Payment instrument authorization technique

Abstract

A method is provided for protecting a payment instrument in non-face-to-face transactions. The payment instrument is issued by an issuing entity and associated with an authorized instrument holder. The authorized instrument holder is subject to authentication by a trusted third party with whom the payment instrument holder has previously registered. The method includes: the authorized instrument holder communicating with the issuing entity to block, on a default basis, authorization of the payment instrument for non-face-to-face transactions unless authorized to unblock the payment instrument by the trusted third party; prior to a non-face-to-face transaction, the authorized instrument holder communicating with the trusted third party to subject him or herself to authentication and to request that the payment instrument be unblocked; and the trusted third party authenticating the authorized instrument holder, and if the authentication result is positive, communicating with the issuing entity to request unblocking of the payment instrument.

Claims

1. A method of protecting a payment instrument in non-face-to-face transactions, the payment instrument being issued by an issuing entity and associated with an authorized instrument holder, the authorized instrument holder being subject to authentication by a trusted third party with whom the payment instrument holder has previously registered, the method comprising:

the authorized instrument holder communicating with the issuing entity to block, on a default basis, authorization of the payment instrument for non-face-to-face transactions;

prior to a non-face-to-face transaction, the authorized instrument holder communicating with the trusted third party to subject him or herself to authentication and to request that the payment instrument be unblocked for non-face-to-face transactions; and

the trusted third party authenticating the authorized instrument holder, and if the authentication result is positive, communicating with the issuing entity to store the request to unblock the payment instrument for non-face-to-face transactions.

2. A method according to claim 1, wherein, the issuing entity retrieves and enforces the unblocking request from the trusted third party, and the non-face-to-face transaction is a transaction with a merchant and further comprising the step of the issuing entity forwarding a payment authorization response to the merchant in response to receipt of a request for authorization from the merchant.

3. A method according to claim 1, wherein the customer has previously blocked use of the payment instrument for non-face-to-face transactions on a default basis and the trusted third party is further adapted to receive a request from the customer to unblock use of the payment instrument for non-face-to-face transactions, the method further comprising the steps of:

using a satellite computer system, associated with the trusted third party and located in proximity to an issuing entity of the payment instrument, the satellite computer system being adapted to communicate with the issuing entity to store the unblock request for the payment instrument account for non-face-to-face transactions in response to a request from the trusted third party computer system to unblock the payment instrument for non-face-to-face transactions, the request being made by the trusted third party computer system upon successful authentication by the trusted third party computer system of the identity of the customer as an authorized user of the payment instrument.

4. A method according to claim 3, wherein the customer has previously blocked use of the payment instrument only in non-face-to-face transactions.

5. A method of protecting a payment instrument in non-face-to-face transactions, the payment instrument being issued by an issuing entity and associated with an authorized instrument holder, the authorized instrument holder being subject to authentication by an authentication function, the method comprising:

the authorized instrument holder communicating with the issuing entity to block, on a default basis, authorization of the payment instrument for non-face-to-face transactions;

prior to a non-face-to-face transaction, the authorized instrument holder communicating with an authentication function to subject him or herself to authentication and to request that the payment instrument be unblocked for non-face-to-face transactions; and

the authentication function authenticating the authorized instrument holder, and if the authentication result is positive, causing the issuing entity to store the request to unblock the payment instrument for non-face-to-face transactions.

6. A method of protecting a payment instrument used in transactions, the payment instrument being issued by an issuing entity and associated with an authorized instrument holder, the authorized instrument holder being subject to authentication by an authentication function, the method comprising:

blocking the authorization for a payment instrument, on a default basis, by the issuing entity;

communicating by the authorized instrument holder, prior to a transaction or multiple transactions, with an authentication function to subject the authorized instrument holder to authentication and to request that the payment instrument be unblocked for future payment authorizations; and

authenticating the authorized instrument holder, and if the authentication result is positive, causing the issuing entity to store the request to unblock the payment instrument for the authorization of payments for the transaction or transactions.

7. A method of claim 6 further comprising a set of conditions set by the instrument holder after successful authentication which must be met before the issuer authorizes the payment instrument for a particular transaction or series of transactions, the conditions being one or more of the following: the transactions are equal to or less than a certain amount total, either individually or collectively; the transaction(s) are in a geographic location or locations where the transaction(s) may take place; the transaction(s) take place on a date that is after a set start date and before a set end date; the transaction(s) are such that the card must be present; the transaction(s) are such that the card is not present.

8. A method of claim 6 further comprising the authorized instrument holder communicating with the authentication function through one of the following methods: by using an application program running locally on the authorized instrument holder's computer or portable computing device which communicates with the authentication function over a network or dial-up connection; by using an application program accessible through the web; by using an application program in conjunction with a storage medium in the possession of the authorized instrument holder, the storage medium storing encrypted personal information; by using the telephone to dial into an automated response system; by contacting a call center or customer service center.

9. A method of claim 6 further comprising notification to the authorized instrument holder of the current status of the payment instrument using one or more of the following means: email; voice notification through a telephone line; a short message signal sent to a pager or mobile phone; through an application program running locally on the authorized instrument holder's computer or portable computing device; through an application program accessible through the web; by contact with a call center or customer service center.

10. A method of claim 6 further comprising a means for the payment instrument holder or a merchant involved in a transaction to view the transaction details including the authorization status of the payment instrument at the time of the transaction.

Description

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention relates to systems and methods of (1) allowing the legitimate holder of a payment instrument to explicitly control the precise conditions under which a payment authorization request against that instrument may be granted or rejected by the financial institution (the instrument issuer) on behalf of the instrument holder, and (2) authenticating payments made using payment instruments, and in particular a system and method for allowing instrument issuers and merchants to ensure that a the payment instrument user is the actual and legitimate holder of that instrument.

2. Description of the Related Art

The recent expansion of commerce on the World Wide Web has added a new source of sales for many established businesses, and has provided new business opportunities for online vending even for companies without a brick and mortar presence. While the Web has provided new opportunities for sales, online shopping has also made it necessary for online merchants to find ways of providing secure methods of obtaining payment from their customers.

One such method is the use of one time use numbers. One time use credit card numbers (a.k.a. Surrogate numbers) are single use credit card account numbers that are generated by the card issuer to the cardholder at the time of an on-line transaction. The single use card number is then transmitted to the merchant by the card holder. The payment authorization/settlement is routed to the acquiring bank and the issuing bank as if it was the real number. The main disadvantages of the one time use credit card numbers are: (1) They do not prevent unauthorized use of the "real" credit card account for neither for "card present" nor "card not present" transactions. (2) They complicate and lengthen the on-line purchase process with merchant sites that require the buyer to store payment information in a merchant wallet (i.e. Amazon.com and Expedia.com). (3) They typically cannot be used for recurring transactions or "signature on file" purchases.

From the point of view of the shopper, online shopping eliminates much of the stress associated with physical shopping. Moreover, online prices are generally lower than prices offered by physical retail merchants. Shopping via the Web has been in existence for a number of years. Shopping by Mail order and Telephone order has been in existence even before the advent of Internet.

The proliferation of various online merchants necessitated the installation of various payment processes. Most of these payment processes require the input of information relating to a payment instrument, such as a credit card, charge card or debit card. Various secure techniques have been developed for securely transmitting this information to the merchant server. For example, the use of Secure Sockets Layer (SSL) protects data being sent across a network.

SmartCard (chip) based payment system architecture based on the SET and 3DSET protocol theoretically offer transmission security, user privacy, strong user authentication, non-repudiation using digital certificate/digital signature. However, these systems require massive investment to the payment processing infrastructure ($11 billion in the U.S alone) and are not expected to be widely accepted and deployed until several years.

However, once at the server, this sensitive financial data is routinely stored in database servers by the online merchants. Moreover, in certain well-publicized instances, hackers have retrieved this kind of data from online merchants servers. It is not unusual for hackers to blackmail and demand the payment of ransom money for this data. There have been cases where the hacker publishes the data when the ransom money is not paid. This has bred insecurity and fear in payment instrument owners. Online merchants also lose credibility in the eyes of their current and potential customers when this type of incident occurs.

Thus, while the Web has provided new opportunities for sales to merchants, as well as added convenience and value for purchasers, incidents such as those discussed above have also made it necessary for online merchants to find ways of providing secure methods of obtaining payment from their customers.

In addition, special considerations must be taken into account when credit cards are used in online transactions. Banks have instituted a classification of payment by card: card present and card not present. Card not present transactions usually incur a higher transaction fee. It is common practice in the United States that any transaction reported by the payment instrument owner as fraudulent is automatically "charged back" to the online Merchant. Such is also the case in Europe. However, since most Europeans use credit lines associated to their debit accounts with banks, the amounts are automatically debited from the accounts. For this reason, it is common for an unauthorized usage to be detected only after the card holder receives a monthly bank statement. In Europe, it is also more the burden of the payment instrument owner to prove the unauthorized usage of his or her payment instrument.

In view of the above, an online merchant must be concerned with receiving payment for goods purchased online. When credit cards are used to pay for a transaction, the possibility exists that someone other than the authorized user of the card is using the credit card information fraudulently makes a purchase fraudulently. This is a problem for a merchant since goods may have been shipped before the fraud is discovered and, as discussed above, the legitimate cardholder is not liable for such use over $50.00.

Another problem facing merchants is the phenomenon of cardholders placing orders and then instructing their issuing bank not to pay, claiming that the transaction was never made. In a card present, or face-to-face transaction, the merchant can display a copy of the cardholder's signature to prove that the purchase was actually made. However, in a card not present (non-face-to-face) online transactions there is no signature, thus making it easier for a cardholder to back out of a transaction.

Cardholders themselves may be concerned with unauthorized use of their credit cards in the online context. In particular, because signatures are not required in card transactions on the Web, a concern exists that their card numbers will be stolen and used for unauthorized purchases.

Thus there exists a need to provide a system and method for providing assurance to the merchant that the person attempting to make a purchase with a payment instrument is in fact the authorized user of the instrument. There also exists a need for a system and method that allows a merchant to prove that the authorized cardholder actually made the transaction. There also exists a need for a system and method for reducing the likelihood of a cardholder's issuing bank authorizing a fraudulent online transaction.

SUMMARY OF THE INVENTION

In consideration of the above deficiencies of the prior art, the present invention provides a process by which owners of payment instruments may have control over the usage of their payment instruments by giving them the ability selectively to block and unblock their payment instruments. It also provides a technique for strongly authenticating the owner of the payment instruments. In particular, there is provided a system and method for assuring that only an authorized user of a payment instrument makes online transactions. By virtue of the techniques and processes of the present invention, the security and privacy concerns of payment instrument owners as well as those of merchants are addressed.

The subject invention is a system made up of various processes that may be used to eliminate fraudulent payment transactions. The secure authorization provided by the present invention is not limited to credit/debit card accounts. This secured payment system can be used with virtual bank accounts/vault accounts, bank accounts, gift certificate accounts, loyalty/reward accounts, credit and debit card accounts.

In accordance with one aspect of the present invention, there is provided a method of protecting a payment instrument in non-face-to-face transactions, the payment instrument being issued by an issuing entity and associated with an authorized instrument holder, the authorized instrument holder being subject to authentication by a trusted third party with whom the payment instrument holder has previously registered.

The method comprises: the authorized instrument holder communicating with the issuing entity to block, on a default basis, authorization of the payment instrument for non-face-to-face transactions unless authorized to unblock the payment instrument by the trusted third party; prior to a non-face-to-face transaction, the authorized instrument holder communicating with the trusted third party to subject him or herself to authentication and to request that the payment instrument be unblocked; and the trusted third party authenticating the authorized instrument holder, and if the authentication result is positive, communicating with the issuing entity to request unblocking of the payment instrument.

In accordance with another aspect of the present invention, there is provided a system for strongly authenticating that a customer attempting to effect a payment transaction with a merchant using a payment instrument is an authorized user of the payment instrument. The system comprises: a storage medium storing encrypted personal information relating to the customer and information relating to the payment instrument; and a trusted third party computer system adapted to: (a) receive requests from the customer to use the payment instrument in a transaction; (b) decrypt the stored personal and payment instrument data; and (c) authenticate the identity of the customer as an authorized user of the payment instrument by requesting input of personal information from among the stored personal information.

In accordance with still another aspect of the present invention, there is provided a system for selectively blocking and unblocking an issuing entity from authorizing, in accordance with a result of a process of authenticating a customer as an authorized user of a payment instrument, the use of the payment instrument in a non-face-to-face transaction with a merchant server over a network. The system comprises: a storage medium storing encrypted personal information relating to the customer and information relating to the payment instrument; and a trusted third party computer system adapted to: receive requests from the customer to unblock the use of the payment instrument in a transaction the merchant server; receive the stored encrypted personal and payment instrument information from the customer; decrypt the received personal and payment instrument data; authenticate the identity of the customer as an authorized user of the payment instrument by requesting that the customer input personal information from among the stored personal information and comparing the input personal information with the stored personal information that has been decrypted; and if the identity is authenticated, communicate with the issuing entity to unblock the use of the payment instrument for the transaction with the merchant server, and communicate with the merchant server to assure the merchant server that the customer is an authorized user of the payment instrument.

In accordance with yet another aspect of the present invention, there is provided a portable memory medium operable to be read by a client terminal of a customer, the portable memory medium having encryptively stored thereon identification and payment instrument information of the customer, the client terminal having software thereon operable to cause the client terminal to initiate communication over a network with at least one merchant Web site and a central server operated by a trusted third party; the central server being operable to decrypt the identification and payment instrument information and to authenticate the customer by requiring the customer to input identifying indicia corresponding to the stored identification information; and the central server, in response to receipt of correct identifying indicia, causing to display on the client terminal a virtual wallet. The virtual wallet allowing the customer to complete payment with a payment instrument from the wallet to the merchant Web site to effect payment of goods or services from the merchant.

In accordance with another aspect of the present invention, there is provided a method for strongly authenticating that a customer attempting to effect a payment transaction with a merchant using a payment instrument is an authorized user of the payment instrument. The method comprises: storing encrypted personal information relating to the customer and information relating to the payment instrument on a storage medium; providing the storage medium to the customer; receiving requests from the customer to use the payment instrument in a transaction; decrypting the stored personal and payment instrument data; and authenticating the identity of the customer as an authorized user of the payment instrument by requesting input of personal information from among the stored personal information.

In accordance with another aspect of the present invention, there is provided a system for strongly authenticating that a customer attempting to effect a payment transaction with a merchant using a payment instrument is an authorized user of the payment instrument. The system comprises: a portable storage medium in the possession of the customer, the portable storage medium storing encrypted personal information relating to the customer and information relating to the payment instrument and which cannot be decrypted by the customer; and a trusted third party computer system adapted to: (a) receive requests from the customer to use the payment instrument in a transaction; (b) decrypt the stored personal and payment instrument data; and (c) authenticate the identity of the customer as an authorized user of the payment instrument by requesting input of personal information from among the stored personal information.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a diagram showing an exemplary network environment in which a preferred embodiment of the present invention operates;

FIG. 2 is a diagram illustrating the functionality and connectivity of a central server in accordance with a preferred embodiment of the present invention;

FIG. 3 is a flow diagram illustrating an authentication procedure in accordance with a first embodiment of the present invention;

FIGS. 3A-1-3A-4 are sample graphical user interface (GUI) screens for the wallet program of the present invention;

FIGS. 3B-1-3B-8 list code for performing a matching procedure according to a preferred embodiment of the present application; and

FIG. 4 is flow diagram illustrating an authentication procedure in accordance with a second embodiment of the present invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

"Computer" may refer to a single computer or to a system of interacting computers. Generally speaking, a computer is a combination of a hardware system, a software operating system and perhaps one or more software application programs. Examples of computers include, without limitation, IBM-type personal computers (PCs) having an operating system such as DOS, Windows, OX/2 or Linux; Macintosh computers; hardware having a JAVA-OS operating system; graphical work stations, such as Sun Microsystems and Silicon Graphics Workstations having a UNIX operating system; PalmPilots; and PilotPCs.

"Network" means a connection between any two or more computers, which permits the transmission of data. An example of a network is the Internet.

"Client/server" architecture is a network architecture in which each computer or process on the network is either a "client" or a "server". A "server" is a computer or device on a network that manages network resources and is operable to receive requests from third parties on the network and respond to those requests. A "client", typically an application that runs on a personal computer or workstation and relies on the server to perform some operations, sends requests to a server.

"Web page" means any documents written in mark-up language including, but not limited to, HTML (hypertext mark-up language) or VRML (virtual reality modeling language), dynamic HTML, XML (extended mark-up language) or related computer languages thereof, as well as to any collection of such documents reachable through one specific Internet address or at one specific Web site, or any document obtainable through a particular URL (Uniform Resource Locator).

"Web site" means at least one Web page, and preferably a plurality of Web pages, virtually connected to form a coherent group.

"Web browser" means any client software program running on a computer which can display text, graphics, or both, from Web pages on Web sites. Examples of Web browsers include, without limitation, Netscape Navigator and Microsoft Internet Explorer.

"Web server" is a server which is capable of serving at least one Web page to a Web browser.

The phrase "display a Web page" includes all actions necessary to render at least a portion of the information on the Web page available to the computer user. As such, the phrase includes, but is not limited to, the static visual display of static graphical information, the audible production of audio information, the animated visual display of animation and the visual display of video stream data.

For the present invention, a software application could be written in substantially any suitable programming language, which could easily be selected by one of ordinary skill in the art. The programming language chosen should be compatible with the computer by which the software application is executed, and in particular with the operating system of that computer. Examples of suitable programming languages include, but are not limited to, C, C++, CGI, Java and Java Scripts. Furthermore, the functions of the present invention, when described as a series of steps for a method, could be implemented as a series of software instructions for being operated by a data processor, such that the present invention could be implemented as software, firmware or hardware, or a combination thereof.

FIG. 1 is a diagram of an exemplary online environment that will be used to illustrate a preferred embodiment of the present invention as it operates, in relation to a large area network, such as the Internet, as well as dedicated network connections, between participants. Exemplary transactions according to preferred embodiments of the present invention will be illustrated in terms of the participants shown in FIG. 1. The figure also illustrates exemplary communication channels linking the various participants. In the illustrated embodiment, the user or customer 1 typically will be operating a personal computer (PC) or other workstation. Typically, the customer 1 can communicate over the Internet 5 with Web sites of merchants with which he or she wishes to do business. The figure shows an exemplary merchant Web server 10, which operates a merchant Web site. The customer's PC usually will have running thereon Web browser software, to enable the customer to download Web pages from Web sites, by, for example, sending Uniform Resource Locators (URLs), i.e., Web addresses, over the Internet 5.

The present invention provides a secure method of the customer 1 making credit, debit or charge card transactions. In the illustrated examples, the transactions to which the present invention will be applied include a communication between the customer 1 and a merchant server 10. Because of the advantageous security provisions of the invention, a credit card or other payment instrument, holder, such as customer 1, can authorize use of his or her card over the Internet, or other card not present transaction, without being concerned that an unauthorized user will make purchases with the card. Further, merchants can accept such cards as payment without being concerned that the transaction is a fraudulent one, since, for example, the merchant server 5 will receive assurance from a trusted third party that the customer is an authorized user of the card. This trusted third party (TTP) operates, in the preferred embodiments, a central Web server 15.

The preferred embodiments of the system and method of the present invention achieve the above security advantages, in accordance with one aspect of the present invention, by providing customer 1 with a portable information storage medium storing personal identifying information relating to the customer, as well as information relating to payment instruments, such as credit cards, or the like. In certain of the illustrated embodiments this information storage medium is a CD-ROM 3. The CD-ROM 3 preferably contains personal information as to the customer 1, as well as information as to selected ones of the customer's payment instruments. For convenience of use and storage, the CD-ROM 3 is preferably of a credit card shape.

The information stored on the CD-ROM 3 is encrypted, in accordance with a preferred embodiment, in a manner such that no computer system of any kind (or array of computers, local or remote) can decrypt the information off the CD-ROM 3 without: (a) knowledge of the encryption key and (b) access to highly specialized encryption hardware. Consequently, neither the payment instrument holder computer, nor any remotely connected computer system, can decrypt the information from CD-ROM 3. Advantageously, the CD-ROM 3 is preferably structured to allow the customer 1 to have information relating to several credit, charge and/or debit cards stored on the CD-ROM 3.

Issuing bank 20 is a bank that has issued one or more of the cards the information for which is stored on the CD-ROM 3. Issuing bank 20 has computer systems adapted to send and receive communications over the Internet 5, as well as over a card association network 35, such as Visanet or Bank net. Acquiring bank 30 is the merchant's bank and also operates computer systems adapted to communicate with other banks, such as the issuing bank 20, over network 35. In addition, the acquiring bank 30 is adapted to communicate over the Internet 5 with, among others, merchant server 10. Satellite server 25 is located at the issuing bank 20 and is associated with and administered by the same trusted third party that administers the central server 15. The presence of satellite server 25 adds functionality to the issuing bank 20's legacy computer system that allows the central server 15 to communicate, via the satellite server 25, with the issuing bank 20's legacy computer system with regard to selective blocking and unblocking of the use of those of customer 1's cards that were issued by issuing bank 20. Although for purposes of simplicity of explanation the figure only shows one issuing bank, it will be appreciated that other of the customer's cards to be associated with the wallet of the present invention may have other issuing banks. Those issuing banks each would be associated with their own satellite server and would function in the system of the present invention similarly to the illustrated issuing bank 20.

The CD-ROM 3 stores personal data, as well as data relating to the payment instruments selected by the customer 1. As a part of the authentication process of the present invention, the personal and payment instrument data preferably is encrypted using a known, highly secure, encryption method such as Triple DES.

Preferably, the encrypted data in the CD-ROM 3 may include, for example:

• Inventors
  Laage, Dominic P.; Laage, Maria T.;
• Assignee
  CDCK Corporation (San Francisco, CA)
• Published
  Aug-16-2005
• Current US Classes:
  705/64
  705/65
  705/66
  705/67
  705/75
  705/77
  705/78
  713/202
• Application #
  791387
• International Classes
  G06F 017/60
• Field of Search
  705/64- 713/202
• Examiner
  Trammell; James P.
• Agent
  Fitzpatrick, Cella Harper & Scinto
• US Patent References:
  5756978
  5771291
  5774546
  5878134
  5915093
  5982736
  6061799
  6094721
  6098053