| Method, system and apparatus for the establishment of a virtual banking environment in a merchant venue while increasing the deposit-based assets of optionally interfaced traditional banking institutions subject to fractional-reserve banking -> Monitor Keywords |
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  Method, system and apparatus for the establishment of a virtual banking environment in a merchant venue while increasing the deposit-based assets of optionally interfaced traditional banking institutions subject to fractional-reserve bankingUSPTO Application #: 20080093438Title: Method, system and apparatus for the establishment of a virtual banking environment in a merchant venue while increasing the deposit-based assets of optionally interfaced traditional banking institutions subject to fractional-reserve banking Abstract: A system, method and associated apparatus for establishing virtual banking in a merchant venue or syndication of merchants to a consumer while optionally increasing the deposit-based assets of a related traditional banking institution, having a consumer portable device for containment of currency amounts linked to the consumer's account and enabled to perform commercial transactions at the direction of the consumer that affect the balance of the consumer's account, which consumer portable device also displays balance and transactional information; a node device for containment of currency amounts accurately reflecting the consumer's account and optionally associated with a captive account at the banking institution and enabled to perform commercial transactions that affect the balance of the consumer's account in accordance with instructions received from the consumer portable device, which node device also optionally provides for balance, statements, transactional information, and profiling of the consumer's transactional activities; an interface between the portable device and the node device for communication therebetween to accurately affect commercial transactions between the two; transacting at least one commercial transaction of the commercial transactions between the two devices; and if there is an optionally related captive account at a financial institution, accurately communicating the transaction to the banking institution such that the balance of said captive account is properly maintained in accordance with the at least one commercial transaction. The commercial transactions also include credit, debit, ATM, money transfers and the like. (end of abstract)
Agent: Mitchell A. Stein, Esq. Stein Law, P.C. - Northport, NY, US Inventors: William O. Berntsen, Lawrence P. Casey USPTO Applicaton #: 20080093438 - Class: 235379 (USPTO) The Patent Description & Claims data below is from USPTO Patent Application 20080093438. Brief Patent Description - Full Patent Description - Patent Application Claims
FIELD OF THE INVENTION [0001]The present invention relates to the field of methods, systems and apparatus for the creation of a virtual banking environment in the venue of a merchant location offering a plurality of services while simultaneously providing heretofore unavailable consumer reporting functions and optionally interfacing with traditional institutional banks for increasing banking reserves and fractional-reserve banking, while employing electronic methods, systems and devices to enable virtual banking in the merchant venue and to gather predominantly the market for the unbanked and underbanked. BACKGROUND OF THE INVENTION [0002]The world of financial transactions including banking (both institutional and virtual--where services akin to traditional banks are provided but without the cloth of the traditional banking institution) is in a state of evolution. Among the elements of import lie the enormous volume of merchant-related activities--from check-cashing, bill payment, money orders, ATM functions, money transfers, credit cards, debit cards, gift cards and the like, and the impact upon the world of the so-called "unbanked" or "underbanked." This former class, which includes those who have no bank accounts (the "unbanked") to those who may have access to banking services yet do not generally use the same (the "underbanked") estimated at some 73 million of 208 million income earning American households (approximately 33.2% of all), are those who are unable to hold a bank account in the traditional method, for credit or other reasons, and are relegated to living on the essential fringes of the banking world. While the volume money that passes through this class is large, the ability for banks to utilize such money and for those in the class to actually grow into "bankable" households with credit and normal bank accounts has heretofore been a relative impossibility. The numbers of this class rise, while the solution to blend this group into the traditional banking scenarios has remained an unresolved problem. It is one of the objects of this invention to provide solution(s) that fall within the rubric of legal structure. Lying behind this array of elements is a fairly well-established, yet unwieldy banking system, including fractional-reserve banking, which has been established over a multiplicity of years, but yearns to grow to meet these newly developing demands. These elements and solutions are explained and integrated herein. [0003]For example, the traditional approach of banks courting savings customers has given way to an estimated 14% of U.S. income earners, as much as 28 million people, lacking in bank accounts, with another 22%, or about 45 million people using banks intermittently. Such people are often called the "unbanked" or "underbanked" but nonetheless spend an estimated $11 billion in fees for some 324 million "alternative" financial transactions annually at check-cashing outlets, money-wire companies or other operations, all as reported by the Chicago-based Center for Financial Services Innovation. Many banks are anxious to capture this customer base, but both customers and banks are concerned with risks inherent in becoming "banked." Typically, such "unbanked" customers use a myriad of check-cashing facilities to liquidate their paychecks and then to use the cash thereby received. Banks and merchants are increasingly establishing facilities to handle these types of transactions, as the fees charged through normal card-based banking systems are unwieldy. It is one of many objects of this invention to capture the transactions of these so-called "unbanked" and "underbanked" customers and to provide them with services that are equivalent to those typically provided to the banked with reservations as necessary to minimize the risk. [0004]Indeed, in an almost transparent attempt to utilize the enormous volume of sales activities and to avoid the costs of traditional credit card transactions, Wal-Mart sought an application to itself become a bank--an application withdrawn on or about Mar. 16, 2007 for reasons that may appear mysterious, yet, have become clearer. Upon the heals of withdrawal of the application, Wal-Mart announced an array of services largely specialized to its customer base, with the utilization of GE Money Bank, including financial services, services for the unbanked and underbanked and money centers. It is unclear the extent of the tie-in to GE Money Bank, although the advantages are many. [0005]The Office of Regional and Community Affairs of the Federal Reserve Bank of New York released a white paper in August of 2005 ("Stored Value Cards as a Method of Electronic Payment for Unbanked Customers") which generally indicates the issues confronting the merchant, open and closed loop cards, and Regulation E which governs electronic fund transactions. The deepest concern expressed therein is that the nature of stored value cards ("SVC's) does not permit the consumer to create credit portfolio's, basically as a result of the inability to render account statement information. Indeed, one can well recognize that a simple SVC is but a magnetic sweep means and a code identifier--there is no specific means for a consumer who uses such an SVC to be capable of even knowing the card balance, let alone checking on account activity other than a manual process. It is thus an object of the instant invention to satisfy the long felt need in the industry to provide a stored value-styled environment wherein a device provides the very equivalents of statements, transactions, histories and balances on demand to the consumer and downloaded at merchant sites. [0006]It should be further appreciated that whether open or closed loop, the merchant who endeavors to provide a system that enables statement equivalents, transactions, histories and balances to the consumer, maintains the same in-house, and generally supervises the transactions. To be gained by an interface with a financial institution are many advantages, yet they are but optional to the merchant. Indeed, in "one stop shops" like Wal-Mart, it is easy to recognize that a modality that permits the full gamut of customer services equivalent to that of a bank through a device that is SVC-type but provides the necessary predicates to satisfy traditional Regulation E requirements, permits the merchant to act as if it were a bank, and even to provide credit services as if it were a virtual bank, where the security for the transactions is not the FDIC (which guarantees up to $100 k per account), but is, instead the merchant which can also securitize a much greater amount. Furthermore, it is not clear that where the merchant acts in the capacity of a virtual bank it is subject to regulatory authority, while providing perhaps greater services and security than an actual regulated bank. That having been stated, however, it is also observable that in such environments, the merchant may very well wish to be tied in with a bank (as Wal-Mart has done with GE Capital) in order to increase fractional-reserve banking opportunities, as explained in greater detail hereinbelow. [0007]It is thus an object of the present invention to provide a virtual banking environment in a merchant location and the option to the merchant of "banking" one or more of its transactions with a regulated banking institution to enable fractional-reserve banking, via a method, system and series of devices that provide a plurality of SVC-type services to the consumer while simultaneously giving statement equivalents, transactional information, histories and balances on demand. Indeed, one could well recognize that the instant invention renders the merchant a virtual bank--perhaps without regulation--permitting a potential intrusion into the world of the banked in a significant way, in that the merchant can offer protection in excess of the $100 k FDIC limit per account, backed not by the full faith and credit of the United States Government (with the debt load and fees involved), but instead backed by the actual security of the merchant. If the merchant is robust, with positive earnings and significant inventory, these assets can permit the merchant to potentially offer a degree of per account protection of, e.g., $250 k, thereby attracting the attention of the banked investor who may well wish the greater protection that the robust merchant can offer. Inasmuch as the method, system and devices of the instant invention provide "on demand" account information (as shown hereinbelow), it is thus an object of the instant invention to enable merchant(s) with the ability to act as virtual banks primarily targeting the unbanked and underbanked, but likewise viable for the banked. [0008]By way of further background, customers who are banked, unbanked and underbanked are sought after by the banking community. In the course of any given day, such customers utilize a composite of mechanisms to perform financial transactions. In particular, credit cards, debit cards, checks and cash are employed. As a subclass, "gift cards" are used: an industry that has arisen with some reported 54,100,000 Internet sites offering gift cards for purchase. Often, as well, merchants create cash checking and ATM scenarios just to have the marginal float associated therewith. [0009]Gift cards" are generally themselves a class of "stored-value cards" which represent money that has been given to the card issuer for the acquisition of the card which often include not just a pre-determined amount of money to be used on the card, but a cost for the acquisition itself. Typical applications include items like transit system cards, prepaid telephone cards, and merchant-specific cards. For example, transit system cards are acquired by passengers to eliminate the handling of money in connection with a transit ride (buses, subways, trains and the like). Of important among transit system cards--like card usage in general--is the ability to accurately track usage, not just of the transit system, but individual profiles of the user. It is recognized that users are pattern-oriented: taking the same means of transportation at predetermined times daily and purchasing habits are predicable, making the data acquired in connection with card usage itself a valuable commodity. Predictability of the profiled customer usage also plays a key role herein in the advantages that can be obtained in a virtual merchant environment as well as fractional-reserve banking, as discussed in greater detail below. [0010]Fundamentally the only difference between a gift card and a stored-value card is that the former is a closed loop system. Additionally, the stored-value card is reloadable in the sense that additional money can be added thereto at any given time for an additional fee. Gift cards are usually of a predetermined amount provided by a specific merchant. In this sense, in the gift card process all activity remains captive within the specific merchant's environment in which the acquisition of the card has occurred. The broader category of stored value cards still has a predetermined amount--that amount having been provided in order to place the substantial equivalent value on the card--but the system is open in that the card is typically a card that can be used in any location that utilizes the specific card service. In the instant invention, it is the intent to provide the full gamut of services, not just those limited to stored value cards but a full, virtual banking environment. [0011]It is important to understand the background of the card industry and its history to recognize the costs associated with the transactions and the driving need by merchants to avoid paying those costs and instead "capture" the entire transaction without having to pay to the card systems employed a percentage-based expense associated with the transaction. [0012]Since the 1980s, Visa U.S.A. (Visa) and MasterCard International (MasterCard), remained the bank-controlled credit card associations that together have accounted for approximately 70 percent of today's credit card market. Financial institutions, have been able to control the use of and access to their fee-based networks to the disadvantage to their merchant members. Recently, however, the credit card industry has been changing in that some merchants are now large enough to exert their own leverage (like Wal-Mart), legal defeats have impeded the ability of credit card associations to control the market, and some participants have developed new arrangements and alliances that may be a prelude to further changes in the industry. [0013]By way of background, merchant credit has been available since virtually the birth of civilization. Yet, the present-day credit card industry in the United States originated in the nineteenth century. In the early 1800s, merchants and financial intermediaries provided credit for agricultural and durable goods, and by the early 1900s, major U.S. hotels and department stores issued paper identification cards to their most valued customers. When a customer presented such a card to a clerk at the issuing establishment, the customer's creditworthiness and status were instantly established. The cards enabled merchants to cement the loyalty of their top customers, and the cardholders benefited by being able to obtain goods and services using preestablished lines of credit. Generally these cards were useful only at one location or within a limited geographic area--an area where local merchants accepted competitors' cards as proof of a customer's creditworthiness. [0014]In 1949, Diners Club established the first general-purpose charge card, enabling its cardholders to purchase goods and services from many different merchants in what soon became a nationwide network. The Diners Club card was meant for high-end customers and was designed to be used for entertainment and travel expenses. Diners Club charged merchants who accepted the card a 7% charge for each transaction. Merchants found that accepting Diners Club cards brought more customers who spent more freely. The Diners Club program proved successful, and in the following decade it spawned many imitators. Certainly, Diners Club created the fundamental notion of a closed loop card that could be used for purchase with merchants who had an established relationship with Diners Club--the issuer--and who paid the fee of 7% of all transactions for the right to accept the card. Each transaction was processed through Diners Club--with no intervening banks or other institutions--hence acting as a closed loop system. [0015]Whether closed or open looped systems, as explained hereinbelow, it is well understood that the expansion upon this basic principle has resulted in a huge volume of merchant sales and payments of billions of dollars to the card providers for the "privilege" to accept the cards. Interestingly, the charge per purchase absorbed by the merchant is largely transparent to the customer, who pays the ticket price and tax, but has little to no idea that a significant percentage is paid by the merchant in connection with the transaction. Merchants are thus interested in minimizing the costs associated with accepting credit card transactions, thereby maximizing profits by minimizing the fees associated with such cards--another object of the instant invention. [0016]The industry of charge cards grew from its birth with Diners Club in 1949. In the late 1950's, Bank of America, located on the West Coast, began the first general purpose credit card (as opposed to charge card) program. At that time, banking laws placed severe geographic restrictions on individual banks. Virtually no banks were able to operate across state lines, and additional restrictions existed within many states. Yet for a credit card program to be able to compete with Diners Club, a national presence was important. To increase the number of consumers carrying the card and to reach retailers outside of Bank of America's area of operation, therefore, other banks were given the opportunity to "license" Bank of America's credit card. At first Bank of America operated this network internally. As the network grew, the complexity of interchange--the movement of paper sales slips and settlement payments between member banks--became hard to manage. Furthermore, the more active bank licensees sought greater control over the network's policy making and operational implementation. To accommodate these needs, Bank of America syndicated its credit card operations into a separate entity that evolved into the Visa network of today. [0017]In 1966, in the wake of Bank of America's success, a competing network of banks issuing a rival card was established which thereupon evolved over time into what is now the MasterCard network. In these scenarios, an "open" model is used, in that a bank that issues a card is not necessarily the bank that acquires the transaction. In particular, when a consumer purchases at a merchant, that merchant's banking relationship is considered the acquiring bank, which passes back through the Visa/MasterCard networks, back to the issuing bank--the bank that originally issued the card to the cardholder. Again, from the customer's vantage point, that the issuing bank is different from the acquiring bank (in that the merchant has a banking relationship with a bank other than the issuing bank) is transparent, yet the fees paid not just by the merchants but by the inter-banking systems become sizeable as the volume has increased enormously. [0018]In addition, firms that were not constrained by interstate banking restrictions formed card networks on the single-issuer model (the model established by Diners Club, in which many merchants accept payments on a card with a single issuer and hence had a single relationship with the card provider and/or issuing bank.) For instance, the American Express Company introduced its charge card system in 1958, and Sears, Roebuck and Co. established the Discover Card credit card in 1986. Among the challenges each of these networks faced was bringing together large numbers of cardholders with large numbers of merchants who accepted the cards as payment. Achieving a sufficiently large network was hard, partly because merchants, especially larger retailers, were reluctant to honor credit cards that would compete with their own store-branded credit cards. Some smaller merchants, however, viewed general-purpose credit cards as a way to compete with larger merchants for customers. Merchants of all sizes have traditionally remained averse to having fees imposed on them by the credit card network. [0019]Currently the U.S. credit card industry is a mature market. Today credit cards are widely held by consumers: in 2001 an estimated 76 percent of families had some type of credit card. Recent estimates suggest that among all households with incomes over $30,000, 92 percent hold at least one card, and the average for all households is 6.3 credit cards. Credit cards are also widely accepted by merchants, and with the recent addition of fast-food and convenience stores to the credit card networks, credit card payments are now processed at nearly all retail establishments. [0020]The structure of the credit card industry is also noteworthy. As noted above, the general-purpose card market is dominated by Visa and MasterCard, two bank-controlled card associations. The four major card networks have a variety of corporate structures. Visa is a nonstock for-profit membership corporation that as of 2004 was owned by approximately 14,000 financial-institution members from around the world. Until 2003 MasterCard was a nonstock not-for-profit membership association, but then it converted to a private-share corporation known as MasterCard Inc., with the association's principal members becoming its shareholders. MasterCard has more than 23,000 members (including the members of MasterCard's debit network). The Board of Directors of Visa is elected by the member banks with voting rights based primarily on transaction volume. Control of the Visa and MasterCard card associations is roughly proportional to the transaction volume of member issuing banks. American Express is an independent financial services corporation, and Discover Financial Services is now a subsidiary of investment bank Morgan Stanley Dean Witter & Co. The issuance of credit cards is concentrated among the five banks, now narrowing with the acquisition of MBNA by Bank of America including its subsidiary MBNA America Bank, NA (MBNA), a monoline credit card bank, and Washington Mutual, Inc.'s acquisition of Providian Financial Corporation, including its Providian National Bank, another monoline credit card bank. As the conglomeration has occurred, so too has the consternation of the merchant population discussed further hereinbelow [0021]In the industry today, debit cards are also quickly expanding as a product line. Debit transactions reached a record $15.6 billion in 2003. Debit cards are essentially cards that can be used either to directly withdraw cash from cash-dispensing equipment at banks (like ATM's), or can be used as ATM withdrawals at merchant locations, or as credit cards via Visa, MasterCard, or other networks. In the ATM scenario, the amount of a payment made using a debit card is immediately withdrawn from the cardholder's checking account, with the result that, for the card issuer, both the opportunity to earn interest on revolving balances and any inherent credit risk are eliminated. Likewise, when used as a credit card, despite the availability to have the money immediately withdrawn as an ATM-styled transaction, the credit card fee charged by the networks is immediately invoked. (Reasons behind the choice by the consumer are also explained hereinbelow, although the consequential costs are again born by the merchant and largely transparent to the customer.) [0022]The ability to use the Visa and MasterCard networks to post debit transactions was developed in the 1970's, but not until the 1990's was there a significant volume of transactions in these systems. If a merchant has a personal identification number (PIN) entry keypad at its sales location, the transaction is routed like an ATM transaction. In the absence of a keypad, the merchant compels the customer to execute a credit-styled transaction authorization. These transactions then travel through the payment systems like a credit card transaction (except that the cardholder's bank will be informed of the transaction immediately and will be able to hold the customer's funds until settlement is completed). Continue reading... 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