Showing papers on "Payment service provider published in 1996"

System, method and article of manufacture for network electronic authorization utilizing an authorization instrument

Abstract: An electronic monetary system provides for transactions utilizing an electronic-monetary system that emulates a wallet or a purse that is customarily used for keeping money, credit cards and other forms of payment organized. Access to the instruments in the wallet or purse is restricted by a password to avoid unauthorized payments. When access is authorized, a graphical representation of the payment instruments is presented on the display to enable a user to select a payment method of their choice. Once a payment instrument is selected, a summary of the goods for purchase are presented to the user and the user enters an electronic approval for the transaction or cancels the transaction. Electronic approval results in the generation of an electronic transaction to complete the order.

System, method and article of manufacture for the use of payment instrument holders and payment instruments in network electronic commerce

Abstract: An electronic monetary system provides for transactions utilizing an electronic-monetary system that emulates a wallet or a purse that is customarily used for keeping money, credit cards and other forms of payment organized. Access to the instruments in the wallet or purse is restricted by a password to avoid unauthorized payments. An appropriate indicia such as color, an icon or other information associated with the display screen will be used to communicate security authorization for a particular instrument, payment instrument or payment instrument holder. When access is authorized, a graphical representation of the payment instruments is presented on the display to enable a user to select a payment method of their choice. Once a payment instrument is selected, a summary of the goods for purchase are presented to the user and the user enters their electronic approval for the transaction or cancels the transaction. Electronic approval results in the generation of an electronic transaction to complete the order.

Financial Crises, Payment System Problems, and Discount Window Lending

Abstract: In a developed economy, financial crises are rapidly conveyed to the payment system, which tends to rely on private credit extensions in most countries. While many authors recommend that the central bank do no more than provide adequate aggregate liquidity during a crisis, this policy requires well-functioning private credit markets to channel liquidity to solvent, but illiquid, firms. This paper presents a model of private lending which defines a crisis as a time when lenders become uncertain about how to assess financial risks and, therefore, rationally withdraw from making new loans. In such an environment, a government lender of last resort can improve social welfare. Copyright 1996 by Ohio State University Press.

Cash, Paper, and Electronic Payments: A Cross-Country Analysis

Abstract: The social cost of a payment system comprises between 1% to 1.5% of GDP. This cost can be reduced if non-cash payments shift from paper to electronics since the cost of an electronic payment is estimated to be from one-third to one-half that of a paper-based transaction. We examine the use of cash and five non-cash payment instruments in 14 developed countries over 1987-1993. Our purpose is (1) to outline the current use of check, paper giro, electronic giro, credit card, and debit card payments and (2) to determine why some payment instruments are used more intensively than others, especially electronic versus paper-based payments. Standard demand theory influences (own price and incomes, institutional factors, and simple availability measures across countries are examined, as is the effect of habit formation. Payment substitution relationships are also estimated and indicate that checks will decline with further growth of electronic payments while the instruments that make up electronic payments will tend to expand together rather than replace one another. Copyright 1996 by Ohio State University Press.

A system, a method and an apparatus for performing an electric payment transaction in a telecommunication metwork

Abstract: The invention relates to methods and apparatuses for performing electronic payment transactions between a terminal equipment (100) in a telecommunication network and the other transacting party (1, 2, .., N). The invention utilizes a special payment service gateway (10) through which all the payment transactions of the terminal equipments in the telecommunication network are routed. The payment service gateway allows the parties of the payment transaction to support different electronic payment protocols (A, B, .., X) and performs the required protocol conversions so as to provide an end-to-end transaction.

Method and apparatus for providing electronic accounts over a public network

Abstract: A system provides an efficient way of providing electronic accounts to customers over a public network, in which all payments are traceable, i.e. anonymity is available to the degree that the customer provides an account number for paying for the transaction, and that uses as much as possible of emerging public network payment protocols. One embodiment of the system handles small payment from customers to merchants without burdening the banks with each small transaction by aggregating the payment at a payment gateway from the customers and to the merchants.

Controlling risk in payment systems

Abstract: OVER THE PAST TWENTY YEARS the growing integration of financial markets, the development of new financial instruments, and the advance of computer technology have all contributed to a remarkable growth of financial activity in the main industrialized countries. One of the most significant consequences of this growth has been the unprecedented increase in the volume of trade on the largevalue interbank payment systems (see Table 1) which itself has resulted in a massive increase in intraday overdrafts on those systems (see Table 2). The central banks of the large industrialized countries, concerned with the risks that this growth was creating for their banking systems, have been studying the risks on interbank payment systems, work that has borne fruit with the Angell report (Bank for International Settlements [BIS] 1989) and the Lamfalussy report (BIS 1990) both under the aegis of the BIS, and the Padoa-Schioppa report (European Community 1992) under the aegis of the EEC. Of particular concern is the organization of interbank large-value transfer systems. Banks have traditionally concluded among themselves multilateral netting arrangements which settle at discrete time intervals. This is the modern form of clearinghouses, which still operate for small-value transfers. These arrangements

Space efficient method of redeeming electronic payments

Abstract: A method of redeeming for a seller electronic payments generated by and received from a customer using a master key unknown to the seller. In anticipation of making electronic payments, a customer sends a bank the master key that he will use to generate electronic payments. The bank stores the master key. Later, the bank receives from the seller a redemption request including a seller identifier, a first value of a payment index, and an electronic payment associated with the first value of the payment index. The bank authenticates the electronic payment by comparing the electronic payment to a hash of a string including the master key, the seller identifier, and the first value of the payment index. If the electronic payment is authenticated, the bank determines an amount due to the seller and credits that amount to the seller.

A Framework for Analyzing Efficiency, Risks, Costs, and Innovations in the Payments System

Abstract: THE MARKET FOR PAYMENT INSTRUMENTS, such as cash, checks, and electronic funds transfers, is one of the largest, most important, and economically interesting markets in the economic system. Virtually every economic transaction requires the use of a payment instrument. Therefore, on a value basis, the demand for payment instruments equals the demand for all other goods, services, assets, and other financial instruments traded in the economy combined. In a monetary economy, the buyers and sellers of any commodity must not only agree on the price and quantity to be exchanged, but must also concur on the payment method that will be employed in the exchange. That is, every commodity buyer takes on the role of a payor and every commodity seller takes on the role of a payee, and they jointly demand a payment instrument of equal value to the commodities exchanged. The size of payments markets is illustrated in Table 1, which shows transactions

Space efficient method of electronic payments

Abstract: A method of space efficient electronic payments. A customer initiates an electronic transaction by transmitting a request for payment information to a seller. In response, the customer receives from the seller the payment information needed to generate an electronic payment. The customer determines the reliability of the payment information by authenticating it. If the payment information is authenticated, then the customer generates an electronic payment using the payment information and a master key unknown to the seller. Finally, the customer transmits the electronic payment to the seller along with a request for desired goods and/or services.

Electronic payment method for purchase-related transactions over a computer network

Abstract: A method using an open communication network (10) to which retailer server stations (20) and customer stations (30) are connected. According to the method, a retailer server station generates a payment slip for the planned purchase transaction between the retailer and a customer, which slip comprises data on the retailer, the customer, the purchased item or service and the price; the payment slip is transmitted over the network to a payment server station (40); the payment server automatically checks whether the payment of said price is authorised for the customer in question, by querying the client's personal account set up in the payment server for paying small amounts, or, in the case of larger amounts, by making a query over a banking network (50) separate from the computer network (10); if the payment is authorised, the payment server generates a cash voucher comprising at least some of the data on the payment slip; and the cash voucher is transmitted to the retailer to enable the purchase to go ahead.

Transactions Using Bets

Abstract: Small cash transactions, electronic or otherwise, can have their overhead costs reduced by Transactions Using Bets (TUB), using probablistic expectation (betting) as a component. Other types of protocols may also benefit from this idea.

An intermediation and payment system technology

Abstract: This paper presents the Globe-ID(R) [3] electronic commerce enabling technology designed and developed by GC-Tech [2] . The most important design goal was to address electronic commerce as a whole, securing the essential steps of each e-commerce transaction: the offer, the order and the payment. Globe-ID(R) is a system based on an intermediation server which acts as a trusted third party for merchants and consumers. It contributes directly to the securization and notarization of the transactions, manages the e-commerce actors' accounts, and acts as a gateway to the private networks of traditional financial instruments. This paper presents the model, the protocol, and security features of this technology.

Smart cards and retailers ‐ who stands to benefit?

Abstract: Explains that the smart card is increasingly being held and used by consumers in the UK, particularly in its electronic purse or loyalty card capacity. The smart card is a plastic card that carries an embedded computer chip with memory and interactive capabilities. Describes the current major payment options open to consumers, and accepted by retailers, with a review of the costs and benefits of each payment option. Considers the electronic purse pilot of Mondex as a new payment option and looks at the issues facing retailers with the introduction of smart cards. Concludes that acceptance of the smart card as a new payment option depends heavily on retailers’ attitudes and these will be formed by the so‐far unquantified balance of costs and benefits that will accompany the introduction of the smart card.

Computer Money: A Systematic Overview of Electronic Payment Systems

Abstract: New electronic payment mechanisms together with an emerging global information economy on the Internet are set to change the way we do business. In the centre of all these developments are new electronic payment mechanisms, the financial infrastructure needed to open the electronic marketplace. This book gives a structured overview of these new payment mechanisms by first describing what exactly is possible today, what is currently existing or being developed, and how these systems work. It gives the essential background needed for informed decisions and discussions in the areas of electronic payment systems and electronic commerce.

Clearing and Settlement of U.S. Dollar Payments: Back to the Future?

Abstract: The Federal Reserve System was formed in 1914. Wide dissatisfaction with routinely expensive and slow settlement of interregional payments, as well as occasional disruptions of the payments system caused by banking panics, are among the factors that led to its creation. Accordingly, an important purpose for creating the Federal Reserve to serve as the nation’s central bank was to enhance the efficiency and improve the stability of the nation’s payments system. At the time of the formation of the Federal Reserve, the paper check was the principle means of making payment. The Federal Reserve attempted to fulfill its mandate for improving the check-collection system by providing banks with a national check-collection service. Since it was the only institution with a nationwide network of banking offices and settlement accounts for banks, it had an advantage in interregional check collection. Over time, the Reserve Banks added new payment services to exploit the advantages of new technology: wire transfer of reserves, a book-entry service for safekeeping and electronically transferring ownership of government securities, and the automated clearinghouse, designed as an electronic alternative to checks. The share of U.S. dollar payments processed through the Federal Reserve Banks began declining in 1980, when the Reserve Banks began charging for payment services, as required by the Monetary Control Act. This declining share, for both smalland large-dollar payments, appears to represent a major shift in the operation of the U.S. dollar payments system. Our paper examines the implications of this shift for the Federal Reserve’s ability to fulfill its mandate to safeguard the stability and efficiency of the payments system. In particular, we examine whether the problems that existed in the payments system prior to 1914 will at some time reappear as the Fed’s operational role declines. It is important to consider whether the nation’s payments system has changed in ways that make Reserve Bank services less essential for dealing with the problems that have beset it in times past, and what the future role of the Federal Reserve Banks should be as payment processing systems continue to evolve. The following section examines the operation of the payments system prior to the formation of the Federal Reserve, focusing on aspects of the system that were considered defects by advocates of a central bank. Subsequent sections establish a conceptual framework for our analysis and describe the payment services offered by the Reserve Banks and trends in their share of the total volume and value of U.S. dollar payments processed each year. The article then discusses reasons for the declining Reserve Bank share of payment processing and the implications of these trends for the payments system.

Method for effecting an electronic payment transaction having a variable number of payment units, as well as payment means and system for applying the method

Abstract: The invention relates to a method for protected payment with electronic payment device, such as "intelligent" payment cards ("smart cards"), in a variable number of steps. In this connection, use is made of a non-reversible function, of which successive function values are provided by the payment device to the payment station in question by way of proof of payment. On the basis of these function values, there may take place both a verification and a determination of the number of steps. Such method finds application, e.g., in public telephones and in copiers. The invention further relates to a payment device and a payment system for applying the method.

Remarks on Evolving Payment System Issues

Abstract: GOOD MORNING, ladies and gentlemen. On behalf of the Federal Reserve Board and the Journal of Money, Credit, and Banking, I would like to welcome you to our Payment Systems Research and Public Policy Conference. I am particularly pleased to greet our guests from overseas. I believe the international participation in this conference reflects the growing worldwide interest, not only of bankers and policy makers but also of researchers, in payment system issues. The increased attention to these issues reflects recent deep-seated political changes as well as economic developments. Many of the countries of Eastern Europe and the former Soviet Union, for example, are rebuilding payment systems to support market economies. These countries-are interested in very fundamental questions of payment system policy and design. The European Union countries are also grappling with basic payment system issues as a result of the steps being taken toward monetary union. At the same time, central banks in the G-10 countries have continued to emphasize the importance of controlling and reducing payment and settlement risks in global financial markets. Recently there has also been extensive interest surrounding market efforts to develop new electronic banking and payment products for consumers, including efforts to introduce stored-value payment cards, potentially secure payment mechanisms for the Internet, and new versions of home banking products. In view of all this current and prospective change, I would like to make a few remarks about three topics; money, the payment system infrastructure, and payment system risk. My aim is to provide some general background for your discussions over the next two days.

System for payment transactions between two active cards

Abstract: The present invention pertains to a system for debiting and crediting transactions between two active cards (25, 33) with resident accounts, inserted each in one telephone (20, 21, 40) connected to a telephone network (36), which telephones (20, 21, 40) possess conventional known telecommunications technology.

Comment on SCALE ECONOMIES, COST EFFICIENCIES, AND TECHNOLOGICAL CHANGE IN FEDERAL RESERVE PAYMENTS PROCESSING

Abstract: The David Hume quotation at the beginning of this paper advises us that payment systems determine, as much as any other market institution, how smoothly an economy operates. However, unlike the other papers presented at this conference, it is not Hume's "oil" that interests Bauer and Ferrier, but rather how well the machines of payments processing are themselves lubricated. The authors estimate cost functions for each of the three payment services produced and sold by Federal Reserve Banks check processing, automated clearing house services (ACH), and wire transfers (the Fedwire). Based on the parameters of these cost functions, the authors construct measures of scale economies, cost efficiency, and technological progress. Their results lead them to three fundamental conclusions: (a) significant scale economies suggest that the production of ACH and Fedwire services should be consolidated into fewer sites within the Federal Reserve system; (b) ACH and Fedwire processing sites have reduced costs over time by exploiting technological advances; and (c) divergent expense levels at individual Federal Reserve check-processing, ACH, and wire transfer sites may indicate inefficient operations at these sites.

Systemic risk in the finnish payment system: An empirical investigation

Abstract: The volume of large-value funds transfers in the money, foreign exchange and securities markets has increased manifold during the last decade.This development has increased interbank debt positions and extensions of intraday credit resulting from payment transactions in the payment-intermediation sector. Systemic risk in these arrangements refers to the risk that one clearing system participant's failure to settle will cause one or more other participants to default.The danger of systemic failure exists in a clearing system in which payment messages are exchanged during the day but funds are transferred only at the end of the day.In this study, simulation with empirical data is used to measure the probability, extent and resulting effects of a systemic crisis in the Finnish payment system. The major finding of the study is that one participant's failure to settle in the Finnish payment system can cause serious problems for other participants but the danger of systemic failure is relatively small.On average the banks' largest counterparty risks are low and amount to less than 10 per cent of their own funds.However, on some days counterparty risk can amount to over 50 per cent of banks' own funds and thus constitute a systemic risk.Large counterparty risks however do not form long interbank chains that could lead to a domino effect.Even should a payment system participant suddenly be unable to settle, the other participants would probably manage to avoid serious problems. Although the simulation results indicate that presently the probability of systemic crisis in Finland is quite small, it is still important that payment system risk control be further developed.The environment in which the payment system operates is developing very rapidly, and risks are growing as volumes increase.As the system opens up to foreign credit institutions, Finnish payment system participants also find themselves dealing with more and more counterparties about whom they have no prior knowledge.System entry and risk control can no longer be based solely on trust; clear game rules are needed.As part of its task of overseeing payment systems, the central bank will need to closely monitor system developments, promote risk awareness in the markets and payment systems, and prevent the creation of systems in which it is possible for settlement failures to spread.This work should be done in cooperation with international organizations and the EU. Keyword: systemic risk, clearing, settlement, Finland

Method for arranging a payment service in a telecommunications network

Abstract: The object of the invention is a method to arrange a real-time payment service in a telenetwork, in which method a chargeable service to be offered via a telenetwork is charged directly from a customer in real-time. The method has been arranged to be implemented in a telenetwork, as a part of which exists an intelligent network (9), which includes a service switching centre (10), to which the customer's call is directed and where the offered chargeable service is identified based on the service number. According to the invention, the connection of the service switching centre (10) of the intelligent network (9) is adapted to include a payment service unit (15), by means of which is identified the customer calling the service number and a price of the service is determined. The payment service centre (15) is adapted to function as a payment terminal such that account informations or the like of the customer and the service provider and price information of the service are transmitted to a payment service in a dedicated network (17) connected to the telenetwork, in which payment service the transaction is effected such that based on the price information relating to the service from the customer's account the monetary transaction is transferred directly to the account specified by the service provider when the service call is made.

Electronic payment system

Abstract: PROBLEM TO BE SOLVED: To provide an electronic payment system which evade problems of credit of banks and credit card companies to member retailers and problems of utilization value of networks of the banks and credit card companies by interposing an agent payment institution between them. SOLUTION: The agent payment institution is interposed between communication networks connecting consumers, the member retailers of unlimited business, and the banks and credit card companies, and this agent payment institution provides plural password codes for a consumer in advance; and the consumer purchases an article from a member retailer through the agent payment institution with a proper password code, the member retailer confirms the identity of the consumer with the said password code through the agent payment institution and bills the agent payment institution for the sale, and the agent payment institution confirms the identity of the consumer with the said password code and bills the bank or credit card company for the sale. Then, the bank or credit card company bills the consumer to receive the money from the consumer, and the bank or credit card company pays the money to the member retailer through the agent payment institution. COPYRIGHT: (C)1997,JPO

Electronic payment system having several calculation units, electronic payment means, as well as a method for electronic payment

Abstract: The invention relates to a payment system with electronic payment means, such as electronic payment cards (1) such as 'smart cards', and one or more payment stations (2), such as electronic cash registers. The payment stations are designed for receiving, during a payment transaction, a monetary value by crediting, in the payment station, a first value, and debiting, in the payment means, a second value corresponding to the first value. According to the invention, the first and second values may be expressed in different calculation units, such as currencies of different countries. The invention furthermore offers a payment means (1) for application in such a system, and a method for effecting a payment transaction with an electronic payment means.

Abstract Payment Undertakings in International Transactions

Abstract: Payment Undertakings in International Transactions

On the design of secure electronic payment schemes for Internet

Abstract: Considers the design of secure electronic credit card based payment schemes for the Internet, and reveals some of the issues that have not been adequately addressed in the proposed protocols to date. This paper proposes additional mechanisms that need to be incorporated as part of the design phase of the scheme to deal efficiently with the disputes that can arise. The design methods described in this paper are applicable to a range of protocols, including iKP (Internet Kaufmannisch Protokoll), STT (Secure Transaction Technology) and SEPP (Secure Electronic Payment Protocol). Based on this discussion, the paper goes on to propose an improved payment scheme and protocol. The new protocol, referred to as the permission-based payment (PBP) protocol, provides a fair treatment of both the client and the merchant involved in the transaction. It separates the purchase request phase from the payment phase, thereby increasing the ability to handle certain class of disputes more efficiently. It removes the need to store the secret private key at the client's machine or the need for a smart card device. This is important as one cannot assume that all the clients connected to the Internet have smart card readers attached to them. The new protocol makes simpler assumptions about the environment, thereby making the scheme practical for securing commercial electronic credit card transactions.

Comment on Controlling Risk in Payment Systems

Abstract: I am enthusiastic about the paper "Controlling Risk in Payment Systems" by Jean-Charles Rochet and Jean Tirole. Notably, the authors identify and begin to address the issue of "coexistence" and interaction between real-time gross settlement (RTGS) and deferred net settlement (DNS) funds transfer systems. They do so in a way that is exceedingly clear and readable. The alternative settlement designs that underlie RTGS and DNS have important implications for the structure and organization of national payment systems, including implications for the operational role of central banks. The question of the respective roles of the central bank versus private settlement organizations (clearinghouses) is of immediate interest in countries like Japan and the United States, where RTGS and DNS systems have operated side by side for some time. The question is also important in other developed and in developing financial economies, which are now sorting out issues related to the design of national arrangements for interbank settlement. The purpose of this note is to review the Rochet and Tirole analysis from a practitioner's standpoint, drawing on "real life" to help develop further the reasoning that has been started. It is hoped that this review will provide the basis for further analysis that is even more relevant for public policy. My comments are in four parts. First, I underscore the importance of the issue concerning coexistence of and interaction between the RTGS and DNS design alternatives for the organization of national payment systems. Second, I attempt to clarify the institutional framework that is relied upon to examine the issue. Third, I identify additional factors that should be taken into account when examining choices and trade-offs between RTGS and DNS, in order to make the analysis more relevant. Finally, I suggest some questions in addition to those already posed by Rochet and Tirole, to help direct future public policy analysis.

Method for effecting an electronic payment transaction

Abstract: The invention relates to a method for protected payment with electronic payment means, such as 'intelligent' payment cards ('smart cards'), in a variable number of steps. In this connection, use is made of a non-reversible function (F), of which successive function values (βi) are provided by the payment means (1, I) to the payment station (II) in question by way of proof of payment. On the basis of these function values (βi), there may take place both a verification and a determination of the number of steps. Such method finds application, e.g., in public telephones and in copiers. The invention further relates to a payment means and a payment system for applying the method.