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`U.S. DEPARTMENT OF COMMERCE
`P A W T AND TRADEMARK OFFICE
`FEE RECORD SHEET
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`380.00 w
`390.00 w
`63.00 op
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`PTO- 1556
`(5187)
`'U.S. opo: 1898433-214/80104
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`Ex. 2001, p. 1
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`ABSTsACT
`A credit card system is provided which has the added feature of providing
`additional limited-use credit card numbers and/or cards. These numbers and/or cards
`can be used for a single transaction, thereby reducing the potential for fraudulent
`reuse of these numbers and/or cards. The credit card system finds application to
`"card remote" transactions such as by phone or Internet. Additionally, when a single
`use credit card is used for ''card present" transactions, so called "skimming" fraud is
`elhnated. Various other features enhance the credit card system which will allow
`secure trade without the use of elaborate encryption techniques.
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`CREDIT CARD SYS ‘IEM AND METH OD
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`This application claims the benefit of U .S. Provisional Application
`No. 60/099,614 filed September 9, 1998; U.S. Provisional Application
`No. 60/098,175 filed August 26, 1998; and U.S. Provisional Application
`No. 60/092,500 filed July 13, 1998, the entire contents of each of which are
`incorporated by reference herein. This application also claims the benefit of Irish
`Patent Application No. S98 0458 filed June 15, 1998; Irish Patent Application
`No. S98 0346 filed May 7, 1998; and Irish Patent Application No. S98 0223 filed
`March 25, 1998, the entire contents of each of which are incorporated by reference
`herein.
`
`BACIO
`
`1, Field of the Invention
`This invention relates to a credit card system and method, and more
`particularly, to a credit card system and method offering reduced potential of credit
`card number misuse.
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`2. Related Art
`The development of retail electronic commerce has been relatively slow in
`spite of the perceived demand for such trade. The single greatest deterrent to the
`expansion of retail electronic commerce is the potential for fraud. This potential for
`fraud has been a major concern for the credit card companies and financial
`institutions as well as the customers and the providers of the goods and services.
`. The former are concerned about fraud because essentially the financial
`institutions have to bear the initial cost of the fraud. Additionally, the credit card
`companies have an efficient credit card system which is working well for face to face
`transactions, Le., “card present” transactions where the credit card is physically
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`presented to a trader and the trader can obtain the credit card number, compare
`signatures and in many cases photographs before accepting a particular credit card.
`The latter are equally concerned about fraud being well aware that ultimately
`the user must pay for the fraud. However, there are particular personal concerns for
`the consumer in that the fraudulent use of the credit card by misuse of the credit card
`number by a third party may not become apparent for some time. This can happen
`even if the card is still in his or her possession. Further, when fraud does occur the
`consumer ha; the task of persuading the credit card provider that fraud by another did
`indeed occur.
`There is also the additional fear of being overcharged on a credit card. There
`are thus particular risks for those credit card holders who have relatively high
`spending limits, in that if fraud should occur, it may be some considerable time
`before it is detected. One particular form of fraud referred to as "skimming" is
`particularly difficult to control. What happens is that the card holder proffers his or
`her card at an establishment to make a transaction, the relevant information is
`electronically and/or physically copied from the card and the card is subsequently
`reproduced. This can be a particular problem with travelers particularly during an
`extensive period of travel as the fraudulent card may turn up in other places and it
`may be some considerable time before the fraud is detected.
`For remote credit card use, the credit card holder has to provide details of
`name, master credit card number, expiration date and address and often many other
`pieces of information for verification; the storing and updating of the information is
`expensive but necessary. This of itself is a considerable security risk as anybody will
`appreciate that this information could be used to fraudulently charge goods and
`services to the card holder's credit card account. Such fraudulent use is not limited
`to those people to whom the credit card information has been given legitimately, but
`extends to anybody who can illegitimately obtain such details. A major problem in
`relation to this form of fraud is that the credit card may still be in the possession of
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`Ex. 2001, p. 4
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`the legitimate holder as these fraudulent transactions are taking place. This is often
`referred to as "compromised numbers" fraud. Indeed all this fi-aud needs is one
`dishonest staff member, for example in a shop, hotel or restaurant, to record the
`credit card number. It is thus not the same as card theft.
`The current approaches to the limiting of credit card fraud are dependent on
`the theft of a card being reported and elaborate verification systems whereby altered
`patterns of use initiate some enquiry from the credit card company. Many users of
`credit cards have no doubt received telephone calls, when their use of the card has
`been exceptional, or otherwise unusual in the eyes of the organization providing the
`verification services.
`Thus, there have been many developments in an effort to overcome this
`fundamental problem of fraud, both in the general area of fraud for ordinary use of
`credit cards and for the particular problems associated with such remote use.
`One of the developments is the provision of smart cards which are credit card
`devices containing embedded electronic circuitry that can either store information or
`perform computations. Generally speaking they contribute to credit card security
`systems by using some encryption system. A typical example of such a smart card is
`disclosed in U.S. Patent No. 5,317,636 (Vizcaino).
`Another one of the developments is the Secure Electronic Transaction (SET)
`protocol which represents the collaboration between many leading computer
`companies and the credit card industry'which is particularly related to electronic
`transmission of credit card details and in particular via the Internet. It provides a
`detailed protocol for encryption .of credit card details and verification of participants
`in an electronic transaction.
`Another method that is particularly directed to the Internet is described in
`U.S. Patent No. 5,715,314 (Payne et al.). U.S. Patent 5,715,314 discloses using an
`access message that comprises a product identifier and an access message
`authenticator based on a cryptographic key. A buyer computer sends a payment
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`message that identifies a particular product to a payment computer. The payment
`computer is programmed to receive the payment message, to create the access
`message, and to send the access message to a merchant computer. Because the access
`message is tied to a particular product and a particular merchant computer, the access
`message can not be generated until the user sends the payment message to the
`payment computer. Because the access message is different from existing credit card
`formats, the access message is ill-suited for phone/mail orders and other traditional
`credit card transactions.
`There are then specific electronic transaction systems such as "Cyber Cash,"
`"Check Free" and "First Virtual. I' Unfortunately, there are perceived problems with
`what has been proposed to date. Firstly, any form of reliance on encryption is a
`challenge to those who will then try to break it. The manner in which access has
`been gained to extremely sensitive information in Government premises would make
`anyone wary of any reliance on an encryption system. Secondly, a further problem is
`that some of the most secure forms of encryption system are not widely available due
`to government and other security requirements. Limiting the electronic trading
`systems and security systems for use to the Internet is of relatively little use. While
`electronic commerce is perceived to be an area of high risk, in practice to date it is
`not.
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`Additionally, various approaches have been taken to make "card present"
`transaction more attractive. For instance, Japanese Patent Publication No. Hei 6-
`282556 discloses a one time credit card settlement system for use by, e.g., teenage
`children of credit card holders. This system employs a credit card which can be used
`only once in which various information such as specific personal information, use
`conditions, and an approved credit limit identical to those of the original credit card
`are recorded on a data recording element and displayed on the face of the card. The
`one-time credit card contains the same member number, expiration date, card
`company code, and the like as on existing credit card, as well as one-time credit card
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`expiration date not exceeding the expiration date of credit card, available credit limit
`for the card, and the like. The one-time credit card makes use of some of the same
`settlement means as the conventional credit card. However, the system also requires
`use permission information to be recorded on the credit card, the information
`permitting the credit card to be used only once or making it impossible to use the
`credit card when the credit limit has been exceeded. A special card terminal device
`checks the information taken from the card for correctness and imparts use
`permission information for when the card is not permitted to be used on the
`transmission to the credit card issuing company. The use permission information
`takes the form of a punched hole on the card itself. This system has obvious
`drawbacks, such as the card terminal having to be modified for additional functions
`(e.g., punching holes, detected punched holes, imparting additional information,
`etc.). Also, such a system offers little additional security insofar as fraud can still be
`practiced perhaps by covering the holes or otherwise replacing the permission use
`information on the credit card. Further, such a system would require a change in
`nearly all card terminal equipment if it were adopted.
`Patent Nos. 5,627,355 and 5,478,994 (Rahman et al.) disclose another type of
`system that uses a plurality of pin numbers which are added to a credit card number
`on an electronic display. U.S. Patent No. 5,627,355 discloses a credit card having a
`memory element containing a series of passwords in a predetermined sequence.
`These passwords are identical to another sequence stored in a memory of a host
`control computer. Further, the card contains a first futed field containing an account
`number (e.g. , "444 222 333"). In operation, the memory element of the credit card
`device provides a unique password from the sequence with each use of the credit card
`device. This permits verification by comparing the account number and the password
`provided with each use of the device with the account number and the next number in
`sequence as indicatkd by the host computer. The host computer deactivates the
`password after the transaction. Among the drawbacks with this type of system is the
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`need for a power supply, a display, a memory device, a sound generator and the need
`to recycle a limited sequence of pin numbers. Such a system is not readily adapted to
`current credit card transactions because it lacks the ability of providing a check sum
`of the card number and cannot be read by a standard card reader. Also, if the card is
`lost or stolen, there is little to prevent a person from using the card until it is reported
`to be lost or stolen by the correct holder. See, also, U.S. Patent No. 5,606,614
`(Brady et al.).
`Other attempts have been made to make funds available to an individual, but
`with limitations. For example, U.S. Patent Nos. 5.350,906 (Brody et al.) and
`5,326,960 (Tamenbaum et al.) disclose issuing temporary PINS for one time or
`limited time and limited credit access to an account at an ATM. These patents
`disclose a currency transfer system and method for an ATM network. In this system,
`a main account holder (Le., the sponsor) sets up a subaccount that can be accessed by
`a non-subscriber by presenting a fmed limit card associated with the subaccount and
`by entering a password corresponding to the subaccount. Once the fixed limit is
`reached, the card can no longer be used. The fixed limit card contains information
`on its magnetic stripe pertaining to the sponsor account.
`One of the problems with all these systems is that there are many competing
`technologies and therefore there is a multiplicity of incompatible formats which will
`be a deterrent to both traders and consumers. Similarly, many of these systems
`require modifications of the technology used at the point of sale, which will require
`considerable investment and further limit the uptake of the systems.
`
`OBJECTS AND SUM MARY OF THE INVENTIW
`Many solutions have been proposed to the problem of security of credit card
`transactions. However, none of them allow the use of existing credit cards and
`existing credit card formats and terminal equipment. Ideally, as realized by the
`present inventors, the solution would be to obtain the functionality of a credit card,
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`while never in fact revealing the master credit card number. Unfortunately, the only
`way to ensure that master credit card numbers cannot be used fraudulently is to never
`transmit the master credit card number by any direct route, i.e. phone, mail, Internet
`or even to print out the master credit card number during the transaction, such as is
`commonly the case at present.
`According to exemplary embodiments, the present invention is directed
`towards improving the existing credit card system by providing a more secure way of
`using existing credit cards and in particular to providing an improved way of using
`existing credit cards in remote credit card transactions. The present invention is
`further directed towards providing a more secure way of using existing credit cards
`generally which will not require any major modifications to existing credit card
`systems. It is further directed towards providing an improved credit card system that
`will be more user friendly and will provide customers with a greater confidence in
`the security of the system.
`Further the invention is directed towards providing an improved credit card
`system, in one embodiment, that will not necessarily require the use of expensive and
`potentially fallible encryption systems. The present invention is also directed towards
`providing an improved credit card system which will enable a user to obtain the
`functionality of a credit card while never revealing the master credit card number,
`Further the invention is directed towards overcoming as far as possible the
`incidence of skimming and compromise numbers frauds.
`These and other objects of the present invention are satisfied by a first
`exemplary embodiment, which pertains to a credit card technique involving:
`maintaining a pool of credit card numbers which share identical formatting; assigning
`at least one credit card number from the pool of credit card numbers to be a master
`credit card number; assigning at least one credit card number from the pool of credit
`card numbers to be a limited-use credit card number which is deactivated upon a use-
`triggered condition subsequent; and associating the master credit card number with
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`the limited-use credit card number, while ensuring that the master credit card number
`cannot be discovered on the basis of the limited-use credit card number.
`The technique further comprises: receiving notification that the limited-use
`credit card number has been used in a credit card transaction; determining whether a
`limited-use event has occurred based on the notification, and if so, generating a
`deactivation command; and deactivating the limited-use credit card if a limited-use
`event has occurred, based on the deactivation command which is generated upon a
`use-triggered condition subsequent. In one embodiment, the limited-use event is
`satisfied when the limited-use credit card is used only once. In another embodiment,
`the limited-use event is satisfied when the limited-use credit card is used to accrue
`charges which are greater than a prescribed monetary amount, which are greater than
`a prescribed frequency of use, and/or a combination of use frequency, individual
`transaction amount and total amount.
`In one embodiment of the invention, the additional limited-use credit card
`numbers are allocated automatically as soon as the credit card holder uses more than
`a preset amount of limited-use credit card numbers. The advantage of this is that the
`master credit card holder does not have to request the credit card numbers each time
`they are required.
`In another embodiment, a technique for performing a credit card transaction
`based on one of a master credit card number and a limited-use credit card number is
`provided, wherein the limited-use credit card number is randomly chosen with
`respect to the master credit card number, but the limited-use credit card number
`includes identical formatting to the master credit card number and is associated with
`the master credit card number. The technique comprises: entering a transaction on
`the basis of the master credit card number or the limited-use credit card number to
`generate a transaction message; and receiving the transaction message and processing
`the transaction. The step of processing the transaction includes: authorizing or
`denying the transaction; determining whether to deactivate the limited-use credit card
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`number when the limited-use credit card number was used to perform the transaction,
`and generating a deactivation command in response thereto, wherein the determining
`step determines whether to deactivate the limited-use credit card number based on
`whether a limited-use event pertaining to the use of the limited-use credit card
`number has occurred, and if so, generates the deactivation command when the
`limited-use event has occurred; and deactivating the limited-use credit card number
`based on the deactivation command.
`One advantage of the abovedescribed techniques is that the credit card holder
`obtains the functionality of a credit card without ever in fact revealing the master
`credit card number in the course of a transaction. More specifically, according to a
`preferred embodiment, there is no mathematical relationship between the limited-use
`credit card number and the master credit card number. This is attributed to the fact
`that the numbers are randomly selected from a queue of available limited-use credit
`card numbers based upon the requests and/or needs of different customers. It is thus
`virtually impossible to predict which customers are looking for numbers at any time
`or how they will be allocated.
`Further, the technique can use a limited-use credit card number, and hence the
`possibility of compromised numbers credit card fraud may be eliminated or at least
`greatly reduced. Additionally, in one embodiment of the credit card technique, a
`preset credit limit, etc. is allocated. Irrespective of how the trader behaves (for
`example, by fraudulently overcharging or providing additional goods) the total risk to
`the credit card holder is directly related to the preset credit limit, and thereby can be
`minimized.
`
`BNEF DESCRIPTION OF T HE DRAWN GS
`The foregoing, and other, objects, features and advantages of the present
`invention will be more readily understood upon reading the following detailed
`description in conjunction with the drawings in which:
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`Fig. 1 shows an exemplary system for implementing the present invention;
`Fig. 2 shows, in high-level form, the operation of the central processing
`station shown in Fig. 1;
`Fig. 3 is a flow chart illustrating an exemplary process for allocating credit
`card numbers;
`Fig. 4 is a flow chart illustrating an exemplary process for limiting the use of
`a credit card number;
`. Fig. 5 is a flow chart illustrating an exemplary process for distributing credit
`card numbers;
`Fig. 6 is a flow chart illustrating an exemplary process for electronically using
`credit card numbers;
`Fig. 7 is a flow chart illustrating an exemplary process for processing a
`transaction;
`Fig. 8 is a flow chart illustrating another exemplary process for processing a
`transaction; and
`Fig. 9 is a flow chart illustrating an exemplary process for using a credit card
`number as a PIN number.
`
`DETAILED D F S C R I P m
`In this specification the term "credit card" refers to credit cards
`(Mastercard@, Visa@, Diners Club@, etc.) as well as charge cards (e.g., American
`Express@, some department store cards), debit cards such as usable at ATMs and
`many other locations or that are associated with a particular account, and hybrids
`thereof (e.g., extended payment American Express@, bank debit cards with the Visa@
`logo, etc.). Also, the terms "master credit card number" and "master credit card"
`refer to the credit card number and the credit card as generally understood, namely,
`that which is allocated by the credit card provider to the customer for his or her
`account. It will be appreciated that an account may have many master credit cards in
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`the sense of this specification. For example a corporation may provide many of its
`employees with credit cards but essentially each of these employees holds a master
`credit card even if there is only one customer account. Each of these master credit
`cards will have a unique master credit card number, which set of master credit card
`numbers will be linked to the account. Similarly, in families, various members of the
`family may hold a master credit card all of which are paid for out of the one
`customer account.
`The term "limited-use" credit card number is used to encompass at least both
`the embodiment in which the credit card is designated for a single use, and the
`embodiment in which the credit card is designated for multiple uses providing that the
`charges accrued do not exceed a prescribed threshold or thresholds, such a total
`single charge, total charges over a limited time period, total charge
`f+Ls*,Tfk f&nA32=4 u s e Q . € u i i d *Gc\r, hDu, L i Y & d
`transaction, etc. A common feature is that the limitation is based o
`A
`condition subsequent, and not just the expiration date of the card.
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`1. Overv iew of System Features
`There are at least two basic different ways of carrying out th
`invention. In summary, they are the allocation of additional credit card numbers for
`remote trade and secondly the provision of what are effectively disposable credit
`cards for remote and card present trade, both of which have the feature of in the case
`of single use or in the case of multiple use, protecting against the worst effects of
`compromised numbers fraud or skimming.
`In a refinement of the invention, it is possible to control the manner in which
`an actual transaction is carried out as a further protection against unscrupulous
`providers of goods and services.
`Essentially, there are certain matters that will be considered in relation to this
`invention. They are firstly the operational or functional features in so far as they
`affect customers, and then there are the technical features, namely how the invention
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`is implemented, how the invention is provided to the customers, and finally, how the
`invention is handled by the providers of goods and services and the processors of the
`credit cards, Le., the financial institutions and/or their service providers.
`The operational or functional features of this invention will be discussed first
`in the context of a standard credit card system.
`One basic feature of the invention is to provide in a credit card system such
`that each master credit card holder could be provided with one or more of the
`following: 1) additional single use credit card numbers for remote transactions; 2)
`multiple use credit card numbers for remote transactions; 3) single use additional
`credit cards for remote and card present transactions; and 4) multiple use credit cards
`for remote and card present transactions.
`It is also envisaged that in certain situations credit cards can be provided to
`people who do not have an account with any credit card company. This latter feature
`is described in more detail below. Various other features may be provided in the
`above situations which will further improve the security of credit card transactions.
`Dealing firstly with the situation where a master credit card holder has an
`additional credit card number allocated to him or her for a single use, it will be
`appreciated that since the number can only be used for one single transaction, the fact
`that the number is in anybody else’s hands is irrelevant as it has been deactivated and
`the master credit card number is not revealed to the third party. Various other
`features may be added to such single use credit card numbers, for example, the value
`of the transaction can be limited, thus the master credit card holder can have a
`plurality of single use credit card numbers of differing values. For example, when a
`remote trade is carried out, the master credit card holder will use a credit card
`number which has a credit card limit only marginally above or equal to that of the
`value of the transaction. This would reduce the chances of or prevent an
`unscrupulous trader using the credit card number to supply additional goods or
`services over those ordered or to increase the agreed charge.
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`A second embodiment of the invention provides the master credit card holder
`with an additional credit card number for use in remote trade, which credit card
`number could have, as in the previous example of the invention, a credit limit for
`each specific transaction or a credit limit such that when the aggregate amount of a
`series of transactions exceeded a specific credit limit that the credit card number
`would be canceled, invalidated or in some other way deactivated. Similarly, the
`multiple use credit card number could be limited to, for example, five uses with a
`credit limit not exceeding $100 in each transaction and an aggregate credit limit not
`exceeding $400. Similarly, a time restriction could be put on such a credit card
`number in that it would be deactivated if it was used with frequency above (or below)
`a given threshold, for example, more than once a week. It will be appreciated that
`the limits that can be placed on the use of a single use credit number or a multiple use
`credit card number are almost limitless and those having skill in the art will consider
`other ways in which the use of the credit card number could be limited, whether it be
`by time, by amount, frequency of use, by geographical region, or by purpose or use
`(such as limited to Internet trade and so on), or by some combination of these
`separate criterion.
`The third way in which the invention could be carried out is by physically
`providing additional single use credit cards each of which would have a unique
`additional credit card number. Such additional single use credit cards could then be
`used both for remote trade by using the additional credit card numbers for respective
`transactions, and for "card present" trade where each card would be ''swiped" in the
`normal manner. Such a disposable credit card could be made like any common credit
`card, or from a relatively inexpensive material, such as cardboard or thin plastic,
`with the relevant information entered into it in readable (e.g., magnetic) form, as is
`already the case with many forms of passes for use in public transport and the like.
`Again, substantially the same features as with the credit card number could be
`provided. Thus, for example, the disposable credit card could be limited to use
`
`5
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`10
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`15
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`20
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`25
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`Ex. 2001, p. 15
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`.. ..
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`. - . . . ..
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`.
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`. . .
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`. . -
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`.
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`. .
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`D
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`- 14-
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`geographically, to a use, to an amount, to a frequency of use, to an expiration date,
`and so on, Again, those skilled in the art will appreciate that there are many
`variations to this concept.
`Another way of carrying out the invention is to provide a master credit card
`holder with a multiple use additional credit card, where the additional credit card
`provides any limitations as to use triggered conditions subsequent that may be
`desired.
`Ideally, irrespective of the manner in which the invention is carried out, the
`master credit card holder would be provided with either a plurality of single use
`additional credit card numbers or multiple use credit card numbers or a mixture of
`single and multiple use credits cards.
`It will be appreciated that with either single use credit card numbers or single
`use additional credit cards, it is possible to eliminate or reduce the risk of credit card
`number fraud. Further, depending on the credit limit imparted to the particular credit
`card number or additional credit card number or single use additional credit card, it
`is possible to further limit the possibilities of fraud in any remote transaction and that
`with the use of a disposable single use credit card it is possible to eliminate or reduce
`the risk of skimming.
`With multiple use additional credit card numbers and multiple use additional
`credit cards, the above-identified problems may not be totally eliminated due to
`preferences of the user. This is because, in certain circumstances, credit card users
`may prefer to have, for example, an additional credit card number for remote trade
`with a specific credit limit that they use all the time and are willing to take the risk of
`compromised number fraud, in the sense that they can control the severity of this
`misuse. This would be particularly the case where some of the various user triggered
`conditions subsequent limitations suggested above are used with the additional credit
`card number. Substantially the same criteria would apply to an additional multiple
`use credit card.
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`5
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`10
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`15
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`20
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`25
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`Ex. 2001, p. 16
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`D
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`. Effectively, the present invention solves the problem by obtaining the
`functionality of a credit card while never in fact revealing the master credit card
`number as the master credit card number need never be given in a remote transaction.
`Further, the master credit card itself need never be given to a trader.
`In another embodiment of the invention, it is envisaged that people who do
`not hold master credit cards could purchase disposable credit cards which would have
`a credit limit for the total purchases thereon equal to the amount for which the credit
`card was purchased. These could then be used for both card present and card remote
`trade, the only proviso being that if the credit limit was not reached it will then be
`necessary for a refund to be given by the financial institution or credit card provider.
`An obvious way of obtaining such a refund would be through an automatic teller
`machine (ATM). In this way, the existing credit car