Conducting commerce between individuals with integrated shipping

[0001] This application claims priority of U.S. provisional patent application No. 60/135,103 filed Feb. 19, 1999 entitled “Method And Apparatus For Person To Person Commerce,” which is hereby incorporated by reference.

[0002] This application is a divisional of U.S. patent application No. 09/352,468 filed Jul. 14, 1999 entitled “Method and Apparatus for Conducting Commerce Between Individuals,” which is hereby incorporated by reference.

BACKGROUND OF THE INVENTION

[0003] The present invention relates to electronic commerce and more particularly to systems and methods for conducting electronic commerce between individuals.

[0004] Consumers today have a large number of payment choices when purchasing goods or services in person at merchant storefront locations or in mail-order or telephone commerce (referred to herein as “physical world” transactions). For example, most merchants in these transactions accept cash, checks, travelers checks, money orders, and a variety of payment cards, including debit cards, credit cards, and even smart cards. Most consumers have one or more payment cards in their wallet as well as cash and checks. With access to these forms of payment, a consumer can purchase almost any good or service from any merchant.

[0005] Consumers also have a large number of choices of how to purchase goods from other individuals in the physical world. For example, at a garage sale, a consumer can choose to hand a seller cash, a personal check, a travelers check, or a money order for goods being sold at the garage sale. The seller can choose to accept or not to accept the purchaser's check based on information available to the seller at the time of purchase. Individuals who are not merchants are not able to accept payment cards for purchases because of payment rules established by banks and card associations which, essentially, limit payment card acceptance to qualified merchants.

[0006] Many existing forms of payments in the physical world depend upon the seller's ability to trust, or to identify the buyer. For example, a merchant may require a form of identification before accepting a consumer's check for payment. A catalog merchant may wait until a consumer's check has cleared or a payment card transaction has been authorized before shipping the goods to the consumer. A person selling goods to another individual (e.g., at a garage sale, etc.), may require an even greater number of forms of identification from a prospective buyer who chooses to use a check or may simply insist on cash as the only accepted form of payment. Consumers have learned to accept and live with these limitations in the physical world, partly because of the benefits they provide (e.g., greater convenience in form and mode of payment, etc.). The reduced fraud losses made possible by the use of existing payment systems directly benefits banks and merchants and indirectly benefits consumers in the form of reduced transaction costs.

[0007] Another aspect of buying and selling goods in the physical world is the consumer's ability to inspect the goods before paying for them. For example, a consumer interested in buying a used television at a garage sale may inspect it before purchasing it. If, upon inspection, it turns out that the television is does not work properly, the purchaser can choose not to buy it or to offer the seller a lower price.

[0008] Recently, advances in technology have opened up new marketplaces. In particular, the Internet has developed into a new means by which consumers can access and purchase information, communicate and pay for services, and acquire and pay for goods. Because of the anonymous nature of communication networks, new methods and systems must be developed to substitute for existing procedures used in physical world transactions.

[0009] A number of new technologies have been developed to allow payments over the Internet. For example, the Secure Electronic Transaction (SET) specification has been developed to allow customers to make payment card transactions securely over the Internet. The SET protocol, however, is intended for use between consumers and merchants. Other protocols and tools have also been developed to enable transactions to be conducted over the Internet, but these methods are again limited to transactions conducted between consumers and merchants.

[0010] None of these existing systems are designed to permit transactions to be conducted between individuals. So-called “stored value” smart card systems have been developed which may be used to conduct commerce between individuals, such as the Net1 system described in U.S. Pat. No. 5,175,416. In general, these smart card systems utilize electronic purses which contain tokens representing value which may be passed from one consumer to another. However, these chip card-based stored value smart card systems are not yet in widespread use in the U.S. or in other countries around the world. Therefore, it would be desirable to provide a method and system which allows individuals to conduct transactions with other individuals using existing payment cards.

[0011] This need increases as new trading places develop on the Internet. A recent phenomenon is the development of auction sites and classified ad sites where individuals can sell goods to other individuals over the Internet. Unfortunately, there is no widely-available payment scheme that is well-suited for these types of transactions. Most auction or classified ad sites require that a money order or cashiers check be delivered to the seller before the seller needs to ship the product. This places a great risk of loss on the buyer who has little or no recourse if the goods are damaged or not even shipped. Unlike the garage sale buyer in the physical world who has a chance to inspect and test the merchandise before paying for it, the auction site or classified ad site buyer in the Internet world must currently proceed on faith that the seller has honestly and accurately represented the quality and state of the goods to be purchased. Further, it is inconvenient, slow and costly for the buyer to purchase goods using a cashier's check or money order. It would be desirable to provide a method and system allowing a consumer to purchase goods from another non-merchant individual without needing to go through the process of obtaining a cashier's check or money order or waiting for the payment to be mailed to the seller.

[0012] At least one company, recognizing this problem, has developed an “escrow” service designed to facilitate payment between individuals for Internet transactions (see, e.g., the system described at www.iescrow.com). In these escrow type systems, the buyer pays the escrow company the amount agreed-upon between the buyer and seller. After the seller has shipped the goods to the buyer and the buyer has had a reasonable chance to inspect the items(s), the escrow company pays the seller (minus a commission). Unfortunately, however, this form of an escrow service introduces new problems and complexity into the purchase process: the escrow service provider is actually the entity being paid for the goods; the escrow company is a third party to the transaction and is a company that is generally not known to the buyer and seller; or the escrow company may be paid by the buyer yet somehow fail to pay the seller.

[0013] Further, the escrow service provider typically pays the seller using a check or money order. This can be an inconvenient and slow process for the seller, who would like to be paid quickly and conveniently. The commission charged by the escrow service, which can be relatively large, is a deterrent to many buyers and sellers, especially where the transaction involves a small dollar amount (e.g. less than $20). Commissions and shipping can add 50% or more to the cost of purchasing an item. One reason that these escrow services charge such a high commission is the relatively high overhead expense required to receive and generate payments via checks and money orders.

[0014] Accordingly, it would be desirable to provide a system and method for allowing individual consumers to advertise and sell their goods to other individual consumers which allows the efficient use of existing payment cards to facilitate the transaction. Further, it is desirable to allow the purchase amount to be directly credited to a seller's payment card account. The system should be easily integrated into Internet commerce and package shipping web sites.

SUMMARY OF THE INVENTION

[0015] Accordingly, a person to person payment system and method is described which allows individuals who have current and valid payment cards to make payment to and receive payment from other individuals who have current and valid payment cards.

[0016] According to an embodiment of the invention, a transaction server is provided which is coupled to financial authorization network. Individual participants in the payment system register with the transaction server by providing information regarding at least one payment card account. Successful registration requires that the payment card account be valid. In addition, other risk reduction analyses may be performed at the time of registration to provide an enhanced level of security and/or to reduce the risk of fraud or credit loss. Once registered, participants are given at least an account identifier (ID) to reference and access the established account record.

[0017] Participants may negotiate the terms of purchases over the Internet or in the physical world. Once a sale price and terms have been established, one party contacts the transaction server and provides details regarding the transaction, including the party's account ID. A transaction record is created by the transaction server for the current transaction. The other party to the transaction then confirms details regarding the transaction and provides his or her account ID. This information is added to the transaction record, and authorization and other risk analyses are performed on the transaction.

[0018] If the transaction is authorized, the buyer's payment card account is debited. The amount debited may either be directly credited to the seller's payment card account or may be held in an escrow account for a period of time. Preferably, if an escrow account is used, the escrow period is established to allow the buyer to receive and inspect the goods. Upon successful completion of the escrow period, the payment amount is directly credited to the seller's payment card account.

[0019] In alternative embodiments, shipping terms may also be negotiated and paid for directly from the buyer's payment card account or the escrow account. Further, transaction fees may also be directly deducted from the buyer's payment card account or the escrow account.

[0020] In the following description, numerous specific details are set forth in order to provide a thorough understanding of the present invention. It will be apparent to one skilled in the art, however, that the present invention may be practiced without these specific details. In other instances, well-known features have not been described in detail in order not to unnecessarily obscure the present invention.

[0021] A further understanding of the nature and advantages of the invention may be realized by reference to the remaining portions of the specification and the drawings.

BRIEF DESCRIPTION OF THE DRAWINGS

[0022]FIG. 1 is a block diagram depicting a network environment implementing an embodiment of the present invention;

[0023]FIG. 2 is a block diagram depicting a network payment environment implementing a specific embodiment of the present invention;

[0024]FIG. 3 is a flow diagram depicting a seller and a buyer registration process according to an embodiment of the present invention;

[0025]FIG. 4 is a flow diagram depicting a purchase process according to an embodiment of the present invention;

[0026]FIG. 5 is a block diagram depicting a transaction server according to an embodiment of the present invention; and

[0027]FIGS. 6A and 6B are schematic illustrations of databases of FIG. 5.

DESCRIPTION OF SPECIFIC EMBODIMENTS

[0028] Features of embodiments of the present invention will now be described by referring first to FIG. 1, where a payment system <b>100</b> according to the invention is shown. Payment system <b>100</b> is shown implemented across a network <b>102</b>. Network <b>102</b>, in a particular embodiment, is the world-wide network of networks known as the “Internet”. Upon reading this disclosure, those skilled in the art will recognize that other network and communication infrastructures may also be used in the implementation of the present invention. Further, variations of the present invention may be implemented without reliance on the Internet or other networks. Although embodiments of the invention may be implemented using other networks, the Internet is currently preferred because of its accessibility from around the world using common interfaces and protocols. These common interfaces and protocols are well known in the art. For example, the Internet uses a communication protocol referred to as the “Transmission Control Protocol/Internet Protocol” (TCP/IP). The Internet also makes use of a number of common information transport protocols, including basic file transfer protocols (FTP). Other, more interactive, protocols have also been developed for use on the Internet.

[0029] In the past several years, a graphically-interactive information transport protocol has been widely accepted on the Internet. This protocol, called the “Hyper Text Transfer Protocol” (HTTP) enables use of a distributed information system known as the “world wide web” (the “web” or “WWW”) which follows a conventional client-server model. The web allows client computers to use browser software to view and interact with documents residing in servers across the Internet. Web clients and servers communicate using the HTTP protocol to transfer both textual and graphical information in a coordinated manner. An HTTP session is established between a client browser and a server based on a request initiated by the client browser. This request typically involves the client browser's specification of a Uniform Resource Locator (URL) of the desired server. The request typically follows the format: &lt;protocol identifier&gt;://&lt;protocol server address&gt;/&lt;qualifier&gt;, where the protocol may include, e.g., HTTP, FTP, etc. The development and proliferation of web servers providing information via the WWW has led to an explosion of Internet commerce applications, including the development of auction and classified ad sites.

[0030] For the purposes of this disclosure, examples will be given referring to Internet sites and resources which utilize the HTTP protocol. Those skilled in the art will recognize that other network interfaces and protocols may be used. For example, network <b>102</b> may be a public or private X.25 network using SNA or ATM protocols, etc.

[0031] Payment system <b>100</b> includes a number of terminals <b>108</b><i>a</i>-<b>108</b><i>n </i>and a number of servers <b>104</b><i>a</i>-<i>n. </i>In general, terminals <b>108</b><i>a</i>-<i>n </i>are small computers or “personal computers” or workstations operated by human operators to retrieve, browse, or interact with information and service providers across the Internet. Servers <b>104</b><i>a</i>-<i>n, </i>in general, are larger computers or workstations configured and used to store data and information for retrieval over the Internet. In this simplified scenario, terminals <b>108</b><i>a</i>-<b>108</b><i>n </i>are clients and servers <b>104</b><i>a</i>-<i>n </i>are the servers in the client-server relationship. Because of the design of the Internet and the web, roles of the computers can be reversed in any given transaction, for example, the smaller computers may also act as “servers” by providing information to the larger computers.

[0032] The web uses the client-server model to communicate information between clients and servers. Web servers are coupled to the Internet and respond to requests from web clients.

[0033] Terminals <b>108</b><i>a</i>-<i>n </i>and servers <b>104</b><i>a</i>-<i>n </i>may be implemented using any of a number of computing platforms, such as desktop personal computers, laptops, personal digital assistants, screen phones, workstations, etc., running an operating system such as Windows, DOS, UNIX, OS/2, NT, or the like.

[0034]FIG. 2 shows an embodiment of a payment system <b>200</b> according to the invention in more detail, and includes a number of terminals <b>208</b><i>a</i>-<i>n </i>connected to a network <b>203</b>. For simplicity, these terminals are shown as being directly coupled to network <b>203</b>. Those skilled in the art will recognize that terminals <b>208</b> may also be coupled to network <b>203</b> through, e.g., Internet Service Providers (ISPs), through corporate networks, or the like.

[0035] A transaction server <b>210</b> is also shown connected to network <b>203</b>. Transaction server <b>210</b> is coupled to a transaction server storage device <b>212</b> and is also coupled to a financial network <b>220</b>. In one specific embodiment, transaction server <b>210</b> is operated and managed on behalf of a financial institution or a payment card association, such as Visa, and follows established risk control and management rules. Transaction server <b>210</b> is configured to send and receive financial messages to financial network <b>220</b> which, in one specific embodiment, is the VisaNet network. Preferably, financial network <b>220</b> is a network which permits transaction server <b>210</b> to send authorization requests and inquiries to payment card issuing institutions, to receive authorization and inquiry responses, and to cause funds clearing and settlement functions to take place in a manner to be described below.

[0036] A host server <b>202</b> is also shown connected to network <b>203</b>, and is configured to store and manage a number of classified advertisements posted by a number of sellers, including a seller operating terminal <b>208</b><i>n. </i>Posted classified advertisements are stored in host server storage device <b>204</b> for viewing by potential buyers, including a buyer operating terminal <b>208</b><i>a</i>. For example, a potential buyer may view classified advertisements by directing a web browser running on terminal <b>208</b><i>a </i>to the IP address of host server <b>202</b> (e.g.,

[0037] http://www.hostname.com), and by following any HTTP menus or links established by the operator of host server <b>202</b>. This host server <b>202</b> may be a server operated by (or on behalf of) a newspaper, a so-called “Portal” site, a company in the business of facilitating commerce between individuals, or any other entity interested in providing a capability allowing individual sellers to sell new or used goods or services to individual buyers.

[0038] A shipping server <b>214</b> is also shown connected to network <b>203</b>. Shipping server <b>214</b> may be any site established or run on behalf of a company or agency in the business of shipping goods (e.g., DHL, Federal Express, U.S. Post Office, etc.).

[0039] Further details regarding an embodiment of transaction server <b>210</b> are shown in FIG. 5. Transaction server <b>210</b> includes a processor <b>230</b>, such as a conventional Intel microprocessor or the like. Processor <b>230</b> is in communication with storage device <b>212</b> which may be an appropriate combination of magnetic, optical and/or semiconductor memory. Processor <b>230</b> and storage device <b>212</b> may each be located within a single computer or other computing device. Alternatively, or in addition, they may be connected to each other via a remote communication medium (e.g., a serial port, telephone line, or RF transceiver).

[0040] Processor <b>230</b> is operatively coupled to an input device <b>232</b>, which may include a keyboard or keypad for transmitting input or control signals to processor <b>230</b>. A display device <b>236</b> is preferably a video monitor for displaying information from processor <b>230</b>, while output device <b>238</b> may be a printer for printing hardcopy output from processor <b>230</b>. A large number of types of input devices, display devices, and output devices are known to those skilled in the art, and need not be described in detail herein.

[0041] Communication device <b>234</b> is preferably a telephone or cable modem allowing communication between transaction server <b>210</b> and network <b>203</b> (of FIG. 2). Alternatively, communication device <b>234</b> may be a network adapter, or any of a number of different types of communication devices known in the art.

[0042] Storage device <b>212</b> stores a program <b>240</b> for controlling processor <b>230</b>. Processor <b>230</b> performs instructions of program <b>240</b>, and thereby operates in accordance with the present invention, and particularly in accordance with the methods described in detail herein. Program <b>240</b> further includes program elements that may be necessary, such as an operating system and “device drivers” for allowing processor <b>230</b> to interface with components coupled to processor <b>230</b> (e.g., input device <b>232</b>, etc.). Appropriate device drivers and other necessary program elements are known to those skilled in the art, and need not be described in detail herein.

[0043] Storage device <b>212</b> further stores databases or datastores, including an account database <b>242</b> and a transaction database <b>244</b>. Account database <b>242</b> and transaction database <b>244</b> and data stored therein are described in more detail below. As will be understood by those skilled in the art, the schematic illustrations and accompanying descriptions of the databases presented herein are exemplary arrangements for stored representations of information. A number of alternative arrangements may be employed other than the databases and tables shown herein. Similarly, the illustrated entries and data elements represent exemplary information, but those skilled in the art will understand that the number and content of the entries can be different from those illustrated herein.

[0044] These components, when implemented according to features of the present invention as described below, interact to permit participating individuals to purchase goods or services from other participating individuals using payment cards or other types of accounts, such as checking or savings accounts, money market accounts, etc.

[0045] Referring again to FIG. 2, in one specific embodiment, payment system <b>200</b> is configured to enable a first participant operating terminal <b>208</b><i>a </i>to purchase goods or services from a second participant operating terminal <b>208</b><i>n. </i>In this particular embodiment, payment system <b>200</b> may be used to support any type of transaction between participants, including, for example: a purchase of goods offered by one participant at a garage sale; a purchase of goods offered by a participant in a traditional newspaper classified ad; a purchase of goods over the Internet via, e.g., an auction or classified ad site; a purchase of services provided by one participant to another; and any other similar transaction between participants.

[0046] This first embodiment will be described by first referring to FIG. 3, where a registration process <b>250</b> is depicted. In describing this embodiment, references will also be made to components of FIG. 2. In this embodiment, registration process <b>250</b> is generally the same for all participants and allows registrants to act as a buyer, a seller or both. Once registered, a participant will be given a unique identifier, or “account ID” which he or she can communicate to other individuals to let them know that the participant is able to pay or receive payment using the payment methods of the present invention. Alternatively, as discussed below in conjunction with FIG. 4, participants may register at the time of completing a transaction.

[0047] Registration process <b>250</b> begins when a participant contacts transaction server <b>210</b> (step <b>252</b>). A participant may contact transaction server <b>210</b> in a number of ways. For example, a participant may contact the server over network <b>203</b> by directing a web browser running on terminal <b>208</b> to the IP address of transaction server <b>210</b> (e.g., http://www.transactionserver.com), and by following any HTTP menus or links established by the operator of the transaction server. Alternatively, a participant may register by contacting transaction server <b>210</b> using electronic mail or other messaging services. As a further alternative, a participant may contact an operator of transaction server <b>210</b> by interacting with a sales agent or voice response unit over a telephone or in person.

[0048] Once a participant has contacted transaction server <b>210</b> and has indicated a desire (e.g., by following menu instructions, etc.) to register for participation in the payment service, a set of payment rules and regulations may be presented to the participant by transaction server <b>210</b> (step <b>254</b>). These rules are provided to each participant to ensure that he or she fully understands the terms under which payment may be made using a payment card and the terms under which payment may be credited to a payment card account from a buyer's payment card account. In one embodiment, the payment rules may be provided to participants in the form of a so-called “click-wrap” contract which must be completed and agreed to by each participant before further processing can occur (step <b>256</b>). A participant refusing to provide required cardholder information will also cause the registration process to abort.

[0049] If the participant agrees to the rules, registration processing continues at step <b>260</b> where the participant is prompted to enter specific account and cardholder information. At this step, the participant is asked to provide detailed account information such as: cardholder name; address; e-mail address; telephone number; payment card account number; the expiration date of the payment card to be registered. Preferably, this information is entered in a secure session between terminal <b>208</b> and transaction server <b>210</b>. For example, a secure session may be established using secure HTTP (SHTTP) or secure socket layer (SSL) techniques.

[0050] Other security techniques may also be used, so long as the confidentiality of the entered information is preserved. In addition, techniques may be used to authenticate the identity of the participant. For example, the participant may be identified using a public key certificate or other techniques known in the art. Details regarding security techniques to preserve the confidentiality of information or to authenticate the identity of participants is described in <i>Applied Cryptography, </i>Schneier 2d Ed. 1997, the contents of which are hereby incorporated by references for all purposes.

[0051] After transaction server <b>210</b> receives all required cardholder information, an account check may be performed (step <b>262</b>). An account check is any check or verification process performed to verify the authenticity and validity of the account information provided in step <b>260</b> and may comprise the generation of a balance inquiry message or other authorization check of the account information through financial network <b>220</b>. For example, if the Visa VisaNet system is used, transaction server <b>210</b> may generate a balance inquiry message to request the balance of a cardholder's checking, savings, credit card, or other account information provided in step <b>260</b>. For checking, savings, and accounts other than credit card accounts, the financial institution either returns the account ledger balance or the account available balance. For credit card accounts, the payment card issuer returns either the amount of credit remaining to buyer <b>208</b> or buyer's credit limit. Alternatively, a status check request may be generated which is an authorization request for one unit of currency (e.g., 1 U.S. dollar). In response, an authorization message will be returned to transaction server <b>210</b>. Transaction server <b>210</b>, depending upon the response received, may allow the registration process to proceed or may terminate the registration in step <b>264</b> (e.g., where the participant's account has no available funds remaining or where the account is no longer valid). The type of check performed at step <b>262</b> may depend upon, e.g., whether a participant is registering to be a buyer, a seller, or both (e.g., if a participant is registering only to be a seller, information regarding her account balance would probably not be required).

[0052] Additional checks may also be performed at this step <b>262</b>. For example, an address verification check may be performed to verify that the address provided at step <b>260</b> is accurate and matches records maintained by the payment card issuer. Alternatively, or in addition, the entered payment card information may be checked against hot card lists to determine if the card has been reported as being lost or stolen. Other verification and status checks may also be performed at this stage. For example, transaction server <b>210</b> and/or financial network <b>220</b> may perform a risk analysis for each card registration, taking into account data elements for the present registration, such as: the past history of the participant attempting to register; frequency of attempts at registration; other activity on the payment card accounts being registered; nature of the participant's e-mail addresses (e.g., are they anonymous e-mail addresses which do not verify the identity of the participant?); Internet dial-in location; etc. Risk techniques known in the art may be used to assess a risk variable to each transaction based on an analysis of these variables. In the event that a particular registration appears to carry a high probability of fraud, the registration should be aborted without generating a cardholder account record or confirmation message. For example, neural network or rule based fraud analysis and detection techniques may be used to analyze the account and to predict or detect fraudulent or risky activity.

[0053] In some circumstances, if the account check or status check fails at step <b>263</b>, the participant may be given an opportunity to re-register using an alternative card (step <b>265</b>). In general, the opportunity to re-register should not be given if a risk analysis performed at step <b>262</b> indicated that the registration involved a risk of fraud (e.g., the participant had attempted to register a lost or stolen card, etc.).

[0054] If, after performing a successful status or other account check, transaction server <b>210</b> determines that registration may continue, a cardholder account record is generated for the participant (step <b>268</b>). This cardholder account record contains information identifying the participant and includes information input at step <b>260</b> and may also include other information provided by transaction server <b>210</b>, including: a unique identifier of the participant, referred to herein as an “account ID”; an expiration date for the registration; information from the authorization request, status check and/or other fraud checks that were performed; etc. The account ID is generated uniquely for each participant and is used as a record locator to retrieve the cardholder account record. Those skilled in the art will recognize that the account ID may be generated in a number of ways, for example, it may simply be a counter incremented as each new participant registers or it may be a more complex unique number such as a random number or a digital signature based on registration information provided by the cardholder. Once a cardholder account record is generated for the participant and a unique account ID has been generated and assigned to the cardholder account record, the information is stored in transaction server storage device <b>212</b>. Preferably, the information is securely stored using techniques to prevent tampering, theft or other misuse of the information.

[0055] Transaction server <b>210</b> may then prompt the participant to select a password for use in making or accepting payments using the service (step <b>270</b>). The use of this password, in conjunction with the unique account ID, will allow the participant to act as a buyer or seller of goods using the payment techniques of the present invention without needing to re-enter personal information and payment card information for each transaction. Instead, as will be discussed, the participant will only need to enter a limited amount of identifying information, such as his or her password and account ID to make or receive payment using the system. Alternatively, or in addition, other authentication techniques may be used to further prevent fraudulent or unauthorized access to account information. For example, virtual or physical authentication tokens containing certificates may be used to authenticate the identity of the participant when the participant attempts to present an account ID.

[0056] Upon successful generation and storage of a cardholder account record, a confirmation message is transmitted to the participant, signaling completion of the registration process (step <b>272</b>). This confirmation message may be transmitted from transaction server <b>210</b> to terminal <b>208</b> via network <b>203</b> as an electronic mail message or may be otherwise communicated to the participant (e.g., via regular mail, telephone, etc.). Preferably, the confirmation message will include the unique account ID and/or some other information that will allow the participant to uniquely and securely identify the cardholder account record.

[0057] At this point, transaction server <b>210</b> may give the participant an option of registering further payment cards for use with the service (step <b>274</b>).

[0058] Registration process <b>250</b> is repeated for each individual who wants the ability to pay or to receive payment from other individuals using the person to payment techniques of the present invention. Any number of individual participants may register for the service. Further, although only a single transaction server <b>210</b> is shown in FIG. 3, those skilled in the art will recognize that any number of transaction servers <b>210</b> may be used to accommodate participants. For example, different transaction servers may be used to comply with or support different regional or national laws or other requirements, e.g., a transaction server in the U.S. may perform certain risk, fraud, or other checks that are not necessary or relevant for a transaction server located in France.

[0059] An example payment process <b>300</b> will now be described by referring to FIG. 4. Payment process <b>300</b> occurs when two participants, for example, a buyer operating terminal <b>208</b><i>a </i>and a seller operating terminal <b>208</b><i>n </i>wish to conduct a purchase transaction. The, two participants first negotiate terms of the transaction (step <b>302</b>). This negotiation process may occur over network <b>203</b> or may be accomplished in the physical world. For example, the negotiation process may involve one participant answering a newspaper classified ad of the other participant and the two participants agreeing on a sale price and delivery terms. The negotiation between a service provider (e.g., a gardener) and a customer (e.g., a homeowner) may involve the oral establishment of a price for the services with the agreement that the service provider will be paid once services are performed. In an example negotiation process over network <b>203</b>, the selling participant may have advertised goods for sale on an Internet classified ad or auction site, and the buying participant may have seen the advertised goods on the Internet, made an electronic offer via e-mail or other form of communication, and had the offer accepted by the seller. The negotiation process, whether conducted in the physical world or over the Internet, will generally involve the participants reaching agreement as to price, delivery, and nature of the goods or services being purchased.

[0060] The negotiation process will also result in the participants agreeing on a payment method. If the two parties agree (step <b>304</b>) to use the payment method according to the present invention, processing continues to step <b>308</b> where one of the two participants to the transaction contacts transaction server <b>210</b> via the Internet or other means (e.g., telephone or mail). In one embodiment, the seller of the goods or services is the first party to contact transaction server <b>210</b>, although either participant may contact the server to initiate the purchase. The following paragraphs provide a discussion of a transaction where a seller of goods is the first party to contact transaction server <b>210</b> and the buyer of goods is the second party to contact the server. Those skilled in the art, upon reading this disclosure, will recognize that a similar flow and techniques may be used in a transaction where the buyer contacts transaction server <b>210</b> before the seller.

[0061] When contacting transaction server <b>210</b>, the seller (if already registered with transaction server <b>210</b>), provides his or her account ID and password (or other authenticating information). If the seller has not previously registered for the service, he or she is given the opportunity to register (step <b>312</b>). If the seller is unable to successfully register for the service (e.g., does not have a valid payment card, etc.) processing stops and the two participants to the transaction must find some other payment method to consummate the purchase transaction (step <b>306</b>).

[0062] Once the seller has been successfully registered with transaction server <b>210</b> and this has been confirmed (step <b>310</b>) a transaction record is generated for the current purchase transaction (step <b>314</b>). Generation of the transaction record involves receiving certain details about the transaction from the parties. Where the seller is the party to first contact transaction server, the transaction record generated at step <b>184</b> will include all details regarding the transaction as supplied by the seller, including: the account ID of the seller; the date and time of the transaction; the agreed-upon purchase amount; the agreed-upon shipping terms; escrow terms; and buyer contact information (such as an e-mail address of the buyer or other information which will allow the transaction server <b>210</b> or an operator to contact the buyer). Where the payment techniques of the present invention are used to purchase services, details regarding the performance of the services may be provided in the transaction record rather than details regarding shipping.

[0063] Where goods are purchased using techniques of the present invention, the function of shipping the goods may be an integral part of the purchase process. The transaction record generated at step <b>314</b> preferably contains detailed information which will be used to ship the goods (e.g., product weight and dimensions). A buyer will then have the ability to select the preferred mode of delivery and receive an actual or estimated price from the selected shipper. Alternatively, the seller may dictate the terms of shipping (e.g., by insisting that one mode of delivery, such as Federal Express, be used). In this case, the seller will enter sufficient details regarding the shipping so that a total shipping cost may be calculated. Further details regarding the integration of the shipping function and the establishment of the transaction record are provided below.

[0064] Other information which may be provided to establish a transaction record at step <b>314</b> includes details regarding an optional escrow period which may be set by transaction server <b>210</b> or agreed-upon by the parties. This optional escrow period may be used to ensure that goods are shipped and received in good order before the seller is paid for the goods. Further details regarding the optional escrow process are provided below.

[0065] The transaction record generated at step <b>314</b> may also include a detailed description of the goods or services being sold to assist in dispute resolution. For example, the seller may choose to include a digital photograph of the goods being sold.

[0066] Once the transaction record is completed with information provided by the seller, transaction server <b>210</b> assigns a unique transaction ID to the transaction record. This transaction ID is used to uniquely identify the transaction record and may be used by the buyer and the seller to reference the current transaction. The transaction ID may simply be a sequentially-assigned number identifying the transaction or it may be a more complex digital signature uniquely generated based on transaction information. This transaction ID is used to uniquely associate the buyer with the seller and with the specific transaction. The transaction ID may appear on the buyer and seller payment card statements, for example.

[0067] At this time, an optional status request or account check may be performed by sending a message from transaction server <b>210</b> to financial networks <b>220</b>. This status request or account check may be generated to determine if the seller's payment card or account which will be credited for the amount of the purchase is still valid. Preferably, however, this status request or account check is done in conjunction with step <b>330</b> below.

[0068] Once a transaction record is generated for the current transaction, transaction server <b>210</b> generates a confirmation message (step <b>318</b>). This confirmation message will include a reference to the transaction ID and will also include a period of validity (e.g., the confirmation may be good for a short period, such as twelve hours, etc.). If a period of validity is established, the transaction must be completed (goods shipped, received and accepted, or services rendered and accepted) within that period.

[0069] Transaction server <b>210</b> (or an operator of transaction server <b>210</b>) preferably sends the confirmation message to both the seller and the buyer (step <b>320</b>), e.g., by sending an e-mail message to the buyer or by otherwise contacting the parties. To simplify this communication, an e-mail confirmation message sent to the buyer may include a URL pointer to a web page established on transaction server <b>210</b> for the specific transaction. The buyer can then access transaction server <b>210</b> (step <b>322</b>) by simply pointing his or her web browser to the provided URL address to complete the transaction.

[0070] When contacting transaction server <b>210</b>, the buyer provides the transaction ID and his or her account ID and password. Alternatively, or in addition, other authentication techniques may also be employed to more securely authenticate the buyer's identity. If the buyer has not yet registered (e.g., does not have an account ID and password), the registration process of FIG. 3 is completed (step <b>326</b>). Once transaction server <b>210</b> has confirmed that the buyer is registered, the buyer is prompted to enter information to complete the transaction record accessed by the transaction ID (step <b>328</b>). The buyer is prompted to enter information including, for example: his or her account ID; information regarding shipping; etc.

[0071] Embodiments of the present invention may be implemented such that shipping of a good is integrated with the purchase transaction. This has several benefits, for example: it simplifies the overall transaction between the buyer and seller; shipping and confirmed delivery of the goods may be used to trigger the transfer of funds to the seller's account; and it simplifies the debiting of the buyer's payment card account by allowing a single debit for both the cost of shipping and the purchase price of the goods.

[0072] The buyer may enter specific information regarding shipment of the goods to be purchased. For example, if the seller has provided information regarding the dimensions and weight of the good (at step <b>314</b>), the buyer can finalize details of shipping by selecting a mode of delivery. For example, the buyer may select the shipper (e.g., Federal Express; UPS; etc.), the mode of shipment (e.g., overnight delivery; same day service; etc.), and delivery information. Shipping information provided in step <b>328</b> may result in transaction server <b>210</b> linking to shipping server <b>214</b> to retrieve or share information regarding shipping terms and conditions. Alternatively, the seller may establish certain shipping details (e.g., such as requiring that the good only be shipped via Federal Express next day delivery, etc.).

[0073] As an example, if Federal Express delivery of the goods has been selected, transaction server <b>210</b> may connect to a shipping server operated by or on behalf of Federal Express and forward information regarding the goods to be shipped, including the shipping weight and dimensions and delivery details. Shipping server <b>214</b> may then generate a tracking number and calculate the shipping price for the goods. This information may then be returned to transaction server <b>210</b> for entry into the transaction record. Preferably, this interaction between shipping server <b>214</b> and transaction server <b>210</b> is transparent to the participants. Transaction server <b>210</b> may now track or monitor the status of the goods by reference to the shipping tracking number.

[0074] Before completing the transaction, the buyer may be given the opportunity to review all details regarding the transaction, including the information entered by the seller regarding the condition and description of the goods to be sold. The buyer can choose to modify the information, cancel the purchase, or approve the transaction.

[0075] If the buyer chooses to approve the transaction, the transaction record is completed by transaction server <b>210</b> (step <b>328</b>) and an authorization request is then sent from transaction server <b>210</b> to financial networks <b>220</b> (step <b>330</b>). This authorization request is generated to determine if the buyer's payment card or account which is to be used to make the purchase has sufficient funds or credit limit available to cover the cost of the transaction. If shipping, handling, and other transaction fees are to be included in the total transaction price, the authorization request is generated to determine if the payment card or account has sufficient funds to cover the total amount. If the authorization request is declined (e.g., the identified account has insufficient funds, or is otherwise invalid), purchase transaction <b>300</b> aborts and the buyer and seller will need to arrange for some other form of payment to be used (e.g., the buyer may be given a chance to use another payment card by repeating the above process). Additionally, a status request or account check may be performed on seller's account by sending a message from transaction server <b>210</b> to financial networks <b>220</b>. This status request or account check may be generated to determine if the seller's payment card or account which will be credited for the amount of the purchase is still valid.

[0076] To further reduce the risk of fraudulent transactions (e.g., use of stolen buyer account numbers or buyer/seller collusion) the seller's account, the buyer's account and details regarding the present transaction may be subjected to further analysis in addition to the authorization request. For example, transaction server <b>210</b> and/or financial network <b>220</b> may perform a risk analysis for each transaction taking into account data elements for each transaction such as: the past history of the buyer and seller as participants; the amount of the transaction; the type of item being purchased; frequency of purchases; time of the transaction; other activity on the payment card accounts; nature of the participant's e-mail addresses (are they anonymous e-mail addresses which do not verify the identity of the participant?); Internet dial-in location; etc. Risk techniques known in the art may be used to assess a risk variable to each transaction based on an analysis of these variables. In the event that a particular transaction appears to carry a high probability of fraud or an unreasonably high risk of loss, the transaction should be aborted without generating an authorization at step <b>330</b>. Other transaction checking procedures may also be performed as discussed in conjunction with FIG. 3 at step <b>262</b> discussed above.

[0077] In one embodiment, the actual debit of the buyer's account does not occur until either the goods have been shipped or the goods have been delivered. This can be tracked if a shipping service such as Federal Express has been used which tracks and reports the pickup and delivery of packages. For example, if buyer (at step <b>328</b>) has indicated that he or she would like to receive the goods using Federal Express next day delivery, shipper server <b>214</b> (in this case operated by or on behalf of Federal Express) may establish a unique tracking number for the package. This unique shipping tracking number is associated with the transaction ID generated above. Shipping server <b>214</b> may notify transaction server <b>210</b> when the goods have been picked up from seller and when they have been delivered to buyer. This notification is preferably done by referring to the unique shipping tracking number. Once the goods have been confirmed as having been either picked up or delivered, transaction server <b>210</b> may take the necessary steps to ensure the buyer's account is debited for the transaction price.

[0078] The buyer's account is debited using a debit message which is sent by transaction server <b>210</b> to financial networks <b>220</b>. This debit message identifies the buyer's account information and the debit amount (the total amount of the transaction). For example, if a purchase price of $50.00 was agreed upon, and a $10.00 Federal Express delivery was agreed upon, a debit message for the total amount of the transaction ($60.00) will be generated. In some embodiments, depending upon the type of messaging used by financial networks <b>220</b>, the authorization request and the debit message may be combined into a single message.

[0079] The amount debited from the buyer's account may then be placed in an optional escrow account (step <b>334</b>), or may be directly credited to any accounts as established in the transaction record generated at step <b>328</b>. For example, a $50.00 payment may be made to the seller's payment card account while a $10.00 payment may be made directly to Federal Express to pay for the cost of shipping the goods. The amount of the purchase is directly credited to seller's designated payment card account (i.e., the payment card account that the seller registered with transaction server <b>210</b> in the registration process of FIG. 3). To credit the sellers payment card account, transaction server <b>210</b> will generate a credit message which includes information including the credit amount, a source of funds, and the seller's payment card account number to be credited. This credit message will be forwarded from transaction server <b>210</b> to financial networks <b>220</b> for processing. The source of funds for the credit message will be either the buyer's payment card account number or the escrow account (if the optional escrow account is used).

[0080] If the optional escrow account (of step <b>334</b>) is used, the funds debited from the buyer's account may be held in the escrow account until transaction server <b>210</b> receives some notification that the buyer properly received the purchased product in good shape and as advertised. A set escrow period may be established by transaction server <b>210</b> (e.g., all purchases processed by a given transaction server may be given a five-day escrow period) or may be established by agreement among the participants to a transaction. In one alternative embodiment, the escrow period may be triggered by transaction server <b>210</b> receiving some indication from shipping server <b>214</b> that the goods have been shipped or received. If the escrow period lapses without dispute by the buyer, the sellers account is credited with the purchase price (step <b>336</b>) and the payment process is completed (step <b>338</b>). If the optional escrow account is used, the credit message to credit the seller's payment card account will only be generated after the escrow period has successfully ended. The buyer will have a “chargeback” right during the escrow period (that is, the seller's account will not be credited during the escrow period). Alternatively, or in addition, the buyer can signal to server <b>210</b> that the transaction is completed to his or her satisfaction, thereby terminating the escrow period.

[0081] Referring now to FIG. 6, example database structures for account database <b>242</b> and transaction database <b>244</b> are shown (in FIGS. 6A and 6B respectively). The entries of these example databases illustrate various pieces of information that may be entered into and tracked by each database. For example, in FIG. 6A, account database <b>242</b> may include a number of entries, each keyed by an account ID <b>402</b>. Account ID <b>402</b> identifies a particular participant by including data describing the participants card number <b>404</b>, its expiration data <b>406</b>, cardholder information <b>408</b>, an e-mail address <b>410</b>, and a registration date <b>412</b>. This information will be obtained when a participant registers (either through the process of FIG. 3 or the process of FIG. 4). Only the account ID need to be communicated to other participants, ensuring that cardholder information is protected by transaction server <b>210</b>.

[0082] In FIG. 6B, an example format of transaction database <b>244</b> is shown. Transaction database <b>244</b> may include a number of entries, including, for example: a transaction ID <b>414</b>; a buyer account ID <b>416</b>; a seller account ID <b>418</b>; a price term <b>420</b>; a description of goods or services to be sold <b>422</b>; a shipping field <b>424</b>; a transaction date <b>426</b>; and an escrow close <b>428</b>. This information is generated and obtained as described in conjunction with the process of FIG. 4 above. Those skilled in the art will recognize that other data elements and information may be provided in transaction database <b>244</b> and account database <b>242</b>.

[0083] Those skilled in the art will now recognize that embodiments of payment system <b>200</b> may be used to facilitate different types of transactions between individuals. For example, payment system <b>200</b> can be used to facilitate classified ad or auction-style purchases in the physical world or over the Internet. Both buyer and seller need to have (or be able to acquire) account IDs from transaction server <b>210</b> to complete a transaction according to the invention. Payment system <b>200</b> may also be used to facilitate the purchase of services. For example, a babysitter may receive payment to his or her payment card account from a parent's payment card account for babysitting services if both the babysitter and the parent have registered their respective payment cards with the service (e.g., by following the registration steps of FIG. 3). The parent may authorize payment by simply dialing a voice response unit associated with transaction server <b>210</b> to authorize debiting of the parent's account and crediting of the babysitter's account once services have been rendered. The result is a simple, efficient, and cost effective system for making and receiving payments between individuals. While the above is a complete description of the preferred embodiments of the invention, various alternatives, modifications, and equivalents may also be used. Therefore, the above description should not be taken as limiting the scope of the invention that is defined by the appended claims.