means for crediting ity resides solely With the merchant. This can lead a reluc ?nds to the virtual accounts in accordance With funds tance on the behalf of merchants to offer e-commerce deposited in a collection account by subscribers; means for services to their customers. transferring funds from a customer subscriber virtual account to a merchant subscriber account on the instruction [0005] For small purchases, credit cards are uneconomical of the customer subscriber to effect payment to the merchant to a merchant. Typically, a credit card supplier Will charge a for an on-line purchase made from the merchant by the merchant 2.5% of the purchase cost plus a ?xed fee of 30 customer subscriber; and means for transferring funds at the cents. In addition, the e-tailers may be charged a payment request of the merchant subscriber from the system collec gateWay fee of about 30 cents and a further 20 cents in fraud tion bank account to the nominated merchant subscriber and screening costs. For a $40 purchase cost, the total cost of a for reducing the balance of the merchant subscriber virtual credit card payment adds up to $1.80, some 41/z% of the total account by the amount of the funds transferred to the purchase price. The percentage is even higher for loWer merchant subscriber. price goods and does not enable merchants to maintain acceptable pro?t margins. [0012] Embodiments of the invention have a number of advantages. Firstly, the system is loW cost. The system [0006] A further problem With credit cards is that, apart operator can charge a transaction fee to the merchant or the from the USA and United Kingdom, their use is not Wide customer, as appropriate, but fraud prevention and payment spread as a result of Which many potential customers have gateWay charges are avoided. Second, the system is secure no means of paying for on-line purchases. in that there is no need for the customers to disclose any personal information such as their credit card number When [0007] Other methods of on-line payment are possible making an on-line purchase. Third, on-line purchases may although not Widely used. These include direct cash on delivery payment; payments through billing intermediaries; be made by anyone, regardless of Whether they have any and payment through . None is particularly satisfac credit or debit cards or a bank account. Any person may tory. register With the system and make a deposit into the system collection account Which is credited to their virtual account. [0008] There is, therefore, a need for an on-line payment This account is draWn doWn as they make on-line purchases method and system that is loW cost and suf?ciently secure to until such time as the customer deposits more funds into the enable customers to use it Without Worrying about fraud. system collection account. [0009] Broadly, the present invention provides a system in [0013] The system is also suitable for micro-payments Which virtual accounts are created for customers and mer Which are presently uneconomic using credit cards. chants. Customers are provided With public and private [0014] Embodiments of the invention Will noW be account numbers and place funds in a system collection described, by Way of eXample, and With reference to the account Which are credited to their virtual accounts. When accompanying draWings, in Which: an online purchase is made, using the customer private account reference, the funds are transferred from the cus [0015] FIG. 1 is a schematic illustration of an on-line tomer virtual account to the merchant virtual account. The payment system embodying the invention; US 2005/0021455 A1 Jan. 27, 2005

[0016] FIG. 2 is a schematic diagram illustrating the [0027] NeW users of the system can create a virtual setting up of on-line collection accounts; account by on-line registration at the payment system Web site. These created accounts are, in effect, bookkeeping [0017] FIG. 3 is a similar vieW to FIG. 2 showing hoW entries in the underlying system. HoWever, to a user, they collection accounts are entered into a payment system; appear to be an additional bank account into Which they can [0018] FIG. 4 is a similar vieW to FIG. 2 shoWing hoW deposit money to spend on-line. on-line transactions take place; [0028] Each customer can choose the currency in Which [0019] FIG. 5 is a similar vieW to FIG. 2 shoWing hoW they Will operate their primary account. The account is currency exposures are handled; and funded by the user depositing money in the payment system collection account 20, 22 for the chosen currency. This is a [0020] FIG. 6 shoWs hoW WithdraWals may be made from real money transfer and may be achieved in a number of on-line collection accounts. Ways. [0021] Referring to FIG. 1, there is shoWn schematically, [0029] In the on-line environment users may transfer a system for on-line payments in Which a payment system 10 money to the appropriate collection account 20, 22 directly interacts, via the Internet 16, With customers 12, their banks from their bank accounts via an on-line bank transfer. This 16, merchants 14, from Whom the customer Wish to make is a Well knoWn technique for transferring funds. Once the purchases via the merchant Web site WWW.merchant.com, system collection account has been registered as a recogn and the merchant’s bank 18. The message How Will be ised payee, the task of transferring funds is very simple and described in more detail once the payment system has been merely involves specifying the amount and timing of the described. transfer. The system is preregistered With major banks in the [0022] FIG. 2 shoWs a payment system-Which uses the territories in Which it operates as a recognised collection eXisting banking netWork to channel funds betWeen large account. This approach is simple and reduces errors in the corporate collection accounts held by the payment system transfer process. With its corporate bankers. [0030] An alternative is to deposit an amount on-line into [0023] The system uses the Internet to provide connectiv the collection account using a . This is similar to ity betWeen system users globally. Underlying the system is an on-line transfer and debits an amount directly from the a repository of user accounts and merchant accounts. In customer’s bank account and credits it to the system col hardWare terms this may be a suitably programmed conven lection account. This task is performed from the system Web tional relational database such as is provided by Oracle Corp site. and others. [0031] Alternatively, users may pay money into the col [0024] In FIG. 2 a number of bank accounts are shoWn lection account off-line, for eXample by paying cash or schematically including: payment system collection into their system account via a bank or other accounts 20, 22; payment system corporate accounts 24, 26, institution. Funds are deposited into collection accounts 28; customer bank accounts 30, 32; a merchant bank account using the bank system or its equivalent outside the 34 and further customer and merchant accounts 36. It Will be United Kingdom for cash and deposits. Off-line appreciated that the various accounts Will be resident at payments enable the system to be used by anyone, regardless different banks around the World and may be held in various of Whether or not they have banks accounts and enable different currencies. children to use the system, subject to parental controls. [0025] Thus, the payment system collection accounts [0032] The crediting of a customer’s system account by include a US$ account 20 and a GB£ account 22 and the transfer of funds into the system collection account is shoWn payment system corporate accounts include a US$ account at 50 in FIG. 2. 24, a GB£account 26 and various other currency accounts [0033] FIG. 3 shoWs hoW the individual virtual accounts 28. Similarly customer A’s account 30 is shoWn as a US$ are credited With the amount deposited by the customers in account as is merchant account 34. Customer B’s accounts their actual system accounts. Account data is uploaded from 32 is shoWn as a GB£ account and the further merchant and electronic bank ?les and re?ects the oWnership of funds in customer accounts 36 may be in a variety of currencies. the individual customer accounts. It should be understood [0026] For convenience, the system Will only be described that this is a transfer of account information and not a using tWo currencies, GB£ and US$. The payment system transfer of funds from the account. comprises a set of virtual accounts 40 Which are created for [0034] Each system account is assigned tWo account ref each subscriber users and merchants. Thus in FIG. 2, the erences Which Will usually be account numbers. One of these payment system 40 comprises virtual US$ and GB£accounts references is a public account reference and the other is a 41, 42 for customers A and B, virtual system collection private account reference. The public account reference is accounts in U58 and GB£43 and 44 and US$ and GB£ used to deposit funds into a customer’s system account. merchant accounts 45, 46. It Will be appreciated that there Funds cannot be WithdraWn using this account number and are virtual merchant accounts for all currencies handled by so it can be disclosed publicly and used to identify the the system, here US$ and GB£ only but customers only account. require virtual accounts in their oWn currency. In practice, customers may have additional currency accounts if desired. [0035] The second account reference or number is dis In FIG. 2, further accounts in both GB£ and US$ 47, 48 are closed only to the account holder and provides the account shoWn to indicate other subscribing customers and mer holder With access to the funds held in the system account. chants. It is a private number Which can only be used by the account