CA2236118A1

CA2236118A1 - Computerized payment system for purchasing goods and services on the internet

Info

Publication number: CA2236118A1
Application number: CA002236118A
Authority: CA
Inventors: Marshall T. Rose; Darren New; Lee H. Stein; Einar Stefferud; Carlyn M. Lowery; Nathaniel S. Borenstein
Original assignee: Individual
Current assignee: MessageMedia Inc
Priority date: 1995-11-01
Filing date: 1996-10-30
Publication date: 1997-05-09
Also published as: AU7551596A; JP3970324B2; EP0858697A1; JP3970868B2; US5757917A; JP2004295919A; AU720433B2; JP3970869B2; JPH11514763A; EP0858697A4; JP2004295920A; WO1997016897A1

Abstract

A method and system for use on a quasi-public network, such as the Internet, to enable users of the network to conduct commercial transactions involving a payment of funds by one user to another user of the network. The method includes operating a computer system for sending and receiving messages from users over the network. Upon receiving a message over the network from a qualified user-seller, a message is sent over the network to the user-buyer that was identified in the message from the user-seller. The message to the user-buyer requests confirmation of a transaction identified in the message received from the user-seller. Upon receiving a confirmation over the network from the user-buyer, payment information is sent by secure channels off the network to an agent of the user-seller. The user-seller's agent may be a separate entity or the function of the user-seller's agent may be performed by the transaction enabling system. Upon receipt of an authorization code from the seller's agent, the authorization code is encrypted and sent to the user-seller over the network.

Description

-W O97/16897 PCT~US96/17556 4 REFERENCE TO RELATE~ APPLICATION
5This application is related to copending 6application Serial No. 08/308,101, filed September 16, 7 1994, the entire disclosure of which is hereby 8 incorporated by reference herein.

10The present invention relates to a system for ll enabling payment for goods and services over a quasi-12 public network, and more particularly, the present 13 invention relates to a payment system that can be used to 14 enable an Internet user to initiate a payment to another Internet user for goods or services over the Internet.
16The Internet has emerged as a large community 17 of electronically-connected users located around the 18 world who readily and regularly exchange significant 19 amounts of information. The Internet continues to serve its original purposes of providing for access and 21 exchange of information among government agencies, 22 laboratories, and universities for research and 23 education. In addition, the Internet has evolved to 24 serve a variety of interests and forums that extend beyond its original goals.
26The Internet has been considered as a potential 27 new marketplace for various types of products, including 28 goods and services. Using the Internet as a marketplace 29 has many advantages. Although the Internet presently has the capability to serve as a marketplace for goods and 1 services, use of the Internet for this purpose has been 32 slow to develop. One reason for this lack of development 33 is that it is difficult to pay for goods or services 34 using the Internet. An Internet user cannot send cash or a check via the Internet. Sending a check via physical 1 delivery services is slow and sending a credit card 2 number over the Internet poses security problems.

3 In the aforementioned patent application, 4 Serial No. 08/308,101, there was disclosed a payment system that enabled payment on a quasi-public system, 6 such as the Internet. The payment system described in 7 the referenced application is useful for enabling payment 8 for a variety of products and services, especially for g information products that can be delivered electronically over the network without physical packaging. Information 11 products include software, stories, cartoons, recipes, 12 etc.
13 The aforementioned payment system has proven 14 successful. However, there continues to be a need for a payment system for users of the Internet who have 16 products to vend. Such products include goods and 17 services that could be as diverse as clothing, computer 18 hardware, technical support and advice, groceries, 19 educational courses and training, etc. These types of goods and services are not necessarily capable of being 21 transmitted electronically over the network. Such 22 products may also include information products, as 23 described above. Since the Internet provides a medium 24 for users who have all these types of products to sell to reach users who have an interest in purchasing these 26 types of products, it would be advantageous if a system 27 were available for willing users to enter into 28 transactions with other users for the purchase of these 29 goods and services.
Accordingly, there is a need for a system that 31 enables users of the Internet to enter into commercial 32 transactions for goods and services.

34 According to a first embodiment of the present invention, there are provided a method and payment system 36 for use on a quasi-public network, such as the Internet, -WO97/16897 PCT~S96/17556 1 to enable users of the network to conduct commercial 2 transactions involving a payment of funds by one user to 3 another user of the network. The embodiment includes 4 operation of a computer system for sending and receiving messages from users over the network. Upon receiving a message over the network from a qualified user-seller, a 7 message is sent over the network to the user-buyer that 8 was identified in the message from the user-seller. The g message to the user-buyer requests confirmation of a transaction identified in the message received ~rom the 11 user-seller. Upon receiving a confirmation over the 2 network from the user-buyer, payment information is sent 13 by secure channels off the network to an agent of the 14 user-seller. Upon receipt of an authorization code from the seller's agent, the authorization code is 16 cryptographically signed and sent to the user-seller over 17 the network.

19 Figure 1 is a block diagram illustrating a payment system according to a first embodiment of the 21 present invention.
22 Figure 2 is a block diagram of a hardware 23 configuration for the payment system of Figure 1.
24 Figure 3 is a block diagram of the program arrangement of the payment system of Figure 1.
26 Figure 4A is a diagram of the data fields for a 2~ buyer's cardholder account for use with the payment 28 system of Figure 1.
29 Figure 4B is a diagram of the data fields for a seller's account for use with the payment system of 31 Figure 1.
32 Figure 5 is a flow chart showing message flow 33 for an payment request using the payment system of 34 Figure 1.
Figures 6A-6F are diagrams of data messageS
36 used in connection with the payment system of Figure 1.

NO~-2~-1997 14:5~ ~RINKCA''no2236ll8 l998-04-29 3123214299 P.Z4 ~ r ~ /_ lPEA/i~s 2 4 NO
1 Figure 7 i8 a flow chart showing the message flow 2 ~or a payment query and a payment response using ehe 3 payment system o~ Figure l.
4 Figure 8 is a flow chart showing the message ~low i using the payment sy~tem of Figure l for communication 6 with the seller's agent.
Figure 9 is a ~low chart showing the message ~low 8 for sending an encrypted authorization code to the 9 seller using the payment system of Figure l.
D~TATr~n D~C~TP~ION OF T~ PR~ n EMBODIM~TS
~1 I. ovER~T~r SYST~
12 ~igure l shows a block diagram o~ a first embodiment 13 o~ the present invention for a payment system l0. The 14 payment sy~tem l0 is shown in relation to the Internet network 12. The Internet network 12 i8 a large, quasi-16 public network having many users 14. The Internet 17 network 12 3s of a type that the users 14 can access by 18 various means such as dedicated coTnrn~ni cation links or 19. con~entional commercial telephone systems. ~he Internet ~0 network 12 provides numerous services ~or its users such ~1 as e-mail, FTP, and the World Wide Web (www)~ Although 22 the payment system l0 i~ specifically use~ul for the 23 Internet, it may be used in con~unction with other 24 network ~y~tems having a plurality o~ users that can commlln;cate with each other by e-mail.
26 In the e~bodiment of Figure 1, one o~ the users 27 14 (designa~ed as a buyer 20) wishes to acguire goods 28 or services 26 ~rom another o~ the users (designated 29 as a seller 28). The seller 28 may be any user with a product or service to vend. The goods or serv~ces may 31 include anything that can be sold ~or value, such as 32 clothing, appliances, computers, automobiles, 33 technical advice, consulting, and so on. The goods or 34 ser~ices may also include in~ormation products thar can be trans~'erred electronically over a network, such 36 ~ as the Incernet.

;i?Jr~3nF~3F~--WO97/16897 PCT~S96/1755~

1 The seller 28 wishes to sell goods or services 2 26 to the buyer 20 at a price. The price may be an 3 advertised price (e.g. advertised over the Internet, on a 4 bulletin board, or other media), or may be a negotiated price (e.g. negotiated via message or e-mail exchange - over the Internet). Although the example of Figure 1 7 describes one seller 28 and one buyer 20, the payment 8 system 10 is understood to extend to include multiple g buyers of one seller, multiple sellers to one buyer, and lo multiple sellers and multiple buyers. Also, a buyer or a 11 seller may be an individual, a company, or an 12 institution.
13 Also shown in Figure 1 is a financial 14 transaction settlement system 30. The financial transaction settlement system 30 represents presently-16 available commercial institutions that process credit and 17 other financial transactions. For example, the financial 18 transaction settlement system 30 may represent 19 commercially available credit card processing institutions (e.g. Visa, Master Card, Discover, and so 21 on). The financial transaction settlement system 30 22 includes two components: an issuer 32 and an acquirer 34.
23 The issuer 32 includes banks, or other institutions, that 24 issue credit cards to persons, send statements and bills to credit card holders on a regular basis, and collect 26 payment from the credit card holders. These functions 27 are not performed on the Internet but use conventional 28 mail delivery, authorized direct withdrawals from bank 29 accounts, etc.
The payment system 10 of the present embodiment 31 utilizes these commercially available issuers 32 to bill 32 users and to collect payment from users for their 33 transactions on the Internet 12 using the payment system 34 10. For example, a user's transactions that are initiated using the payment system 10 would show up on 36 the user's credit card statement as a charge from the 37 seller 28.

NOU-Z4-1997 15:0~ ~RINKcA 02236il8 igg8-04-29 3123214299 P.01 ' ~ 7 ~;
- ' ~pr~ls ?4N~Y
1 As mentioned above, the financial transaction settlement 2 system 30 also include~ the acquirer comron~nt 34 This acquirer 3 component 34 includes banks or other institutions that provide 4 merchant account~ ~or entities that want to receive payment for the sale of goods or services. These merchant accoun~s are 6 similar or identical to the conventional merchant accounts thac 7 are provided to businesses. As mentioned below, the acquirer 34 8 processes the user charge~ received from the payment system lO
9 and passes this information to the issuer component 32 for the preparation and ~ending of monthly statement~ and bills to users 11 and collecting payment from users.
1~ The payment system lO includes two distinct parts or 13 systems: an above-the-line system 40 and a below-the-line system 14 42. The above-the-line system 40 and the below-the-line system lS 42 are separated by a ~line" or "firewalll~ 44. The line 44 16 isolates the above-the-line ~y~tem 40 from the below-the-line . 17 system 42. The above-the-line system 40 relates to the computer 18 hardware and software on the non-secure side o~ the firewall 44 19 and the below-the-line system 42 relates to the computer hardware and software on the secure side of the firewall 44. The line 44 21 permits limice~ comm~lr~;cation betwQen che above-the-line system ~2 40 and the below-the-line system 42 but prevents unauchorized 23 acces~ to che below-the-line syYtem 42 through the above-the-line 24 system 40. The llne 44 provides security for the information contained on the below-the-llne system 42 and prevents hackers on 26 the Internet from entering the below-the-line system 42 via the 2~ above-the-line system 40.
28 Figure 2 is a ~lock diagram illu~trating one possible 29 configuration o~ hardware C~' ~ on~nts used to im~lement the payment sys~am lO of Figure l. The above-the-line ~ystem 40 31 includes an above-the-line (or "front end") computer 50 and the 32 below-the-line system 42 includes a below-the-line (or ~back 33 end~t) computer 52. The above-the-line computer 50 and the below-31 the-line compucer 52 are connected ~ogether via a private net~ork 53 In a preferred embodiment, the private network i~ an 36 3thernet network. The above-the-line computer 50 .J~1tti CA 02236ll8 l998-04-29 -WO97/16897 PCT~S96/17556 1 includes an above-the-line system board 54 associated 2 with an above-the-line memory 56, a storage device 58 3 such as a fixed disk drive, a back up tape drive 60, a 4 removable media drive 62, a monitor 64, and a power supply 66. The above-the-line computer 50 is connected 6 to the Internet 12 by means of a leased T1 line 69.
7 The below-the-line computer 52 includes a 8 below-the-line computer system board 68 associated with a g below-the-line computer memory 70, a below-the-line lo computer storage device 72 such as a ~ixed disk drive, a 11 back up tape drive 74, a removable media drive 76, a 12 monitor 78, and a power supply 80. The below-the-line 13 computer 52 is connected to the above-the-line computer 14 50 by means of Ethernet cable. The below-the--line computer 52 also has a Novell LAN 81 that provides a 16 secure communication link apart from the Internet.
17 Both the above-the-line computer 50 and the 18 below-the-line computer 52 in this embodiment are 19 preferably commercially available Sun Microsystems SS1000 computers. Pre~erably, both the above-the-line computer 21 50 and the below-the-line computer 52 are equipped with 22 64 MB memory. As mentioned above, the dedicated private 23 network is an Ethernet and includes a SBus host adaptor.
24 The communication server is a Sun Microsystems SPARCserver 1000. Both the above-the-line monitor 64 and 26 the below--the--line monitor 78 are commercially available 27 Sun 17 inch monitors. The above-the-line and below-the-28 line tape drives are Python 5GB tape drives using 4mm 29 tape available ~rom Sony, Inc. The above-the-line disk drive 58 and the below-the--line disk drive 72 are 31 commercially available Seagate 1.7GB disk drives. The 32 host adaptor is a Sun Microsystems SBus host adaptor.
~ 33 The network server is a commercially available Sun 34 Microsystems SSarray 101. The above--the--line and below--the-line computers 50 and 52 may be similar or identical 36 to the front end and back end computers that are -W097/16897 PCT~S96/17556 1 described in the aforementioned related patent 2 application Ser. No. 08/308,101.
3 Referring to Figure 3, the above-the-line 4 computer 50 runs an above-the-line program 90. The above-the-line program 90 is a software program that 6 provides for communication with users 14 on the Internet 7 12. Specifically, the above-the-line program 90 includes 8 modules that can be accessed and used by Internet users 9 who are buyers 20 and Internet users who are sellers 28.
lo The below-the-line computer 52 runs a below-11 the-line program 92. The above-the-line program 90 12 communicates with the below-the-line program 92 via the 13 private network 53. Thus, the above-the-line program 90 4 is physically separate and isolated from the below-the-line program 92. The below-the-line program 92 receives 16 information from and sends information to the above-the-line program 90 by means of batch processing. This comprises, in part, the firewall or line 44 and results 19 in an inherently safe method of communicating between the publicly accessible part of the payment system, i.e. the 21 above-the-line system 40, and the secure part of the 22 payment system, i.e. the below-the-line system 42.
23 To access the above-the-line program 90 over 24 the Internet, users 14 who are buyers may use a user interface software program 118 that can be run on their 26 own computers for interactive access, or alternatively, 27 users 14 may access the payment system 90 via 28 conventional e-mail programs, for store-and-forward 29 access. Similarly, users who are sellers 28 may access the above-the-line program 90 over the Internet, by 31 running an interface software program 119 on their own 32 computers for interactive access, or alternatively, may 33 access the payment system 10 via conventional e-mail 34 program. Programs 90, 118, and 119 may be written in any suitable programming language, such as Tcl or C. The 36 software modules are capable of being used with the UNIX

-1 operating system, DOS, and may be ported to various other 2 operating systems.

3 II. ESTABLISHING BUYERS AND SELLERS ACCOUNTS
4 In order ~or a user of the Internet to use the payment system 10 for transactions as a buyer, the user 6 obtains a subscriber (or cardholder) account 100 with the 7 payment system 10. The buyer's cardholder account may be 8 similar or identical to the cardholder account described 9 in the related patent application. In order for a user of the Internet to use the payment system 10 for 11 transactions as a seller, the user obtains a seller's 12 account 200 with the payment system 10. Each user may 13 arrange with the payment system 10 individually to set up 14 appropriate accounts, or alternatively, a bank may make arrangements with the payment system 10 to provide 16 appropriate accounts to a large number of the bank's 17 customers, such as its credit card customers, as a 18 enhancement or a promotion. The characteristics of the 19 buyer's and seller's accounts are set forth as follows:

A. The buyers' accounts 21 Referring to Figure 4A, there is depicted a 22 representation of the data in a buyer's cardholder 23 account 100. The buyer's cardholder account 100 includes 24 the following information: a cardnumber 102, the cardholder's name 103, the cardholder's Internet e-mail 26 address 104, a state 106, and a pay-in selection 108.
27 These items are explained below. In addition, the 28 cardholder account 100 may include additional 29 information, such as a pay-out selection and a currency pre~erence 112, as disclosed in the aforementioned patent ~ 31 application.
32 The cardnumber 102 uniquely identifies the cardholder account 100. The cardnumber 102 is an 34 alphanumeric string that is easily typed and read by a human. Also, the cardnumber 102 is relatively hard to W O 97/16897 PCT~US96/17556 1 guess and bears no deducible relationship to any 2 financial artifact, such as a credit cardnumber, 3 a checking account number, nor to any e-mail address.
4 The cardholder's name 103 is the cardholder's actual name, businèss name, or an alias.
6 The cardholder Internet e-mail address 104 is 7 the e-mail address of the cardholder that is unique for 8 each user of the Internet.
g The state 106 is one of "active", "suspended", or "invalid."
11 The pay-in selection 108 is how the cardholder 12 transfers funds, i.e. makes payment, for use with the 13 payment system 10. Typically, this may be done by using 14 a conventional authorization to charge a credit card.
The pay-in selection is not encoded in nor directly 16 derivable from the cardnumber.
17 Users of the Internet who wish to use the 18 payment system 10 for the purchase of goods or services 19 over the Internet may obtain cardholder or subscriber accounts as described in the aforementioned patent 21 application, or by making an application to First Virtual 22 at its web site.

23 B. The sellers' accounts 24 Users of the Internet who wish to use the payment system 10 as sellers need to be qualified.
26 Sellers are qualified by establishing a relationship with 27 an acquiring bank 34 that underwrites the seller 28 for 28 credit worthiness and that provides the seller 28 with a 29 merchant account. As shown in Figure 1, an acquiring bank 34 is part of the settlement system 30.
31 Establishing a merchant account enables the seller 28 to 32 act as a merchant and accept credit cards (or credit card 33 numbers) for payment for goods and services.
34 Referring to Figure 1, when a user becomes qualified as a seller, the user also establishes a 36 relationship with a seller's agent 115. The seller's -W O 97/16897 PCT~US96/175~6 1 agent 115 is a bank card processor that interacts with 2 the credit card bureaus 117 such as Visa, Master Card, 3 etc., that are part of the settlement system 30 The 4 seller's agent 115 performs the functions of credit card authorizations and chargebacks. Companies that are now 6 performing these services include EDS and FDR. For 7 example, in a conventional credit card transaction at an 8 retail outlet, after a customer presents a credit card g for payment, the clerk passes the card through a card lo reader that makes a call to a bank card processing l1 company for authorization. The call ~rom the card reader 12 identifies the card number and the amount of sale. If 13 the credit card is valid and the amount is within the 14 credit limits of the card, the seller's agent 117 responds with an authorization code. In the context of 16 the present embodiment of the payment system, it is 17 intended that sellers' agents 115 will perform similar 18 functions as they do now with respect to conventional 19 credit card transactions. There may be many seller's agents associated with different sellers, or many of the 21 sellers may use the same agent. In an alternative 22 embodiment, the payment system 10 may perform the 23 function of seller's agent.
24 As mentioned above, a user of the Internet who wishes to use the payment system 10 to obtain payment for 26 transactions as a seller of goods or services obtains a 27 seller's account 200 with the payment system 10.
28 Referring to Figure 4B, the seller's account 200 includes 29 the following data: a seller's account cardnumber 202, the seller's name 203, the seller's Internet e-mail 31 address 204, and a state 206. These data are similar to 32 the data in the buyer's cardholder account 100. The ~33 seller's account 200 includes at least one additional 34 item of data that is not included in the buyer's cardholder account, that is, the seller's account 200 36 includes a seller's agent number 219. In addition, the 37 seller's account may include other information.

CA 02236ll8 l998-04-29 WO 97/16897 PCTnJS96/17556 l Referring again to Figure 3, the buyer 2 cardholder account and seller account information is 3 distributed in the payment system 10. Only a portion of 4 the buyer cardholder account and seller account information resides in the above-the--line system 40 where 6 it is accessible by the above-the-line program 90.
7 However, full copies of all the buyers' cardholder and 8 sellers' account information reside on the below-the-line g system 42 where it is accessible by the below-the-line I0 program 92. Specifically, the parts of the subscriber ll and seller account information that reside on the above-12 the-line computer 50 are located in one or more data 13 files 91 stored on the above-the-line computer storage 14 device 58. The subscriber and seller account information that resides on the below-the--line computer 52 is located 16 in one or more data files 114 stored on the below--the--17 line computer storage device 72. The above-the-line 18 program 90 operates with the database file 91 that is.
19 stored on the above-the-line storage 58 and the below-the--line program 92 operates with the database file 114 21 located on the below-the-line storage 72.
22 The items of information in the buyer 23 cardholder account located in the file 91 on the above-24 the-line computer 50 include the subscriber account number 102, the cardholder's name 103, the Internet 26 e-mail address information 104, and the state 106.
27 However, the above-the-line computer 50 does not contain 28 any of the pay-in 108 information, such as credit card 29 information, etc., associated with the buyer-subscriber.
Credit card or other payment information is located only 31 in the data file 114 located on the storage device 72 of 32 the below-the--line system 42. Similarly, the items of 33 information in the seller's account 200 located on the 34 above-the--line system 40 include the seller's account number 202, the seller's name 203, the seller's Internet 36 e-mail address information 204, and the state 206 of the 37 seller's account. However, the above-the-line system 40 W097/16897 PCT~S96/17556 1 does not contain the seller's agent number 219. This 2 information is located only in the data file 114 on the 3 storage device 72 of below-the-line computer 52.
,, 4 III. METHODS OF OPERATION OF THE PAYMENT SYSTEM
As mentioned above, the payment system 10 6 provides users of the Internet with a means for 7 initiating a payment transaction, and in particular, a 8 means for payment for goods or services.
g It is assumed for purposes of the operation of lo the embodiment described herein that the Internet user 11 who wants to make a payment has already established a 12 buyer's cardholder account with the payment system, as 13 described above. Further, it is assumed that the 14 Internet user who wants to receive payments has established a seller's account with the payment system, 16 as described above.
Referring to Figure 5, an Internet user (i.e.
18 the buyer 20) becomes aware of goods or services that the 19 seller 28 has to vend. This may occur in many different ways. For example, the buyer 20 may be searching on the 21 Internet for a seller of the particular product or 22 service. Alternatively, the buyer 20 may be "browsing"
23 and happen upon the seller's page. Also, the seller 28 24 may send messages to a class of Internet users to inform them of the goods or services that it has to sell. The 26 buyer 20 may be aware of the seller 28 via advertising, 27 on the Internet or other media, through others, from a 28 bulletin board, from a product warehouse on the Internet, 29 or any other means.
The buyer 20 becomes interested in the goods or 31 services that the seller 28 has to vend and then the 32 buyer 20 may contact the seller 28 by sending a message 33 to the seller's Internet address or by an interactive 34 protocol, e.g. the World Wide Web, FTP, etc. The means to contact the seller, e.g. the seller's e-mail address 36 or Web site address, may be included in advertising, etc.

-W097/16897 PCT~S96/17556 1 The buyer 20 and the seller 28 may par=take in an exchange 2 of messages 107 over the Internet before the buyer 20 3 decides to purchase the goods or services from the seller 4 28. For example, the buyer 20 may send massages to the s seller 28 to inquire about product availability, 6 specifications, options, support, etc. The seller 28 may 7 respond with appropriate messages over the Internet in 8 reply to the buyer's inquiries. Also, the buyer and g seller may exchange messages to negotiate a price for the lo goods or services. In addition, if the goods or services 11 that the seller wants to sell are of a type that require 12 a physical delivery, the buyer and seller may make 13 appropriate arrangements for such delivery by message 14 exchange over the Internet.
When the buyer 20 decides to buy the goods or 16 services, the buyer 20 informs the seller 28 of the 17 buyer's cardnumber 102 by providing an appropriate 18 message 128 over the Internet 12. The information 19 included in the buyer's message 128 is represented in Figure 6A. The message 128 may take the form of an 21 e--mail message over the Internet 12 that includes the 22 buyer's cardnumber, or alternatively, the buyer 20 may 23 inform the seller of its cardnumber 102 by means of 24 interactive protocols, or by including the cardnumber in a username in a file transferred from the buyer 20 to the 26 seller 28 using the Internet 12, or by other means.
27 Referring again to Figure 5, upon receiving the 28 buyer's message 128 that includes the buyer's cardnumber 29 102, the seller 28 sends an payment-request message 129 to the payment system 10 via the Internet 12.
31 Specifically, the seller 28 sends the payment--request 32 message 129 to the above-the-line program 90 on the 33 above--the--line system 40. The payment-request message 34 129 may be sent by either e--mail or by using an interactive protocol on the Internet 12.
36 Referring to Figure 6B, the payment-request 37 message 129 contains the following information: the = = = ~ :
CA 02236ll8 l998-04-29 -WO 97/16897 PcTAJs96/l7556 1 buyer's cardnumber 102, the seller's cardnumber 202, a 2 textual description 232 of the transaction, an amount 3 234, a merchant's transaction-identifier 236, and any 4 physical delivery 237 information for the purchase.
After receiving the payment-request message 129, the above-the-line program 90 ascertains whether the 7 payment-request message 129 is from a qualified seller 8 28. This is performed by the above-the-line program 90 g by checking the database file 91 on the above-the-line lo system 40. Upon confirmation that the payment-request 11 message 129 is from a qualified seller, the payment 12 system 10 generates a message to ask the buyer 20 whether 13 the buyer 20 wishes to authorize payment for the 14 transaction to the seller 28. Specifically, as shown in Figure 7, the above-the-line program 90 generates 16 an payment-query message 140 to be sent to the buyer 20 17 over the Internet.
18 As shown in Figure 6C, the payment-query 19 message 140 contains the following data: a transaction-identifier 142, the buyer's name 103, the seller's name 21 203, the textual description of the transaction 232, and 22 an amount 235. The transaction-identifier 142 is a 23 number or code uniquely-generated by the above-the-line 24 program 90. Using the information contained in the payment-request message 129 from the seller 28, 26 specifically the buyer's cardnumber 102 and the seller's 27 cardnumber 202, the above-the-line program 90 looks up 28 the buyer's name 103 and the seller's name 203. In the 29 payment-query message 140, the buyer's name 103 and the seller's name 203 are used instead of the buyer's 31 cardnumber 102 and the seller's cardnumber 102 in order 32 to minimize transmission of the cardnumber information 33 over the Internet thereby improving security of the 34 system. The amount 235 sent to the buyer may differ from in the transaction amount 234 received from the seller to 36 account for any currency exchange rates or service 37 charges imposed by the payment system 10.

CA 02236ll8 l998-04-29 W O97/16897 PCT~US96/17556 1 After generating the payment-~uery message 140, 2 the above-the-line system 40 sends the payment-query 3 message 140 to the buyer's e-mail address and waits for 4 a response from the buyer 20. The payment-query message 140 requests the buyer 20 to respond with one of three 6 possible replies: "yes", "no", or "fraud." Thus, there 7 are four possible alternatives that can occur in response 8 to the payment-query message 140, taking into account the g three permitted responses by the buyer and the possibility of no reply.

1l 1. No reply from Buyer 12 If there is no reply from the buyer 20 to the 13 payment-query message 140 after a period of time, the above-the-line system 40 will send the payment-query message 140 again, i.e. a second notice. The above-the-16 line system 40 may send the payment-query message 140 to 17 the buyer 20 several times until a response from the 18 buyer 20 is obtained. If more than a certain number of 19 days elapses, or more than a certain number of payment-query messages 140 are outstanding to the buyer 20, and 21 the above-the-line system 40 does not receive an 22 appropriate response from the buyer 20, as indicated 23 below, then the above-the-line system 40 causes the 24 buyer's cardholder account lO0 to become suspended. This is done by changing the buyer's cardholder state 106 from 26 "active" to "suspended." The buyer's account 100 may be 27 reinstated later if an appropriate response is received 28 and/or the number of outstanding payment-query messages 29 140 for the buyer 20 drops to less than a certain threshold. Upon reinstatement, the buyer's account 100 31 is returned to an "active" state. Further, any 32 outstanding payment-query messages 140 may be sent again 33 some time later.

CA 02236ll8 l998-04-29 W0 97/l6897 PCT~S96/17556 1 2. Buyer responds "no"
2 Referring to Figure 7, in response to the 3 payment-query message 140, the buyer 20 may respond by 4 sending a payment-response message 150 to the above-the-line system 40 via the Internet 12. As illustrated in 6 Figure 6D, the payment-response message 150 contains the 7 following data: the payment system generated 8 transaction-identifier 142 and an indication 152 of the g buyer's willingness to allow transfer of funds. The 10 willingness indication 152 is one of "yes", "no", or 11 "fraud."
12 The structure of the payment-query message 140 13 facilitates preparation of the payment-response message 14 150 by the buyer 20. In the payment-query message 140, 15 the transaction-identifier 142 is placed in the "subject"
16 of the payment-query message 140 and the e-mail address 17 to which the buyer's payment-response message 150 should 18 be sent (e.g. "response@card.com") is placed in the 19 "sender's address" of the payment-query message 140.
20 Many conventional e-mail programs in use on the Internet, 21 including many older programs, have a feature that will 22 automatically read the "subject" and "sender's address"
23 of a received message and format a reply message directed 24 to the sender's address with the same "subject" as the 25 received message. If the buyer 20 uses this common 26 feature to send his payment-response message 150 back to 27 the payment system 10, the only information that the 28 buyer 20 will have to add is the willingness indication 29 152 which is only a one word or one letter reply, (i.e., 30 "yes", "no", or "fraud", or "Y", "N", or "F").
31 If the buyer 20 replies "no" in the willingness 32 indicator 152, the above-the-line system 40 sends a 33 payment-result 160 to the seller 28 with a "no"
34 indication 152. The format of a payment-result message 35 160 is shown in Figure 6E. A payment-result message 160 36 contains the following information: the transaction-37 identifier 142, the seller's name 203, the buyer's name . = =

-l 103, the textual description of the transaction 232, the 2 amount 235, the negative indication 152 of the buyer's 3 willingness to allow transfer of funds, and the seller's 4 transaction-identifier 236 if present in the originating payment--request message 129. Optionally, the original 6 transaction amount 234 may also be included. When a 7 buyer declines to authorize payment, a service charge may 8 be generated to the buyer 20 by the payment system.
g Information regarding the buyer's "no" reply in the payment-response 150 is delivered from the above-the-ll line program 90 to the below-the-line program 92 where a 12 service charge may be added to a settlement queue for the 13 buyer 20, as discussed in the related application.
4 Further, if a "no" indication is received more than a certain number of times in a certain number of 16 transactions over a certain time period, then the state 17 106 of buyer's account 100 may become "suspended" This 18 is to prevent a user from making a practice of ordering 19 products without authorizing payment ~or them. If the buyer's account state 106 becomes suspended, this 21 information is also transmitted by batch processing from 22 the above-the-line program 90 to the below-the-line 23 program 92 so that the cardholder account information on 24 the below-the-line computer 52 conforms to that on the above-the-line computer 50.

26 3. Buyer res~onds "fraud"
27 Referring again to Figure 7, if the buyer 20 28 responds to the payment-query message 140 by sending a 29 payment-response message 150 to the above-the-line computer 50 via the Internet 12 that indicates "fraud" in 31 the willingness indication 152, the payment system 10 32 changes the state 106 of the buyer's cardholder account 33 100 to "invalid." A response of "fraud" indicates that 34 the buyer 20 did not request the goods or services from the seller 28. The information that the buyer 20 36 responded "fraud" to the willingness indication 152 is NU-J--~4--lYY~ aL bKlNi<cA~uor2236ll8 1998-04-29 ~L~ lC ~ r ,~
S 24N()V 19 I transmitted by batch processing ~rom the above-the-line 2 program 90 to the below-the-line program 92 so that the 3 cardholder account in~ormation on the below-the-line 4 computer 52 conforms to that on the above-the-line computer sO. If the buyer Z0 responds "~raudll, an appropriate 6 message ~s sent to seller 28.

8 4. Buy-r responds ~y-s~
9 I~, in response to the payment-query message 140, the buyer 20 responds by sending a payment-re~ponse message 150 Il to the above-the-line system 40 via the ~nternet 12 that l2 indicates "yes" in the willingness indication 152, the 13 above-the-line program 90 ~ransfers the transaction 14 in~ormation, by batch processing, to the below-the-lino system 52. The in~ormation co~njcated ~rom the above-the-16 line system 50 to the below-the-line system 52 include~ the , _ 17 buyer~s cardnumber 102, the seller's cardnumber 202, a l8 transaction number 142, the amount of the tr~nsaction 235, 19 and any phy~ical delivery in~or~ation for the purchase.
2Q When the below-the-line aystem 52 receive~ the Zl in~ormation ~rom the above-the-line system 50, it a sociates 22 the identi~ed buyer's cardnumber 102 with the buyer's 23 payment in~ormation. This in~ormation is stored in the data 24 file 11~ on the below-the-line storage 72 as shown in Figure 2. The below-the-line ~ystem 42 al~o associates the 26 seller's account number 202 with the sellerls agent number 27 219 which is al~o stored on the below-the-line system 28 storage 72.
29 Next, referring to Figure 8, the below-the-line ~ystem 42 communicate~ with the seller's agent 115 associated with 31 the seller's agent number 219. The com~ln;cation 250 to the 32 seller~ agent 115 identifies the seller 203, the 33 transaction amount 235, the buyer's payment information 34 (such as the buyer'~ credit card number), and any physical ,~ delivery in~ormation ~or the purchase. The communication ~6 250 to the seller~s agent A!~lrNDF .. m.~'' CA 02236ll8 l998-04-29 -WO97/16897 PCT~S96/17556 1 115 is performed off the Internet on secure communication 2 channels. The communication 250 requests whether the 3 seller's agent 115 will authorize a charge of the 4 indicated amount 235 to the buyer's credit card.
If the seller's agent 115 indicates that it 6 will approve the charge, it sends an authorization code 7 260 to the below-the--line system 40. Upon receipt of the 8 authorization code 260, the below-the-line program 92 g generates a cryptographic signature for the authorization lo code 260. In a preferred embodiment, public key 11 cryptography is used, such as programs available from 12 RSA, or PGP. For purposes of security, it is very 13 desirable to ensure the authenticity of the sender of the 14 authorization code. Accordingly, public key cryptography is used to authenticate the sender's message (in this 16 case, the message of the payment system lO) and is not 17 necessarily used to prevent someone else from reading the 18 authorization code.
19 The signed authorization code 262 is batch processed across the line 44 from the below-the-line 21 system 42 to the above-the-line system 40. Referring to 22 Figure 9, upon receipt of the encrypted authorization 23 code 262 from the below-the-line system 42, the above-24 the--line system 40 prepares and sends a payment--notification 264 to seller 28. The payment-notification 26 264 may be a plain text e--mail message that includes the 27 seller's transaction identifier 236 and the 28 cryptographically signed authorization code 262. The 29 information included in the payment-notification message 264 is represented in Figure 6F. Upon receipt of the 31 payment--notification 264, the seller 28 can authenticate 32 the authorization code 260 using the public key of the 33 payment system used by the encryption program on the 34 below--the--line system 42. Upon verification of the authenticity of the message 264, the seller 28 can 36 proceed to deliver the goods or services to the buyer 20 37 using whatever arrangements had been previously made.

CA 02236ll8 l998-04-29 -WO97/16897 PCT~S96/17556 l Further processing of the charges to the 2 buyer's credit card account and credits to the seller~s 3 merchant account are conducted by the conventional 4 settlement system 30 off the Internet using secure communications channels. This isolates the buyer--seller activity which occurs on the Internet from the financial 7 and credit activity which occurs off the Internet.
8 If the seller's agent 115 accepts the buyer's g card, the charge is processed in the conventional way in the credit card system 30 to post the charge to the ll buyer's credit card in the usual manner by sending the 12 appropriate information to the buyer's credit card issuer 13 32. The buyer's credit card issuer 32 sends the buyer 20 14 a credit card bill, typically via the postal system. The credit card bill lists the charge 235 as an item on the 16 user's credit card bill. The settlement system 30 also 17 arranges to make a payment to the seller 28. This may be 18 a transfer from the acquirer--bank 34 to the seller's bank l9 for direct deposit to the seller's checking account.
If the seller's agent 115 refuses to accept the 21 buyer's credit card number, e.g. the credit card is lost, 22 stolen, canceled, expired, or the transaction amount 23 exceeds the card's limit, etc., the seller's agent does 24 not send an authorization code back to the below--the--line system 42. Instead, the seller's agent may send a code 26 indicating refusal of the buyer's card. This information 27 is similarly batch processed to the above--the--line system 28 42 and an appropriate message is sent to the seller 28 29 indicating the lack of authorization. The seller 28 may then refuse to deliver the goods or services to the buyer 31 20, or re~uest another card number.
32 The description previously set forth explains 33 how the payment system can process a charge to the user 34 using the conventional, commercially available credit card system. There may be various modifications of the 36 previously described arrangement that may be utilized.
37 For example, the issuer bank 32 may process a debit to a ~ ~OU-2~-1997 15:01 T~RINKcA~no2236ll8 ~998-04-29 3123214299 P.03 Ua~S ~ ~ ~ i 7 5 ,~ ~
24 ~Y
1 bank account o~ the buyer 20 instead o~ sending a credit card ~ bill. Alternately, the iRsuer bank 32 may send the buyer a bill 3 (other than a credit card bill) for the accumulated charges.
4 As mentioned above, the function of the seller's agent S may be per~ormed by the payment system instead o~ a 6 separate entity. According to this alternative, instead o~
7 communicating the information about the transaction (i e.
8 the seller, che transaction amount, the buyer's credit card 9 nuT,nber, physical delivery information, etc.) to a separate party designated by the seller a~ its agent who in turn 11 replies whether it will approve the transaction, the 12 payment syatem can perform this ~unction itaelr. I~ this 13 ~unction is performed by the payment Cystem~ it is L4 performed either on the below-the-line system or on an another entirely separate, secure sy~tem. Like a separate 16 seller's agent, the payment Cystem would comm1~n~cate with 17 the appropriate credit card services to determine whether 18 to authorize the transaction in the amount identified in 19 the co~m~nication from the above-the-line sy~~em. The payment system would then per~orm the seller's agent's 21 ~unction of generating an Authorization code. Then, as in 22 the above-described embodiment having separate seller's 23 agents, the payment system would generate a 24 cryptographically-signed message including the authorization code, send the message to the above-che-line 26 system, and send the cryptographically-signed message to 27 the seller over the Internet.

29 The payment syatem described above is particularly advaneageous ~or u~e on networka that do not have a 31 centralized management authority, such as the Ineernet.
32 Other such sy~tems include FIDOnet and W CP/Usenet, 33 although it is recognized that these systems are considered 34 by some to be part o~ or associated with the Internet. The ,5 payment system described above could also ~,~..- 3 -W097/16897 PCT~S96/17556 l be used on future versions, generations, etc., of the 2 Internet. The payment system could also be used on 3 centrally managed computer systems, such as America 4 Online, Prodigy, etc.
The payment system described above enables 6 Internet users to initiate commercial transactions to buy 7 and sell goods or services over a quasi-public network, 8 such as the Internet, regardless of where the users are g located or where the payment system is located. Either the buyer or the seller may be located in the U.S. or ll outside the U.S. Also, some or all of the payment system 12 components, such as the above-the-line system or the 13 below-the-line system, may be located either in the U.S.
14 or outside the U.S.
The foregoing detailed description should be 16 regarded as illustrative rather than limiting and the 17 appended claims including all equivalents are intended to 18 define the scope of the invention.

Claims

WE CLAIM:

1. A method for enabling a seller and a buyer communicating over a quasi-public network to initiate a commercial transaction involving a payment of funds by the buyer to the seller, said method comprising the steps of:
on a computer system coupled to said quasi-public network, receiving a message over the quasi-public network from the seller, the seller's message identifying the buyer and a transaction;
from said computer system coupled to said network, sending a message over the quasi-public network to the identified buyer, said message to the buyer identifying the transaction;
on said computer system coupled to said quasi-public network, receiving a message over the quasi-public network from the identified buyer, said buyer's message indicating acceptance or refusal of the transaction;
if the buyer's message indicates approval of the transaction, from a secure part of said computer system, communicating to an agent of the seller via a secure communication channel information for permitting the buyer to pay for transaction;
on said secure part of said computer system, receiving an authorization code from the seller's agent via said secure communication channels; and from said computer system coupled to said quasi-public network, sending a cryptographically-signed message including the authorization code to the seller via the quasi-public network.

2. The method of claim 1 further comprising the step of :
connecting a computer system to the quasi-public network, said computer system having a means for sending and receiving messages.

3. The method of claim 1 in which the cryptographically-signed message utilizes public key cryptography.

4. The method of claim 1 further comprising the steps of:
on said secure part of said computer system, cryptographically-encoding the authorization code; and from said computer system coupled to said network, attaching said cryptographically-encoded authorization code to the message to the seller.

5. The method of claim 1 in which the message received over the quasi-public network from a qualified seller is an e-mail message.

6. The method of claim 1 in which the message sent over the quasi-public network to the identified buyer is an e-mail message.

7. The method of claim 1 in which the message received other the quasi-public network from the identified buyer is an e-mail message.

8. The method of claim 1 in which the message sent other the quasi-public network to the seller is an e-mail message.

9. The method of claim 1 in which the quasi-public network is the Internet.

10. The method of claim 1 further comprising the step of:
qualifying users of the quasi-public network as sellers.

11. The method of claim 1 further comprising the step of:
maintaining a database of account holders who are users of the quasi-public network.

12. The method of claim 11 in which said database includes information regarding account holders who are qualified as sellers and account holders who are not qualified as sellers.

13. The method of claim 11 in which the database includes information indicating whether an account holder is qualified as a seller.

14. The method of claim 1 further comprising the step of maintaining a first system and a second system, said first system comprising communication accessible to the quasi-public network, and said second system comprising communication accessible to sellers' agents who interface with a bankcard processing network, and further in which said method further comprises the step of;
communicating information regarding the transaction from the first system to the second system, after approval by the buyer of the transaction.

15. The method of claim 1 further comprising the step of maintaining a first system and a second system, said first system comprising a first database of account holders, said account holders being users of the quasi-public network and including a first group of account holders who are qualified as sellers and a second group of account holders who are not qualified as sellers, and said second system comprising a second database of said account holders including information associated with said second group of account holders including means by which payment can be made by said second group of account holders.

16. The method of claim 15 further comprising the step of maintaining a firewall between said first system and said second system

17. The method of claim 15 in which communication between the first system and the second system is by batch processing.

18. The method of claim 1 in which the transaction is for goods or services provided by the seller to the buyer.

19. A method of operating a computer system coupled to a quasi-public network to enable a seller and a buyer communicating over said quasi-public network to enter into a commercial transaction involving a payment of funds by the buyer for goods or services of value provided by the seller to the buyer, said method comprising the steps of:
on said computer system having a portion thereof that has access to the quasi-public network and a secure portion isolated from said quasi-public network, qualifying a first group of users of the quasi-public network as sellers:
maintaining bankcard payment information for a second group of users of the quasi-public network, said bankcard payment information maintained on a storage medium on said secure portion of said computer system;
maintaining listings of said first and second groups of users on a storage medium on said portion of said computer system that has access to the quasi-public network, but that is isolated from the secure portion of the computer system;
in response to a message over the quasi-public network to said portion of said computer system having access to the quasi-public network from a user of the first group identifying a potential transaction with a user of the second group, sending a message from said portion having access to the quasi-puplic network over the quasi-public network to the identified user of the second group for confirmation;
upon receipt of a message over the quasi-public network to said portion of said computer system having access to the quasi-public network from the user of the second group confirming the transaction with the user of the first group, communicating bankcard information from said secure portion of said computer system over secure channels to an agent of the user of the first group;
upon receipt of an authorization code from the agent via secure channels, cryptographically signing the authorization code; and sending the authorization code to the user of the first group via the quasi-public network.

20. The method of claim 19 further comprising the step of:
on said computer system, receiving authorization from said firt group of users to act as said agent,

21. The method of claim 20 further wherein said authorization code is generated by said system.

22. A system for enabling commerce among users on a quasi-public computer network, comprising:
means for sending and receiving messages to users on the quasi-public network;
means for identifying users who are qualified as sellers;
means for identifying messages received from users who are gualified as sellers;
means for generating messages to users who are buyers identified in the messages received from the qualified sellers requesting confirmation of transactions between said users who are sellers and said users who are buyers;
means for identifying messages from the buyers indicating confirmation of the transactions;
means for isolating the sending and receiving of messages to and from users from financial information associated with said users who are buyers for settling financial transactions;
means for sending financial information associated with buyers via secure channels to agents of sellers relative to confirmed transactions;
means for receiving authorization codes from the sellers' agents;
means for cryptographically signing the authorization codes; and means for generating messages to the sellers including the cryptographically encored authorization codes.

23. A method of operating a computer system to enable users of a quasi-public network to initiate a commercial transaction involving a payment of funds by one user of the quasi-public network to another user of the quasi-public network, the method comprising the steps of:
maintaining a listing of users of the quasi-public network who are qualified to function as sellers;
operating a computer system that is connected to the quasi-public network, said computer system having a means for sending and receiving messages from users of the quasi-public network;
upon receipt of a message over the quasi-public network from a first user of the quasi-public network, said first user being qualified to function as a seller, sending a message over the quasi-public network to a second user of the quasi-public network, said second user being identified in the message from the first user, said message being sent to the second user including a request to confirm a transaction identified in the message received from the first user;
upon receipt of a confirmation of the transaction from the second user, forwarding payment information of the second user to an agent of the first user; and upon receipt of an authorization code from the agent, encrypting the authorization code and sending the authorization code to the first user.

24. A payment method for use with the Internet comprising:
qualifying a user as a seller;
receiving a message via the Internet from the qualified seller regarding a transaction with a buyer that identifies at least an account identification of the buyer, said account identification maintained by the system;
requesting confirmation of the transaction from the buyer by communicating a message to the buyer via the Internet;
upon receiving confirmation from the buyer of the transaction from the buyer via the Internet;
sending a message off the Internet to an agent of the seller, said message containing information relating to the transaction and payment information for the buyer;
receiving confirmation of the transaction from the seller's agent; and communicating an authorization code to the seller.

25. The method of claim 24 further comprising the step of:
obtaining authorization from said seller to act as an agent therefor.

26. The method of claim 25 further comprising the steps of:

confirming the transaction and payment information as sellers agent; and generating said confirmation as seller's agent.

27. The method of claim 24 further comprising the step of cryptographically signing a message including the authorization code communicated to the seller