Distributed payment and loyalty processing for retail and vending

#This invention relates to electronic payment and loyalty systems for retail and automatic unattended vending. In particular the invention relates to an electronic payment and loyalty system wherein the customer account information is cached in a nonvolatile memory on the payment terminal or point of sale system and addresses the problems of securely storing customer identity information, operation of the payment system during a failure of the server or network, allowing the use and funding of offline electronic stored value accounts, and the use of customer account synchronization scheduling to limit merchant fraud risk in a network or retail locations.

#Electronic payment processing for attended retail locations and self-service automated vending locations is usually typically performed using online authorization or offline authentication with a chip or smart card. Payment processors have adopted authorization and authentication processes on a wide scale to prevent fraud losses and to limit abuse of accounts by customers. These approaches are applied to both credit and debit electronic payment accounts, as well as to check authorization and guarantee schemes.

#With online authorization system, the payment terminal captures the payment account information and some security information from a magnetic stripe card or other electronically coded token (chip card, RFID device). The payment terminal connects to the payment server or host and requests an authorization. The server returns an authorization or a decline depending on the state and validity of the customer's account. Periodically, the payment terminal submits a settlement batch file to the payment system server, which then creates a settlement batch to transfer funds from the customers Financial Institution (FI) to the merchant's Demand Deposit Account (DDA). Existing prior art online authorization systems include those operated by Master Card International, Visa International, and American Express along with numerous smaller networks and private label systems.

#The invention will be described by reference to the preferred and alternative embodiments thereof in conjunction with the drawings in which:

#FIG. 1 is an overall diagrammatic view of the preferred embodiment of the system or the invention;

#FIG. 2 is a block diagram of the payment terminal used at a merchant terminal according to the preferred embodiment;

#The preferred embodiment of the invention is used to facilitate transactions with customers who wish to make payment and gain loyalty benefits at one of several merchant locations. The customer and merchant employee interface with the payment system using dedicated terminals or other Point Of Sale (POS) systems at the merchant locations, which communicate over a data network with centralized servers or hosts. In the preferred embodiment customer account information is cached in a secure manner in nonvolatile memory on the payment terminal or POS system and synchronized with the host as required. The major system components of the payment system used in the preferred embodiment of the invention are illustrated in FIG. 1. However it will be appreciated that many aspects of the invention are equally applicable to other embodiments of payment systems that might be contemplated for use in conjunction with payment and electronic loyalty systems at physical merchant locations.

#The major system components of the preferred embodiment include:

#Transaction manager 10