Regulation 3.2
AUSTRALIA
Patents Act 1990 COMPLETE SPECIFICATION STANDARD PATENT
DIVISIONAL
APPLICANT:
Invention Title: FRANCIS ENDA MURPHY TRANSACTION PROCESSING The following statement is a full description of this invention, including the best method of performing it known to me:
O
TRANSACTION PROCESSING The invention relates to transaction processing, and more particularly to charge, credit and Sdebit card transaction processing.
M
n Card transaction processing requires the communication of data from a number of disparate Sand often geographically remote point of sale sources to a local or target processing 8 computer system. This communication is required for authentication and validation as well
C
as for account reconciliation purposes. Proprietary systems, operating in a strictly controlled environment such as a store charge card present little difficulties to operators as the points of sale and account rationalisation can be strictly controlled and changed if necessary.
However, to process transactions from magnetic card readers located in merchant outlets throughout the world, far more processing power is required. This processing demand is further increased by the variety of cards that must be accommodated and by the number of currencies being presented. The mobility of card users means that an apparently simple transaction may involve two or more transaction conversions.
For example, a cardholder from one country who is normally billed for transactions on a card in a given user currency, may traeil and obtain goods or services in a second country having a different or local currency. When paying, the cardholder signs a receipt for the transaction in the -local currency. This transaction is then processed by the systems of the merchant and passed to an acquiring bank. Files for each merchant are amalgamated from each bank and introduced into a global system such as the Visa T M system. As the international settlement currency is the United States dollar, the transaction is converted from the local currency to the settlement currency from the acquiring bank. This settlement currency amount is then transmitted to the bank that issued the card to the cardholder for conversion into the user currency. Not withstanding the possibility for error during transmission and the costs associated with each conversion the system has inherent delays. These delays and conversions adversely affect the cardholder.
There is therefore a need for transaction processing method, which will overcome these problems.
c-2 SAccordingly, there is provided a method for processing a transaction using a point-of-sale apparatus, a remote processor, an acquiring bank scheme and an issuing bank authority wherein conversion of the transaction to a financial amount into a currency associated with a card is performed at the point of sale apparatus and wherein the conversion comprises the steps of extracting a credit card number from the presented transaction; parsing the CC extracted credit card number to obtain a country code identifier; retrieving a conversion N7, rate associated with the country code identifier from a local datastore; and applying the retrieved rate to a local merchant currency amount to generate a billing figure.
Ideally, the method includes the further steps of periodically receiving a connection request from the point of sale apparatus at the remote processor; retrieving exchange and associated data from a storage device of the remote processor; and replacing the contents of the local datastore with the retrieved data so as to update the data on the local datastore, whereby the local database performs the conversion transactions locally using the updated data.
A method in accordance with the invention has a number of advantages over previously, known solutions. Merchants using the invention have no foreign exchange exposure andi the cardholders in turn have minimum exposure. This promotes user confidence and thus increases the commercial appeal of the merchant. As the number of conversions is reduced the acquirer can offer very competitive merchant service charges (MCS) a portion of which can be returned to the merchant to promote loyalty. The simplicity of the process can be readily explained to customers and thus trust and confidence are enhanced, furthermore there is not disturbance to the existing operational processes. Cardholders are more likely to buy goods and services from operators utilising the invention because of the reduced end cost and the transparency of seeing the amount to be debited in the appropriate currency at the point of sale.
The invention also provides an apparatus for processing a credit card transaction the features of which are defined in the appended Claims 3, 4 and Q The invention will be more clearly understood from the following description of an embodiment thereof, given by way of example only, with reference to the accompanying 1drawing, in which:
O
Fig. I is a flow chart illustrating in overview the manner in which a CC transaction is processed.
Referring to the drawing, there is shown in operation, a transaction processing system of the SInvention indicated generally by the reference numeral 1. The system 1 handles processing between a card 2 presented at a point-of-sale apparatus 3 located at a merchant's premises through a remote processor 4 and on to a card issuing bank authority 6 through an acquiring bankcard scheme Before describing the method of the current invention further, the steps of processing prior art transactions are now described in brief The example given is for a cardholder who is, normally billed in Japanese Yen presenting a card in the United Kingdom whose currency is Sterling.
f
O
c-i 4 SStep 1 the transaction is presented to the Japanese cardholder in Sterling.
Step 2 The Merchant passes the transaction to an Acquiring Bank CI 5 Step 3 the transaction is converted into the international settlement currency, C€3 namely, US dollars for transmission through the card schemes.
Step 4 the transaction is transmitted through the card schemes mechanism to the ,I Card Issuing Bank.
Step 5 the card issuing bank a local Japanese currency amount, which is converted from the transmission US Dollar.
The transaction has therefore been through three conversion mechanisms and had three margins applied before being applied to a cardholder account.
The present invention overcomes these problems.
When a card holder presents the card for processing of a transaction the card is swiped through a terminal unit 3, as the card 2 is swiped certain details relating to the transaction and the card itself are received by the terminal unit 3. The terminal unit 3 then uses locally stored credit card information to extract from the bin number of the card a country identifier associated with that card. When the country identifier has been extracted and identified a currency conversion rate to a local currency being the currency of the merchant operating the terminal unit is applied to the charge associated with the transaction to give a card currency value for that transaction. The converted being in the cardholders currency is then transmitted to a remote processing station for this transaction is then processed through the normal credit card transaction processing system namely proceeding from the remote processing station to a credit card debit acquirer and from that acquirer through the various credit card issuing schemes back to the issuing bank. This issuing bank is the bank, which issued the card to the cardholder in the cardholder currency. The card holders account has an amount equivalent to the authorisation sought removed from the available
U
Scard credit and authorisation for the request is returned through the credit card issuing bank, through the card schemes and though the debit acquirer to the remote server. A C record of the amount of the transaction in cardholder currency and in merchant currency is stored in the point of sale apparatus. Once this authorisation has been received by the merchant the transaction can be processed in the normal way and authenticating signature ,1 obtained where appropriate.
At a preset interval or on request from the remote server transaction details are transferred Sfrom the point of sale apparatus to the remote server. When the transaction are received from a given merchant, a file is created for transaction details, this file contains a conversion rate for each transaction into each and every currency operated by the remote processor. This record is then transmitted, including details of the card issuer and cardissuing bank, to the acquiring bank and through the acquiring bank onto the various credit card issuing banks. These amounts are then reconciled against the cardholder's accounts and payment is returned through the issuing bank and acquirer to the remote processor.
When the remote processor receives the transaction, the value of the transaction is returned to the remote processor in cardholder currency and is then converted at the appropriate rate to the merchant currency. The merchant currency amount is then settled to the merchants account in payment of the transaction. This amount maybe net of merchant service charge or maybe a gross figure.
When the transaction is originally processed the rate of conversion from the merchant currency to the cardholder currency is obtained on a three-day basis, this is the figure used plus a foreign exchange margin to convert from the merchant currency to the cardholder currency. When reconciling the account, the local processor, extracts details of this transaction and obtains a daily spot rate for conversion. In the event of such a transaction operated on the spot daily rate would yield a net benefit in conversion values then this excess is credited to a local account.
Settlement of the account with the merchant may have an additional component in that the profit margin on a given transaction may be stored in a foreign exchange profit holding account. This profit holding account may issue a dividend on each transaction in relation
U
d to the parties involved namely the remote server and the merchant operating the system.
SIn addition, it will be understood that in certain "card not present" CNP environments such as in the rental of motor cars it will be possible for the electronic point of sale to process 5 and convert the transaction and transfer the currency, both in merchant currency and CC cardholder currency, in a batch process to the remote server for processing of the Stransactions.
Details relating to transaction to be processed maybe downloaded periodically or contemporaneously with a batch process to transfer information relating to country identification codes and exchange rates to be transferred from the local processor to the point of sale apparatus. Additionally, details relating to fraudulent use of credit cards maybe also be transferred from the local server to the point of sale apparatus if required.
Such details may include lists of stolen credit card numbers so that detection of the cards is immediate at the point of sale without reference to the remote processor.
In the circumstances where credit card transactions are being processed across a network such as the internet where no electronic points of sale systems exist, the conversions may
U
Sbe performed at a merchants or vendor site using details similar to that described with relation to the electronic point of sale apparatus being downloaded to a local merchants server. This information again includes details on currency identification codes associated with particular credit card numbers, conversion rates for range of currencies for which transactions are processed and details relating to stolen or fraudulently used credit cards.
e¢ When a customer requests processing of a transaction it may be required for them to seek a Srequest for a currency for which the charges are to be quoted. This may be alternatively be extracted automatically from a bin number of the credit card being presented. As an r additional security for the overall system, the requested currency for quotation and the currency obtained from the bin number may be compared and in the event that a discrepancy arises further authentication of the transaction request maybe sought.
Alternatively, in the event of such a mismatch a user warning may be generated to seek verification from the user that billing of the transaction is not in the same currency as the card issued and request authorisation to proceed.
The details relating to the conversion rates to be applied may equally be applied on the merchant site may equally be dynamically presented to the merchant site by the remote, processor as required or requested by the vendor site. Obviously, this represents a significant improvement over known systems in that the event of a sudden fluctuation in exchange markets significantly affecting a conversion rate between currencies the remote server may deliver exchange rate information. It is anticipated that the delivery of such information will be prioritised so that the greatest volume of transactions being processed in a given time frame are service first.
It will be appreciated that the systems described, both relating to the exchange rates being supplied on spot and fixed term basis may be applied in an M-Commerce environment. In this situation, the provision of near instantaneous exchange rate data may be supplied.
The invention is not limited to the embodiment hereinbefore described, but may be varied in both construction and detail within the scope of the appended claims.