(19) United States
`(12) Patent Application Publication (10) Pub. No.: US 2011/0208.659 A1
`Easterly et al.
`(43) Pub. Date:
`Aug. 25, 2011
`
`US 2011 0208.659A1
`
`(54) METHOD AND APPARATUS FOR MAKING
`SECURE TRANSACTIONS USING AN
`INTERNET ACCESSIBLE DEVICE AND
`APPLICATION
`
`(60) Provisional application No. 61/331,469, filed on May
`5, 2010, provisional application No. 60/913,964, filed
`on Apr. 25, 2007, provisional application No. 60/915,
`139, filed on May 1, 2007.
`
`(75) Inventors:
`
`Frank Easterly, Midlothian, VA
`Sisord Mason, Columbus,
`
`(73) Assignee:
`
`Last Mile Technologies, LLC,
`Richmond, VA (US)
`
`(21) Appl. No.:
`(22) Filed:
`
`13/101.317
`May 5, 2011
`
`9
`
`Related U.S. Application Data
`(63) Continuation-in-part of application No. 12/109,960,
`filed on Apr. 25, 2008, which is a continuation-in-part
`of application No. 1 1/464,694, filed on Aug. 15, 2006,
`now abandoned.
`
`Publication Classification
`
`(51) Int. Cl.
`(2006.01)
`G06O 20/00
`(52) U.S. Cl. .......................................................... T05/79
`
`ABSTRACT
`(57)
`A method for making financial transactions uses a proprietary
`server and networkin communication with a merchant's point
`of sale (POS) terminal and a customer's smart phone. The
`Smartphone runs an application that generates or downloads
`from the server a two dimensional barcode containing
`encrypted information. The barcode display is scanned at the
`POS, and transaction information is returned to the propri
`etary server for processing as an ACH or a conventional
`transaction.
`
`SKU
`System
`
`
`
`
`
`
`
`Traditional Funding Mechanisms
`Credit Cards, Debit Cards, etc.
`
`POS eCache Server
`System
`Switch
`
`Ex.1005
`APPLE INC. / Page 1 of 26
`
`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 1 of 11
`
`US 2011/0208.659 A1
`
`Traditional Funding Mechanisms
`Credit Cards, Debit Cards, etc.
`
`SKU
`System
`
`Retailer
`Inventory System
`
`Consumer
`
`
`
`POS
`System
`
`ACH
`eCache Server External
`Switch eCache Server Network
`
`Primary
`Barcode
`
`Extension
`Barcode
`
`FIG.
`
`
`
`Retailer
`Inventory
`
`System
`
`
`
`POS
`
`ACH
`Network
`
`a
`
`Traditional Funding Mechanisms
`Credit Cards, Debit Cards, etc.
`
`o
`
`POS eCache Server
`System
`Switch
`FIG. A
`
`Ex.1005
`APPLE INC. / Page 2 of 26
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`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 2 of 11
`
`US 2011/0208.659 A1
`
`Master Barcode or
`Other Identifier
`
`eCache 21
`
`
`
`Primary Barcode
`20
`
`
`
`
`
`Reiecti
`
`34
`
`Valiate
`
`
`
`FIG. 3
`
`Send for Approval to
`e-ACH Network or to
`Credit or Debit Network
`
`Ex.1005
`APPLE INC. / Page 3 of 26
`
`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 3 of 11
`
`US 2011/0208.659 A1
`
`41
`Purchases
`
`Cashi
`aSner more
`40
`
`- - s
`43
`ge
`
`Primary Barcode 42
`Extension Barcode 45
`
`Basket Metrics
`44
`
`
`
`No-
`45
`
`alidation
`N 47 l.
`
`Approval
`48
`
`Customer Database
`49
`
`FIG. 4
`
`Ex.1005
`APPLE INC. / Page 4 of 26
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`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 4 of 11
`
`US 2011/0208.659 A1
`
`Primary Barcode 51
`Extension Barcode 53
`
`
`
`
`
`
`
`
`
`
`External Verification
`59
`External Verification
`Service 58
`
`
`
`Server Switch
`54
`
`Credit Info
`56
`
`
`
`Store Data
`55
`
`FIG. 5
`
`
`
`Approval Transmission Data
`60
`
`Rewards Protocol
`61
`
`Rewards Database
`62
`FIG. 6
`
`Ex.1005
`APPLE INC. / Page 5 of 26
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`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 5 of 11
`
`US 2011/0208.659 A1
`
`Supplier
`70
`
`
`
`
`
`
`
`Consigned Merchandise
`71
`
`x8
`
`
`
`Retailer
`Inventory System
`
`74
`Consigned Merchandise
`
`
`
`Consumer
`73
`
`Retailer Inventory
`System 72
`
`
`
`
`
`
`
`
`
`
`
`eCache Server
`Switch 75
`Criteria
`76
`
`ACH Transaction
`to Supplier 77
`
`Supplier
`78
`
`FIG. 7B
`
`Ex.1005
`APPLE INC. / Page 6 of 26
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`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 6 of 11
`
`US 2011/0208.659 A1
`
`
`
`
`
`8.
`
`Paiter
`Mercha
`Website
`
`‘:
`A
`
`88
`
`Payment
`Gateway
`4:
`
`Enroe
`Gateway
`:::::::
`
`Website
`
`-
`
`
`
`
`
`81
`
`82
`
`83
`
`a:
`
`s:
`f y
`
`:
`4. Y
`
`-atise
`Control
`Server
`Š
`
`Payment
`arisactor
`Seve;
`
`ACCoit
`Maragement
`Serve
`
`Payment
`Code
`Server
`
`update
`Seiwei
`
`
`
`wessaging
`Serve
`
`Ex.1005
`APPLE INC. / Page 7 of 26
`
`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 7 of 11
`
`US 2011/0208.659 A1
`
`( Launch App )
`N
`-
`
`OO
`
`-N 110
`Yes - Networks. No
`YConnection
`- ? -
`--
`
`12O
`
`System
`Status Check
`
`140
`
`Message in
`box
`
`Sugg? - N.
`
`15O
`
`New
`Red?
`-> Update Now
`
`- 250
`- App
`Activated
`Y&
`×
`? -
`
`Yes
`
`Payent
`280-Codes
`-
`Valid
`<
`Available yes Y
`
`s
`
`Message
`(Modal)
`Get
`Confected
`26O
`
`No - 270
`- Network N.
`Connection
`s
`-
`s/
`
`(instruct use)
`‘Update Clock,
`2O
`
`290 Message
`(Modal)
`Get
`Corrected
`
`No.
`
`y 170
`-1s Server N
`YDisabled?-
`
`Y.
`
`.
`
`.
`
`8O
`
`
`
`Message
`(Modal)
`
`Yes
`
`190
`/ Handset Activation)
`\
`Required
`?
`
`&
`
`SMS MSWMS
`
`X
`
`^
`
`NO
`
`2OO -
`- \
`- is Clock
`N valid? -
`
`- - | Yes
`
`w
`300-N
`- Network N.
`\Connection
`N -
`---
`
`X
`
`-
`
`310
`( Get Codes )
`
`X.
`
`220 -->
`- Are Payments
`NTerms Good? -
`
`
`
`
`
`
`
`Refresh
`Payment
`okes
`
`Payment
`History Sync
`
`330
`
`inbox Sync
`
`34O
`
`Retailer
`Update
`
`Fig 9
`
`| Handset
`\Activation/
`
`Yx
`
`---
`
`
`
`240
`
`PIN Entry
`Screen
`
`Ex.1005
`APPLE INC. / Page 8 of 26
`
`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 8 of 11
`
`US 2011/0208.659 A1
`
`
`
`Fig. 10
`
`Fig. 11
`
`
`
`Ex.1005
`APPLE INC. / Page 9 of 26
`
`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 9 of 11
`
`US 2011/0208.659 A1
`
`8:38 &8::it:::::::::SEs
`
`Fig. 4.
`
`
`
`Fig. 5
`
`Fig 17
`
`Ex.1005
`APPLE INC. / Page 10 of 26
`
`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 10 of 11
`
`US 2011/0208.659 A1
`
`Fig. 18
`
`Fig. 19
`
`
`
`Ex.1005
`APPLE INC. / Page 11 of 26
`
`

`

`Patent Application Publication
`
`Aug. 25, 2011 Sheet 11 of 11
`
`US 2011/0208.659 A1
`
`
`
`citexss: after assaction:
`
`: Exse another arisatia
`
`Fig. 22
`
`Fig. 23
`
`Ex.1005
`APPLE INC. / Page 12 of 26
`
`

`

`US 2011/0208.659 A1
`
`Aug. 25, 2011
`
`METHOD AND APPARATUS FOR MAKING
`SECURE TRANSACTIONS USING AN
`INTERNET ACCESSIBLE DEVICE AND
`APPLICATION
`
`CROSS REFERENCE TO RELATED
`APPLICATIONS
`0001. This application claims benefit under 35 U.S.C.
`S119(e) to U.S. Provisional Application Ser. No. 61/331,469,
`filed May 5, 2010. This application is also a Continuation-in
`Part of U.S. application Ser. No. 12/109,960, filed Apr. 25,
`2008, which is a Continuation-in-Part of application Ser. No.
`1 1/464,694, filed Aug. 15, 2006, in addition to claiming the
`benefit under 35 U.S.C. S 119(e) of Provisional Application
`No. 60/913,964, filed Apr. 25, 2007 and Provisional Applica
`tion No. 60/915,139, filed May 1, 2007. The disclosures of
`these applications are incorporated herein in their entirety by
`reference.
`
`FIELD OF THE INVENTION
`0002 The present invention relates to the facilitation of
`certain financial and nonfinancial transactions between cus
`tomers, retailers and Suppliers using Smart devices. In par
`ticular, it relates to a method of making transactions using an
`application residing on a Smart device to provide secure,
`encrypted communications with a proprietary server using
`scanable barcodes to authenticate the identity of the pur
`chaser and authorize, clear and settle a transaction between
`the purchaser and a third party who may be a merchant.
`
`BACKGROUND OF THE INVENTION
`0003. The volume of electronic payment transactions
`executed with general purpose cards such as credit cards,
`debit cards, both “online' and "offline', and ATM cards at the
`point of sale (“POS) account for 28.5% of consumer spend
`ing in 2005 up from 12.6% in 1995. The system for executing
`electronic transactions is currently determined by card issu
`ing banks, card associations, EFT networks and processors
`which charge Substantial fees for processing these transac
`tions in the form of interchange. Today's card payment net
`works are grossly inefficient and layered with cost. Each time
`a card association, EFT network or processor touches a trans
`action they add fees in the form of interchange. Those trans
`action fees are borne by the merchant, passed on to the cus
`tomer and continue to rise. United States interchange fees
`have increased 29% since 1995. At present the transaction fee
`paid by the merchant for a relatively moderate purchase of
`S100.00 can approach S3.00. It will be readily seen that given
`the already large and increasing percentage of POS sales that
`are executed using general purpose cards such as credit cards,
`debit cards and ATM cards, these transaction fees have a
`significant impact on merchant profitability. Since a greater
`number of transactions are subject to interchange fees the
`total cost of interchange to merchants have tripled in the last
`ten years. As the trend toward increasing usage of Such pay
`ment mechanisms continues to rise, the transaction fees will
`similarly increase. In 2005 American merchants paid nearly
`S50 Billion to accept credit cards.
`0004. This presents a dilemma for merchants because
`while customers generally like the convenience of using Such
`devices for completing purchases, the transactions continue
`to grow more costly. On average credit card transactions cost
`
`American Merchants six times as much as cash transactions
`and twice as much as checks or PIN based debit cards.
`
`Average Cost Per Transaction of Accepting Payments for
`U.S. Retailers in 2000
`0005
`
`Credit
`Cards
`
`SO.72
`
`On-Line
`Off-Line
`(PIN)
`(Signature)
`Debit Cards Checks Debit Cards Cash
`
`SO.72
`
`SO.36
`
`SO.34
`
`SO.12
`
`Average Cost
`Per Transaction
`
`0006 Furthermore, while customers generally like using
`checks for payment, the use of checks has been in decline. In
`addition, checks are not as convenient as cards, hence their
`use has been in decline. Accordingly, there is a need to pro
`vide consumers and merchants with a real alternative to the
`disadvantages of the current methods of payment while pre
`serving the advantage of payment by check.
`0007 Moreover, because conventional debit cards, credit
`cards and ATM cards are under the control of the issuing
`banks, card associations, EFT networks and processors mer
`chants must comply with the dictates of these institutions and
`have no control over the processes. These merchant restraints
`are designed to restrict merchants’ options as to what type of
`payment Systems they can accept and how they can price
`them, and force merchants to bundle the pricing of payment
`systems with the underlying goods and services being sold. In
`effect, all consumers underwrite the increased costs of gen
`eral purpose cards in the form of higher prices for all con
`Sumers, even those who pay by cash. Another disadvantage is
`that merchants have no ability to identify a specific customer
`by name, address, telephone number, e-mail address or other
`identifying data and link them to consumer purchase infor
`mation within transaction related databases. Such informa
`tion is of tremendous potential value to merchants as it may
`allow the tracking of transaction related data, so-called “bas
`ket metrics” and the relationship of that data to the specific
`customer. Basket-metrics can include information without
`limitation, such as item count, sales amount, demographics
`concerning customers and store location, responsiveness to
`promotions such as coupon or special promotion codes and
`customer related data concerning the purchase frequency,
`volume and value on a per customer basis over the lifetime of
`a shopping relationship. Without the ability to readily track
`that information and associate it to individual consumers
`whose names, addresses and other contact information is
`known, retailers lose the opportunity to directly target and
`market consumers on an individual basis.
`0008 Furthermore, as consumer purchases are currently
`effectuated, managing effective buyer loyalty or rewards pro
`grams is rendered difficult because Such programs require the
`tracking of consumer purchases both in terms of number and
`volume. Unless merchants have an effective method for gath
`ering, compiling and administering necessary transaction
`related data along with consumer specific data, reward and
`customer loyalty programs cannot effectively be managed.
`0009. In addition, merchants generally do not have access
`to consumer credit information including, of specific con
`cern, readily accessible information regarding prior approv
`als or declines at the point of sale (“POS). Occasionally a
`
`Ex.1005
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`US 2011/0208.659 A1
`
`Aug. 25, 2011
`
`merchant will receive an approval from a credit card issuer
`only to later find out that the approval was based upon a “stand
`in event when the customer's actual balance information was
`unavailable. Thus a merchant may complete a sales transac
`tion only to have the transaction Subsequently fail to close or
`be charged back. This occurs when a consumer is the victim
`of fraud, enters a dispute with their credit card company, or
`when a consumer with a poor credit history defaults, has
`insufficient funds, or otherwise precludes funding of the
`sales. Similarly, other customers may have an excessive rate
`of returns. That is, the customer may regularly purchase items
`but subsequently return them for a refund or other credit. Such
`customers may be considered less desirable or less profitable
`customers; information as to whom the merchant would like
`to be informed.
`0010 Finally, under current systems, managing effective
`consignment relationships is rendered difficult and time con
`Suming as a result of the record keeping that must accompany
`Such arrangements and the delays in settling accounts
`between the parties involved. Thus, for example, a supplier
`may be hesitant to enter into a consignment agreement
`because of the delays in receiving payments from merchants.
`0011. Accordingly, there is therefore a need for a retailer
`owned POS payment system which provides convenience to
`consumers, reduces and controls transaction costs for mer
`chants, allows for the effective management of consignment
`relationships, and allows for merchant access to consumer
`transaction related information which the merchant can then
`use for a variety of purposes.
`
`SUMMARY OF THE INVENTION
`0012. The present invention provides a method for facili
`tating financial and related non-financial transactions
`between customers, retailers and Suppliers engaged in com
`mercial remittance transactions performed over the internet,
`over wired and wireless telephone networks, and over local
`area networks including but not limited to Bluetooth and WiFi
`systems. The system uses a proprietary network (a virtual
`private network) that interfaces with merchants who are reg
`istered to use the proprietary system (described hereinafter as
`the “ecache' system), which is the proprietary network and
`system that is referenced in this application and all prior
`patent applications from which priority is claimed, all of
`which are hereby incorporated in their entirety by reference.
`The transaction related data that the eCache system stores and
`accesses may be stored either within the merchant's own
`system or on eCache servers which are external to the mer
`chant's system. The eCache server or servers have encryption
`means, storage, and a processor. The eCache decision making
`process may similarly occur within the merchant's system or
`on the eCache server or system of servers.
`0013 The eCache system bypasses conventional card pro
`cessing infrastructure by providing and utilizing a link
`between the retailer's POS system and the ACH network. The
`Automated Clearing House (ACH) is a central clearing facil
`ity operated by a private organization or a Federal Reserve
`Bank (FRB) on behalf of Depositor Financial Institutions
`(DFIs). Participating DFIs transmit or receive ACH entries
`that allow for transactions to be funded from a customer
`checking account or a pooled account established for reward
`and loyalty transactions as an ACH transaction. International
`banks also participate in Such bank to bank transfers using the
`International ACH (IAT) proprietary network. Users (as used
`herein, “users' and “customers' may be used interchange
`
`ably unless context dictates otherwise) are cross-referenced
`to bank accounts (demand deposit accounts, or DDAs) they
`control, and through which the user can make withdrawals, or
`settle accounts on the internet. Banks are identified using a
`bank identification number. An additional link allows general
`purpose cards such as credit cards, debit cards, charge cards,
`gift cards, and prepaid cards, to be Switched to and authorized
`through a merchant processor network, association network,
`debit (EFT) network or ATM network, where they may be
`used to complete a sales transaction. General purpose card
`transactions and eCache transactions may be routed through
`a server resident within the merchant's POS or other systems
`at the merchant location.
`0014. An eCache server is a server that contains propri
`etary Software that reviews transaction data to validate input
`data, link to internal or external databases, approve or decline
`transactions based upon a rules database applied to input data
`and its internal or external databases. The server also contains
`routing preference tables which allow a transaction to be
`routed to external debit or credit networks based upon the
`lowest cost of that transaction to a retailer. Coupons and
`reward programs may also be included in the routing tables,
`and used to determine the lowest cost of a transaction to a
`retailer. If desired, “split tender choices can be made
`whereby a transaction is partially funded from any of two or
`more funding sources that may include coupons. The eCache
`server issues instructions to member banks that will be carried
`out on existing financial networks. In so doing, the eCache
`server can make predetermined choices for structuring the
`transaction, taking into consideration Such factors as transac
`tional costs charged by other financial networks for various
`types of transactions, the time for settlement of the transac
`tion, and the finality and immediacy to be accorded the trans
`action in real time. The eCache server will instruct member
`banks to initiate monetary transfers. Such transfers may
`involve only internal bank transfers, or such instructions may
`involve initiating an ACH transfer of funds between banks. As
`a general rule, regardless whether the transfer will be an
`intrabank transfer or will transfer money from one bank to
`another, the transaction will be initiated as a preformatted
`ACHCCD, that is, a request to initiate an ACH transaction. In
`one embodiment of the invention, a preformatted ACH is sent
`to, or generated by, a Smart device from which it may be
`transmitted for further processing at a merchant's POS or by
`the eCache server. The server also stores decision data to be
`transmitted to an external server for additional processing.
`Such additional processing may include batching approved
`transaction data to an external server for Submission to the
`ACH network or to a credit or debit card network. The server
`also creates end-of-day settlement files that contain financial
`and non-financial data that are transmitted to external servers.
`(0015 The VPN of this invention is hosted indirectly
`through member banks who are also directly connected to one
`of the ACH networks that provide banks with means to trans
`fer funds between banks on behalf of their customers. The
`eCache server is a proprietary server and network that is
`operated by an eCache Operator. The eCache Operator is
`authorized by member banks or other financial or non-finan
`cial institutions (collectively referred to herein as “banks') to
`originate ACH transactions with member banks on behalf of
`the banks account holders through operating agreements
`with each member bank. When an operating agreement is
`executed with a bank, the eCache server establishes a dis
`crete, secure network connection to that bank, and creates
`
`Ex.1005
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`US 2011/0208.659 A1
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`Aug. 25, 2011
`
`potential indirect access for all that bank's demand deposit
`account (DDA) customers to the eCache server.
`0016. The server may also be hosted externally by eCache.
`The server has the ability to distinguish between eCache
`transactions and general purpose card transactions. General
`purpose card transactions can be routed to selected merchant
`processors according to merchant established guidelines.
`eCache transactions can be approved or declined by the
`eCache server.
`0017. The eCache server connects the merchant retail
`inventory, POS and ACH networks and operates over existing
`retailer platforms. Depending on the degree of connectivity
`and the linkages between various retailer systems within a
`retailer's network environment, the eCache server may con
`nect at one or multiple nodes. If, for example there are link
`ages between the merchant's POS system and inventory sys
`tem, eCache may function by linking only to either the POS
`system or the inventory system. If the systems are not linked,
`depending on the functionality the retailer requires, the
`eCache server may link separately to the various systems of
`the retailer. It may further integrate inventory systems, bar
`code readers, SKU systems, POS terminals and other existing
`retailer information systems. By operating within the inven
`tory system of the retailer or supplier, the system allows for
`the automatic recordation of a complete transaction record
`incorporating a wide variety of sales related data. In addition,
`through use of the consumer specific bar codes, data from
`each transaction may be related to the individual consumer
`and associated with demographic data that further identifies
`the consumer.
`0018. The invention employs a new payment medium that
`includes a system of unique primary barcodes which are
`personal to a customer and may be tendered at the POS of a
`merchant or retailer. The primary barcode may be an Interna
`tional Standards Organization barcode, a Global Electronic
`Party Information Registry barcode, a UPC barcode, or any
`other type of barcode. There is no requirement that the bar
`code be any particular type as long as the primary barcode
`may be read or entered by a barcode reader at a merchant's
`POS. In a preferred embodiment, so-called two-dimensional
`barcodes, or 2-D barcodes, are able to incorporate informa
`tion Sufficient to identify the parties to a transaction and all
`other relevant information regarding the transaction Such that
`a transaction may be completed upon presentation and read
`ing of the barcodes in a 'single pass, along with an identifi
`cation of items that are the Subject of a transaction.
`0019. Each customer-specific primary barcode is further
`linked to an extension barcode or barcodes. The extension
`barcodes are linked to specific retailers POS systems and
`may also be linked to the retailers inventory or SKU systems.
`0020. In a preferred embodiment of the invention, primary
`and extension barcode data may be combined into a single
`“combined barcode for scanning. Such combined barcode
`may be presented to a POS system, a computer or any device
`capable of reading a barcode. The combined barcode contains
`all of the data required to authenticate, authorize, clear and
`settle a transaction.
`0021 Smart devices having internet connectivity may run
`an installed eCache application that, interalia, combines the
`primary and extension barcode data, generates a combined
`barcode that may be encrypted, if desired, and that may be
`scanned in a single scan. The combined barcode may there
`after be decrypted and decomposed into the original primary
`and extension barcodes at the eCache server. In some embodi
`
`ments, the application may also permit the primary barcode
`holder to create an extension barcode using an application
`that is downloaded to a Smart device, Smartphone, or com
`puter. In this embodiment, the primary barcode holder is
`given the ability to create complete transactions. In cases in
`which the POS does not have a scanner, any barcode may be
`entered manually into a device capable of capturing and pro
`cessing the information. In addition, the application may take
`advantage of a Smart device's global location services to
`facilitate communications with eCache or any other external
`Source to authenticate, authorize, clear, and settle a transac
`tion, or to determine the location of the user and the identity
`of the merchant situated at the user's location.
`0022. Smart devices may be used to receive barcodes gen
`erated by the eCache server or, alternatively, to generate bar
`codes from information previously downloaded from the
`eCache server. As used herein, “smartphone' refers to exist
`ing internet-accessible Smart devices capable of running
`installed applications, and those to be developed in the future,
`regardless whether they perform traditional telephonic activi
`ties or of the wireless protocol or medium through which they
`access the internet. One of the advantages of Smart phone
`technology is the display capability which allows for the
`Smartphone to receive and display various images in addition
`to data. Another advantage is the ability to encrypt or decrypt
`information sent between the Smartphone and the proprietary
`network. Smartphones also allow a customer or other user to
`download and install software applications onto the phone.
`These software applications can take the form of games, GPS
`tracking, Software, financial services management or in the
`case of this invention the eCache software application. The
`eCache application is downloaded after the customer or other
`user enrolls with eCache. Since the customer or user will have
`downloaded and installed the eCache application, the inven
`tion is not dependent upon the cellular provider to provide any
`service other than internet connectivity for the transmission
`of data.
`0023 The customer may enroll and supply information
`sufficient to verify the customer's identity. The customer also
`enters specific information that creates a personal value pro
`file. The value profile contains information such as DDA
`(direct deposit account) account numbers, credit and debit
`stored value card account numbers, reward program informa
`tion, acceptance of promotional offers from selected mer
`chants, and the customer's preference to receive coupons. The
`value profile might also contain an optional application for
`overdraft loans or consumer loans as a source of settlement
`funds. The credit facility could be offered by eCache, the
`merchant oran alliance partner. The value profile also asks the
`customer to select settlement preferences. For example, a
`customer might do weekly grocery shopping at a particular
`grocer. The grocer might have a loyalty program that offers
`members special weekly promotional offers, or might have
`coupons that the grocer wishes to offer to the customer. Addi
`tionally, the merchant in this example, a grocer—might
`have entered into an agreement with a rewards point issuer,
`Such as an airline or credit card issuer, to allow customers to
`redeem reward points to be applied to purchase merchandise
`in the merchant's stores. The value or conversion rate from
`reward points to the merchant might vary, so the invention
`manages the conversion from reward value to merchant dol
`lars. In this manner the customer can establish a preference
`with a grocer to “pay' or settle a transaction in the following
`manner: First, apply any promotional dollars; second, apply
`
`Ex.1005
`APPLE INC. / Page 15 of 26
`
`

`

`US 2011/0208.659 A1
`
`Aug. 25, 2011
`
`coupons; third, convert points from the customer's airline
`card; and, fourth, the remainder of the cost of the transaction
`is to be deducted from the customer's DDA account. This list
`and sequence is illustrative only. In this embodiment, the
`customer or user is capable of controlling the settlement. In
`the process, the customer is able to control the value of the
`reward points being used. The customer's value creates con
`trols for settlement options.
`0024. Alternatively, the merchant or provider of goods or
`services may control the value of the transaction by reducing
`interchange fees and creating promotions for the merchant's
`customers. For example the merchant may create promo
`tional offers to stimulate the sales of “house' brands that have
`a higher profit margin for the merchant, or may influence the
`customer to pay or settle from the customer's DDA account
`instead of using credit or debit cards which have high accep
`tance costs due to “interchange' fees imposed by card asso
`ciations, by for example associating rewards points with
`transactions that utilize a DDA. The merchant might also
`want to move merchandise at a particular store location. For
`example, if a store had an overSupply of a perishable good or
`an item that will soon be out of date, the merchant may wish
`to push a special coupon to a customer who has the eCache
`application on the customer's cell phone. The GPS tracking
`component of a Smartphone allows the merchant to know that
`a customer has entered a specific Store. Store specific coupons
`or offers can then be sent to the eCache application to be
`included in the customer's settlement profile. Alternatively,
`the merchant has a GPS coordinate for each POS scanner
`connected to the network. When a transaction is scanned from
`a specific scanner the merchant and eCache know the location
`of the customer and may send time sensitive coupons to the
`customer's Smart device for use with local merchants in close
`proximity to the customer. Such coupons may be sent during
`or immediately following checkout, and will offer bargains or
`discounts to the customer if used prior to their expiration time
`in a store of another merchant located near the customer's
`location.
`0025. Each primary barcode is personal to a customer and
`may take many different forms. Primary barcodes are issued
`to qualified customers and allow for the ready payment of
`commercial transactions and further allow for the gathering
`of a wide variety of information related to the transaction.
`Qualified customers will have agreed to terms and conditions
`for use of the barcode system and may have submitted a wide
`variety of information in connection therewith. The informa
`tion may include full name, address, telephone number, driv
`er's license information, e-mail address or other identifying
`and demographic data. Such information may further include
`demand deposit account (DDA) information, and account
`information concerning credit cards, debit cards, stored value
`or prepaid cards or payment methods. Customers using the
`eCache system will conclude and fund transactions by initi
`ating an ACH transaction or a general purpose card transac
`tion using one of the accounts.
`0026. In addition to the primary barcode, each customer is
`also provided with an extension barcode or barcodes which
`may either be assigned to the customer or selected by the
`customer. The extension barcodes are linked to a specific
`retailer and allow a customer the privilege of completing a
`sales transaction with that retailer who is a participant in the
`barcode program. For purposes of security against barcode
`theft or fraud, an individual's master barcode may not be
`given to the individual, but may be maintained by the eCache
`
`system and linked to one or more primary barcodes issued to
`the individual for day in and day out usage. In some embodi
`ments, the master and extension barcodes may be combined
`into a single encrypted barcode to be used by the Smartphone
`application. In one preferred embodiment, barcodes will be
`issued on a one-time, single-transaction use, and will be dis
`carded when the purpose of identifying the customer, cus
`tomer preferences, or other data associated with the transac
`tion has been completed. The extension barcode may be a
`scanable barcode or may take the form of a series of numbers
`or characters that may be entered by keypad or other mecha
`1S.
`0027 Of relevance to the instant invention, a smartphone
`can receive or generate, and can display 2-D barcodes. 2-D
`barcodes are images that can be recognized by various optical
`scanning technologies. 2-D barcodes enjoy significant advan
`tages over existing technology in that significant amounts of
`data, up to a terabyte, may be encoded in a 2-D barcode. The
`2-D barcode becomes the intersection between the 2-Dbar
`code “view'