WO2003079262A1

WO2003079262A1 - Reloadable debit card system and method

Info

Publication number: WO2003079262A1
Application number: PCT/US2002/007035
Authority: WO
Inventors: Adam Coyle
Original assignee: First Data Corporation A Delaware Corporation
Priority date: 2002-03-08
Filing date: 2002-03-08
Publication date: 2003-09-25
Also published as: AU2002245628A1

Abstract

A reloadable debit card system (2) and method includes an issuing institution (4) whereat a main account is set up and multiple sub-accounts are established thereunder. Each sub-account corresponds to a respective cardholder. The sub-accounts are established and debit cards (10) are printed with respective sub-account numbers prior to distributing the cards to an POS distribution network (8). The cards (10) are purchased from the POS member establishments for predetermined incremental values, resulting in credits to the sub-accounts (12) Value can be added to such cards (10) in such increments. Goods and services can be purchased with the cards (10) whereupon the sub-accounts (12) are debited. Negotiable instruments, such as money orders and the like, can optionally be purchased with the cards (10).

Description

RELOADABLE DEBIT CARD SYSTEM AND METHOD

Background of the Invention

1. Field of the Invention

The present invention relates generally to debit cards, and in particular to a non-cash, value-added, reloadable card which can be issued anonymously.

2. Description of the Prior Art

Commercial transactions typically involve transferring funds. Payments for goods and services involve transferring funds from buyers to sellers. Payments are also made on accounts. Payments can be made with cash, checks, drafts and various other negotiable instruments. Such methods all have their advantages. However, credit and debit cards enjoy ever-increasing popularity for paying on accounts and for purchasing goods and services. An important advantage of credit/debit cards relates to their security. For example, even if a card is lost or stolen, its owner is normally exposed to only limited liability, if any, for its misuse. Moreover, various security measures tend to minimize unauthorized credit/debit card usage. By verifying cardholder identities and by invoking other security measures, commercial institutions have achieved some measure of success in curbing credit/debit card fraud. Such measures notwithstanding, credit/debit card fraud and the related problem of identity theft continue to cause huge losses. Credit cards essentially provide their holders with lines of credit from issuing institutions. Thus, purchases and account payments result in credit card account balances. The cardholders are responsible for paying these balances pursuant to the terms and conditions of the credit card agreements. Debit cards, on the other hand, are used for spending funds which have been pre- deposited in cardholders' accounts. They tend to operate much like checking accounts because consumers generally cannot exceed predetermined limits based on their previous deposits with the issuing institutions. Various systems and methods have previously been proposed for providing consumers with the convenience of credit/debit cards with certain use restrictions. For example, the Levine et al. U.S. Patent No. 5,477,038 discloses a method and apparatus for distributing currency using debit cards. Special-purpose cards have also been proposed and include pre-paid telephone calling cards. An example is shown in the

Stimson et al. U.S. Patent No. 5,511,114. The Stimson et al. U.S. Patents No. 5,577,109 and No. 5,721,768 also show pre-paid (i.e., debit) cards, which are designed for general purchases.

Debit cards are also used for obtaining cash from pre-funded accounts. The Cucinotta et al. U.S. Patent No. 5,663,546 discloses an example of such a card. The cardholder can remain anonymous whereby cash transfers can be made confidentially. The global computer network ("Internet") has been utilized for loading debit cards, which can then be used for making purchases over the global computer network. An example of such a system and architecture is shown in the Davis et al. U.S. Patent No. 6,105,008.

Other types of debit cards include "gift" cards, which are typically not reloadable. Gift cards are available in variations which permit cash to be dispensed and in other variations which are restricted to purchases of goods and services. For example, Western Union offers gift cards for dispensing cash to card holders, who can remain anonymous. Heretofore there has not been available a reloadable debit card system and method for purchasing goods and services with the advantages and features of the present invention.

Summary of the Invention

In the practice of the present invention, a reloadable, non-cash dispensing debit card system is provided. The system includes an issuing institution with a main account. Multiple sub-accounts are established under the main account and are associated with respective debit cards issued by the issuing institution. The debit cards are pre-assigned sub-account numbers and incremental face values. The face values can be determined by a cardholder/purchaser within a predetermined incremental value structure allowing the face value of the card to be adjusted in predetermined increments. The cards are distributed to retail (POS) establishments for sale to cardholders/purchasers who can use them for purchasing goods and services, but not for cash redemption. Optionally, the cards can be used to purchase negotiable instruments, such as money orders. In the practice of the method of the present invention, an issuing institution establishes a main account with sub-accounts which are assigned identifying numbers associated with individual debit cards. The cards are distributed to retail (POS) merchants and sold to customers/cardholders. Goods and services are purchased with the cards, which can be reloaded with additional value in predetermined increments. Objects and Advantages of the Invention

The principal objects and advantages of the present invention include: providing a reloadable debit card system and method; providing a debit card for such a system; providing such a card which can be used anonymously; providing such a card which can be reloaded in predetermined increments; providing such a card which can be restricted to goods and services purchases; providing such a card which can be preprinted for distribution to retail (POS) establishments for resale; providing such a card which can be used for the purchase of goods and services throughout a network of subscribing merchants; providing a method of purchasing goods and services with reloadable debit cards; providing such a method wherein the cards are preprinted; providing such a method wherein the cards are reloadable in incremental value amounts; and providing a card-based purchasing system and method which are efficient in operation, secure and particularly well adapted for the proposed uses thereof.

Other objects and advantages of the present invention will become apparent from the following description, wherein are set forth exemplary embodiments thereof.

Brief Description of the Drawings

Fig. 1 is a schematic block diagram of a reloadable debit card system embodying the present invention.

Fig. 2 is a flow diagram of a reloadable debit card method embodying the present invention.

Detailed Description of the Preferred Embodiments I. Introduction and Environment As required, detailed embodiments of the present invention are disclosed herein; however, it is to be understood that the disclosed embodiments are merely exemplary of the invention, which may be embodied in various forms. Therefore, specific structural and functional details disclosed herein are not to be interpreted as limiting, but merely as a basis for the claims and as a representative basis for teaching one skilled in the art to variously employ the present invention in virtually any appropriately detailed structure. Referring to the drawings in more detail, the reference numeral 2 generally designates a system for purchasing goods and services with a reloadable (value-added) debit card 10. The system 2 includes a card-issuing institution 4. The institution 4 can comprise any suitable financial institution, such as a bank, a credit/debit card company, a credit union, etc. A host computer 6 is associated with the issuing institution 4 for supporting the system 2. A point-of-sale (POS) retail establishment network 8 comprises merchants and other entities providing goods and services which preferably subscribe to the card-acceptance program of the institution 4. By way of example, and without limitation on the generality of useful applications of the system 2, the institution 4 can comprise a major credit card company and the POS network 8 can accept the credit card as a form of payment for their respective goods and services. It will be appreciated that by aligning the system 2 with such an institution, a very large and widespread market can potentially be reached due to the widespread acceptance and usability of value-added cards 10 issued by the institution 2.

FIG. 1 shows two POS retail establishment networks 8, which can comprise retail merchants respectively issuing the card 10 and conducting a sales transaction with the card holder 11. However, the same POS retail establishments 8 can conduct both activities, i.e., card 10 sales and merchandise sales. Moreover, as noted above, the number of retail establishments in the network 8 is virtually unlimited and all of them can conduct transactions in both cards 10 and merchandise.

The cards 10 can be preprinted by the institution 4 for distribution to the POS network 8 for sales to individual consumers 12 who thereby become holders of sub- accounts 12. The sub-accounts 12 are established under a main account 14 maintained by the institution 4 and represent an aggregate of the sub-accounts 12 in a particular system 2. Each card 10 is imprinted with a sub-account identifier 18, such as a number or combination of alpha and/or numeric characters or digits, which are associated with a respective sub-account 12. The printed identifier 18 can be selectively covered by a concealing strip 20, which can be in place, for example, prior to purchase and removed by the sub-account holder 11 prior to use. In this manner security can be provided whereby the identifier 18 is kept confidential.

Each card 10 is also equipped with a magnetic strip 22 for recording the identifier 18 which can be detected by a magnetic card reader 24 associated with a POS establishment 8. The card reader 24 is connected to a POS computer terminal 26, which is linked (e.g. hardwired, via internet, wirelessly, etc.) to the institution host computer 6. Transactions can thus be submitted essentially instantaneously to the institution 4 for approval or rejection, depending upon the account balance in the sub-account 12. Security is provided for the system 2 by employing several procedures. Firstly, the use of the card 10 can be limited to payment for goods and/or services, which can broadly include negotiable instruments such as money orders, cashiers checks, travelers checks, etc., made payable to the sub-account holder. By preventing the use of the card 10 to directly acquire cash, the cards 10 are less inviting for theft, misuse, etc. The concealed identifier 18 also provides security, and the card 10 can be imprinted with a suitable legend 28 suggesting that the identifier 18 be kept confidential and that the card not be accepted with a pre-exposed identifier 18, which might indicate that security for the card 10 had been compromised. Still further, the POS establishment 8 can require the use of a magnetic card reader 24 for insuring that the card 10 must physically be present for a transaction to be conducted. Still further, a PIN could be assigned to each sub-account 12, which PIN would not appear on the card 10 but would be known to the sub-account holder 11 for verification of his or her card ownership and hence authorization to conclude the transaction.

II. VALUE-ADDED CARD TRANSACTION METHOD Fig. 2 is a flow chart depicting an exemplary debit or value-added card transaction method embodying the present invention. The method commences at start 100 and proceeds to an establish main account by card-issuing institution step 102. The main account is configured with multiple sub-accounts established at 104 and each sub- account 12 is assigned an account number at 106. Incremental face values for the cards 10 are determined at 107. For example, the cards 10 can have predetermined incremental face values of $5, $10, etc. Cards 10 are printed with their sub-account numbers at 108. The cards 10 can optionally be provided with magnetic strips 22 at decision block 110 which, if answered affirmatively, results in the cards 10 being encoded with their sub-account numbers at 111. If the cards do not have magnetic strips 22 (negative branch from decision block 110), or after the sub-account numbers are encoded at 111, the method proceeds to distributing the cards 10 to merchant (POS) establishments 8 at 112.

The cards 10 can be pre-distributed to the POS network at 112 for inventorying same. The card sales occur at 114 whereupon the sub-accounts 12 are credited at 116 and the POS establishment collects the card fees representing the card values plus the transaction fees at 117. Procedures for implementing the method can be simplified by providing the added value in predetermined increments, such as $5, $10, $20, etc., as indicated by the determine incremental face value step 107. The sub-account holder purchases goods and/or services (i.e., at any POS establishment subscribing to the POS network 8) with the card 10 at 118 whereupon the sub-account number is input at 120. It will be appreciated that the account number input step 130 can be accomplished in various ways. For example, the account number could be read by a magnetic card reader from the magnetic strip. Alternatively, the account number could be input with a keypad or numeric keyboard. Still further, the account number could be input remotely, e.g., by telephone or by global computer network (Internet). Purchase authorization is requested by the POS member establishment 8 at 122 by transmitting the sub-account number and the requested amount (i.e., price) to the issuing institution 4 at 124. If a magnetic strip 22 is present on the card 10, as determined at decision block 126, the card 10 is swiped by a magnetic card reader 22 at 128. If the decision at 126 is negative, or after swiping the card at 128, a "Sufficient Funds?" decision box 130 is reached. If affirmative, the transaction is authorized at 132 and the method proceeds to an end block 134. If the sub-account balance is insufficient to cover the transaction and any fees associated therewith (negative branch from "Sufficient Funds?" decision block 130), the method proceeds to a "Reload Card?" decision block at 136. The affirmative branch from the decision block 136 leads to the credit sub-account step at 114. Otherwise (negative branch from "Reload Card?" decision block 136) the method proceeds to the end block 134. It will be appreciated that the card 10 can be utilized indefinitely by simply adding to its incremental value as needed at 116. Optionally, the affirmative branch from a "Purchase Negotiable Instrument?" decision block 138 provides for payment of all or part of the entire value of the card (after deducting transaction fees). Payment can be made in the form of a negotiable instrument, such as a money order, cashiers check, etc. made payable to the sub-account holder 11. The sub-account holder 11 can present the negotiable instrument for cashing same. Such a negotiable instrument purchase can be handled like any other goods or services purchase with the card 10. The negative branch from the "Purchase Negotiable Instrument?" decision block 138 leads to the end block 140.

From a reading of the description above pertaining to the disclosed embodiments of the present invention, modifications and variations thereto may become apparent to those skilled in the art. Other alternatives and variations may also become apparent to those of ordinary skill in the art upon a close examination of this specification in view of the drawings. It should be appreciated that many features and aspects of the present invention were described above by way of example only and are therefore not intended to be interpreted as required or essential elements of the invention. Any elements of the invention that are required or essential would have been explicitly indicated to be so, for example by describing that the element "must" be included. Therefore, the scope of the present invention is to be limited only by the following appended claims.

Claims

CLAIMSWhat is claimed and desired to be secured by Letters Patent is as follows:

1. A stored- value card system, which comprises: a card issuing institution; a point-of-sale retail establishment authorized by the issuing institution to sell the cards; a card identifier associated with each card and assigned thereto by the issuing institution; a reloadable value associated with each card and representing a purchase price thereof, the purchase price being received by the point-of-sale establishment and credited to the card by the issuing institution; a sub-account associated with each card and identified by the card identifier; and said card being usable for purchases by presenting said card at a point-of-sale establishment whereby said sub-account is debited.

2. The system according to claim 1 wherein said cards can be used to purchase negotiable instruments from point-of-sale establishments.

3. The system according to claim 2 wherein said cards can be used to acquire money orders from point-of-sale establishments.

4. The system according to claim 1 wherein said cards are limited to usage for purchases.

5. The system according to claim 1 wherein said card values are not redeemable for cash.

6. The system according to claim 1 wherein each card includes: the card identifier being printed on the card and selectively concealed by a removable concealing strip attached to the card.

7. The system according to claim 1 which includes: a magnetic strip on each card, the card identifier being encoded on the magnetic strip.

8. The system according to claim 1 which includes: a reader at a point-of-sale retail establishment for reading the card identifiers and thereby verifying the sub-account balances.

9. The system according to claim 1 which includes: a network comprising multiple point-of-sale establishments which accept said card for the purchase of goods and services.

10. A method of purchasing goods and services in transactions utilizing value-added cards, which method comprises the steps of: establishing a master account for value-added cards at a card-issuing institution; establishing a plurality of sub-accounts of said master account at said institution; preprinting a plurality of value-added cards; issuing said cards to a point-of-sale retail establishment; pre-assigning sub-account identifiers to said cards; selling the cards at the point-of-sale establishment to retail customers/sub-account holders; crediting the sub-accounts associated with said cards with initial values corresponding to the purchase amounts thereof; making purchases with said cards by providing the cards to merchants; and debiting the respective sub-accounts in the amounts of said purchases.

11. The method of claim 10, which includes the additional step of reloading said cards by purchasing additional values therefor in the form of credits to said sub-accounts.

12. The method according to claim 11, wherein said initial values and said subsequent added values correspond to incremental amounts predetermined by said issuing institution.

13. The method according to claim 10, which includes the additional step of issuing a negotiable instrument to a sub-account holder and debiting the corresponding sub- account a comparable amount.

14. The method of claim 13, which includes the additional step of the sub-account holder purchasing a money order with the card.

15. The method according to claim 10, which includes the additional step of providing a numerical identifier for said sub-account.

16. The method of claim 10, which includes the additional steps of: concealing the identifier prior to purchase of a respective card; and revealing the identifier by the sub-account holder after purchase of a respective card.

17. The method of claim 10, which includes the additional steps of: transmitting to the issuing institution a transaction authorization request, including an amount of the transaction and a respective sub-account identifier; and authorizing the transaction if sufficient funds are available in the sub-account.

18. The method of claim 11 , which includes the additional steps of: providing a computer terminal at the point-of-sale establishment; and providing a computer terminal at the card-issuing institution linked to the point- of-sale computer terminal.

19. The method of claim 10, which includes the additional steps of: providing magnetic strips on said cards; encoding the identifiers on the magnetic strips; providing magnetic card readers at the point-of-sale establishments; reading the identifiers at the point-of-sale establishments with the card readers from the magnetic strips; and transmitting the identifiers from the point-of-sale establishments to the card- issuing institution.

20. A method of purchasing goods and services in transactions utilizing value-added cards, which method comprises the steps of: establishing a master account for value-added cards at a card-issuing institution; establishing a plurality of sub-accounts of said master account at said institution; preprinting a plurality of value-added cards; issuing said cards to a point-of-sale retail establishment; pre-assigning sub-account identifiers to said cards; selling the cards at the point-of-sale establishment to retail customers/sub-account holders; crediting the sub-accounts associated with said cards with initial values corresponding to the purchase amounts thereof; making purchases with said cards by providing the cards to merchants; debiting the respective sub-accounts in the amounts of said purchases; reloading said cards by purchasing additional values therefor in the form of credits to said sub-accounts; said initial values and said subsequent added values corresponding to incremental amounts predetermined by said issuing institution; issuing negotiable instruments to sub-account holders and debiting the corresponding sub-accounts comparable amounts; providing a numerical identifier for each said sub-account;

concealing the identifiers prior to purchase of the respective cards; revealing the identifiers by the subaccount holders after purchases of respective cards; transmitting to the issuing institution transaction authorization requests, including amounts of the transactions and respective sub-account identifiers; determining if sufficient funds are available in the respective sub-accounts; authorizing the transactions if sufficient funds are available in the sub-accounts; providing reload options for the card holders in the event insufficient funds are available in the sub-accounts; providing computer terminals at the point-of-sale establishments; providing a computer terminal at the card-issuing institution linked to the point- of-sale computer terminals; providing magnetic strips on said cards; including the identifiers on the magnetic strips; providing magnetic card readers at the point-of-sale establishments; and reading the identifiers from the magnetic strips at the point-of-sale establishments with the card readers.