WO2000022494A2

WO2000022494A2 - Financial transaction system and method

Info

Publication number: WO2000022494A2
Application number: PCT/US1999/024078
Authority: WO
Inventors: Karen Macaluso; Gerald R Black
Original assignee: Karen Macaluso; Black, Gerald, R.
Priority date: 1998-10-13
Filing date: 1999-10-13
Publication date: 2000-04-20
Also published as: AU1206300A

Abstract

The financial transaction information system provides an alternative form of legal tender that can be used in all transactions to pay bills by mail or in person, without using checks, cash, conventional credit cards, or money orders. The system comprises a cash-alternative instrument, ATM and point-of-sale terminals, a databank and system driver, and a network of system financial institutions. The cash-alternative instrument is initially acquired at a participating terminal. An account balance is pre-paid at the time of acquisition and can thereafter be used instead of cash for the purchase of goods and services from participating merchants. Instrument holders can avoid bank affiliation while collecting interest on their accounts. One component of the system enables distributions to groups of persons from any public or private agency, a second component enables persons or entities to wire transfer legal tender from almost any remote location, a third component enables participants to engage in secured loans or pawn-shop activities, a fourth component enables participating merchants and service providers to promote the use of such electronic commerce, and a fifth component enables participating merchants and service providers to barter their goods and services. Instrument holders can avoid bank affiliation while collecting interest on their accounts. The system that enables all people, regardless of class or credit status, to become full instrument holders in a cashless society.

Description

FINANCIAL TRANSACTION SYSTEM AND METHOD

FIELD OF USE

A system for financial transactions that enables everyone to participate in a cashless society by providing instrument holders with a new form of legal tender, the legal tender being for multi-purpose financial transactions independent of any national or regional currency; and more particularly, to various components that enable (1) distributions to groups of persons from any public or private agency, (2) wire transfers, (3) secured loans, (4) promotional means for electronic commerce, and (5) bartering.

BACKGROUND OF THE INVENTION

Generally, financial institutions issue ATM and debit cards with magnetically encoded stripes. While usage of such cards increases, many people are unable to acquire such cards (students, immigrants, people with poor or no credit). Others are unwilling to use credit cards because of a concern for accumulating additional debt. Also, advanced information technologies enable personal information from financial transactions to be captured and preserved in massive databases which many believe pose a serious threat to individual privacy.

Accordingly, cash is still the preferred and often the only method for settling a financial transaction. Ca'sh transactions are quick and provide the user with a degree of anonymity that is unavailable with other forms of payment. However, people with cash in their possession are exposed to personal danger from others. Consequently, there is a need for a cash-alternative that is as convenient and as private as cash and which is of no value to others.

Telephone companies are now issuing pre-paid phone cards to pay for telephone services. The cards have a predetermined value and are issued in exchange for cash. Such cards are limited to pay only for services offered by the telephone companies. U.S. Patent No. 5,721,768 (Stimson et al.) discloses an improved telephone pre-paid calling card system and includes a host computer, a main processor, a plurality of on-site terminals, and a plurality of cards. Such systems are nothing more than a pre-paid payment plan for the services of the telephone companies, and lack the versatility of cash.

Almost every product and service category in both the consumer and business-to-business sector is subject to barter. The list runs the gamut from accounting services to landscaping. Even Fortune 500 companies participate. Economists estimate that corporate barter systems involve $55 billion annually. It is estimated that sixty-five percent of the corporations listed on the New York Stock Exchange are using barter. That includes an impressive list of companies such as General Motors Corp. (traded locomotives for tea in Sri Lanka), PepsiCo Inc. (traded syrup and technology for Russian vodka), The Coca- Cola Co., General Electric Co., McDonnell Douglas Corp., Pitney Bowes Inc., Turner Broadcasting System Inc., Mitsubishi Motors Corp. and Xerox Corp. Worldwide, bartering is known to be very profitable despite the lack of formal records. Analysts say that Asia alone has a bartering business worth $69 Billion a year. Bartering is particularly becoming popular in former nations of the Soviet Union.

Want is needed is a system that enables groups of persons receiving payments from public or private agencies to receive such funds electronically without ever leaving home, or being released from the hospital or sick bed, and that enables elderly, disabled or persons otherwise inconvenienced to gain immediate access to such funds without any delay while the availability of such funds are confirmed between financial institutions.

What is needed is a system that will enable all people, regardless of credit status, to participate in a cashless society; a system that will assure a certain degree of anonymity for all financial transactions by not requiring participants to provide personal identification during usage; and a system that will avoid monthly bills, interest charges, and penalty fees. What is needed is a system that will enable participants to avoid bank affiliation while collecting interest on their accounts; a system where participants will be able to access their accounts 24-hours from anywhere in the world; a system that will enable participants improved day-to-day management of their personal finances; a system that is universally accepted as legal tender; and a system that will provide participants with an instrument that can be readily recharged, can be used to any and all pay bills, that does not have to be negotiated or converted from transaction to transaction, and is of no value to others.

What is needed is a system that provides an alternative form of legal tender that can be used in all transactions to pay bills by mail, by telephone or the Internet, or in person without using checks, cash, conventional credit cards, or money orders, and can be physically exchanged between parties as legal tender; and a system that will provide participants with current rates of exchange between differing currencies while being of no particular currency.

What is needed is a means enabling persons of any class, whether or not they have a bank affiliation to gain ready access to legal tender from a large number of participating merchants, ensuring that a fair price is negotiated for the participant. What is needed is a system that enables merchants to generate new business contacts, improve profitability using excess production or business capacity, by moving sluggish inventory, while at the same time guaranteeing collections.

What is needed is a method of encouraging participants to engage in cashless commerce each time he/she engages in a financial transaction and buys the goods and services of participating merchants and service-providers, that requires participants to pay no additional costs, and that is in compliance with all national and regional laws. What is needed is a system that enables persons to transfer funds without ever leaving home, a hospital bed or nursing home, or from prison, and to immediately gain access to such funds from virtually any location where financial transactions occur.

SUMMARY OF THE INVENTION

All of the above-mentioned needs are met by the financial transaction system of the present invention. The term "cash-alternative instrument" as used herein refers to a new form of legal tender that is tangible and read or scanned by machines, such as cardreaders or high-speed optical scanners or the like. The instrument has numerous configurations, such as a card-like device (such as a smart card or a conventional credit card), a paperlike document, a metal engraved plate, or other form that includes information for processing a financial transaction.

In the preferred embodiment of the present invention, the cash-alternative instrument is only identifiable by a number, into which cash may be added or spent as any conventional debit card. Every cash-alternative instrument has its own identifying number ( PAN) and is accessed with a user personal identification number (PLN). This PIN can be changed by the user which gives the cash-alternative instrument a transferability feature, making the cash-alternative instrument of the present invention exchangeable as legal tender. Suddenly, this financial capability becomes available to an economic strata of people who have been cut-off from conventional banking services. Anywhere a debit or credit card may be used for payment of goods and/or services, the cash-alternative instrument of the present invention is available.

The following features makes the financial transaction system of the present invention unique:

• Since the cash-alternative instrument will be identified with only an account number and a PIN, anonymity is provided similar to cash; • The PLN can be charged by calling a customer service number - enabling the cash- alternative instrument to be transferred, similar to cash;

The cash-alternative instrument can be recharged by accessing any participating outlet terminal. The user may also send value to the system financial institution to be credited to the particular account.

• The cash-alternative instrument is compatible with existing credit and debit-type systems and can be used in both on-line and off-line transactions.

• Once affiliated with conventional credit card companies, authorizations against the account are enabled, such that the cash-alternative instrument can be used at hundreds of thousands of retail outlets around the world including hotels, car rental agencies, and purchases or payments over the telephone and Internet.

The cash-alternative instrument is multi-purpose, replacing phone cards and all other single-purpose cards, credit and debit cards, ATM cards, money orders, travelers' checks, and the like. The cash-alternative instrument is unlike any other form of instrument currently known by the inventors. One component of the system of the present invention enables distributions to groups of persons from any public or private agency, a second component enables persons or entities to wire transfer legal tender from almost any remote location, a third component enables participants to engage in secured loans or pawn-shop activities, a fourth component enables participating merchants and service providers to promotion the use of such electronic commerce, and a fifth component enables participating merchants and service providers to barter their goods and services. Instrument holders can avoid bank affiliation while collecting interest on their accounts.

The cash-alternative instrument is acquired anywhere in the world from a wide variety of sources, including but not limited to a terminal in a participating outlet, such as a point- of-sale terminal, or an ATM machine, inside a bank, by telephone, through the Internet, or by mail. In one preferred embodiment of the present invention, the cash-alternative instrument is shaped similar to a credit card, and includes a tracking number, such as a PAN that is preferably printed onto each card. The PAN is used by the cardholder to report lost or stolen cards. The PAN is also preferably embedded into the magnetic stripe of the card, perhaps as a microchip, to enable identification of the card during usage. The initial value of the card is determined at the time of acquisition and paid for with any acceptable form of legal tender. The card preferably includes one or more PLN's or passwords as security identifiers and to discourage use by unauthorized persons. The card is preferably not activated until acquisition, at which time the card is inserted into conventional cardreader. The value of the card is credited into the account record along with the PAN. If a PLN is used, the PLN is also included in the account record for reference purposes for matching purposes to access the account.

A system driver processor manages the financial transactions and processes information regarding such transactions. Upon acquisition, the purchase value of the cash-alternative instrument is debited to the issuer's account and is credited to the instrument holder's account at the system financial institution. The system driver processor tracks and processes information regarding the financial transactions. Once an account is identified, the driver identifies and verifies the available account balance. A record is established for each account and the driver credits the account as value is added and debits the account as value is used. The system of the present invention is fully compatible with Master Card, Visa, American Express, conventional ATM's and other similar-type systems.

The funds are deposited and maintained at a centralized system financial institution, and in another preferred embodiment of the present invention the money is available for investment by the system financial institution. A portion of the return on investment is credited to the instrument holder's account as interest. Each merchant does not need an account with the system financial institution, as existing banks can form a network with the system financial institution for processing transactions. Since the financial institution is associated with the system and not the participant, the cash-alternative instrument enables the instrument holder to engage in financial transactions without ever having to establish a bank account.

For a more complete understanding of the financial transaction system and method of the present invention, reference is made to the following detailed description and accompanying drawings in which the presently preferred embodiments of the invention are shown by way of example. As the invention may be embodied in many forms without departing from spirit of essential characteristics thereof, it is expressly understood that the drawings are for purposes of illustration and description only, and are not intended as a definition of the limits of the invention. Throughout the description, like reference numbers refer to the same component throughout the several views.

BRIEF DESCRIPTION OF THE DRAWINGS

FIGURE IA is a simplified block diagram of a first preferred embodiment of the financial transaction system of the present invention, the diagram also including some basic system logic;

FIGURE IB is a basic schematic diagram showing the basic steps of the method of the present invention for processing financial transactions;

FIGURE 2 is a logic diagram of a preferred embodiment for acquiring the multi-purpose cash-alternative instrument of the present invention through a retail merchant;

FIGURE 3 is a logic diagram of the method of the present invention showing a preferred embodiment for adding value to the multi-purpose cash-alternative instrument of the present invention through a point-of-sale terminal;

FIGURE 4 is a logic diagram of a method for using the multi-purpose cash-alternative instrument of the present invention of the present invention through a point-of-sale terminal for a financial transaction;

FIGURE 5 is a schematic diagram disclosing a preferred embodiment for accessing of the system financial institution of the present invention through a banking network either directly or indirectly;

FIGURE 6 discloses a typical ATM or point-of-sale terminal for use with the system of the present invention;

FIGURE 6A discloses a typical ATM screen display for transaction options for use with the preferred embodiment of the system of the present invention;

FIGURE 6B discloses a typical ATM screen display for full-service transaction options for use with the preferred embodiment system of the present invention shown in FIGURE 6A;

FIGURE 7 is a simplified block diagram of the system of the preferred embodiment of the present invention including multi-purpose cash-alternative instruments, ATM and point-of-sale terminals, a system driver, and a banking network;

FIGURE 8 discloses a schematic flowchart of a preferred embodiment of a combination key/cash-alternative instrument card of the present invention, the program logic enabling a guest to use the key-card to enable room access as legal tender;

FIGURE 9 discloses a functional block diagram of the preferred embodiment of FIGURE 8, the operating codes of which are disposed on the multi-purpose card of the present invention opposite the card;

FIGURE 10 discloses a simplified block diagram of the preferred embodiment of the system of the present invention enabling the instrument holder to readily convert between differing currencies;

FIGURE 11 discloses a simplified logic diagram for use of a typical bartering system in combination with the preferred embodiment of the system of the present invention;

FIGURE 12 discloses a simplified logic diagram for use of a typical secured loan in combination with the preferred embodiment of the system of the present invention;

FIGURE 13 discloses a simplified logic diagram for use of a typical fund transfer by wire or the like in combination with the preferred embodiment of the system of the present invention; and

FIGURE 14 discloses a simplified block diagram as to a government distribution component of a preferred embodiment of the present invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

Referring now to the drawings, FIGURE 1 A discloses a first preferred embodiment of the financial transaction system of the present invention. The system comprises a cash- alternative instrument, a system financial institution, a system driver, and a plurality of remote terminals (e.g. - point-of-sale terminals, service provider terminals). The cash- alternative instrument is multi-purpose, replacing phone cards and all similar single purpose cards, credit and debit cards, ATM cards, money orders, travelers' checks, and the like. The cash-alternative instrument is acquired anywhere in the world from a wide variety of sources, including but not limited, to participating outlets, such as a point-of- sale terminal, or ATM machines, inside financial institutions, by telephone, through the Internet, or through the mail. In one preferred embodiment, acquisition occurs in a similar manner to the way that a money order is acquired (see FIGURE 2). In one preferred embodiment of the present invention, the cash-alternative instrument is a plastic card made of a PVC-type material. The card preferably includes a tracking number, such as a PAN, that is imprinted onto each card. The PAN is used by the cardholder to report a lost or stolen card. The PAN is also preferably embedded into each card as a microchip or by other stamping or similar means currently known in the art, to enable cardreaders to identify the card during usage. Preferably, batching the PAN's for the cash-alternative instruments of the present invention is sequential, distribution to the merchants and service providers is sequential, and distribution to the individual customers is random. PAN's are assigned randomly as the cards are acquired. The initial value of the card is determined by the payee at the time of acquisition and paid for either by cash, check, money order, credit card, debit card, or other form of legal tender. The card includes a security identifier such as a PLN or a biometric identifier (such as a fingerprint) of the cardholder to minimize the value of the card to others if the card is lost or stolen. One preferred embodiment of the cash-alternative instrument of the present invention includes more than one PIN's or passwords or combination thereof to identify the cardholder. During acquisition at a point-of-sale terminal, the cards are dispensed in a vending-type machine and charged at the point-of-sale terminal. When acquired at an ATM-type machine, the cash-alternative instruments is dispensed directly by the ATM- type machine.

In one preferred embodiment, a security black-out cover is positioned over the PAN, on only one side of the card if the plastic is not raised, or on both sides of the card if the card has raised or depressed numbering. This cover enables the PAN to be hidden during acquisition. The security black-out cover can be saved by the cardholder for recording purposes in the event that case the cash-alternative instrument of the present invention is lost or stolen, enabling the cardholder to report the loss. In another embodiment, the cash-alternative instrument of the present invention is acquired in an envelope so that the person dispensing the cash-alternative instrument cannot see the PAN. Also, multiple security black-out covers can be stacked on top of each other to enable the cardholder to save the security black-out covers in more than one place. The cash-alternative instrument of the present invention is preferably not activated until acquisition, at which time the cash-alternative instrument is inserted into a cardreader. The cardholder selects the amount and pays for the cash-alternative instrument. The value of the cash-alternative instrument is captured and preserved into the account record along with the PAN. If a PLN is used for security measures, the PLN is also included in the account record for matching with the PLN submitted during subsequent usage. When acquisition of the cash-alternative instrument occurs at a point-of-sale terminal, the cash- alternative instruments are acquired either through vending machines or directly from merchants as payment is made. When the cash-alternative instrument is acquired at an ATM-type machine, the cash-alternative instruments are charged when dispensed by the ATM-type machine only after cash has been deposited into the ATM machine. A paper receipt is optional for record keeping purposes. When a paper receipt is issued, the receipt can include advertising and coupon exchange and numbers for play in games (such as sweepstakes or lottery-type games) associated with the system.

The system driver manages the financial transactions and processes information regarding such transactions. The system driver processor tracks and processes information regarding each financial transaction relative to each account. Once an account is identified, the driver identifies the available account balance. A record is established for each account and the driver credits the account balance as additional value is received and debits the account whenever the cash-alternative instrument of the present invention is used. Upon acquisition, the purchase value (less fees and other costs) of the cash- alternative instrument is debited to the merchant's account and is credited to the instrument holder's account at the system financial institution.

The cash-alternative instrument of the present invention serves as a means of networking the instrument holder to his/her account. In one preferred embodiment, a chip or equivalent is embedded into the cash-alternative instrument to confirm that the cash- alternative instrument is not a counterfeit for purposes of protecting the system financial institution. The cash-alternative instrument is accepted at numerous participating outlets for financial transactions. When the cash-alternative instrument is presented for the purchase of goods or services, an inquiry is made through the system financial institution concerning the available account balance. In another preferred embodiment of the present invention, use of the cash-alternative instrument is similar to the use of a conventional debit card. The driver locates the account record and matches each cash-alternative instrument with the account record. If the transaction is approved, the driver debits the instrument holder's account and credits the merchant's account. The updated account balance is then stored into the account record. The PLN may also be embedded into the cash-alternative instrument. If the PLN is not so embedded, the PIN for the cash- alternative instrument (1) can be initially charged with no PLN and the PLN is assigned at the time of first usage, (2) can be selected by the cash-alternative instrument holder at the time of acquisition, or (3) can be included with the cash-alternative instrument at the time of acquisition. The PIN can subsequently be changed by the holder of the cash- alternative instrument.

In another preferred embodiment, the funds are deposited and maintained at the centralized system financial institution, where the funds are invested by the financial institution. The cash-alternative instrument provides incentives or interest on funds within the account to encourage customer participation in the cash-alternative system of the present invention and also as a benefit to customers and businesses. A portion of the return on investment is credited to the instrument holder's account as interest. Each merchant and/or service provider does not need an account with the system financial institution, as existing banks and financial institutions can form a network with the system financial institution for processing transactions (see FIGURE 5). Since the financial institution is associated with the system and not the participant, the cash- alternative instrument enables the instrument holder to engage in financial transactions without ever having to establish a bank account. The system driver may be associated with the system financial institution or may be independent of the system financial institution. Deposits into the individual accounts are made by a variety of sources. An employee can receive part or all of his/her pay by direct deposit into his/her account by his/her employer. Similarly, parents can transfer money to students periodically enabling improved budgeting by the students. Fees can be collected upon initial acquisition and with each subsequent transaction. Similarly, government benefits and refunds can be distributed as set forth below. Also, the system financial institution receives additional revenues from interest or investment of the deposited revenues received on the individual accounts by the employer. The transaction fees can be shared with the merchant or ATM bank, employers, issuing financial institution and network banks, insurance costs, an escalating jackpot as later described, or other miscellaneous expenses.

Sample transactions occur as follows: The first phase involves establishing the account. The cash-alternative instrument is acquired at a point-of-sale terminal, bank or an ATM machine. When acquisition occurs at a point-of-sale terminal the instrument holder advances cash, check, money order, or the like into the account. When acquisition occurs at an ATM machine, the instrument holder generally pays in cash. Typically, a transaction fee is debited at the time of acquisition. Upon registration the available balance of the account is stored in the databank as the driver tracks account usage and account value. The purchase value is credited from the instrument holder's account at the participating outlet and debited to the merchant's account at the merchant's bank. The second phase involves account access. A request is initiated at a point-of-sale terminal, an ATM machine, a telephone, or a computer terminal to access the account either by use of the cash-alternative instrument and by identifying the instrument holder. If the PLN's and passwords match, the account is accessed to determine if the account balance is large enough to enable confirmation of the transaction. The purchase is debited to the instrument holder's account and credited to the merchant's account.

Many people using the cash-alternative instrument of the present invention are concerned about privacy issues and are attracted by the improved privacy protection provided by the cash-alternative instrument. However, there are people who are less concerned about privacy issues but have limited access to banking services. These people include students, legal immigrants, and people with poor credit ratings. While the system financial institution may want to limit these people to stored-value or pre-paid type transactions, as these people establish themselves professional and personally, they become attractive customers for full-banking services. FIGURES 6A and 6B show an example of various simplified display screens for typical transactions and for full-service banking. Accordingly, the system of the present invention offers customers savings accounts (including special savings account services such as Christmas clubs and birthday clubs), checking accounts, and credit services to selected customers. Such services also include credit cards and secured loans (such as home-improvement loans, car loans, and first and second mortgages), as the system financial institution deems appropriate. The cash-alternative instrument of the present invention can be used at ATM machines to transfer money between accounts, particularly when full-service banking options are available.

In another preferred embodiment of the cash-alternative instrument of the present invention, the face of the cash-alternative instrument in instances when exchanged as a gift card, includes the face (photograph) of the instrument holder, or a message or personal image selected by the donor. Also, these gift cards (unlike conventional gift cards) are not limited to one particular merchant or service provider but are negotiable anywhere, to purchase goods and services as selected by the instrument holder.

The cash-alternative instrument of the present invention is used in bartering-type applications, in conjunction with pawnshops to advance money to instrument holders. The instrument holder supplies personal effects, such as jewelry, for collateral that can be redeemed once the debt has been repaid based upon the terms and conditions negotiated between the parties. In yet another embodiment, the cash-alternative instrument of the present invention has its own appraisers who provide such services directly to instrument holders. The cash-alternative instrument is used for credit exchange or cash, in change machines, or anywhere else other cash-alternative instruments are accepted, including but not limited to phones and the Internet. When use occurs at a point-of-sale terminal, even stamps or food-stamps can be added to the value of the cash-alternative instrument. The cash-alternative instrument is an alternative to cash and can be readily converted into cash, if needed. When the cash-alternative instrument is a PVC card, the card is compatible with any point-of-sale, ATM, or any other instrument reader, and eliminates the need for the instrument holder to submit personal data.

Multiple PLN's, passwords, biometric identifiers, or combinations thereof can be used for purposes of system security. A typical biometric would be a thumb print or a print of the index finger submitted at the time of acquisition of the cash-alternative instrument and can be captured either by a biometric pen (when acquisition occurs at a point of sale terminal) or by pressing a button on a keypad, either of which has fingerprint sensors. Preferably, the keypad is similar to a telephone keypad with numbers and letters combined on one key, so that PLN's and passwords are submitted through the use of the same keys.

The financial transaction system of the present invention enables instrument holders to avoid any bank affiliation, since the financial institution is associated with the system and not the participant. This feature is of particular importance to immigrants who are trying to establish citizenship and have problems opening a bank account. Also, people with marginal credit are subject to having their accounts seized by creditors and the government. There is no need for a holder of the cash-alternative instrument of the present invention to carry a wallet or purse since the cash-alternative instrument is legal tender and guaranteed, not requiring any identification. Also, since the cash-alternative instrument is legal tender, there is also no need to carry any checks, cash, or credit cards. Since PLN's and other security measures are used, the cash-alternative instrument is of essentially no value to others and can be easily replaced if lost. The cash-alternative instrument is accepted anywhere that has a conventional cardreader, and can be used at conventional ATM machines for withdrawals and deposits. Also, the cash-alternative instrument can also be recharged by an Internet terminal or by phone. The cash- alternative instrument is particularly useful for people with marginal or no credit where the cash-alternative instrument is used to access the instrument holder's own funds. There is no need for instrument holders to verify or confirm user identification, thereby avoiding delays. The cash-alternative instrument is accepted worldwide, is in no particular currency, and instrument holders can easily avoid multiple exchange conversions resulting in monetary losses. The cash-alternative instrument is also compatible with all currencies.

Typical U.S. Government payments include social security, supplemental security, veterans benefits, civil service payments, military retirement benefits. FIGURE 14 discloses a simplified block diagram as to a government distribution component of a preferred embodiment of the present invention, the system being compatible with the cash-alternative instrument. The system of the present invention is compatible with recent federal legislation enabling direct deposit in the form of an electronic transfer account (ETA) for people with no bank affiliation. Persons can receive fund transfers without ever leaving home, or being released from a hospital or sick bed. Elderly, disabled or persons otherwise inconvenienced can put their hand in their wallets or purses or pockets or dresser drawers and have immediate access to additional funds. Persons can receive fund transfers without ever leaving home, or being released from the hospital or sick bed. Elderly, disabled or persons otherwise inconvenienced can put their hand in their wallets or purses or pockets or dresser drawers and have immediate access to additional funds. Government or private agencies can thereby distribute funds to all parties, such parties selecting between conventional mail distribution, direct deposit in a conventional checking or savings account, or by using the system of the present invention. One example of fund transfer is shown in FIGURE 13. Preferably, the recipient advises the agency of the account number, but in another preferred embodiment, the government deposits such funds and advises the recipient of the account number and the PIN and/or password.

In one embodiment, the PIN includes various codes to advise the system driver of particular conditions. For example, if the PLN includes a 911 code, that advises the system driver that the instrument holder may be in danger, to advise relevant law enforcement officials, and only dispense a small amount of cash. Other codes may be used to advise the system driver that emergency relief is needed for severe health conditions, such as heart attacks, strokes, and seizures. Also, a personalized PLN can be selected by the cardholder as appropriate to notify the system driver of emergency situations.

Initially, the cash-alternative instrument of the present invention as shown in FIGURE 10 is acquired by payment of legal tender. Such payment may be made by credit card, money order, debit card, check, cash, or any other conventional method of paying for goods and services. In a global economy, where multiple currencies are commonly exchanged, such value can be in any of a number of currencies. In a world of stronger and weaker currencies, when values of certain currencies relative to other currencies fluctuate with daily trading and where certain currencies are unstable, customers need to be assured that the value that they deposit into the account is not diminished before they have an opportunity to access the funds. Accordingly, the cash-alternative system of the present invention accepts deposits in any national or regional currency and enables the customer acquiring the cash-alternative instrument to not only advise the system as to which currency is being deposited, but also in which currency the account is to be held. In addition, the customer has the option to switch subsequently to yet another currency as market conditions change, and the currency exchange occurs at market rates when the information is transmitted to the driver. Also, the instrument holder can simply request the system to select which currency is the most stable and trust the matter to system investors much as mutual funds are used for investment purposes. This is an added benefit since this not only stabilizes the account but also enables the instrument holder to receive a return on investment. In addition, when a request for goods or services is made, the customer designates the currency of payment and the exchange occurs at market rates at that time. Other "prompts" provide the instrument holder with currency exchange options when the cash-alternative instrument of the present invention is used at a conventional ATM machine. Such currency exchange options are incorporated into the system when the instrument holder makes transactions in person, or by phone, or over the Internet.

Since the cash-alternative instrument is legal tender, it is used to pay bills without the need for checking accounts. A special form of the cash-alternative instrument includes the name of the payee and can be transmitted by mail. The system also issues paper for use as a negotiable instrument to pay bills. In either case, it is preferred that a PLN be replaced with the name of the payee. The system of the present invention also includes options for unique bill-paying centers (similar to libraries that are commonly used by senior citizens). The cash-alternative instrument is submitted and all bills are electronically transferred to the payees as value is debited to the instrument holder's account. Also bill payment can occur by phone or through the Internet. For utilities, direct debits from the account can be used to pay such bills. There is no need for the payee to know the payer, providing the instrument holder's account with anonymity, since the transfer is processed by the PAN and any problems with the electronic transfer can be captured through the system driver.

The instrument holder has the option of anonymity or no anonymity. If the instrument holder is identified to the driver during acquisition, the instrument holder receives monthly statements. Otherwise, the instrument holder can receive printouts of account activity. In instances of anonymity, the cash-alternative instrument is comparable to cash, leaving no paper trail.

Conventional system involve the use of cash, checks, credit cards, debit cards, ATM cards, all of which are replaced by the system of the present invention. In conventional credit card systems, the merchant pays the transaction fee. In the system of the present invention the merchant receives part of the transaction fee. With conventional credit card systems there is a need to acquire the card, qualify, pay finance charges, monthly statements, penalty fees and late payment, annual fees, etc. These features are eliminated with the system of the present invention. In conventional credit card transactions, the cardholder needs identity confirmation, delays and bank approval, and is often embarrassed by being turned down.

Another embodiment of the system of the present invention relates generally to remote computer terminals, and more particularly, to a method and a game apparatus which is used with any transaction terminal, such as ATM machines, remote terminals, pay-at-the- pump gasoline pumps, debit-style pay phones, change machines, laundry mats, pay toilets, and even home personal computers.

One cash-alternative instrument replaces dozens of other cards. The cash-alternative instrument is programmable for all identification, discount cards, credit, debit, passports, driver's licenses. No paper receipt is necessary, providing improved safety for the instrument holder as cash is unnecessary. With the promotional aspect, numerous smaller prizes are awarded as well as lottery or sweepstakes bonuses. Many other game formats are available for the promotional purposes.

These cash-alternative instruments are not limited to ATM or debit cards, or any other card in particular. The cash-alternative instrument dispensing machine may print a paper receipt upon request at the election of the customer, which is a tangible record of the transaction. The receipt may contain information on winning prizes. The receipt can also be used for advertising purposes, and include coupons or game space. Points may be given for machine usage and redeemed for prizes, similar to "S&H green stamps."

No modification is necessary to the electronic transactions for the gaming variation other than to have existing machines electronically networked to a central computer where customer data is stored. This information is maintained by existing drivers or by a new driver specifically designed to process system and usage of the cash-alternative instrument. Paper receipts are optional and can be used to redeem prizes or play games. The paper receipts may contain peel-off, scratch off. Also, plain paper games can be used with computer generated winners.

In one embodiment, the cash-alternative instrument enables the participant to play a promotional game with a self-generating jackpot. Progressive jackpots have been particularly popular in various promotional purposes such as fast-food restaurants and gas stations. In one preferred embodiment of the financial transaction system of the present invention a portion of the transaction fee is allotted to a sweepstakes-type jackpot. Participants pay no additional costs to participate in the jackpot. A portion of the money received from the use of the cash-alternative instrument of the present invention is pooled for a jackpot, either smaller prizes, a grand prize, or both. One major advantage of progressive play is that the jackpots are self-generating and funded by transaction fees. A portion of each transaction fee is added to the game total, to encourage participation in the system. As usage of the cash-alternative instrument of the present invention grows, the size of the jackpots grow. The jackpot also increases as more people play and with increased frequency. All financial transactions are included, including point-of-sale transactions, ATM transactions, telephone purchases, and purchases over the Internet. The largest sweepstakes in the world is compatible with an inherent part of the system with minimal additional effort. By enabling participation of hundreds of thousands or even millions of participants can play in a single game.

In one variation in the gaming methods of the present invention, all instrument holders automatically participate with each transaction and have a chance to win. Such prizes can be international, national, regional, merchant-based, and even based upon each participants use of the system. Also, the prizes can be bank wide, or generated by the driver processor exclusive or all types of transactions worldwide. Winners are randomly chosen from all users of system of the present invention, such system being in compliance with all national and regional laws, rules, regulations, and ordinances. The sweepstakes and lottery-type jackpots are completely self-generated by transaction fees, monthly interest, and annual finance fees. A percentage of the transaction fees are applied to the jackpot. Increased usage make the card more profitable than cash (see for example, U.S. Patent Application U.S.S.N. 08/667,407 entitled "Method and Apparatus for Promoting the use of Automatic Teller Machines by Karen Macaluso).

Card transactions occur more readily than cash since the customer is often not fully aware of the amount of card usage. Participants improve their opportunity to win by increased participation. Instrument holders will include participants, machine owners, location of machine, financial institutions, and merchants.

The self-generating jackpot feature of the present invention is not intended to be restricted to any particular form or arrangement, or any specific embodiment disclosed herein, or any specific use, since the same may be modified in various particulars or relations without departing from the spirit or scope of the invention, method or apparatus. Transaction fees and interest generated by the financial institution are applied to the jackpot and to provide other incentives for participants.

When a paper receipt is requested and issued to the participant, such receipt preferably includes an entry number for use in the jackpot game, or a prize coupon. The receipt paper is either stacked or rolled paper. One portion of the receipt, either the upper or lower portion includes financial information regarding the transaction, and the opposing portion includes the prize coupon. To redeem the coupon, the two portions are separated, as by tearing, and the participant retains the confidential information regarding the financial transaction. Participants are drawn to increased usage of the cash-alternative instrument of the present invention since entry into the jackpot occurs with each transaction. The coupons are redeemable for prizes and are used for advertising purposes by providers of goods and services. Additional state-of-the-art security is available and applicable for Internet and phone purchases to protect the integrity of the system. FIGURE 11 discloses a simplified logic diagram for use of a typical bartering system in combination with the preferred embodiment of the system of the present invention. If executed in a professional fashion, barter can benefit the trading client in a number of key areas: by generating sales and generating new business contacts; by improving profitability, turning liabilities into assets; by utilizing excess production or business capacity; by moving sluggish inventory (trading excess or sluggish inventory and turning potential write-offs into profit); by conserving cash (providing an alternative method of payment that offsets business expenses and conserves cash); by guaranteeing collections (computerized record-keeping eliminates accounts receivable and collection problems); and through flexibility. Trade volume is controlled by the client, as only goods and services are traded as deemed appropriate to the needs of the participants. Similarly, FIGURE 12 discloses a simplified logic diagram for use of a typical secured loan in combination with the preferred embodiment of the system of the present invention that enables participants to engage in secured loans or pawn-shop activities.

In another preferred embodiment shown in FIGURE 13, instead of receiving funds by a wire transfer or from western union, funds can be transferred by use of the system of the present invention without leaving home, being released from a hospital or nursing home. The person or entity transferring the funds uses an automatic teller machine, a telephone, or an Internet terminal to complete the money transfer. In one preferred embodiment, the cash-alternative instrument of the present invention includes a magnetic strip, a 16-digit PAN and a PLN. The account can be credited to the transferee while the card is still in the user's wallet.

In another embodiment, the card also includes a key which enables the holder access to a secure area (see for example U.S. Patent No. 4,677,284 or copending PCT Application No. PCT/US97/05736). If the card is used in a closed environment, such as a hotel, casino, university, prison, cruise ship, resort, or the like, the card enables the instrument holder access to a guest room, dorm room, or prison cell within the closed environment. FIGURE 8 discloses a schematic flowchart of a combination key/multi-purpose pre-paid card of the present invention disclosing the program logic for enabling a guest to use the key-card to enable room access; and FIGURE 9 discloses a preferred embodiment of a functional block diagram of the preferred embodiment of FIGURE 8, the operating codes being disposed on the multi-purpose card of the present invention opposite the card.

The electronic key-card has a set of data encoded on one end portion thereof, preferably either the same end portion as the cash-alternative instrument or the opposing end portion. The lock includes a multi-level memory with each level identified by an identification code. A combination code is stored at each memory level in memory. The set of data encoded on the key card comprises an identification code and a combination code. The data encoded on the guest room key is read into the lock by a cardreader. The lock may perform a number of predefined functions, such as opening the lock, changing the codes in multi-memory, or erasing the codes in multi-memory. The predefined functions are stored in a function table with each predefined function identified by a function code, which are also stored in the function table.

The lock includes a comparator for comparing the inputs to each other. Power to the lock is provided by a power source. The lock includes an installation code memory for storing an installation code. The installation code must be matched before a function may be performed. The control unit controls the activity of all the electronic components of the lock as described above, and is interactively engaged directly with the hotel or resort central computer.

The security system operation begins when the guest inserts the key-card into the cardreader which reads the identification code. The control unit signals compare the key identification code to the code in the lock memory. If the identification codes match, power to the lock is disengaged except for the power necessary to maintain the data in memory. This sequence of events is termed "power down". After the lock performs the "power down" sequence, the operation of the security system is completed. If the identification code on the end of the user key does match the lock identification code, the control unit signals a multi-level memory to transmit the combination code at the memory level identified by the combination code from the key-card to the comparator. The control unit further signals the cardreader to transmit this combination code to the comparator. The combination codes from the key-card and the cardreader are compared. If the two combination codes match, the control unit signals the lock mechanism to open. After signaling the lock mechanism, the control unit performs the power down sequence, completing the operation of the system.

The principles of this invention are applicable to closed environments other than resorts, hotel-casinos, hotels, and casinos. Such environments include cruise liners, prisons, universities, Indian reservations, military complexes, sports arenas, movie theaters. The system is also useful in any hotel to improve security involving on-site charging to a room. In addition, the system may be used in any other closed environments involving continual activity, or extraordinary expenses. As used herein, a "closed environment is a community of people that: (1) requires registration to become a part of the community; and (2) where the purchase of goods or services occurs. Examples include:

* hotels-resorts - the key provides access to the guest room and other private suites and for guest tracking while the cash-alternative instrument is used for all on-site purchases.

* luxury cruise liners - the key provides access to the guest room while the cash- alternative instrument is used as a method of payment for all on-site purchases.

* airports - the key provides access to private clubs for preferred passengers and security access for airport security personnel while the cash-alternative instrument is used as a method of payment for tickets, food, car rentals, etc.

* hotel-casinos - the key provides access to the guest room while the cash-alternative instrument is used for all purchases within the complex (particularly useful when chips and cash are not used for gaming - player tracking). * racetracks, bowling alleys, pool halls - key is used for access to the facility and private rooms on site while the cash-alternative instrument is used as a method of payment for on-site purchases.

* theme parks - the key provides gate entry and entry to any private facilities within the park while the cash-alternative instrument is used as a method of payment within the park.

* hospitals - the key provides access to the patient rooms (private and semi-private) while the cash-alternative instrument is used for purposes of identification for treatment purposes and patient tracking and for purchases, the key can be used by physicians, nurses, and administrative personnel for access to secure areas, parking, access to patient records, and the cash-alternative instrument can be used for on-site purchases.

* college campuses and public/private schools - the key provides access to the dorm and individual rooms and classrooms and for purposes of identification while the cash-alternative instrument is used for student aid requests, scholarships, and purchases on campus (cash-alternative instrument also used for identification for medical treatment).

* military bases - the key is used for identification for access into the base, secure areas within the base, and individual rooms and tracking while the cash-alternative instrument is used as a method of payment for purchases on-site.

* prisons - the key is used for cell access and inmate tracking while the cash- alternative instrument is used as a method of payment on site.

* sports complexes - the key provides access to the gate and private suites while the cash-alternative instrument is used as a method of payment within the complex.

* shopping malls - the key provides access to the mall and private restaurants/suites and shopper tracking while the cash-alternative instrument is used as a method of payment on-site.

Throughout this application, various Patents and Applications are referenced by patent number and inventor. The disclosures of these Patents and Applications in their entireties are hereby incorporated by reference into this specification in order to more fully describe the state of the art to which this invention pertains.

It is evident that many alternatives, modifications, and variations of the financial transaction system and method of the present invention will be apparent to those skilled in the art in light of the disclosure herein. It is intended that the metes and bounds of the present invention be determined by the appended claims rather than by the language of the above specification, and that all such alternatives, modifications, and variations which form a conjointly cooperative equivalent are intended to be included within the spirit and scope of these claims.

Claims

1. A financial transaction system comprising:

a cash-alternative instrument for use in financial transactions, the cash-alternative instrument being obtained from a terminal at a participating outlet, an initial value of the cash-alternative instrument being determined at time of acquisition, the initial value of the cash-alternative instrument being purchased during the time of acquisition, the cash-alternative instrument including an identifier enabling matching with a particular participant account, the cash-alternative instrument being useful for acquisition of a variety of different types of goods;

a system financial institution for establishing the particular participant account for the value of the cash-alternative instrument, the value of the particular participant account being subsequently credited upon the pre-payment of additional value, value of the particular participant account being debited during a subsequent financial transaction;

a system driver managing financial transactions, the system driver using the identifier to select the particular participant account and adjusting the initial value of the particular participant account relative to the subsequent financial transaction; and

a point-of-sale terminal disposed within a participating merchant outlet, the point-of- sale terminal being where a subsequent financial transaction is initiated upon presentation of the cash-alternative instrument, the participating merchant outlet doing business with a merchant bank and having a merchant account, value being debited from the particular participant account at the system financial institution and credited to the merchant account upon approval by the system driver of the financial transaction.

2. A financial transaction system comprising:

a cash-alternative instrument for use in financial transactions, the cash-alternative instrument being obtained from a terminal at a participating outlet, an initial value of the cash-alternative instrument being determined at time of acquisition, the initial value of the cash-alternative instrument being purchased during the time of acquisition, the cash-alternative instrument including an identifier enabling matching with a particular participant account, the cash-alternative instrument being useful for acquisition of a variety of different types of services;

a point-of-sale terminal disposed within a participating service-provider outlet, the point-of-sale terminal being where a subsequent financial transaction is initiated upon presentation of the cash-alternative instrument, the participating service-provider outlet doing business with a service-provider bank and having a service-provider account, value being debited from the particular participant account at the system financial institution and credited to the service-provider account upon approval by the system driver of the financial transaction.

3. A method for processing financial transactions, the method comprising: presenting payment for the acquisition of a cash-alternative instrument at a participating outlet, the cash-alternative instrument having an initial value, a particular participant account being established a system financial institution upon payment presentation, the balance of the particular participant account corresponding to the initial value, the cash-alternative instrument being dispensed for subsequent use to access the particular participant account upon the payment presentation;

requesting access to the particular participant account by presenting the cash- alternative instrument at point-of-sale within a participating merchant outlet for the acquisition of selected goods, the point-of-sale being where a subsequent financial transaction is initiated upon presentation of the cash-alternative instrument, the participating merchant outlet doing business with a service-provider bank and having a service-provider account;

debiting value from the particular participant account at the system financial institution; and

crediting value to the merchant account at the merchant bank upon approval of the financial transaction.

4. A method for processing financial transactions, the method comprising:

presenting payment for the acquisition of a cash-alternative instrument at a participating outlet, the cash-alternative instrument having an initial value, a particular participant account being established a system financial institution upon payment presentation, the balance of the particular participant account corresponding to the initial value, the cash-alternative instrument being dispensed for subsequent use to access the particular participant account upon the payment presentation; requesting access to the particular participant account by presenting the cash- alternative instrument at point-of-sale within a participating service-provider outlet for the acquisition of selected services, the point-of-sale being where a subsequent financial transaction is initiated upon presentation of the cash-alternative instrument, the participating service-provider outlet doing business with a service-provider bank and having a service-provider account;

crediting value to the service-provider account at the service-provider bank upon approval of the financial transaction.

5. A cash-alternative instrument having a card shape, the cash alternative instrument being compatible with conventional card-readers, the initial value of the cash-alternative instrument is prepaid at time of acquisition, the cash-alternative instrument being a form of legal tender and useful for acquisition of a variety of goods and services, the cash- alternative instrument including information that is useful in identifying a particular participant account, the particular participant account is held in a system financial institution, the cash-alternative instrument being compatible with conventional credit payment means;

whereby the system financial institution has no direct affiliation with the participant.

6. An instrument for use in a closed environment, the instrument comprising:

means for making payment for goods within the closed environment, the payment means having an initial value, the payment means being acquired during time of participant registration for the closed environment, the payment means being compatible with conventional card-readers, the initial value of the payment means being prepaid during participant registration; and

means for engagement with a lock disposed within the closed environment, the engagement means including a key code, the key-code being programmed into the engagement means either prior to or during participant registration, the engagement means enabling access to a secure area within the closed environment.

7. An cash-alternative instrument for use in a closed environment, the cash-alternative instrument being legal tender, the cash-alternative instrument including means for making payment for goods and services within the closed environment, the payment means having an initial value, the payment means being acquired during time of participant registration for the closed environment, the payment means being compatible with conventional card-readers, the initial value of the payment means being prepaid during participant registration.

8. A method of conducting a financial transaction, the method comprising:

acquiring a cash-alternative instrument by presenting payment at a participating outlet, the cash-alternative instrument having an initial value, a particular participant account being established with a system financial institution upon payment presentation, the balance of the particular participant account corresponding to the initial value;

selecting a variety of goods or services for purchase, the goods or services having a purpose price; and exchanging the cash alternative instrument as payment for the goods or services.

9. A currency conversion method, the method comprising;

presenting payment in a first currency for the acquisition of a cash-alternative instrument at a participating outlet, the cash-alternative instrument having an initial value, a particular participant account being established with a system financial institution upon payment presentation in the first currency; and

selecting a second currency for conversion, the initial value being converted from the first currency to the second currency at the time of selection of the second currency.

10. A cash-alternative instrument that is compatible with conventional card-readers, the initial value of the cash-alternative instrument being prepaid at time of acquisition, the cash-alternative instrument being a form of legal tender and useful for acquisition of a variety of goods and services, the cash-alternative instrument including information that is useful in identifying a particular participant account, the particular participant account is held in a system financial institution, the cash-alternative instrument including information that is used to identify a particular participant, the system financial institution providing full-service banking options selected from the group of a savings account, a line of credit, a checking account, traveler's checks, money orders, cashiers checks, secured loans, debit cards, and credit cards, the system financial institution having no direct affiliation with the participant.

11. A method of distributing government benefits, the method comprising: identifying a recipient desiring deposit of recipient government benefit with system financial institution;

establishing account for receipt of the government benefit with the system financial institution;

crediting the recipient account with designated government benefit; and

debiting government account for amount of the government benefit.

12. A method of distributing employee compensation for employee compensation from employer, the method comprising:

identifying an employee desiring deposit of employee compensation with system financial institution;

establishing account for employee with the system financial institution;

crediting the employee account with designated employee compensation; and

debiting employer account for amount of the employee compensation.

13. A method of exchanging goods or services for value, the method comprising:

soliciting by the first of a proposal from a second party;

reviewing by the first party the proposal; negotiating transaction terms;

assigning transaction code in computer database;

transferring goods or services from first party to the second party for the value;

crediting the account of the first party; and

debiting the account of the second party.

14. A method of exchanging by a first party of a first set of goods or services for a second set of goods or services from a second set of goods or services, the method comprising:

identifying by first party of second party seeking the goods or services of the first party;

negotiating transaction terms value is to be received by the first party in addition to the goods and services of the second party;

assigning transaction code in computer database

transferring goods or services from first party to the second party;

transferring goods or services from second party to the first party;

crediting the account of the first party of the value received; and

debiting the account of the second party for the value received.

15. A cash-alternative instrument comprising:

means for making payment for goods, the payment means having an initial value, the payment means being compatible with conventional card-readers; and

means for participating in a gaming activity, the participating means including an entry into the gaming activity.

16. A cash-alternative instrument comprising:

security means for enabling a holder of the cash-alternative instrument to signal occurrence of particular conditions requiring need for immediate assistance.

17. A method of transmitting funds from a first entity disposed at a first site to a second entity disposed at a second site, the method comprising:

identifying an amount of value to be transferred to an account accessible to the second entity;

advising a system driver of the transaction;

submitting payment by the first entity for the transaction; and

crediting the account of the second entity with the amount value.