|Title of Invention||
"SYSTEM FOR ELECTRONIC PAYMENT VALIDATION USING TRANSACTION AUTHORISATION TOKENS"
|Abstract||An account holder initiates a transaction by providing a vendor both account information as well as a specific Transaction Authorization Token (TAT) that was previously stored in a Token Log. The vendor passes the account information and TAT with the transaction information to an institution responsible for authorizing one or more transactions involving the financial account. That institution determines whether or not to authorize the transaction by consulting the Token Log entry for the given TAT.|
|Full Text||The present invention relates to a system for electronic payment validation using transaction authorization tokens.
The present invention relates generally to payment systems. More specifically, the present invention relates to a system and method for authorizing electronic transactions.
Background of the Invention
Increasingly, the majority of financial transactions in the developed world are being made electronically. Electronic transactions have many advantages over non-electronic transactions, such as greater efficiency. However, electronic transactions also introduce new opportunities for fraud.
When hard currency is stolen it is physically stolen. However, with electronic transactions, thieves need to obtain little more than the victim's account number in order to have access to the funds. This area of thievery fits within the realm of so-called "identity theft," where the thief acts as though he or she were the account holder in electronically accessing the funds belonging to the account holder.
One form of protection has been written signatures, which are not always required, particularly with online transactions. Another form of protection is Personal Identification Numbers (PINs), which can also be stolen almost as easily as account numbers.
Summary of the Invention
The present invention provides a system and method for preventing identity theft and other forms of fraud with respect to financial transactions. When a person initiates a financial transaction, he or she simultaneously initiates authorization of that transaction by creating and/or accessing a Transaction Authorization Token (TAT). The TAT is a symbol that is stored in a Token Log (also referred to herein as a Token Action Log). The Token Log also contains conditions for transactions associated with specific TAT entries. The Token Log is accessible by, for example, the financial institution holding the account on which the financial
transaction will be based, either by direct access or by polling the device or system that stores the Token Log.
At the time of the transaction, the account holder provides the vendor (typically a product seller or service provider) with the account number and with a selected TAT. The vendor communicates that information to the financial institution in order to authorize the transaction. The financial institution determines whether to authorize the transaction by checking the transaction information against conditions recorded in the Token Log for the given TAT.
In one embodiment, the financial institution checks for a valid TAT by "polling" the account holder's communication device, e.g., sending an inquiry message and expecting a reply. In such an embodiment, the TAT may be stored in a Transaction Log on the account holder's communication device. The polling inquiry message may include an indication of transaction details, such as the transaction amount, the vendor's name, etc.
The communication device may then check those details against parameters stored with the TAT in the Token Log. For example, a TAT may only be valid for transactions less than a particular monetary amount. The communication device may respond to the polling inquiry with an indication that the transaction is either authorized or not authorized. The communication device may also note that the particular TAT has been accessed, and, if specified as single-use, that the particular TAT can no longer be used to authorize transactions. Other TATs may be designated to be able to authorize a specific number of transactions, or even an infinite number of transactions.
In another embodiment, the TAT can be transmitted to the financial institution prior to or shortly after the transaction is initiated. The TAT might be accompanied by parameters that specify conditions of the transaction (e.g., maximum dollar amount, pattern match for the vendor's name, etc.). The financial institution then uses that TAT and accompanying parameters to verify the transaction. In this case, the TAT might be temporarily stored by the financial institution.
In yet another embodiment, the TAT can be stored at a location separate from either the account holder's communication device or the financial institution's computer systems. In this embodiment, the financial institution would check for a
valid TAT by polling this third-party organization's computer system similar to the polling method described above.
When a token is checked against the conditions recorded in the Token Log, the system may also initiate other actions that are configured in the system. For example, the Token Log entry for the given token might contain information about the nature of the transactions, i.e., that it was for a business expense and perhaps even the category of the expense (lodging, meals, etc.)- If the token designates a business expense, the system may be configured to automatically notify the company that a business expense of a given category has been incurred. This could simplify the process of tracking business expenses, since employees would designate the nature of the expense at the time the given token is stored in the Token Log.
In general, the Token Log may contain information in addition to the token and the corresponding transaction conditions, which additional information might be used in other activities pertaining to the transaction besides simply authorizing the transaction.
Another example is an account holder who desires to be notified when a given transaction is checked against the Token Log entry. He or she may record information in the Token Log indicating that an email message is to be sent to a given address when a transaction is validated by the given token. The Token Log entry may contain information that initiates action some time after the time that the given transaction is checked against the entry. For example, if a Token Log entry contains information about the category of the transaction (e.g., business-related, tax deductible, food, etc.), the financial institution could use that information to later provide categorically-organized statements to the account holder.
The general concept is that token entries in a Token Log, besides being associated with conditions for given transactions, may also contain information about other actions besides simply authorizing transactions. It is for this reason that a Token Log may be also be called a Token Action Log, containing tokens and corresponding action information.
One aspect of this invention is that it may require, with possible exceptions, that the account holder authorize the transaction through a communication channel that is distinct from the transaction interaction with the
vendor. The financial institution may thus require, with possible exceptions, that a
walid TAT entry in a Token Log be consulted before a given transaction is fully
The possible exceptions to requiring a valid TAT to authorize transactions
allow for the cases where, for instance, communication between the account holder's
communication device and the financial institution is not practical or possible, and
the financial institution or third-party Token Log administrator does not already have
a TAT for the transaction.
As an example, the communication device might be embodied as a cell
phone, and the account holder might want to conduct a financial transaction at a
location outside of the cell phone's calling area. In such cases, exceptions to
requiring TAT authorization can be pre-arranged between the account holder and the
As a further example, a pre-arranged exception might specify that up to
three transactions totaling less than $500 may be processed without validation from
a TAT. In one embodiment, the financial institution's or third-party's Token Log may
previously store a token and conditions specifically designated for transactions that
do not otherwise accompany a token.
Alternatively, the out-of-communication account holder might give a
merchant a TAT that was previously stored in the Token Log at the financial
institution or third-party Token Log administrator. In this way, the account holder
does not need to be in communication with the keeper of the Token Log at the time
of the transaction, but can simply recall the TAT that was previously stored. The
account holder might keep one or more previously stored TATs on his or her person
for such instances, such as in a portable electronic device, on a piece of paper, or in
his or her mind.
Additional aspects of the present invention will be apparent from the
following detailed description of preferred embodiments, which proceeds with
reference to the accompanying drawings.
Brief Description of the Drawings FIG. 1 is a block diagram of components of a system in accordance with an embodiment of the invention;
FIG. 2 is a basic flowchart of how transaction authorization tokens (TATs) are used to authorize transactions;
FIG. 3 is a block diagram of a configuration of a Token Log. FIG. 4 shows an application of the TAT system using an account holder's cell phone to create tokens; FIG. 5 is a continuation of FIG. 4 that illustrates an attempted fraud.
Detailed Description In the following description, well-known structures, materials, or operations are not shown or not described in detail to avoid obscuring aspects of the invention. Furthermore, the described features, structures, or characteristics may be combined in any suitable manner in one or more embodiments.
FIG. 1 shows a block diagram of a system in accordance with an embodiment of the invention. In one embodiment, an account holder system 102 includes a token creation and editing module 104, which is, in turn, controlled by a user interface 106. As used herein, the term "account holder" may also refer to a user authorized by the account holder.
When the user initiates the creation or editing of a token or token settings, a token log access module 108 stores the token and settings in a Token Log 110. In FIG. 1, the Token Log 110 is shown separate from the account holder system 102, the vendor system 114, and the financial institution system 122. In other embodiments, however, the Token Log 110 may be either part of the account holder system 102, part of the financial institution system 122, or part of a third-party system. Throughout this disclosure, the term "financial institution" may refer to an entity designated by a financial institution to authorize transactions on its behalf. When the user specifies that a token should be issued, a token issuance module 112 retrieves a token as appropriate via the token access module 108. In some instances, the user will request the issuance of a token that is not already in the Token Log, in which case the token will be both created and issued.
As illustrated, the token issuance module 112 may present the token to be
issued via the user interface 106, so that the user can pass the token to the vendor's
user interface 116. However, in another embodiment, the token issuance module
112 may interface directly with the vendor system 114, and thereby pass the specific
TAT for the given transaction without user interaction.
When the vendor receives a token and accompanying account number
information, it is entered, in one embodiment, via the vendor's user interface 116.
That information is then combined with other transaction information, such as the
transaction amount. The transaction authorization request module 118
communicates that information to the financial institution's system 122.
When the financial institution receives the transaction information (and
TAT) via a communication interface 120, it is processed by a transaction
authorization module 124, with the purpose of determining whether the transaction
should be authorized. The transaction authorization module 124 accomplishes this
by having a token log access module 126 look up conditions and actions associated
with the token in the Token Log 110. The transaction authorization module 124 uses
that information to determine whether or not the transaction should be authorized.
That determination is communicated via the communication interface 120 back to the
vendor's transaction authorization response module 130, which has the responsibility
of informing the vendor 116 of the outcome.
In some embodiments, the financial institution's transaction authorization
module also initiates other actions associated with the given token by use of an
action processing module 128. Examples of such actions are provided above and
include notifying the account holder or some other entity that the token has been
used to authorize or reject a given transaction.
FIG. 2 is a basic flowchart of how TATs can be used to authorize financial
transactions and prevent fraud. The diagram is broken down into three areas of
action: account holder actions 202, vendor actions 204, and financial institution
actions 206. The actual Token Log 208 is shown separate from these action areas,
since in different embodiments the Token Log may reside with the account holder,
with the financial institution, or with some third-party.
The account holder starts his or her actions 202 by creating a token and
corresponding financial transaction conditions which are then stored in a Token Log
until the time they are used to authorize a transaction. The token may be created
and stored days or months before a transaction, moments before a transaction, or during a transaction. This undefined time lag is represented by the dashed line to the step in which the account holder provides the account information and a token to a vendor. The account information generally includes the account type and the account number. The account number might be a credit card number, a debit card number, etc.
The vendor actions 204 continue with the vendor receiving the account information and token from the account holder, and forwarding it with transaction information to the financial institution. Transaction information may include the amount of the transaction and the vendor's identification. In one embodiment, the financial institution is a credit card processor.
A primary action of the financial institution 206 is to authorize or not authorize the transaction, as appropriate. The financial institution determines if the transaction is appropriate by consulting the Token Log according to the given token. For the given token, the Token Log indicates any conditions that are required for transactions accompanying that token. Example conditions include the following:
• The monetary amount of the transaction cannot be greater than a specified amount.
• The date of the transaction has to be before or after a given date.
• The transaction must be at least a specified number of days from a prior transaction or event.
• The vendor's name must match a specific pattern.
• The token could not have been used to authorize more than a specified number of prior transactions.
The conditions recorded in the Token Log are typically determined by the account holder. However, in other embodiments the conditions might be specified by the financial institution or be specified as defaults within the Token Log. The financial institution consults the Token Log either by direct access to the Token Log or by polling the system that controls the Token Log. Either way, the objective is for the financial institution to determine whether the transaction is authorized. If it is authorized, the financial institution may notify the vendor, so that the vendor may proceed with the transaction. If the transaction is not authorized, the
financial institution may also notify the vendor of such so that the transaction may be
FIG.3 shows a block diagram of a configuration of a Token Log. The
Token Log 302 may be embodied as a data structure that associates tokens with
relevant information. For example, a Token Log entry 304 includes a token 306 that
is the arbitrary symbol "2945." Note that the specific format of tokens is not
restricted in this invention, and they could contain digits, alphabetic characters, or
other symbols. An advantage of using numerical digits is that they can be entered in
the numeric keypads that many vendors already use for authorizing credit card
The example token entry 304 also includes information about the
conditions 308 required of a transaction to be authorized. In this example, the
transaction amount is limited to no more than 50 dollars, the vendor's name must
start with the letter "b," the token will only authorize transactions before 15-Oct-2003,
it will only authorize at most one transaction, etc.
The example token entry 304 also includes information about other actions
310 that are to be performed at the time the given token is used to authorize a
transaction. The inclusion of other actions is why Token Logs are also called "Token
Action Logs." Moreover,the entry may include meta data 312, which is other
information pertaining to the token, such as the number of transactions it has been
used to authorize, the categories of those transactions, etc. Beneath the example
entry 304 are three other entries, illustrating that multiple tokens and corresponding
information are recorded in a Token Log 302.
FIG. 4 shows one embodiment of the TAT system in which the account is
a credit card account and the account holder uses his or her cell phone to create and
store tokens. Note that tokens could be just as easily created on a computer or
some other device. For this example, the account holder creates the token at the
time of the transaction. Alternatively, the account holder could use a token that was
previously created and stored in the Token Log.
The steps for the FIG. 4 example are numbered within each block of the
diagram, and are described as follows:
• Step 1: The account holder orders his meal.
• Step 2: The restaurant employee indicates the price ($3.39).
• Step 3: The account holder creates a TAT using his cell phone by using a software function of the phone. Techniques for programming a cell phone are known in the art. Note that the account holder could use a previously created token or create a new token just for this transaction. In this example, he or she creates a new token and specifies conditions: one use on or before 3-Mar-03 with a $5 limit from a vendor whose name starts with the letter "B." In this example, the cell phone software comes up with the token (e.g., "1593") as an arbitrary sequence of four digits. Of course, any number of digits or other type of code may be used within the scope of the invention.
• Step 4: The cell phone stores the TAT in the Token Log, which may be kept in the cell phone or may be kept at a remote location (e.g., central server). There are various means for sending the token to a remote location, one of which is to send it as part of a specially formatted text message (e.g., via SMS) to the keeper of the Token Log. The message might be formatted as XML or as some other structure. Regardless, the TAT is stored in a Token Log, which is organized using any suitable data structure.
• Step 5: The cell phone displays the TAT for the account holder so that he or she can pass it to the vendor.
• Step 6: The account holder gives the credit card to the vendor with the created TAT.
• Step 7: The restaurant employee runs ("swipes") the card through the merchant card reader and types in the given TAT.
• Step 8: The card reader transfers the information to the credit card processing organization, which is the "financial institution" for this scenario. The transferred information includes the vendor's name and/or identifier, the credit card number, the transaction amount, and the given TAT. Although not illustrated as such in the figure, this information may be formatted in XML or some other structured format.
• Step 9: The credit card processing organization checks the TAT against
the information in the Token Log. If the Token Log is stored in the account
holder's cell phone, then the card processor might poll that phone by
sending a short-text message to the account holder's cell phone that triggers the cell phone to automatically check the Token Log conditions. Such a message could alternatively be sent to a third party responsible for keeping the Token Log. If the Token Log is kept by the card processor, then the card processor's computer system can directly check the specific token conditions in the Token Log.
• Step 10: Since this example shows a legitimate transaction that meets the
token conditions, the card processor can report back to the vendor (to the
restaurant's card device) that the transaction is authorized. The restaurant
employee can then complete the transaction, and serve the burger and
fries. When systems are functioning properly, the entire authentication
process may take a few seconds or less.
FIG. 5 continues the example of FIG. 4 in the situation wherein the restaurant employee attempts to fraudulently use the account holder's credit card to purchase a big-screen television from an online vendor. Steps of this scenario are as follows:
• Step 1: The employee gets the account holder's credit card number from
the account holder who used it at the restaurant. The employee realizes
_that this card requires TATs for authorization, so simultaneously gets the TAT that was created for the restaurant transaction.
• Step 2: The employee locates a television vendor on the Internet.
• Step 3: The employee selects a top-of-the-line plasma TV to purchase.
• Step 4: The online TV vendor website reports a price of $9999.
• Step 5: The employee navigates to the check-out portion of the website and enters the stolen credit card number and TAT.
• Step 6: The vendor computer automatically transmits the appropriate transaction information to the credit card processor for authorization. Step 7 illustrates an example of that information, although in actual application the information may be formatted in XML or some other structured format.
• Step 8: The credit card processor checks the token and transaction information against the Token Log, such as by one of the methods described in the description of FIG. 4. In this case, the transaction information does not match up to the conditions of the token. The token
has already been used to authorize one transaction, and it was previously set to only authorize one transaction. Further, the amount exceeds the limit of $5, and the vendor's name does not start with the letter "B." • Step 9: Since the transaction conditions are not met, the card processor notifies the TV vendor that the transaction is not authorized, so that the TV vendor can cancel the transaction and not ship the television to the employee.
Note that the example described in FIGs. 4 and 5 shows simply one embodiment of the invention. This invention does not limit the embodiments to using cell phones or computers as the devices to create and/or transmit tokens. Nor does the invention limit the means or location with which the tokens are stored in the Token Log, nor how the Token Log is checked for a given token accompanying a given transaction. Those skilled in the art will see that there are many methods and data structures that can be used for these functions.
Based on the foregoing, the present invention offers numerous advantages not found in conventional approaches. For instance, the present invention protects account holders from identity theft and unauthorized use of account funds. If a dishonest person steals the account holder's account number, it would be useless without also having the ability to produce valid tokens that are in the Token Log. If tokens are generated by, for example, the account holder's cell phone then it may appear that stealing the account number and the cell phone could result in identity theft and unauthorized use of account funds. The solution is to require the user of the cell phone enter a special code before tokens are generated or accessed. The person stealing the cell phone would not have that code, and thus would not be able to produce TATs.
The invention also protects financial institutions who usually assume some liability for transactions involving stolen account information. Further, it protects vendors who can be liable for charge-back of transactions involving fraud. An additional advantage to vendors can occur by improving the opportunity to have non-repudiation of transactions. For example, if an online vendor ships a product to a customer who pays online with a credit card, that customer might later dispute the transaction with the credit card processor, claiming that he never ordered the product, and that someone must have stolen his credit
card number. However, the vendor may have required that such transactions can only be paid for online with a TAT that allows a non-repudiation condition. That way, checking the Token Log includes checking that the transaction cannot be reversed by the customer without the vendor's approval.
1. A system for electronic validation using transaction authorization
a token creator (101) to enter and store one or more tokens;
a token log (110) to associate specific tokens with specific conditions under
which specific financial transactions will be valid; and
a token access (108) sub-system to make one or more tokens available to an
account holder for distribution to one or more vendors involved in
transactions pertaining to an account of the account holder, wherein each
vendor is to provide a specific token, an indication of the account, and
information about a transaction to an institution responsible for authorizing
one or more transactions involving the account, which institution authorizes
each vendor to complete each vendor's transaction responsive to the specific
conditions associated with each specific token in the token log being
a communication interface (120) for receiving a token, an indication of an
account, and information about a transaction from a vendor;
a transaction authorization module (124) for checking whether at least one
condition associated with the token in the token log is satisfied;
wherein the communication interface (120) is to notify the vendor that the
transaction is authorized responsive to the at least one condition being
2. The system as claimed in claim 1, wherein the indication of an account is one of a credit card number, a debit card number, an online payment number, a merchant account number, and a bank account number.
3. The system as claimed in claim 1, wherein the token log (110) comprises a data structure that associates specific tokens with one or more specific transaction conditions.
4. The system as claimed in claim 1, wherein the specific conditions having a maximum monetary amount for one or more specific transactions.
5. The system as claimed in claim 1, wherein the specific conditions having a pattern to match a name of the vendor for one or more specific transactions.
6. The system as claimed in claim 1, wherein the specific conditions having a time-frame in which one or more specific transactions are to be completed.
7. The system as claimed in claim 1, wherein the specific conditions having a number of times a specific token may be used to authorize transactions.
8. The system as claimed in claim 1, wherein the specific conditions having a minimum time interval between uses of a specific token to authorize transactions.
9. The system as claimed in claim 1, wherein the specific conditions having the existence of a specific token in the token log.
|Indian Patent Application Number||591/DELNP/2005|
|PG Journal Number||41/2010|
|Date of Filing||16-Feb-2005|
|Name of Patentee||SCOTT SAMSPSON|
|Applicant Address||652 SOUTH 250 WEST OREM, UTAH 84058, USA|
|PCT International Classification Number||G06Q 20/00|
|PCT International Application Number||PCT/US2003/030496|
|PCT International Filing date||2003-09-29|