[0001]    This application claims the benefit of U.S. Provisional Patent Application 61/863,201, filed on Aug. 7, 2013. 
     
    
     FIELD OF THE INVENTION 
       [0002]    The embodiments disclosed herein relate to a system architecture and a method to reduce fees and costs associated with electronic point-of-sale payments, while maximizing fees collected during the transaction. In particular, the present invention reduces costs associated with the authorization and settlement of credit and debit card transactions. 
       BACKGROUND OF THE INVENTION 
       [0003]    Credit and debit cards, along with the advent of electronic sales and services transactions, have changed forever how the U.S. and global marketplaces function. Point-of-sale purchases are those purchases made at the physical location where the retail goods or services are provided. Retailers accept a wide variety of payment methods, each of which carries with it its own processing and handling costs, and impacts the handling of customers (both physically and electronically) in different ways. Transactions of this type are generally handled by and through an electronic fund transfer (EFT) device, such as the combination of a cash register and a debit/credit card reader. 
         [0004]    If a retailer were able to choose for each customer the specific payment to use for a given transaction, the decision would be based upon a number of factors (the “Transaction Factors”), including:
       The balance of the transaction   The payment methods that the customer has available   The payment types available for a given payment method, such as Debit or Signature Cards   Whether the customer will be requesting cash back on the transaction, and if there are fees captured or other benefits associated with the cash back transaction   Third party discounts or incentives associated with a given payment type   Chargeback or inquiry rates associated with a given payment type, and the costs of retaining a signature or receipt   The length of time to process the customer in the lane (e.g., whether or not a signature is required)   The impact of payment choices on the availability of funds   Store-related costs associated with the labor for a particular payment type   Fees associated with authorizing and settling the card payment utilizing a particular payment type (e.g., whether or not the bank providing the card is regulated or unregulated under the Durbin Amendment)   Other changes and impacts that occur as a result of changes in banking and regulatory structures, fee agreements, and the like       
 
         [0016]    Technologies exist to process point-of-sale electronic payments. However, prior payment processing means are limited in that payment handling was determined solely from the first digits of the card at issue. The use of the above Transaction Factors is needed in order to minimize the retailer&#39;s cost at the point of the sale. 
         [0017]    What is needed, therefore, is a system and method that changes the payment flow at the point of sale and an EFT device based upon the Transaction Factors, so that the customer is guided during their interaction with the transaction based upon the card that they are utilizing, the payment types supported by that card, and their cash back selection, such that the transaction incurs the least cost for the retailer. 
         [0018]    While the discussion herein discusses the invention in terms of retail sales, it will be understood that the method may be applied to other transactions, such as service sales, wholesale purchases, and the like. 
       SUMMARY OF THE INVENTION 
       [0019]    The present invention is related to a system for handling and authorizing point of sale payments. In particular, the present invention dynamically alters the manner in which a payment is handled in a point of sale transaction such that the retailer&#39;s costs are minimized. 
     
    
     
       BRIEF DESCRIPTION OF THE DRAWINGS 
         [0020]      FIG. 1  illustrates the High Level Flow of the present invention. 
           [0021]      FIG. 2  illustrates the inputs to cost that are utilized in dynamically predicting costs of payment handling. 
           [0022]      FIG. 3  illustrates the elements utilized to generate a recommended transaction. 
           [0023]      FIG. 4  illustrates an embodiment of the present invention showing a dynamically-guided consumer purchase process. 
           [0024]      FIG. 5  illustrates an embodiment of the present invention showing decision components for a dynamically guided consumer purchase process in accordance with an embodiment of the present invention. 
           [0025]      FIG. 6  illustrates a system in accordance with an embodiment of the present invention. 
       
    
    
     DETAILED DESCRIPTION OF THE INVENTION 
       [0026]    In the following detailed description, reference is made to the accompanying drawings, which form a part hereof and illustrate specific embodiments that may be practiced. In the drawings, like reference numerals describe substantially similar components throughout the several views. These embodiments are described in sufficient detail to enable those skilled in the art to practice them, and it is to be understood that structural and logical changes may be made. 
         [0027]    Referring now to  FIG. 1 , a High Level Flow of the present invention is shown. At the start  101 , the card information is provided  102 . This is generally done through the process of a point of sale customer “swiping” the magnetic strip located on credit and debit cards through an electronic card reader, but the card information may also be provided by manually keying in the care information at the point of sale register, or by other means. The card type is determined  103  by utilizing the card prefix and the length of the card number. Once the card type is determined  103 , whether or not the card can be authorized in more than one way is determined  104 . If the card cannot be authorized in more than one way, the transaction is handled normally  105  with no dynamic prediction  106 . If the card may be authorized in more than one manner, the costs of handling are dynamically predicted  106 , utilizing the Inputs to Cost ( FIG. 2 ). Once the costs of handling are predicted  106 , a recommended transaction and customer prompting is generated  107 , based upon the dynamic prediction  106  of the transaction with the least transaction costs for the point of sale retailer. The transaction is then handled  108  utilizing the recommended transaction. 
         [0028]    Referring now to  FIG. 2 , Inputs to Cost that are utilized for the step of dynamically predicting ( FIG. 1 ,  106 ) the costs of handling. These Inputs may comprise: interchange rate components  201 ; the presence or lack of Durban regulations  202  (Durbin regulations allow the U.S. Federal Reserve the power to regulate debit card interchange fees); the transaction amount  203 ; network and debit fees  204 ; card issuer (Visa, MasterCard, American Express, etc.) fees  205 ; any applicable signature limit  206 , which impacts transaction costs at the point of sale, whether the card is a commercial card  207 , whether the card is a pre-paid card  208 , and other associated fees and costs  209 . It will be understood that this list is not exhaustive; transaction costs change not just in value but in type over time, and the present invention takes into account this shifting landscape of Inputs to Cost. 
         [0029]    Referring now to  FIG. 3 , once the costs of handling are dynamically predicted ( FIG. 1 ,  106 ), the generation of the recommended transaction and customer prompting ( FIG. 1 ,  107 ) is comprised of one or more elements. These elements include: cash back awards and cash back fees to charge  301 ; “rewards” card fees or discounts  302 ; signature handling and PIN entry  303 ; AVS/CCV prompting  304  (these are the three- or four-digit security numbers utilized on credit and debit cards); PO number prompting  305 , whether or not to re-enter the card information  306 , and other customer prompting  307 . It will be understood that the Elements of Recommended Handling identified herein is not exhaustive. There are changes to card processing that occur over time, and the present invention is structured such that those changes will be taken into account as they occur for recommending transaction and customer prompting. 
         [0030]      FIG. 4  shows an alternate flow chart in accordance with an embodiment of the present invention. A consumer presents a card to pay for a purchase  401 . The system determines  402  the card capabilities and the methods of authorization. The methods of authorization  403  can include such parameters as pin debit, signature debit, credit, gift, electronic benefits, HSA/FSA, or other authorization methods. It will be understood that, as the marketplace progresses and changes, available authorization methods may change and such new or changed authorization methods can be incorporated into the present invention without deviating from the scope of the invention. The system then recommends flow  404  based upon the system determinations in  402 , as well as the purchase amount and configured rules/predicted costs. The flow components  405  may include cash back, PIN entry, amount ok (authorization of purchase) signature capture, the choice of credit or debit, selection of account that the card is associated with, or other flow components. As with the methods of authorization  403 , it will be understood that the set of flow components to choose from may change as the marketplace use of cards is modified and evolves, and the set of potential flow components may change without deviating from the scope of the present invention. Once the system has recommended a flow  404 , the system dynamically guides  406  the consumer payment and method of authorization and completes the customer purchase  407 . 
         [0031]    Decision components ( FIG. 5 ) for determining the flow for dynamically guiding the customer&#39;s payment and method of authorization include networks  501 , processors  502 , signature not required  503 , issuer  504 , regulated  505 , commercial cards  506 , pre-paid  507 , country code  508 , or other components  509 . For networks  501 , each debit card can be processed by one or more networks, each of which may have different costs which are considered when guiding the purchasing process. For processors  502 , requests for payments on credit or debit cards, the information is sent to a payment processor. The payment processor authorizes the payment through an appropriate network and charges a fee for doing so. Below a certain purchase limit, signatures may not be required  503  for a particular card. This component further includes chargeback protection. The system also considers the issuer  504 ; the bank or institution that issued the card and collects fees for the card&#39;s use independent of the network  501  or the processor  502 . The system also considers whether or not the transaction is regulated  505 . Government regulations control the fees charged by networks ( 501 ) and are taken into consideration when determining a recommended system flow. There are also commercial cards  506 . Commercial cards are issued as “business cards” that receive an interchange discount if more information is provided. Pre-paid  507  cards include credit card company branded “gift cards.” Such “gift cards” contain a balance placed upon them at the time of the purchase of the gift card. The balance is depleted as it is used, and in some cases the card allows the balance to be refilled or re-charged with payments to add additional monetary value to the card. The system further considers the country code  508 , which identifies the country of issue for the card. Finally, there may be other  509  components taken into account by the system, such as retailer cost allocation and components for additional items such as signature capture time, chargeback and retrieval costs, and the like. These other  509  components may also change, be added to or modified as the marketplace and cards change to include other components. Such changes, additions or modifications will be understood to not fall outside the scope and intention of the present invention. 
         [0032]      FIG. 6  shows a system configuration in accordance with an embodiment of the invention. A first input interface  601  receives account information from a payee. The payment interface device  601  may be chosen from the list comprising  602  a PIN Pad, MSR (magnetic card (stripe) reader), a contactless card reader, an NFC device (near field communication device), or similar device. Through  604  point of sale information entered by the cashier or by the customer, a second input interface  603  communicates second information to the system, second information being the amount, cashback and other payment information. In a standard configuration, the cashier operates a register that may also be used as a first and second input interface, and communicates with the payment interface device  601 . 
         [0033]    The payment request is sent  605  to the system processor  606 . The system processor  606  may be resident in the payment interface device  601 , a store server, a central server, or may be provided through a cloud service. A third input interface  608  communicates third information to the system  607 , the third information being permitted authorization methods and payee account handling options based upon the prefix of the payee account. The third input interface  608  communicates BIN (bank identification number) setup information to the system, the BIN setup information may comprise information  609  from a database or a Config file. A fourth input interface  610  communicates fourth information  611  to the system, the fourth information containing the configuration of desired payee account handling based upon the second and third information derived from the first information. The first, second, and third information are processed by the system to determine the configuration of desired payee account handling, and the payment optimization  607 . Once payment optimization  607  is determined by the system, the payment handling recommendation  612  is communicated to the payment interface devices. 
         [0034]    The above description and drawings illustrate embodiments which achieve the objects, features, and advantages described. Although certain advantages and embodiments have been described above, those skilled in the art will recognize that substitutions, additions, deletions, modifications and/or other changes may be made.
A system and method that changes the payment flow at the point of sale and an EFT device based upon the Transaction Factors, so that the customer is guided during their interaction with the transaction based upon the card that they are utilizing, the payment types supported by that card, and their cash back selection, such that the transaction incurs the least cost for the retailer.