Showing papers on "Payment service provider published in 1995"

Electronic commerce using a secure courier system

Abstract: A courier electronic payment system provides customers, merchants, and banks with a secure mechanism for using a public network as a platform for credit card payment services. The system governs the relationship between a Customer, Merchant, and Acquirer Gateway to perform credit card purchases over such networks as the Internet. The system uses a secure connection to simplify the problem of Internet-based financial transactions in accordance with an electronic payment protocol that secures credit card payments and certifies infrastructure that is required to enable all of the parties to participate in the electronic commerce, as well as to provide the necessary formats and interfaces between the different modules and systems.

Automated interactive bill payment system

Abstract: Method and apparatus for processing payment transactions using debit card numbers without the requirement of a personal identification number (PIN) is disclosed. A telepay system of the present invention provides an interface between a standard touchtone telephone and at least one debit card network such that real-time bill payment transactions may be effected using a keypad of the telephone. The telepay system includes an interactive voice response unit for prompting a payor to enter an access code, account number, debit card number and payment amount and for informing the user of the status of the transaction. Real-time processing of transactions is provided through use of debit card networks, rather than the Automated Clearing House. The telepay system is also capable of performing settlement functions and processing inquiries by payees of the system regarding previously processed transactions.

Remote financial transaction system

Abstract: PURPOSE: To attain the remote financial transaction secured highly. CONSTITUTION: This remote financial transaction system uses a payment module accessible to a memory and able to be communicated with an off-site processing system via, e.g. an interactive network. The payment module accesses payment account information stored in the memory and personal identification information corresponding to it. The user selects a desired remote financial transaction and a payment account to be accessed (440). The personal identification information and the required payment account information are read from the memory and ciphered (450) and sent to a financial organ having the account finally via the interactive network (460). The financial organ decides whether the selected remote financial transaction is accepted or rejected and sends a message denoting the acceptance or rejection to the user via the interactive network.

Requirements for network payment: the NetCheque perspective

Abstract: Secure methods of payment are needed before we will see widespread commercial use of the Internet. Recently proposed and implemented payment methods follow one of three models: electronic currency, credit-debit, and secure credit card transactions. Such payment services have different strengths and weaknesses with respect to the requirements of security, reliability, scalability, anonymity, acceptability, customer base, flexibility, convertibility, efficiency, ease of integration with applications, and ease of use. NetCheque is a payment system based on the credit-debit model. NetCheque is described and its strengths with respect to these requirements are discussed.

Incentives and provider payment methods

Abstract: The mode of payment creates powerful incentives affecting provider behavior and the efficiency, equity and quality outcomes of health finance reforms. This paper examines provider incentives as well as administrative costs, and institutional conditions for successful implementation associated with provider payment alternatives. The paper focuses on payments by institutions (third parties) to providers. The alternatives considered are budget reforms, capitation, fee-for-service, and case-based reimbursement. The authors conclude that competition, whether through a regulated private sector or within a public system, has the potential to improve the performance of any payment method. All methods generate both adverse and beneficial incentives. Systems with mixed forms of provider payment can provide trade offs to offset the disadvantages of individual modes. Low income countries should avoid complex payment systems requiring higher levels of institutional development.

Computerized payment system for purchasing information products by electronic transfer on the internet

Abstract: A payment system (10) for enabling a first Internet user to make a payment to a second Internet user, for the purchase of an information product deliverable over the Internet (12). The payment system (10) provides cardholder accounts for the first and second Internet users. When the second user sends the information product to the first user over the Internet (12), the second user also makes a request over the Internet (12), the front end portion of the payment system (10) requests payment from the first user. The front end portion of the payment system (10) queries the first user over the Internet (12) whether to proceed with payment to the second user. If the first user replies affirmatively, a charge to the first user is processed off the Internet (12); however if the first user replies negatively, the first user is not charged for the information product. The payment system (10) informs the second user of the first user's decision and pays the second user upon collection of the charge from the first user.

Payment switches for open networks

Abstract: We describe the first operational Internet payment switch that provides real-time authorization suitable for direct use by merchant servers. A payment switch is a server that creates digital representations of conventional financial instruments, and forwards authentic payment orders on these instruments to their corresponding conventional financial networks and institutions. Our payment switch provides support for time-based and item-based pricing, implements switch based authorization and settlement aggregation for micropayments, and includes an extensive customer support system in order to provide a high level of customer confidence in electronic commerce. Fraud control is based on a transaction-specific multi-level security model that accommodates existing Internet browsers. Multiple authentication technologies are applied to every transaction.

Method and system for commodity-based currency for payment of accounts and elimination of payment risk

Abstract: A system and method for permitting gold or other commodities to circulate as currency requires a network of system users that participate in financial transactions where payment is made in units of gold. The gold is kept in secure storage at a deposit site for the benefit of the users. The payments in gold are effected through a computer system having data storage and transaction processing programs that credit or debit the units of account of gold held for the account of each system user.

Remote access medical network.

Abstract: A remote access medical network (10) which minimizes paperwork in connection with health care services includes an insurance network (12) for processing an insurance claim. A remote terminal (30, 34, 38, 42) located at a health care service provider sends the insurance claim to the insurance network. A card reader (32, 36, 40, 44) coupled to the remote terminal (30, 34, 38, 40) reads information about a patient from a patient health care card (50) for completing the insurance claim, and reads payment information from the health care card (50) for completing payment to the health care service provider. The patient health care card (50) is preferably a smart card (50). The smart card (50) may be used to provide payment to the service provider. Insurance payments are obtained by transmitting the insurance claim to the insurance network (12). A financial network (13) credits a bank account of the service provider via an electronic funds transfer.

Electronic Payments of Small Amounts

Abstract: This note considers the application of electronic cash to transactions in which many small amounts must be paid to the same payee and in which it is not possible to just pay the total amount afterwards. The most notable example of such a transaction is payment for phone calls. If currently published electronic cash systems are used and a full payment protocol is executed for each of the small amounts, the overall complexity of the system will be prohibitively large (time, storage and communication). This note describes how such payments can be handled in a wide class of payment systems. The solution is very easy to adapt as it only influences the payment and deposit transactions involving such payments. Furthermore, making and verifying each small payment requires very little computation and communication, and the total complexity of both transactions is comparable to that of a payment of a fixed amount.

Antitrust and Payment Technologies

Abstract: oint ventures, particularly those involving networks that contain many industry J particinants. uresent some of the most interesting and difficult antitrust issues. Modern payment and electronic funds transfer networks are technologies that have greatly benefited consumers and the economy by reducing transaction costs and allowing consumers to economize on their holdings of non-interest hearing forms of money Payment networks, however, may also be able to engage in collective actions that allow their members to exercise market power, and these networks have been involved in several significant antitrust disputes. If members of a payment network exercise market po\\ver, the effects can he eouivalenr. to a privately imposed sales tax on all network transactions.’ Retail sales of aoods and services in the United States total about 32 trillion per year. A significant fraction of these sales are made by merchants who accent credit cards and other electronic forms of paymuent, so even a small tax on transactions becatmse of market power can affect a large volume of sales. And because networks often exhibit significant scale econounies, rival systems may not exist or may be unable to constrain the dominant svstem~s pricing significantly Economies of scale can make it hard for a relatively small network to coanpete and grow if the dominant network is significantly larger. It can he difficult to determine whether a particular collective rule, or a particular husiness combination between two competing networks, creates net benefits or net harms to consumers. Though antitrust intervention with respect to a network~structure or policies has the potential to generate savings for society, it also carries potential risks. Ill-founded antitrust intervention can reduce or eliminate the benefits society could otherwise enjoy from efficient network muergers and practices and can deter other networks from embarking on efficient activities. Antitrust intervention should therefore take place onlywhen the economic effects of intervention are well understood and there is clear evidence that the benefits from intervention outweigh the harms. It is sometimes stated that there are two levels at which competition occurs in payment networks: intrasystern competition occurs among members of a given network. and inrcrsvstem competition occurs among competing networks. Though this dichotomy is useful for some purposes, it has also led to confusion about the competitive importance of particular network rules and structures. Courts and commentators sometimes have treated the number of independent (and nonoverlapping) networks as the sole determinant of socierys welfare. thouch we believe that the competitive economics of navment networks are far more complicated. In this article we examine the concent of network comupetition and the notion that consumers of payment services can always be best nrorecrecl through vigorous efforts by courts and antitrtmst enforcers to prevent the formation of overincltcsive networks. It is our view that one typically cannot determine, on the basis of theoretical considerations alone, whether permitting access to payment networks by firms that already provide payment services is, on net, beneficial or harmful to consumers or to society. Instead, we believe that a careful analysis of the facts and economic evidence concerning particular networks and their policies is necessary to justify antitrust interyention. We explain later that in same cases such a network might even be able to impase this tax an transactions that do not use the network.

Payment Systems: Principles, Practice, and Improvements

Abstract: This book is intended as an introduction to payment systems. An efficient and smoothly operating payment system is a necessary precondition for business development, both domestically and internationally. Our goal is to provide a relatively complete understanding of the benefits, costs, risks, and problems associated with mature payment systems, such as those now operating in the United States and Europe. This framework is then used to outline areas where the payment systems of less developed countries and newly emerging socialist countries (such as Russia) may be restructured and improved. The focus is on the economic incentives and institutional arrangements that determine the use of and problems with different types of payment instruments and how these incentives may be adjusted to improve the overall operation of a payment system. Both smaller-value consumer (retail) payments and larger-value business (wholesale) payments are covered and short-run and long-run suggestions for payment system improvement are noted.

Payment switches for open networks

Abstract: We describe the first operational Internet payment switch that provides real-time authorization suitable for direct use by merchant servers. A payment switch is a server that creates digital representations of conventional financial instruments and forwards authentic payment orders on these instruments to their corresponding conventional financial networks and institutions. Our payment switch provides support for time-based and item-based pricing, implements switch based authorization and settlement aggregation for micro-payments, and includes an extensive customer support system in order to provide a high level of customer confidence in electronic commerce. Fraud control is based on a transaction-specific multi-level security model that accommodates existing Internet browsers. Multiple authentication technologies are applied to every transaction.

Transforming Payment Systems: Meeting the Needs of Emerging Market Economies

Abstract: Market economies rely on the payment system to facilitate trade and exchange among enterprises and between enterprises and consumers in product markets. At the same time, the payment system is also used to transform domestic and international savings flows into productive investments through financial markets. Emerging market economies face the difficult task of attempting to simultaneously promote the development of product and financial markets, improve the efficiency of production, and mobilize domestic savings. These and other tasks are made easier when a cost-effective payment system exists which is responsive to user needs. The primary issues associated with transforming and improving payment systems in formerly centrally planned and emerging market economies are discussed in this paper. Emphasis is placed on meeting the payment needs of consumers and enterprises, as users of payment services, and on the role played by the banking system and the central bank as supplier and/or regulator of payment services. The indirect role of country size, banking structure, and institutional framework are also discussed. These influences are illustrated by outlining the evolution of payment arrangements in various market economies. The essential differences in payment systems between centrally-planned and market economies are outlined and both short-term and longer-term methods to improve these payment systems are noted. Distinctions among various payment instruments are made clearer by modeling the payment cycle and choices regarding alternative suppliers of payment services and the tiering of payment processing arrangements are discussed. Market needs in an evolving payment system are outlined by illustrating the different paths taken in Europe and the U.S. in the evolution of their payment systems. The benefits and costs of paper versus electronic payments, the role played by payment pricing and float, and the interplay between commercial banks and the central bank in this process are also discussed. The paper ends with a survey of the many issues needing to be raised - from payment instrument design to cost recovery - to provide users with an effective payment system.

Payment Systems and Antitrust: Can the Opportunities for Network Competition Be Recognized?

Abstract: 5 1iews of payment systems competition have evolved during the past generaSI’ tion. When automated teller machine (ATM) netw-orks were first created in the 1970s, policymakers considered two models for these emerging networks: (1) a monopoly/public utility network model, with open access obligations and (potentially) some form of regulation or (2) a competing network model, with numerous networks competing in a lightly regulated environment. This article describes howthese visions of network competition have evolved. Even though the network competition model was chosen in the 1970s, because of a history of nonenforcement by antitrust agencies and regulators, it appears that by the close of this century the monopoly/public utility model may he victorious. This article describes how that change occurred and considers whether it is appropriate. The first section of the article describes general trends in antitrust enforcement affecting payment systexns networks since the I 970s. The next section examines the framework applied to antitrust analysis of ATM network mergers and is followed by a section applying this analysis to two recent ATM network mergers. The article examines how the monopoly/public utility model appears to have prevailed in the ATM network merger context.

The Texas Banking Crisis and the Payments System

Abstract: The Federal Reserve System plays a crucial role in the payments system that is especially important during periods of financial turmoil. In this article, Robert Clair, Joanna Kolson, and Kenneth Robinson explain the process and the risks involved in clearing checks in the private sector. They compare these processes and risks with the essentially risk-free check-clearing service the Federal Reserve System offers. During banking crises, they hypothesize, banks will increase their check-clearing through the Federal Reserve to minimize their risk exposure. A model of Federal Reserve check-clearing volume is constructed and estimated. The empirical results show that during banking crises, Federal Reserve check- processing volume rises as banks seek safer methods of clearing checks. Consequently, Federal Reserve payment services are important tools in minimizing the disruptive effects of banking crises on the economy.

Regulatory solutions to payment system risks: Lessons from privately negotiated derivatives

Abstract: Payment system risks were the “major minor” banking policy issue of the 1980s. They were minor issues in that they were of interest mainly to the Federal Reserve System and to bank operations officers; they were major issues in that they supposedly involved significant risks and that they were a source of constant regulatory pressure on banks.

Electronic remittance system, repeating system, and remittance method

Abstract: PROBLEM TO BE SOLVED: To provide an electronic remittance system which can send payment relative data while securing compatibility with a conventional electronic remittance system. SOLUTION: A repeating center 15 is connected between a terminal of an existent financial network system and a financial institution. The repeating center 15 is equipped with a separation part 15 which separates payment instruction data and payment relative data sent from an enterprise, etc., while giving discrimination information, stores the discrimination information allocated to the separated payment relative data and payment instruction data in a database 154, and sends the payment instruction data and discrimination information allocated to the payment instruction data to a destination financial institution, and a coupling part 156 which accesses the database 154 according to the discrimination information sent from the destination financial institution together with money reception information data to read corresponding payment relative data out, and sends the read payment relative data and money reception information data to the corresponding enterprise. COPYRIGHT: (C)1997,JPO

Making Payments in Cyberspace

Abstract: Cyberspace is loosely defined as the collection of computer communication networks that has evolved since the early 1970s. Although it is most often associated with the Internet, a myriad of bulletin board providers and commercial services are also included.

Self service document processing for banking automation

Abstract: The high street cash dispenser or automated teller machine (ATM) was one of the major technological successes of the eighties. A recent major advance in the development of the ATM has been to extend the range of services available to the consumer to include payment transactions eg. bill payment and cheque deposit. These additional services now make it possible for as ATM to provide the consumer with a complete suite of automated financial transactions at convenient locations 24 hours per day. The result of AT&Ts investment and development effort in this field has been the creation of a new self service document processing module (DPM) that enables ATMs to accept and process a wide range of documents including bills, cheques and giros from almost any country in the world. Considerable technical challenges were faced by AT&T during the development ofthe DPM. Central to this solution is the document processing transaction that requires the payment ATM to accept a document from the consumer and read the relevant information from it so the data can be electronically transacted. This paper describes some of the technical issues and associated solutions that have been developed by AT&T to automate document based payment transactions in a self service terminal. (5 pages)

Point-of-sale payment using interactive television

Abstract: A method for providing point-of-sale (POS) payment using interactive television (ITV) by directly debiting a customer's bank account through electronic transfer of funds or by billing a customer's credit card account. The customer places an order for products or services on his ITV and can make POS payment either by authorizing direct debit from his bank account or by authorizing a charge to his credit card account. The customer's debit and credit account information is collected and stored by the ITV server so that there is no need to swipe the customer's debit or credit card through a magnetic stripe reader at the moment of sale.

Project design for payment systems

Abstract: Weaknesses in a payment system can result in inefficient use of the available money stock, inequitable risk sharing between trading parties, lack of confidence in the banking system, and inadequate support for the development of other essential financial services. Moreover, because of the opportunity cost of money, lags between the sale of goods and services and the receipt of funds are costly. To meet market demand, this Note recommends four payment services: local clearinghouse arrangements to process local interbank debit and credit payments, a capability to process nonlocal inter- and intrabank debit and credit payments, a separate capability to process high-value and other time-sensitive credit payments, and a capability to process international payments in a variety of currencies. The common factors that influence the success of the payment systems are: speed of payment, certainty and finality of payment, system reliability, safety and security, convenience, and cost. The challenge is to strike the right balance across these factors, depending on user needs. This Note also includes a framework for modernizing the payment system. Any initiative for such project must involve users--at the policy level and at the working level.

Payment services for global online systems including Internet

Abstract: I am the Managing Director of Grant/Seebeck International, an online consulting company based in the United States. I am pleased today to be the Chairperson of a session on electronic payment services. For the last three days you have had a wonderful time going about looking at the stands and seeing what is happening in the online business and in the Internet. You have seen a lot of great products, but today we hope to answer a question. At the end of a great meal and a great feast you are always presented with a bill, and the question is, how am I going to pay for what I have just seen? Our panel is going to try to answer that question. We have a distinguished panel. All of us have been around the online business for a very long time. We have been here since it was a little business in which we had to convince people, publishers, information providers that they could actually make money in the electronic information business. A lot of people back in the late 70s and early 80s believed that the electronic information business was a business in which they would not make money, and so these people have been around since then. I am happy to introduce to you our panel.

The Next Upheaval in the US Payment Systems

Abstract: An $84 billion industry is at stake The first wave of new technology saw banks lose the credit card business A second wave may benefit companies that control the gateways to electronic payments Consumer checks are safe for now Despite the fanfare ushering in new payment technologies such as e-cash, smart cards, and credit card transactions on the Internet, the economic significance of the payments industry and the structural changes it is experiencing are seldom fully appreciated. Few even view payment products and services as an industry. But $84 billion a year is generated by the US payments system (Exhibit 1) - equivalent to 40 percent of the total revenues earned by commercial banks, savings and loans, and credit unions in America today. Almost $33 billion is earned by intermediaries such as banks, credit card processors, and payment networks from the fees paid by consumers and businesses to make their transactions. The remaining $51 billion comes from the interest earned on customers' balances. Traditional financial institutions and payment processors still control 99.9 percent of these revenues. Yet the explosive growth of technology and the arrival, of nonbank entrants are bound to erode this dominance with the shift to electronic payments, rendering much of today's costly banking infrastructure obsolete. Surprisingly, senior executives at financial institutions have been slow to grasp the importance of the changes that lie ahead, perhaps because they still view the industry in a piecemeal fashion rather than applying the integrated business perspective brought to retail banking or brokerage. Rare is the banker who thinks of trying to increase his or her share of all the revenues and profits being captured by the various intermediaries from the moment the consumer pays at the checkout until the funds are transferred into the retailer's account. When banks ruled the payments system, this narrow outlook might not have mattered: as long as a bank held your checking account, it controlled all payment revenues. But now, a range of communication, network processing, and software companies with competitive cost structures and a different business mentality have caught the scent of opportunity and are circling to attack. In some areas, such as credit card processing and card issuance, these entrants have already made a killing. In others, such as check intermediary revenues, the battles are yet to begin. Though it is impossible to predict their outcome, it is clear they will be fought on five different fronts: consumer credit cards; processing revenues anti payment networks; check revenues; business payments; and employee payroll transactions [ILLUSTRATION FOR EXHIBIT 2 OMITTED]. All US payment institutions will need to think about how - or indeed whether - to compete in each of these areas of the industry. Within this article, that industry is defined as the transactions, instruments, networks, and players that facilitate the delivery of commerce to consumers, businesses, and governments. Excluded are cash transactions of less than $2 and payments related to equity and debt securities and international commerce. Consumer credit cards Consumer credit cards are the most mature and pervasive form of electronic payment. Their conversion from a paper based to an electronic product has had an enormous impact on the structure of the payments industry, and may offer lessons for other sectors of the business. Consumer credit cards account for almost half of the total US payments industry, with $43 billion collected by a broad range of banks, card issuers, and merchant acquirers (the banks that sign up merchants to accept credit cards). Although much of this revenue comes from interest on card balances, $16 billion derives from the interchange fees charged to merchants and the fees paid by consumers (Exhibit 3). [TABULAR DATA FOR EXHIBIT 3 OMITTED] Credit cards have been one of the fastest-growing businesses within financial services. …