(12) United States Patent
`Lapsley et al.
`
`(10) Patent No.:
`(45) Date of Patent:
`
`US 7,536,352 B2
`*May 19, 2009
`
`USOO7536352B2
`
`(56)
`
`(54) TOKENLESS BIOMETRIC ELECTRONIC
`FINANCIAL TRANSACTIONS VIAATHIRD
`PARTY DENTICATOR
`(75) Inventors: Philip D. Lapsley, Oakland, CA (US);
`Jonathan Alexander Lee, Oakland, CA
`(US); David Ferrin Pare, Jr., Berkeley,
`CA (US); Ned Hoffman, Sebastopol,
`CA (US)
`
`(73) Assignee: YT Acquisition Corporation, Delray
`Beach, FL (US)
`s
`Subject to any disclaimer, the term of this
`patent is extended or adjusted under 35
`U.S.C. 154(b) by 606 days.
`
`(*) Notice:
`
`This patent is Subject to a terminal dis-
`claimer.
`
`1-1.
`(22) Filed:
`
`(21) Appl. No.: 11/109,096
`9
`Apr. 18, 2005
`O
`O
`Prior Publication Data
`US 2005/0187843 A1
`Aug. 25, 2005
`
`(65)
`
`O
`O
`Related U.S. Application Data
`(63) Continuation of application No. 09/731,536, filed on
`Dec. 6, 2000, now Pat. No. 6,950,810, which is a
`continuation-in-part of application No. 09/239,570,
`filed on Jan. 29, 1999, now Pat. No. 6,269,348, which
`is a continuation of application No. 08/705.399, filed
`on Aug. 29, 1996, now Pat. No. 5,870,723, which is a
`continuation-in-part of application No. 08/442,895,
`filed on May 17, 1995, now Pat. No. 5,613,012, which
`is a continuation-in-part of application No. 08/345,
`523, filed on Nov. 28, 1994, now Pat. No. 5,615,277.
`
`(51) Int. Cl.
`(2006.01)
`G06O 40/00
`(52) U.S. Cl. ............................. 705/44; 705/78; 705/64;
`705/65; 705/67; 382/115; 235/380
`
`(58) Field of Classification Search ....................... None
`See application file for complete search history.
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`EEEEEEEzzo
`
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`
`DPCTRANSSENASAAccountos
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`
`NeRTRANSACTIONACUNT 70
`
`SLET MANCAACCOUNT fia
`
`PATRANSMTSSECTEDFNANCIA-ACCOUNToeNTFER
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`
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`FINANCALACCOUNTIENTFERTO
`FINANCIALRANSACTIONPRESSOR
`
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`
`TRANSACTIONSEXECUTE 808
`
`Ex.1009
`APPLE INC. / Page 1 of 21
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`Ex.1009
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`US 7,536,352 B2
`Page 3
`
`WO
`WO
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`
`WO98,25227
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`
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`26, 1996.
`
`* cited by examiner
`Primary Examiner Harish T Dass
`Assistant Examiner Jennifer Liversedge
`(74) Attorney, Agent, or Firm—Marger Johnson &
`McCollom, P.C.
`
`(57)
`
`ABSTRACT
`
`A method and device enables tokenless authorization of an
`electronic payment between a payor and a payee using an
`electronic identicator and a one payor bid biometric sample.
`The payor registers with a registration biometric sample, and
`a payor financial account identifier. The payee registers a
`payee identification data with the electronic identicator. A
`payee bid identification data and a payor bid biometric
`sample are electronically forwarded to the identicator. The
`bid biometric sample is compared with registered biometric
`samples and the payee’s bid identification data is compared
`with a payee's registered identification data for a successful
`or failed identifications of the payor and payee. If the identi
`cator Successfully identifies the payor and payee, the identi
`cator electronically forwards a payor financial account iden
`tifier to the payee. An electronic financial transaction is then
`formed comprising a transaction amount and a payor finan
`cial account identifier.
`
`23 Claims, 8 Drawing Sheets
`
`Ex.1009
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`

`

`U.S. Patent
`
`May 19, 2009
`
`Sheet 1 of 8
`
`US 7,536,352 B2
`
`s
`
`
`
`O CO
`v.
`C.
`V
`vam
`
`e
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`g
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`s
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`

`U.S. Patent
`
`May 19, 2009
`
`Sheet 2 of 8
`
`US 7,536,352 B2
`
`
`
`FIG. 2
`
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`U.S. Patent
`
`May 19, 2009
`
`Sheet 3 of 8
`
`US 7,536,352 B2
`
`101
`
`
`
`"()
`
`302
`
`COPD Provider
`
`FIG. 3
`
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`U.S. Patent
`
`May 19, 2009
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`Sheet 4 of 8
`
`US 7,536,352 B2
`
`
`
`
`
`
`
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`9:27
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`Ex.1009
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`U.S. Patent
`
`May 19, 2009
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`Sheet 5 of 8
`
`US 7,536,352 B2
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`
`
`O
`w
`4.
`Z
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`w
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`5.
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`

`U.S. Patent
`
`May 19, 2009
`
`Sheet 6 of 8
`
`US 7,536,352 B2
`
`INPUT PAYOR BIOMETRIC 702
`
`INPUT PAYOR PIN 704
`
`TRANSMIT PAYOR BIO-PIN AND
`PAYEE HARDWARE ID TO DPC 720
`
`DPC IDENTIFIES PAYOR AND
`RETREVES FINANCIAL ACCOUNT DENTIFIERS
`
`7O6
`
`DPC IDENTIFIES PAYEE
`VIA HARDWARE D
`
`712
`
`DPC TRANSMTS FINANCIAL ACCOUNT 708
`DENTIFIERS TO PAYEE
`
`ENTERTRANSACTION AMOUNT 710
`
`SELECT FINANCIAL ACCOUNT 714
`
`PIA TRANSMITS SELECTED FINANCIAL ACCOUNT DENTIFIER
`TO STORE PAYMENT SYSTEM
`
`724
`
`
`
`STORE PAYMENT SYSTEM FORWARDS SELECTED
`FINANCIALACCOUNT IDENTIFIERTO
`FINANCIAL TRANSACTION PROCESSOR
`
`806
`
`TRANSACTION IS EXECUTED 808
`
`FIG. 6
`
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`U.S. Patent
`
`May 19, 2009
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`Sheet 7 of 8
`
`US 7,536,352 B2
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`808
`
`
`
`804 | HOAvd QNES
`
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`
`
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`
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`
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`Ex.1009
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`U.S. Patent
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`May 19, 2009
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`Sheet 8 of 8
`
`US 7,536,352 B2
`
`906
`
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`

`1.
`TOKENLESS BOMETRICELECTRONIC
`FINANCIAL TRANSACTIONS VIAATHIRD
`PARTY DENTICATOR
`
`CROSS REFERENCE
`
`This application is a continuation of application Ser. No.
`09/731,536, filed on Dec. 6, 2000, now U.S. Pat. No. 6,950,
`810, which is a continuation-in-part of application Ser. No.
`09/239,570, filed on Jan. 29, 1999, now U.S. Pat. No. 6,269,
`348, which is a continuation of application Ser. No. 08/705,
`399, filed on Aug. 29, 1996 now U.S. Pat. No. 5,870,723,
`which is a continuation-in-part of U.S. application Ser. No.
`08/442,895 filed on May 17, 1995 now U.S. Pat. No. 5,613,
`012 which is a continuation-in-part of U.S. application Ser.
`No. 08/345,523, filed on Nov. 28, 1994, now U.S. Pat. No.
`5,615,277, all commonly assigned, and all incorporated by
`reference herein.
`
`10
`
`15
`
`FIELD OF THE INVENTION
`
`This invention relates to the field of tokenless biometric
`financial transactions. Specifically, this invention is directed
`towards a system and method of using biometrics for process
`ing electronic financial transactions such as on-line debit,
`off-line debit and credit transactions without requiring the
`user to directly use or possess any man-made tokens such as
`debit or credit cards or checks. For any transaction designated
`to be processed as an electronic credit or debit, this invention
`provides a user, whether an individual or a business, with the
`ability to pay for goods and services either at the retail point
`of-sale (“POS), at an automated teller machine ("ATM") or
`over the internet using only a biometric.
`
`BACKGROUND
`
`The use of a token, an inanimate object that confers a
`capability to the buyer presenting it, is pervasive in today's
`electronic financial world. Whether a consumer is buying
`groceries with a debit card or shopping in a department store
`with a credit card, at the heart of that transaction is a money
`transfer enabled by a token, which acts to identify both the
`consumer as well as the financial account being accessed.
`Traditionally, a person must directly possess a man-made
`personalized token whenever attempting authorization for an
`electronic financial transaction. Tokens such as magnetic ink
`encoded paper checks, Smart cards, magnetic Swipe cards,
`identification cards or even a personal computer programmed
`with resident user-specific account data, are “personalized'
`because they are each programmed or encoded with data that
`is unique and personalized to the authorized user. For
`examples: at a retail point-of-sale, the user directly possesses
`and physically presents personalized credit or debit cards
`encoded with his unique account data to the merchant; or,
`over the internet, the user directly possesses and electroni
`cally presents his personal computer's resident user-unique
`account data to the remote merchant. By contrast, as the
`disclosed invention is completely tokenless, it does not
`require the user to directly possess, carry or remember any
`personalized token that can be lost, stolen or damaged.
`The sole functions of such tokens are to attempt to identify
`both the user and the financial account being accessed to pay
`for the transaction. However, these tokens can be easily
`exchanged, either knowingly or unknowingly, between users,
`thereby de-coupling them from the original intended user.
`Because these encoded credit or debit cards, identification
`cards or personal computers storing resident user data are
`
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`US 7,536,352 B2
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`2
`ubiquitous in today's consumer and business transactions as
`verification of the submitter's check writing authority, and the
`attendant inconveniences and security Vulnerabilities of Such
`tokens are widespread.
`Credit cards can easily be turned into cash if the card falls
`into the wrong hands. While theft of a token constitutes the
`majority of fraud in the system, fraud from counterfeit credit
`cards is rising rapidly. Counterfeit credit cards are manufac
`tured by a more technically sophisticated criminal who
`acquires a cardholder's valid account number, produces a
`valid-looking counterfeit card, encodes the magnetic strip,
`and embosses the counterfeit plastic card with the account
`number. The card is then repeatedly presented to merchants
`until the account's credit limit is reached. Another form of
`loss is caused by a criminal seller or his employees who
`surreptitiously obtains the cardholder's account number and
`enterfictitious transactions against the card and then take cash
`out of the till. It is estimated that losses due to all types of
`fraud exceed one billion dollars annually.
`Generally, debit cards are used in conjunction with a per
`sonal identification number (PIN). However, various strate
`gies have been used to obtain PINs from unwary cardholders.
`These techniques range from Trojan horse automated teller
`machines in shopping malls that dispense cash but record the
`PIN, to fraudulent seller point-of-sale devices that also record
`the PIN, to criminals with binoculars that watch cardholders
`enter PINs at ATMs. The subsequently manufactured coun
`terfeit debit cards are then used in various ATM machines
`until the unlucky account is emptied.
`Customer fraud, for both credit and debit cards, is also on
`the rise. Customers intent on this sort of fraud can claim that
`they lost their card, say that their PIN was written on the card,
`and then withdraw money from their account using card, and
`then refuse to be responsible for the loss.
`The financial industry is well aware of the trends in fraud,
`and is constantly taking steps to improve the security of the
`card. However, the linkage between the buyer and his token is
`tenuous, and that is the fundamental reason behind card fraud
`today.
`One possible solution to stolen-card fraud involves placing
`PIN protection for magnetic stripe credit cards, much as debit
`cards have PINs today. This will raise the administrative costs
`for each card, since cardholders will undoubtedly wish to
`select their own PIN for each of their 3.4 cards (the national
`average). In addition, this solution still doesn’t address the
`problem of counterfeit cards.
`Another solution that solves both stolen-card fraud and
`greatly reduces counterfeit-card fraud involves using a Smart
`card that includes either a biometric or a PIN. In this
`approach, authenticated biometrics are recorded from a user
`of known identity and stored for future reference on a token.
`In every Subsequent access attempt, the user is required to
`physically enter the requested biometric, which is then com
`pared to the authenticated biometric on the token to determine
`if the two match in order to verify user identity.
`Various token-based biometric technologies have been
`Suggested in the prior art, using Smart cards, magnetic Swipe
`cards, or paper checks in conjunction with fingerprints, hand
`prints, Voice prints, retinal images, facial scans or handwrit
`ing samples. However, because the biometrics are generally
`either: a) stored in electronic and reproducible form on the
`token itself, whereby a significant risk of fraud still exists
`because the comparison and Verification process is not iso
`lated from the hardware and software directly used by the
`payor attempting access, or, b) used in tandem with the user
`directly using magnetic Swipe cards, paper checks or a PC
`with the user's financial data stored resident therein.
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`Ex.1009
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`Examples of this approach to system security are described in
`U.S. Pat. No. 4,821,118 (Lafreniere); U.S. Pat. No. 4,993,068
`(Piosenka et al.); U.S. Pat No. 4,995,086 (Lilley et al.); U.S.
`Pat. No. 5,054,089 (Uchida et al.); U.S. Pat. No. 5,095,194
`(Barbanell); U.S. Pat. No. 5,109,427 (Yang); U.S. Pat. No.
`5,109,428 (Igaki et al.); U.S. Pat. No. 5,144,680 (Kobayashi
`et al.); U.S. Pat. No. 5,146,102 (Higuchi et al.); U.S. Pat. No.
`5,180,901 (Hirainatsu); U.S. Pat. No. 5,210,588 (Lee); U.S.
`Pat. No. 5,210,797 (Usui et al.); U.S. Pat. No. 5,222, 152
`(Fishbine et al.); U.S. Pat. No. 5,230,025 (Fishbine et al.);
`U.S. Pat. No. 5,241,606 (Horie): U.S. Pat. No. 5,265,162
`(Bush et al.); U.S. Pat. No. 5,321,242 (Heath, Jr.); U.S. Pat.
`No. 5,325,442 (Knapp); and U.S. Pat. No. 5.351,303 (Will
`more).
`Uniformly, the above patents disclose financial systems
`that require the user's presentation of personalized tokens to
`authorize each transaction, thereby teaching away from
`tokenless biometric financial transactions. To date, the con
`Sumer financial transaction industry has had a simple equa
`tion to balance: in order to reduce fraud, the cost and com
`plexity of the personalized token directly possessed by the
`user must increase.
`Also, the above patents that disclose commercial transac
`tion systems teach away from biometric recognition without
`the use of tokens or PINs. Reasons cited for such teachings
`range from Storage requirements for biometric recognition
`systems to significant time lapses in identification of a large
`number of individuals, even for the most powerful computers.
`Unfortunately, any Smartcard-based system will cost sig
`nificantly more than the current magnetic stripe card systems
`currently in place. A PIN smartcard costs perhaps S3, and a
`biometric smartcard will cost S5. In addition, each point-of
`sale station would need a Smartcard reader, and if biometrics
`are required, a biometric scanner will also have to be attached
`to the reader. With 120 million cardholders and 5 million
`stations, the initial conversion cost is from two to five times
`greater than the current annual fraud losses.
`This large price tag has forced the industry to look for new
`ways of using the power in the Smartcard in addition to simple
`commercial transaction. It is envisioned that in addition to
`storing credit and debit account numbers and biometric or
`PIN authentication information, Smart cards may also store
`phone numbers, frequent flyer miles, coupons obtained from
`stores, a transaction history, electronic cash usable at toll
`booths and on public transit systems, as well as the buyer's
`name, vital statistics, and perhaps even medical records.
`The net result of “smartening the token is centralization of
`function. This looks good during design, but in actual use
`results in increased vulnerability for the consumer. Given the
`number of functions that the Smartcard will be performing,
`the loss or damage of this monster card will be excruciatingly
`inconvenient for the cardholder. Being without such a card
`will financially incapacitate the cardholder until it is replaced.
`Additionally, losing a card full of electronic cash will also
`result in a real financial loss as well.
`Thus, after spending vast Sums of money, the resulting
`system will definitely be more secure, but will result in
`heavier and heavier penalties on the consumer for destruction
`or loss of the card.
`To date, the consumer financial transaction industry has
`had a simple equation to balance: in order to reduce fraud, the
`cost of the card must increase. As a result, there has long been
`a need for an electronic financial transaction system that is
`highly fraud-resistant, practical, convenient for the consumer,
`and yet cost-effective to deploy.
`As a result, there is a need for a new electronic financial
`transactions system that is highly fraud-resistant, practical,
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`US 7,536,352 B2
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`convenient for the consumer, and yet cost-effective to deploy.
`More specifically, there is a need for an electronic financial
`transaction system that relies solely on a payor's biometric
`for transaction authorization, and does not require the payor
`to directly possess any personalized man-made memory
`tokens Such as Smart cards, magnetic Swipe cards, encoded
`paper checks or personal computers for identification.
`Lastly, such a system must be affordable and flexible
`enough to be operatively compatible with existing networks
`having a variety of electronic transaction devices and system
`configurations. Accordingly, it is the objective of the present
`invention to provide a new system and method of tokenless
`biometric financial transactions.
`There is also a need for an electronic financial transaction
`system that uses a strong link to the person being identified, as
`opposed to merely verifying a buyer's possession of any
`physical objects that can be freely transferred. This will result
`in a dramatic decrease in fraud, as only the buyer can autho
`rize a transaction.
`Accordingly, it is an objective of the present invention to
`provide a new system and method of tokenless biometric
`financial transactions for electronic credit and debit.
`Another objective of the invention is to provide an elec
`tronic credit and debit financial transaction system and
`method that eliminates the need for a payor to directly possess
`any personalized man-made token which is encoded or pro
`grammed with data personal to or customized for a single
`authorized user. Further, it is an objective of the invention to
`provide an electronic financial transaction system that is
`capable of Verifying a user's identity based on one or more
`unique characteristics physically personal to the user, as
`opposed to Verifying mere possession of personalized objec
`tives and information.
`Another objective of the invention is to provide an elec
`tronic financial transaction system that is practical, conve
`nient, and easy to use, where payors no longer need to remem
`ber personal identification numbers to access their financial
`acCOunts.
`Another objective of the invention is to provide increased
`security in a very cost-effective manner, by completely elimi
`nating the need for the payor to directly use ever more com
`plicated and expensive personalized tokens.
`Another objective of the invention is to provide an elec
`tronic financial transaction system that is highly resistant to
`fraudulent access attempts by unauthorized users.
`Another objective of the invention is to authenticate the
`system to the payor once the electronic financial transaction is
`complete, so the payor can detect any attempt by criminals to
`steal their authentication information.
`Another objective of the invention is that the payee be
`identified by an electronic third party identicator (ETPI),
`wherein the payee’s identification is verified. Therefore, the
`payee would register with the ETPI payee identification data,
`which optionally comprises, a payee hardware ID code, a
`payee phone number, a payee email address, a payee digital
`certificate code, a payee financial account number, a payee
`biometric, or a payee biometric and PIN combination.
`Still, another objective of the invention is to be added in a
`simple and cost-effective manner to existing terminals cur
`rently installed at points of sale and used over the Internet
`around the world.
`Yet another objective of the invention is to be efficiently
`and effectively operative with existing financial transactions
`systems and protocols, specifically as these systems and pro
`tocols pertain to processing of electronic credit and debits.
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`Ex.1009
`APPLE INC. / Page 13 of 21
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`US 7,536,352 B2
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`A final objective of the invention is to make use of existing
`credit and debit authorization systems already present at
`points of sale.
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`SUMMARY
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`Sonal and/or professional electronic transactions at any time
`without dependence upon tokens, which may be stolen, lost or
`damaged.
`The invention is convenient to sellers and financial institu
`tions by making electronic credit and debit purchases and
`other financial transactions less cumbersome and more spon
`taneous. The paperwork of financial transactions is signifi
`cantly reduced as compared to standard credit and debit trans
`actions wherein the copies of the signed receipt must often be
`retained by the seller, financial institutions and the buyer.
`Overall, because the method and system of this invention
`are designed to provide a person with simultaneous direct
`access to all or any number of his financial accounts, the need
`for transactions involving credit cards, debit cards, paper
`money, credit drafts and the like can be greatly reduced,
`thereby reducing the cost of equipment and staff required to
`collect, account, and process such transactions.
`Further, the present invention will mitigate the substantial
`manufacturing and distributing costs of issuing and reissuing
`personalized tokens such as magnetic Swipe cards and Smart
`cards, thereby providing further economic savings to issuing
`banks, businesses, and ultimately to consumers.
`Moreover, the invention is markedly advantageous and
`Superior to existing systems in being highly fraud resistant.
`As discussed above, present authorization systems are inher
`ently unreliable because they base determination of a user's
`identity on the physical presentation of a manufactured per
`sonalized token along with, in some cases, information that
`the user knows. Unfortunately, both the token and informa
`tion can be transferred to another person through loss, theft or
`by voluntary action of the authorized user.
`Thus, unless the loss or unintended transfer of these items
`is realized and reported by the authorized user, anyone pos
`sessing such items can be recognized by existing authoriza
`tion systems as the buyer to whom that token and its corre
`sponding financial accounts areassigned. Even appending the
`need for presentation of a biometric in conjunction with Such
`personalized tokens is severely flawed, since if the authorized
`buyer is unable to present the requisite token at the time of
`transaction, he will be unable to access his financial accounts.
`As such, these complex arrangements are ineffective, since
`the security they intend to provide can easily block an autho
`rized user from using his own rightful financial resources by
`virtue of his personalized token having been lost, stolen or
`damaged.
`By contrast, the present invention virtually eliminates the
`risk of denying access to rightful users while simultaneously
`protecting against granting access to unauthorized users. By
`determining identity and transaction authorization solely
`from an analysis of a user's unique biometric characteristics,
`this invention creates a highly secure system that maintains
`optimal convenience for both buyers and sellers to transaction
`their electronic business anytime, anywhere.
`Additionally, the invention leverages the existing financial
`transaction processing networks and business relationships
`already existing at point-of-sale for many merchants. In this
`way, the invention is easy to integrate with a merchants
`existing operations.
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`The invention satisfies these needs by providing a method
`and device for tokenless authorization of an electronic pay
`ment between a payor and a payee using an ETPI and at least
`one payor bid biometric sample. The method comprises a
`payor registration step, wherein the payor registers with an
`ETPI at least one registration biometric sample, and at least
`one payor financial account identifier. In a payee registration
`step, the payee registers a payee identification data with the
`ETPI. At least one bid biometric sample is then obtained from
`the payor's person in a collection step. Preferably in one
`transmission step the payee bid identification data and payor
`bid biometric sample are electronically forwarded to the third
`party electronic identicator. A comparator engine or the iden
`tification module of the third party identicator compares the
`bid biometric sample with at least one registered biometric
`sample for producing either a successful or failed identifica
`tion of the payor. The comparator engine also compares the
`payee's bid identification data with registered payee identifi
`cation data for producing either a successful or failed identi
`fication of the payee. Once the third party identicator Success
`fully identifies the payor and payee, at leas