Title:
Method, system and apparatus for the establishment of a virtual banking environment in a merchant venue while increasing the deposit-based assets of optionally interfaced traditional banking institutions subject to fractional-reserve banking
Kind Code:
A1


Abstract:
A system, method and associated apparatus for establishing virtual banking in a merchant venue or syndication of merchants to a consumer while optionally increasing the deposit-based assets of a related traditional banking institution, having a consumer portable device for containment of currency amounts linked to the consumer's account and enabled to perform commercial transactions at the direction of the consumer that affect the balance of the consumer's account, which consumer portable device also displays balance and transactional information; a node device for containment of currency amounts accurately reflecting the consumer's account and optionally associated with a captive account at the banking institution and enabled to perform commercial transactions that affect the balance of the consumer's account in accordance with instructions received from the consumer portable device, which node device also optionally provides for balance, statements, transactional information, and profiling of the consumer's transactional activities; an interface between the portable device and the node device for communication therebetween to accurately affect commercial transactions between the two; transacting at least one commercial transaction of the commercial transactions between the two devices; and if there is an optionally related captive account at a financial institution, accurately communicating the transaction to the banking institution such that the balance of said captive account is properly maintained in accordance with the at least one commercial transaction. The commercial transactions also include credit, debit, ATM, money transfers and the like.



Inventors:
Berntsen, William O. (Whitehouse Station, NJ, US)
Casey, Lawrence P. (Annandale, NJ, US)
Application Number:
11/895981
Publication Date:
04/24/2008
Filing Date:
08/28/2007
Primary Class:
International Classes:
G07F19/00
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Primary Examiner:
AMELUNXEN, BARBARA J
Attorney, Agent or Firm:
Mitchell A. Stein, Esq. (Northport, NY, US)
Claims:
We claim:

1. A system for establishing a virtual banking environment in a merchant venue to a consumer with a consumer's account while optionally increasing the deposit-based assets of a related traditional banking institution having a captive account therein for fractional-reserve banking at the banking institution, comprising: (a) a consumer portable device for containment of currency amounts linked to the consumer's account and enabled to perform commercial transactions at the direction of the consumer that affect the balance of the consumer's account, which consumer portable device also displays balance and transactional information; (b) a node device for containment of currency amounts accurately reflecting the consumer's account and optionally associated with a captive account at the banking institution and enabled to perform commercial transactions that affect the balance of the consumer's account in accordance with instructions received from the consumer portable device, which node device also optionally provides for balance, statements, transactional information, and profiling of the consumer's transactional activities; (c) an interface between said portable device and said node device for communication therebetween to accurately affect commercial transactions between the two; (d) transacting at least one commercial transaction of said commercial transactions between the two devices; and (e) if there is an optionally related captive account at a financial institution, accurately communicating the transaction to the banking institution such that the balance of said captive account is properly maintained in accordance with the at least one commercial transaction.

2. The system of claim 1, wherein said commercial transactions are selected from the group consisting of general spending and purchases, government benefits, check cashing, child support payments and receipts, credit functions, savings functions, insurance functions, ATM functions, money transfers, travelers' checks, electronic and paper check writing, employee related functions, miscellaneous functions, fractional currency deposits and withdrawals, and combinations thereof.

3. The system of claim 1, wherein the accounts comprise fractional currency.

4. The system of claim 1, wherein the portable device comprises a microprocessor, display means for displaying said balance and transactional information, and communications with an operator of the device, operator interface means for entering and receiving transaction related and balance related data, power, memory, and wireless communication means for optional communication with the banking institution and direct communication with the node device.

5. The system of claim 1, wherein the portable device further comprises security means for ensuring the accuracy of the transaction and operators of the respective portable and node devices.

6. The system of claim 1, wherein the node device comprises a microprocessor, display means for displaying said balance and transactional information, communications with an operator of the device, operator interface means for entering and receiving transaction related and balance related data, power, memory, and communication means for communicating with the banking institution and portable device.

7. The system of claim 1, wherein a consumer receives from the merchant a portable device with a predetermined, prepaid amount, which is utilizable solely at the merchant's facility.

8. The system of claim 1, further comprising the steps of: (a) receiving a check from a consumer; (b) cashing the check by adding the funds from the check to the consumer account.

9. The system of claim 1, further comprising inter-bank means wherein a portion of the money represented by the portable device is interchangeable at another bank via an ATM network with another merchant.

10. A method for increasing the asset base of a banking institution having a merchant account captive therein for fractional-reserve banking, comprising: (a) encrypting in a consumer portable device currency amounts linked to a consumer account captive at the banking institution; (b) encrypting in a node device currency amounts linked to the merchant account at the banking institution; (c) enabling the performance of commercial transactions wherein one account is debited a specific amount and the second account is credited that amount in accordance with a commercial transaction; (c) communicating in an encrypted manner between said portable device and said node device for communication therebetween to accurately affect the commercial transaction between the two that comprises a credit to one and a debit to the other in accordance with the specific amount; (d) transacting a commercial transaction between the two devices such that one of the accounts is debited for the transaction said specific amount and the other account is credited said specific amount commensurate with the commercial transaction; and (e) communicating the transaction to the banking institution such that the balances of each respective account are properly credited and debited in accordance with the commercial transaction.

11. The method of claim 10, wherein the commercial transaction is selected from the group consisting of general spending and purchases, government benefits, check cashing, child support payments and receipts, credit functions, savings functions, insurance functions, ATM functions, money transfers, travelers' checks, electronic and paper check writing, employee related functions, miscellaneous functions, fractional currency deposits and withdrawals, and combinations thereof.

12. The method of claim 10, wherein the accounts comprise fractional currency.

13. The method of claim 10, further comprising the steps of: (a) receiving a check from a consumer; (b) cashing the check by adding the funds from the check to the consumer account.

14. The method of claim 10, further comprising inter-bank means wherein a portion of the money represented by the portable device is interchangeable at another bank via an ATM network with another merchant.

15. An apparatus for increasing the asset base of a banking institution having a first and second account captive therein for fractional-reserve banking, comprising: (a) portable means for encrypted containment of currency amounts linked to the first account at the banking institution and enabled to perform commercial transactions that affect the balance of the first account; (b) node device means for encrypted containment of currency amounts linked to the second account at the banking institution and enabled to perform commercial transactions that affect the balance of the second account; (c) encrypted interface means between said portable device means and said node device means for communication therebetween to accurately affect a commercial transaction between the two that comprises a credit to one and a debit to the other; (d) such that by transacting a commercial transaction between the two device means one of the accounts is debited for the transaction a specific amount and the other account is credited said specific amount debited commensurate with the commercial transaction; and (e) communicating means for communicating the transaction to the banking institution such that the balances of each respective account are properly credited and debited in accordance with the commercial transaction.

16. The apparatus of claim 15, wherein the commercial transaction is selected from the group consisting of general spending and purchases, government benefits, check cashing, child support payments and receipts, credit functions, savings functions, insurance functions, ATM functions, money transfers, travelers' checks, electronic and paper check writing, employee related functions, miscellaneous functions, fractional currency deposits and withdrawals, and combinations thereof.

17. The apparatus of claim 15, wherein the accounts comprise fractional currency.

18. The apparatus of claim 15, wherein the portable device means comprises a microprocessor, display means for displaying said balance and transactional information, communications with an operator of the device, operator interface means for entering and receiving transaction related and balance related data, power, memory, and wireless communication means for communicating with the institution (which may not be subject to Regulation D banking) and node device.

19. The apparatus of claim 15, wherein the portable device means further comprises security means for ensuring the accuracy of the transaction and operators of the respective portable and node devices.

20. The apparatus of claim 15, wherein the node device means comprises a microprocessor, display means for displaying said balance and communications with an operator of the device, operator interface means for entering and receiving transaction related and balance related data, power, memory, and communication means for communicating with the banking institution and portable device.

Description:

FIELD OF THE INVENTION

The present invention relates to the field of methods, systems and apparatus for the creation of a virtual banking environment in the venue of a merchant location offering a plurality of services while simultaneously providing heretofore unavailable consumer reporting functions and optionally interfacing with traditional institutional banks for increasing banking reserves and fractional-reserve banking, while employing electronic methods, systems and devices to enable virtual banking in the merchant venue and to gather predominantly the market for the unbanked and underbanked.

BACKGROUND OF THE INVENTION

The world of financial transactions including banking (both institutional and virtual—where services akin to traditional banks are provided but without the cloth of the traditional banking institution) is in a state of evolution. Among the elements of import lie the enormous volume of merchant-related activities—from check-cashing, bill payment, money orders, ATM functions, money transfers, credit cards, debit cards, gift cards and the like, and the impact upon the world of the so-called “unbanked” or “underbanked.” This former class, which includes those who have no bank accounts (the “unbanked”) to those who may have access to banking services yet do not generally use the same (the “underbanked”) estimated at some 73 million of 208 million income earning American households (approximately 33.2% of all), are those who are unable to hold a bank account in the traditional method, for credit or other reasons, and are relegated to living on the essential fringes of the banking world. While the volume money that passes through this class is large, the ability for banks to utilize such money and for those in the class to actually grow into “bankable” households with credit and normal bank accounts has heretofore been a relative impossibility. The numbers of this class rise, while the solution to blend this group into the traditional banking scenarios has remained an unresolved problem. It is one of the objects of this invention to provide solution(s) that fall within the rubric of legal structure. Lying behind this array of elements is a fairly well-established, yet unwieldy banking system, including fractional-reserve banking, which has been established over a multiplicity of years, but yearns to grow to meet these newly developing demands. These elements and solutions are explained and integrated herein.

For example, the traditional approach of banks courting savings customers has given way to an estimated 14% of U.S. income earners, as much as 28 million people, lacking in bank accounts, with another 22%, or about 45 million people using banks intermittently. Such people are often called the “unbanked” or “underbanked” but nonetheless spend an estimated $11 billion in fees for some 324 million “alternative” financial transactions annually at check-cashing outlets, money-wire companies or other operations, all as reported by the Chicago-based Center for Financial Services Innovation. Many banks are anxious to capture this customer base, but both customers and banks are concerned with risks inherent in becoming “banked.” Typically, such “unbanked” customers use a myriad of check-cashing facilities to liquidate their paychecks and then to use the cash thereby received. Banks and merchants are increasingly establishing facilities to handle these types of transactions, as the fees charged through normal card-based banking systems are unwieldy. It is one of many objects of this invention to capture the transactions of these so-called “unbanked” and “underbanked” customers and to provide them with services that are equivalent to those typically provided to the banked with reservations as necessary to minimize the risk.

Indeed, in an almost transparent attempt to utilize the enormous volume of sales activities and to avoid the costs of traditional credit card transactions, Wal-Mart sought an application to itself become a bank—an application withdrawn on or about Mar. 16, 2007 for reasons that may appear mysterious, yet, have become clearer. Upon the heals of withdrawal of the application, Wal-Mart announced an array of services largely specialized to its customer base, with the utilization of GE Money Bank, including financial services, services for the unbanked and underbanked and money centers. It is unclear the extent of the tie-in to GE Money Bank, although the advantages are many.

The Office of Regional and Community Affairs of the Federal Reserve Bank of New York released a white paper in August of 2005 (“Stored Value Cards as a Method of Electronic Payment for Unbanked Customers”) which generally indicates the issues confronting the merchant, open and closed loop cards, and Regulation E which governs electronic fund transactions. The deepest concern expressed therein is that the nature of stored value cards (“SVC's) does not permit the consumer to create credit portfolio's, basically as a result of the inability to render account statement information. Indeed, one can well recognize that a simple SVC is but a magnetic sweep means and a code identifier—there is no specific means for a consumer who uses such an SVC to be capable of even knowing the card balance, let alone checking on account activity other than a manual process. It is thus an object of the instant invention to satisfy the long felt need in the industry to provide a stored value-styled environment wherein a device provides the very equivalents of statements, transactions, histories and balances on demand to the consumer and downloaded at merchant sites.

It should be further appreciated that whether open or closed loop, the merchant who endeavors to provide a system that enables statement equivalents, transactions, histories and balances to the consumer, maintains the same in-house, and generally supervises the transactions. To be gained by an interface with a financial institution are many advantages, yet they are but optional to the merchant. Indeed, in “one stop shops” like Wal-Mart, it is easy to recognize that a modality that permits the full gamut of customer services equivalent to that of a bank through a device that is SVC-type but provides the necessary predicates to satisfy traditional Regulation E requirements, permits the merchant to act as if it were a bank, and even to provide credit services as if it were a virtual bank, where the security for the transactions is not the FDIC (which guarantees up to $100 k per account), but is, instead the merchant which can also securitize a much greater amount. Furthermore, it is not clear that where the merchant acts in the capacity of a virtual bank it is subject to regulatory authority, while providing perhaps greater services and security than an actual regulated bank. That having been stated, however, it is also observable that in such environments, the merchant may very well wish to be tied in with a bank (as Wal-Mart has done with GE Capital) in order to increase fractional-reserve banking opportunities, as explained in greater detail hereinbelow.

It is thus an object of the present invention to provide a virtual banking environment in a merchant location and the option to the merchant of “banking” one or more of its transactions with a regulated banking institution to enable fractional-reserve banking, via a method, system and series of devices that provide a plurality of SVC-type services to the consumer while simultaneously giving statement equivalents, transactional information, histories and balances on demand. Indeed, one could well recognize that the instant invention renders the merchant a virtual bank—perhaps without regulation—permitting a potential intrusion into the world of the banked in a significant way, in that the merchant can offer protection in excess of the $100 k FDIC limit per account, backed not by the full faith and credit of the United States Government (with the debt load and fees involved), but instead backed by the actual security of the merchant. If the merchant is robust, with positive earnings and significant inventory, these assets can permit the merchant to potentially offer a degree of per account protection of, e.g., $250 k, thereby attracting the attention of the banked investor who may well wish the greater protection that the robust merchant can offer. Inasmuch as the method, system and devices of the instant invention provide “on demand” account information (as shown hereinbelow), it is thus an object of the instant invention to enable merchant(s) with the ability to act as virtual banks primarily targeting the unbanked and underbanked, but likewise viable for the banked.

By way of further background, customers who are banked, unbanked and underbanked are sought after by the banking community. In the course of any given day, such customers utilize a composite of mechanisms to perform financial transactions. In particular, credit cards, debit cards, checks and cash are employed. As a subclass, “gift cards” are used: an industry that has arisen with some reported 54,100,000 Internet sites offering gift cards for purchase. Often, as well, merchants create cash checking and ATM scenarios just to have the marginal float associated therewith.

“Gift cards” are generally themselves a class of “stored-value cards” which represent money that has been given to the card issuer for the acquisition of the card which often include not just a pre-determined amount of money to be used on the card, but a cost for the acquisition itself. Typical applications include items like transit system cards, prepaid telephone cards, and merchant-specific cards. For example, transit system cards are acquired by passengers to eliminate the handling of money in connection with a transit ride (buses, subways, trains and the like). Of important among transit system cards—like card usage in general—is the ability to accurately track usage, not just of the transit system, but individual profiles of the user. It is recognized that users are pattern-oriented: taking the same means of transportation at predetermined times daily and purchasing habits are predicable, making the data acquired in connection with card usage itself a valuable commodity. Predictability of the profiled customer usage also plays a key role herein in the advantages that can be obtained in a virtual merchant environment as well as fractional-reserve banking, as discussed in greater detail below.

Fundamentally the only difference between a gift card and a stored-value card is that the former is a closed loop system. Additionally, the stored-value card is reloadable in the sense that additional money can be added thereto at any given time for an additional fee. Gift cards are usually of a predetermined amount provided by a specific merchant. In this sense, in the gift card process all activity remains captive within the specific merchant's environment in which the acquisition of the card has occurred. The broader category of stored value cards still has a predetermined amount—that amount having been provided in order to place the substantial equivalent value on the card—but the system is open in that the card is typically a card that can be used in any location that utilizes the specific card service. In the instant invention, it is the intent to provide the full gamut of services, not just those limited to stored value cards but a full, virtual banking environment.

It is important to understand the background of the card industry and its history to recognize the costs associated with the transactions and the driving need by merchants to avoid paying those costs and instead “capture” the entire transaction without having to pay to the card systems employed a percentage-based expense associated with the transaction.

Since the 1980s, Visa U.S.A. (Visa) and MasterCard International (MasterCard), remained the bank-controlled credit card associations that together have accounted for approximately 70 percent of today's credit card market. Financial institutions, have been able to control the use of and access to their fee-based networks to the disadvantage to their merchant members. Recently, however, the credit card industry has been changing in that some merchants are now large enough to exert their own leverage (like Wal-Mart), legal defeats have impeded the ability of credit card associations to control the market, and some participants have developed new arrangements and alliances that may be a prelude to further changes in the industry.

By way of background, merchant credit has been available since virtually the birth of civilization. Yet, the present-day credit card industry in the United States originated in the nineteenth century. In the early 1800s, merchants and financial intermediaries provided credit for agricultural and durable goods, and by the early 1900s, major U.S. hotels and department stores issued paper identification cards to their most valued customers. When a customer presented such a card to a clerk at the issuing establishment, the customer's creditworthiness and status were instantly established. The cards enabled merchants to cement the loyalty of their top customers, and the cardholders benefited by being able to obtain goods and services using preestablished lines of credit. Generally these cards were useful only at one location or within a limited geographic area—an area where local merchants accepted competitors' cards as proof of a customer's creditworthiness.

In 1949, Diners Club established the first general-purpose charge card, enabling its cardholders to purchase goods and services from many different merchants in what soon became a nationwide network. The Diners Club card was meant for high-end customers and was designed to be used for entertainment and travel expenses. Diners Club charged merchants who accepted the card a 7% charge for each transaction. Merchants found that accepting Diners Club cards brought more customers who spent more freely. The Diners Club program proved successful, and in the following decade it spawned many imitators. Certainly, Diners Club created the fundamental notion of a closed loop card that could be used for purchase with merchants who had an established relationship with Diners Club—the issuer—and who paid the fee of 7% of all transactions for the right to accept the card. Each transaction was processed through Diners Club—with no intervening banks or other institutions—hence acting as a closed loop system.

Whether closed or open looped systems, as explained hereinbelow, it is well understood that the expansion upon this basic principle has resulted in a huge volume of merchant sales and payments of billions of dollars to the card providers for the “privilege” to accept the cards. Interestingly, the charge per purchase absorbed by the merchant is largely transparent to the customer, who pays the ticket price and tax, but has little to no idea that a significant percentage is paid by the merchant in connection with the transaction. Merchants are thus interested in minimizing the costs associated with accepting credit card transactions, thereby maximizing profits by minimizing the fees associated with such cards—another object of the instant invention.

The industry of charge cards grew from its birth with Diners Club in 1949. In the late 1950's, Bank of America, located on the West Coast, began the first general purpose credit card (as opposed to charge card) program. At that time, banking laws placed severe geographic restrictions on individual banks. Virtually no banks were able to operate across state lines, and additional restrictions existed within many states. Yet for a credit card program to be able to compete with Diners Club, a national presence was important. To increase the number of consumers carrying the card and to reach retailers outside of Bank of America's area of operation, therefore, other banks were given the opportunity to “license” Bank of America's credit card. At first Bank of America operated this network internally. As the network grew, the complexity of interchange—the movement of paper sales slips and settlement payments between member banks—became hard to manage. Furthermore, the more active bank licensees sought greater control over the network's policy making and operational implementation. To accommodate these needs, Bank of America syndicated its credit card operations into a separate entity that evolved into the Visa network of today.

In 1966, in the wake of Bank of America's success, a competing network of banks issuing a rival card was established which thereupon evolved over time into what is now the MasterCard network. In these scenarios, an “open” model is used, in that a bank that issues a card is not necessarily the bank that acquires the transaction. In particular, when a consumer purchases at a merchant, that merchant's banking relationship is considered the acquiring bank, which passes back through the Visa/MasterCard networks, back to the issuing bank—the bank that originally issued the card to the cardholder. Again, from the customer's vantage point, that the issuing bank is different from the acquiring bank (in that the merchant has a banking relationship with a bank other than the issuing bank) is transparent, yet the fees paid not just by the merchants but by the inter-banking systems become sizeable as the volume has increased enormously.

In addition, firms that were not constrained by interstate banking restrictions formed card networks on the single-issuer model (the model established by Diners Club, in which many merchants accept payments on a card with a single issuer and hence had a single relationship with the card provider and/or issuing bank.) For instance, the American Express Company introduced its charge card system in 1958, and Sears, Roebuck and Co. established the Discover Card credit card in 1986. Among the challenges each of these networks faced was bringing together large numbers of cardholders with large numbers of merchants who accepted the cards as payment. Achieving a sufficiently large network was hard, partly because merchants, especially larger retailers, were reluctant to honor credit cards that would compete with their own store-branded credit cards. Some smaller merchants, however, viewed general-purpose credit cards as a way to compete with larger merchants for customers. Merchants of all sizes have traditionally remained averse to having fees imposed on them by the credit card network.

Currently the U.S. credit card industry is a mature market. Today credit cards are widely held by consumers: in 2001 an estimated 76 percent of families had some type of credit card. Recent estimates suggest that among all households with incomes over $30,000, 92 percent hold at least one card, and the average for all households is 6.3 credit cards. Credit cards are also widely accepted by merchants, and with the recent addition of fast-food and convenience stores to the credit card networks, credit card payments are now processed at nearly all retail establishments.

The structure of the credit card industry is also noteworthy. As noted above, the general-purpose card market is dominated by Visa and MasterCard, two bank-controlled card associations. The four major card networks have a variety of corporate structures. Visa is a nonstock for-profit membership corporation that as of 2004 was owned by approximately 14,000 financial-institution members from around the world. Until 2003 MasterCard was a nonstock not-for-profit membership association, but then it converted to a private-share corporation known as MasterCard Inc., with the association's principal members becoming its shareholders. MasterCard has more than 23,000 members (including the members of MasterCard's debit network). The Board of Directors of Visa is elected by the member banks with voting rights based primarily on transaction volume. Control of the Visa and MasterCard card associations is roughly proportional to the transaction volume of member issuing banks. American Express is an independent financial services corporation, and Discover Financial Services is now a subsidiary of investment bank Morgan Stanley Dean Witter & Co. The issuance of credit cards is concentrated among the five banks, now narrowing with the acquisition of MBNA by Bank of America including its subsidiary MBNA America Bank, NA (MBNA), a monoline credit card bank, and Washington Mutual, Inc.'s acquisition of Providian Financial Corporation, including its Providian National Bank, another monoline credit card bank. As the conglomeration has occurred, so too has the consternation of the merchant population discussed further hereinbelow

In the industry today, debit cards are also quickly expanding as a product line. Debit transactions reached a record $15.6 billion in 2003. Debit cards are essentially cards that can be used either to directly withdraw cash from cash-dispensing equipment at banks (like ATM's), or can be used as ATM withdrawals at merchant locations, or as credit cards via Visa, MasterCard, or other networks. In the ATM scenario, the amount of a payment made using a debit card is immediately withdrawn from the cardholder's checking account, with the result that, for the card issuer, both the opportunity to earn interest on revolving balances and any inherent credit risk are eliminated. Likewise, when used as a credit card, despite the availability to have the money immediately withdrawn as an ATM-styled transaction, the credit card fee charged by the networks is immediately invoked. (Reasons behind the choice by the consumer are also explained hereinbelow, although the consequential costs are again born by the merchant and largely transparent to the customer.)

The ability to use the Visa and MasterCard networks to post debit transactions was developed in the 1970's, but not until the 1990's was there a significant volume of transactions in these systems. If a merchant has a personal identification number (PIN) entry keypad at its sales location, the transaction is routed like an ATM transaction. In the absence of a keypad, the merchant compels the customer to execute a credit-styled transaction authorization. These transactions then travel through the payment systems like a credit card transaction (except that the cardholder's bank will be informed of the transaction immediately and will be able to hold the customer's funds until settlement is completed).

It should be appreciated that many consumers opt out of the ATM-styled transaction to avoid having to enter their secret PIN number, despite the availability of the entry key pad. Inasmuch as the customer is left to pick without regard to the costs to the merchant, the differing fees charged to merchants for transacting PIN debits and signature debits has became the basis for conflict and resultant litigation.

Interchange fees are set by the card associations and in 2004 were a source of some $25 billion in revenue to card issuers. At the same time, interchange fees are a source of irritation to merchants and can be among the largest and largest-growing costs of doing business for many retailers. A standard interchange fee is around 200 basis points, plus $0.10 per transaction, but many transactions have lower fees and some have higher fees. Large merchants can negotiate directly with the card association for very low interchange fees, but these fees are not publicly circulated.

The pricing structure of interchange fees is complex. The specific interchange fee depends on the card association, the type and size of merchant, the type of card, and the type of transaction. Merchants that sell low-margin items—for example, convenience stores, supermarkets, and warehouse clubs—have lower rates. Hotels and car rental establishments have higher rates. Newer premium credit cards that offer more rewards have high rates. Credit card transactions have higher rates than signature debit card transactions, whose rates are higher than PIN debit card transactions. Sales transacted over the telephone or Internet have higher interchange rates, ostensibly to compensate for the greater risk of fraud associated with transactions that are not conducted in person. There is considerable friction among network participants over the issue of interchange fees, and card associations are being challenged on the structure and application of those fees. Merchants increasingly view interchange fees as an unnecessary and growing cost over which they have no control. Furthermore, banks are now issuing credit cards with even higher interchange fees. Merchants are unable to refuse transactions made with these cards. Therefore, merchants perceive issuing banks as earning revenue at their expense, with no added value to merchants. Merchants pass on the costs of interchange fees to their customers, who are largely unaware of this cost. Thus, it remains an object of the invention to permit merchants the opportunity to become virtual banking environments—generally free from regulation—by the provision of the method, system and devices set forth herein which provide to the merchant and the consumer transactional information on demand.

Among other factors, the interchange fee structure that favors large merchants over smaller ones is inspiring merchants to challenge the interchange system more actively. Early in 2005, merchants formed a trade association for the purpose of changing interchange fees. In addition, Visa and MasterCard have been forced to defend the interchange arrangement from litigation filed in June 2005 by a group of smaller merchants.

Despite merchant discontent, card issuers have incentives to maintain or increase interchange fees. Issuers are marketing credit cards with reward or loyalty programs that encourage greater card use and reinforce customer loyalty to the brand. An estimated 12 to 24 percent of cards held by consumers have rewards associated with them, and in 2003 an estimated 60 percent of credit card spending was attributed to cards with rewards. Card issuers are funding these increasingly popular reward programs through interchange fees—another loop effectively financed by the merchants.

Thus, it is of no great surprise that merchants seek an alternative mechanism, whereby transactions can occur without the significant fees associated with the networks. To keep the transactions in a closed or even open loop environment, as described further herein, also creates a vast, untapped opportunity for fractional-reserve banking, also discussed hereinbelow. It is thus an additional object of the instant invention to provide such solutions.

It is important to understand the role of cash in all transactions as well. It is habitual to consumers that despite the availability of card-based options, cash (i.e., paper and coinage) remains a primary vehicle for financial transactions. Daily, consumers withdraw cash or receive cash for purchases, whether the purchase is major or incidental.

Yet, as a result of historical underpinnings to such transactions (tax predominantly), the amounts of money involved in such commercial transactions rarely result in whole numbers, but rather include fractions of a dollar. Nor are such transactions rounded to the nearest paper value (like a dollar, for instance) but rather to the penney (one hundredth of a dollar), as the perception of the consumer defies any alternative. With pricing and taxing, the net sum for transactions is therefore rendered in fractions of a dollar.

Indeed, even in the retail world of check cashing, rarely does the number reach a whole one, but invariably includes fractions of a dollar.

Thus, in virtually every commercial scenario, there is a residual, fractional portion of at least a dollar remaining from such transactions. In transactions where cash is a result for change, or where cash is tendered to initiate the transaction, fractional metallic currency is inevitably received as coinage. Thereupon, the consumer must face the requirement of handling coinage and determining the best mechanism to utilize the same. Perhaps as a result of the bulk in carrying coinage about, or its perceived limited value (in comparison to paper money), or some other factor that renders the same a nuisance, carrying coinage is short term. The consumer generally seeks to disband the same.

One mechanism of disbanding of coinage is, e.g., a compulsory tip. In this manner, at the point of sale (“POS”), a consumer may simply say “keep the change” or present the change. While styled as a gracious gesture, the harsh reality is that the consumer would rather give away what appears to be trivial than face the nuisance associated with carrying the same. Of course, mathematically, calculating for that consumer the amount of money lost by avoiding the nuisance of change amounts to non-trivial amounts over time. Yet, this is but one option to avoid the necessity to handle metallic currency and determine where to place the same, or to carry the same.

Historically, the use of a “piggy bank” was predominately invoked as a curious form of non-institutional savings account (for which no interest is received). As the name connotes, the “piggy bank” was principally used by children as a means to teach conceptual savings and the individual valuations of the denominations of fractional metallic currency. Of course, such use for teaching is no longer necessary, as imitation “play” money is available, and children are trained to understand the fractional differences in currency quite rapidly. Thus, the juvenile teaching aspect of fractional metallic currency has truly become a relic of past memory, and not of present interest.

Moreover, as a result of the perceived substantial dissimilarity in value of individual coins (in comparison to large tranches of higher valued paper dollars), the perceived inconvenience of bulky currency has resulted in adults—not children—literally dumping their pockets at days end into containers (baskets, buckets, jars and the like), rarely to be seen or used by anyone again. All too often, jars are filled with coinage not because the consumer wishes a non-interest bearing savings account, but rather because the consumer wishes not to have the need to carry the bulk of coinage about. Industries have arisen that provide, for example, the ability—for a fee—to take such heavy and bulky containers filled with coinage to a location where the coinage is automatically sorted and paper currency (or chits) provided for conversion. Banks will accept coinage, but except for a rare few charge the customer for presenting the same. Even banks, as discussed in greater detail below, view coinage as a nuisance (while missing the point, pivotal to the subject invention, of the actual quantity of fractional metallic currency in circulation). Considering the heft of the containers and a cost for the transaction, one might determine that all those storage containers are not really worth the effort. Nonetheless, other than simply overtipping by the consumer in a transaction to avoid the receipt of fractional metallic currency (coinage) or simply giving the same away, of necessity the consumer will receive such heft, and routinely store it in some portion of the consumer's living space generally to be ignored for the future.

Antithetically, a number of devices still require the use of coinage for operation. For example, while “dropping a dime” in a telephone for a call has since changed in price, the concept of using coinage remains the same. Vending machines for the purchase of consumables or other items still require the use of coinage. Passive vending machines, like parking meters, tolls, admissions rights, municipal and private transit (trains, subways, buses, taxis and the like) all require some fraction of a dollar (“fractional currency”) which generally amounts to coinage. (Some “smart” vending machines permit the use of debit or credit cards, but the technical interface is difficult to humanize, and market entry has been limited. Hard currency still remains the predominant form for the same.)

Despite the fact that consumers routinely engage such vending devices during the course of any given day, based upon the habitual desire to avoid the perceived nuisance of change (generally heft, ringing in the pockets, and other forms of consumer concern), rather than having change handy, the consumer who faces such devices must now scurry to a vendor not for a purchase, but to provide coinage—change on the dollar. This, of course, creates a never-ending burden on, for example, a street vendor proximate to an array of parking meters, to keep a stock pile of coins for swapping for dollars—of zero net sum gain—or, in the alternative, to almost rudely deny the desperate requestor who has parked and is racing to avoid the ticket.

No matter the scenario, rarely does a day end with cash transactions “zeroing” out. Rather, the end result is that the consumer who initiates the day with no coinage (having dumped the change from the prior day in the family bin to avoid inconvenience) now completes the day with more coinage, which, in turn hits the same family bin. The situation escalates, in typical fashion. Rarely does the consumer actually prepare for the event, but rather, disturbingly, must face coinage at the time of the occurrence. Interestingly, despite the fact that the result of a failure to pay for, by way of example, a parking meter, results in a multiple dollar fine—which is in whole dollars and is typically paid by a mailed in check—such sanction is avoided only upon the necessity of the moment. As a result of the inherent nuisance of change, many a consumer will avoid the necessity for change-related behavior, or face the urgency of the moment if it occurs.

As shown by the foregoing, it has become known that consumers receive more coinage then they actually place back into commerce. For a further example, at the “register” in stores for typical commercial transactions, it should be noted that generally coinage is given away. Reportedly, many retail stores (supermarkets, for example) have daily (and at times more frequently) delivery of coinage in all denominations. Such stores must track the rate of depletion of the plurality of forms of fractional metallic currency in order to predict the needs and avoid the confusion of having too much of one form of coinage and not enough of another. While paper currency leaves such stores in armored trucks to be transferred to a banking institution, coinage is actually routinely delivered to such retail stores as the paper is extracted. The need to provide fractional currency in commercial transactions—which is heretofore solely in the form of coinage—is a constant, nagging occurrence to many retail establishments.

Likewise, at the merchant end, a plethora of other problems arise in connection with transactions. For example, at many registers today, as described above, the consumer has the option of using a debit card or using the same card as a credit card. Interestingly, the debit card does not involve a fee to the merchant, whereas the credit card transaction involves a complicated scheme in which a percentage (say 1-10% depending on the credit card and the rating of the merchant) is lost as a transaction cost. (Patrons avoid the “debit card” feature over fear that someone may see entry of their personal number—the same used at a bank to withdraw cash.) To say that this amounts to billions of dollars for carrying forward the mere transaction alone is an understatement. The merchant loses money based upon a credit transaction fee, while the card companies and underlying banks enjoy the percentage of the sale as the transaction fee itself. Indeed, this scenario has resulted in the National Retail Foundation reporting a total membership sales volume of $4.7 trillion upon a membership of 1.4 million. Retailers who are members employ 23 million employees. Indeed, there is a reported lawsuit concerning unfair credit card usage charges to such merchant/retailers in a drive to reduce this mechanized approach—with limited value added—because of the huge loss in revenue to the merchant as a result thereof.

In this vein, as discussed, prepaid gift cards have become a predominant tool. Not only does the consumer have the ability to gift a finite amount to another, but the merchant has received the money for the card and the card is viable predominantly at the merchant's location (but occasionally elsewhere as well). Currently, gift cards predominate as a means to capture the sale both ways—acquisition of the card by paying therefor, and use thereafter. Even here, however, gift cards have a remaining balance (small as it may be) not easily recoverable to the consumer.

Returning to coinage, which still remains a predominant issue, while governments can (and do) repatriate paper currency in large and successful manners for a host of necessary reasons, the same cannot be said of fractional metallic currency. Observably, consumers “hoard” coinage not because they are numismatists (coin collectors, of which there are many but the total amount of money involved is small) but because they simply wish to avoid the nuisance associated therewith. Simply put, paper is lighter and worth more. Yet, the Department of the Treasury reported that the total value of all fractional metallic currency in circulation is approximately a staggering $33.3 billion dollars, growing at a rate of about $900 million annually. Thus, the accumulation of coinage in total numbers is remarkable. Indeed, the sum total value of all paper currency in the form of $1, $5, and $10 bills in circulation is less than the value of metallic currency. Considering the disparate value between paper and coinage, the sheer bulk of such coinage is overwhelming, and the value staggering, heretofore beyond the control of the banking institutions.

It is thus an object of the instant invention to provide a system, method and devices that enable the minimization to elimination of fractional metallic currency from transactions without forfeiture of the underlying value. Likewise, it is a further object of the instant invention to provide a platform for which not just metallic currency is eliminated, although that is presently preferred, but likewise all currency, gift cards, SVC's, and cash received for check cashing can be eliminated in the future.

In order to understand the subtlety of the instant invention, it is necessary to understand money, banking, and the concept of “fractional-reserve banking.”

Arguably, money was perhaps the most important advancement as a platform for human development and exchange of products and services. Money has been independently utilized at one time or another in each important civilization in the history of the world. There is also a remarkable similarity in the process by which money has evolved in different times in history and in different parts of the world.

Historically, money has typically evolved through three stages. In the first stage, money is comprised of a rare and inherently valuable material. The value of each denomination is related to the quantity of rare material contained therein. In the second stage, money is made of another material, such as paper, with no inherent value. In this stage, however, such other material can be exchanged into the rare material upon demand. In the third and final stage, money cannot be exchanged into anything physical, but its value is determined by law and custom.

Physical money has historically arisen as a means to facilitate trade. In most cases some form of metallic money has been used, but there are also other examples, where shells, or even large stones (on an isolated island) have been used as money. Oil was proposed as form of currency by the great Soros (and indeed is, at some level, used as a currency in and of itself). Gold and silver have predominated in the world as intrinsically valuable rare materials that can be easily rendered into denominations (contained pictures or other images of origin or pictorial images), but other metals have occasionally also been used. Bronze was the basis of the monetary system in early Roman times. Copper has also been used at times, for example in Spain and Sweden. In many cases, combinations have been used, with fixed exchange rates between different metals. Those fixed exchange rates have usually broken down as the relative value of the metals has moved due to changes in supply or demand.

Coins are the basis of almost every metallic monetary system. A coin in a physical money system is a piece of metal with a stamp. The stamp is a guarantee that the metallic weight and content is correct. Likewise, it is a mechanism to standardize coins of the same denomination as actually being of the same weight, caliber and value. While metallic coinage may appear trivial in the current climate, quality was historically important. Previously, metals had to be weighed in order to determine value, and that made trade more difficult.

In the United States, the third stage indicated above—where paper currency is no longer backed by the value of the underlying rare material—occurred as a result of the abolition of the gold standard by President Franklin Roosevelt in 1933. At this point was born the substitution of fiat paper tickets by the Federal Reserve as the United States' “monetary standard.” Some thirty years later, the fractional metallic currency (coinage) followed suit, with the substitution of alloys for the traditional intrinsically valuable copper, silver and nickel originally used as the coinage material. Another crucial part of this process was the federal cartelization of the nation's banks through the creation of the Federal Reserve System in 1913.

Banking is a particularly arcane part of the economic system; one of the problems is that the word “bank” covers many different activities, with very different implications. During the Renaissance era, the Medicis in Italy and the Fuggers in Germany, were “bankers;” their banking, however, was not only private but also began at least as a legitimate, non-inflationary, and highly productive activity. Essentially, these were “merchant-bankers,” who started as prominent merchants. In the course of their trade, the merchants began to extend credit to their customers, and in the case of these great banking families, the credit or “banking” part of their operations eventually overshadowed their mercantile activities. These firms lent money out of their own profits and savings, and earned interest from the loans. Hence, they were channels for the productive investment of their own savings.

To the extent that banks lend their own savings, or mobilize the savings of others, their activities are productive and unexceptionable. Even in our current commercial banking system, if a customer purchases a $10,000 CD (“certificate of deposit”) redeemable in six months, earning a certain fixed interest return, that customer is actually taking savings and lending it to the bank (in exchange for the CD which is an “IOU”). The bank, in turn lends upon the money actually received in exchange for the CD at an interest rate higher than that being paid to the customer who purchased the CD. The difference between the higher rate to the debtor who received the loan, and the lower rate to the CD-holder who placed the cash, constitutes the bank's earnings. Indeed, in this manner, the bank has served the function of channeling savings into the hands of credit-worthy or productive borrowers.

The same is even true of the great “investment banking” houses, which developed as industrial capitalism flowered in the nineteenth century. Investment bankers would take their own capital, or capital invested or loaned by others, to underwrite corporations gathering capital by selling securities to stockholders and creditors. The problem with the investment bankers is that one of their major fields of investment was the underwriting of government bonds, which plunged them hip-deep into politics, giving them a powerful incentive for pressuring and manipulating governments, so that taxes would be levied to pay off their and their clients' government bonds. Hence, the powerful and baleful political influence of investment bankers in the nineteenth and twentieth centuries: in particular, the Rothschilds in Western Europe, and Jay Cooke and the House of Morgan in the United States.

By the late nineteenth century, the Morgans took the lead in trying to pressure the U.S. government to cartelize industries they were interested in—first railroads and then manufacturing: to protect these industries from the winds of free competition, and to use the power of government to enable these industries to restrict production and raise prices.

In particular, the investment bankers acted as a ginger group to work for the cartelization of commercial banks. To some extent, commercial bankers lend out their own capital and money acquired by CD's. But most commercial banking is “deposit banking” based upon a perception, which most depositors believe, that their money is “down at the bank,” ready to be redeemed in cash at any time. For example, if person X has a checking account of $1,000 at a local bank, X knows that this is a “demand deposit,” i.e., that the bank pledges to pay him $1,000 in cash, on demand, anytime he wishes to “get his money out.” Naturally, the X's are convinced that their money is safely there, in the bank, for them to take out at any time. Hence, they think of their checking account as equivalent to a warehouse receipt. (If one puts a chair in a warehouse before going on a trip, one expects to get the chair back whenever one presents the receipt.) Unfortunately, while banks depend on the warehouse perception, the fact is far more complicated. Indeed, the money is not actually there at the warehouse.

An honest warehouse makes sure that the goods entrusted to its care are there, in its storeroom or vault. Deposit banks as the Banks of Amsterdam and Hamburg in the seventeenth century indeed acted as warehouses and backed all of their receipts fully by the assets deposited, e.g., gold and silver. This honest deposit or “giro” banking is called “100 percent reserve” banking. Ever since, banks have habitually created warehouse receipts (originally bank notes and now deposits) less than 100 percent, out of a carefully constructed fractional-reserve banking, meaning that bank deposits are backed by only a small fraction of the cash they promise to have at hand and redeem. Currently, in the United States, this minimum fraction is fixed by the Federal Reserve System annually. Presently and historically this level has been at 10 percent.

To understand fractional-reserve banking in the absence of a central bank, an example can be shown. “Y” invests $1,000 of cash in a bank 1. This amount is thus captive in the bank 1 subject to the terms of the investment. It pays out at a rate. This bank 1 then lends $10,000 to “W,” either for consumer spending or to invest in his business. The question arises: how can a bank lend more than it has received? The answer resides in the “fraction” in the fractional-reserve system. The bank simply opens a checking account of $10,000 for W. Why does W borrow from the bank? Well, for one thing, the bank charges a lower rate of interest than Y would have. Since demand deposits at the bank function as equivalent to cash, the nation's money supply has just increased by $10,000.

Now, W spends the money he borrowed. Sooner or later, the money he spends, whether for a vacation, or for expanding his business, will be spent on the goods or services of clients of another bank 2. Bank 2 receives a check from bank 1 and applies the same to demand cash (captive) so that it can utilize the same for fractional-reserve lending. Yet, if bank 1 defaults, the system could collapse.

Hence, under free competition, without government support and enforcement, there will only be limited scope for fractional-reserve banking. Banks could form cartels to prop each other up, but generally cartels on the market fail without government enforcement, without the government cracking down on competitors who insist on busting the cartel, in this case, forcing competing banks to pay up.

Hence historically there was a drive by bankers to compel the government to cartelize their industry by means of a Central Bank. Central Banking began with the Bank of England in the 1690's, spread to the rest of the Western world in the eighteenth and nineteenth centuries, and finally was imposed upon the United States by banking cartelists via the Federal Reserve System of 1913. Particularly enthusiastic about the Central Bank were the investment bankers, such as the Morgans, who pioneered the cartel idea, and who by this time had expanded into commercial banking.

In modern central banking, the Central Bank is granted the monopoly of the issue of bank notes (originally written or printed warehouse receipts as opposed to the intangible receipts of bank deposits), which are now identical to the government's paper money and therefore the monetary “standard” in the country. People want to use physical cash as well as bank deposits. If, therefore, X seeks to redeem $1,000 in cash from his checking bank, the bank draws down its own checking account with the Federal Reserve Bank (the “Fed”), effectively “buying” $1,000 of Federal Reserve Notes (the cash in the United States today) from the Fed. The Fed, in other words, acts as a bankers' bank. Banks keep checking deposits at the Fed and these deposits constitute their reserves, on which they can and do perform fractional-reserve banking at the average leverage of 10 to 1.

For further example, if the Fed determines that it is advisable to expand (i.e., inflate) the money supply, the Fed goes into the market (called the “open market”) and purchases an asset. It does not really matter what asset it buys; the important point is that it writes out a check. The Fed could, if it wanted to, buy any asset it wished, including corporate stocks, buildings, or foreign currency. In practice, the Fed routinely acquires U.S. government securities.

Let's assume that the Fed buys $10,000,000 of U.S. Treasury bills from some “approved” government bond dealer (a small group), say Investment Banker on Wall Street. The Fed writes out a check for $10,000,000, which it gives to Investment Banker in exchange for $10,000,000 in U.S. securities. Investment Banker can do only one thing with the check: deposit it in its checking account at a commercial bank. The “money supply” of the country has already increased by $10,000,000; no one else's checking account has decreased at all. There has been a net increase of $10,000,000.

The commercial bank is delighted to get a check on the Fed, and rushes down to deposit it in its own checking account at the Fed, which now increases by $10,000,000. This means that commercial banks can create loans and deposits based upon their reserves. But this checking account constitutes the “reserves” of commercial banks, which have now increased across the nation by $10,000,000. This means that commercial banks can create deposits based on these reserves, and that, as checks and reserves seep out to other banks each one can add its own fractional-reserve move, until the banking system as a whole has increased its demand deposits by $100,000,000: ten times the original purchase of assets by the Fed. The banking system in most circumstances is required to keep cash reserves or cash equivalents at the Federal Reserve Bank amounting to 10 percent of customer deposits. The basis of this 10% reserve activity is called a “net transaction.” There are two other lesser activities that require no reserve to be provided to the Federal Reserve Bank: “non-transactions and non-personal saving deposits.” The banking system on a fractional-reserve basis on a net transactions designation has a “money multiplier”—the amount of deposits the banks can expand on top of reserves—which is 10. A purchase of assets of $10 million by the Fed has generated very quickly a tenfold, $100,000,000 increase in the money supply of the banking system as a whole.

It should be observed that banks are regulated (like Regulations D and E) in the manner in which protections are provided to prevent this leveraged system from collapsing. Yet, observably, banks today are highly competitive, seeking to increase their “captive” reserve in order to increase their fractional-reserve and ability to expand in the exponential process indicated above.

In order to permit expansion of the reserve at banks, banks are constantly seeking depositors, those who wish to have their money captive by a bank (as in, e.g., a CD) which permits the reserve to increase and the leverage (of about 10:1) to be employed upon this money.

The meeting between the approximately $33 billion of fractional metallic currency and the fractional-reserve banking system lies as part of the heart of the instant invention which provides a system, method and devices to achieve the goal of minimizing the use of fractional metallic currency as coinage, but rather keeping the same and transactions related thereto within the scope of a banking institution for use by both the depositor and the bank(s) in accordance with standard fractional-reserve banking, while permitting the depositor to avoid the inconvenience of the actual fractional currency without forfeiture of any of its value.

Likewise, the stored value card market, while huge in volume, also leaves fractional currency behind on the card. Interestingly, while Wal-Mart®, with sales of some $348.50 billion, which employees some 1.9 million people at over 4000 U.S. locations, Wal-Mart has recently withdrawn its application with FDIC for a banking license, left, again to stumble around banks, entertain a multiplicity of credit cards (with billions of dollars in fees), check cashing facilities (where cash is the final product, thereby reducing the amount of money Wal-Mart has available), and an inability to control its own credit card which is, instead, through G.E. Money Bank, passed through the Discover wire network, with the concomitant fee. (Wal-Mart is also offering a vast array of other services to its customers which likely do not involve G.E. and tend to suggest Wal-Mart's incursion into the virtual banking environment. Yet, with that having been stated, even the concept of, let alone the specific formulae for, the instant invention and its inherent benefit to an entity like Wal-Mart which has indicated its preference to act as a virtual bank whenever possible, is an object of the instant invention.)

It is thus an object of the instant invention to provide a mechanism whereby money is captive with the merchant, i.e., where virtually all banking activities occur, from currency, credit cards, gift cards, SVC's, debit/credit transactions, ATM actions, and check-cashing are predominantly merchant-specific and results in a mechanism wherein the “cash” is, in reality, captive in large part with the merchant. It should be appreciated that the Wal-Mart theme of a “one stop shop” where everything can be purchased (even grocery food) is attractive to a consumer in that the consumer need not shop anywhere else for virtually all goods necessary. Clearly, it is an object of the invention to provide a system whereby a method, system and series of devices are given in replacement of gift cards and cash, used within the merchant's location, with but a trivial amount actually leaving the captive reserve of the merchant. In this manner, the merchant can virtually predict the amount of captive money—an advantage to a banking institution with whom that merchant can optionally bank, in that that institution can add virtually billions of dollars to its captive, fractional reserve for banking purposes.

Other objects of the instant invention will be shown hereinbelow.

SUMMARY OF THE INVENTION

The various features of novelty which characterize the invention are pointed out with particularity in the claims annexed to and forming a part of the disclosure. For a better understanding of the invention, its operating advantages, and specific objects attained by its use, reference should be had to the drawings and descriptive matter in which there are illustrated and described preferred embodiments of the invention.

The foregoing objects and other objects of the invention are achieved through system, method and devices that establishes a virtual banking environment in a merchant venue while optionally increasing the deposit-based assets of a related traditional banking institution having a captive account therein for fractional-reserve banking at the banking institution. In particular, the invention comprises a virtual banking environment at the merchant's venue. In particular, the merchant provides a portable device interfaced to a node, as indicated hereinbelow, wherein all transactions are stored and rendered available, including virtually all banking activities.

For example, where check cashing is provided in a “one stop shop” environment (typified by, e.g., Wal-Mart), it can be predicted and/or predetermined the amount of the check that will remain on the device for expenditures at that merchant. In a “one stop shop” environment, such a scenario is most advisable, as the consumer can cash a check and acquire virtually all goods normally necessary, while retrieving a small portion of cash, if necessary for other uses. It should be appreciated that while observing the customer's specific transaction history, it can be predicted the frequency of such check cashing and the amount that remains captive with the merchant, as but a predictable fraction remains, if any, removed as cash. Likewise, a predetermined amount (like a gift card) placed upon the consumer portable device is completely captive as its use remains solely within the constrains of the merchant. Even other features—like credit, payments of bills and the like—remain predictable such that an actual bank—in comparison to the merchant operating as a virtual bank—can determine the amount of money that will be received by the system and dispensed, wherein the remainder predictably remains captive.

It should be appreciated that in all such modalities, the predictable nature of the captive amount remaining in the system is directly useable for fractional-reserve banking. Likewise, by avoiding the entire pre-existing credit card processing systems explained hereinabove, the extra percentage expense can be avoided. Yet, the optionally associated banking institution gains greater advantage. Rather than receiving a percentage of a sale via a credit card system (which has created such large friction between merchant and bank), in these instances the optionally associated bank has a 10:1 leverage of the captive money remaining with the merchant for direct use in fractional-reserve banking. It can easily be observed that the key feature of the instant invention thereby obtained is that the optionally associated bank's revenue, based upon fractional-reserve banking resulting therefrom, is greater in utility and actual return than the frictional credit-card processing systems heretofore employed.

Likewise, the consumer is benefitted, another feature of the instant invention, in that the consumer—whether the “banked” or “unbanked”—has the ability to acquire nearly all necessary food and household goods from the “one stop shop” on a predicable, budgetary basis, leaving but a small need, if any, to withdraw cash. For if the consumer can purchase all necessary goods and supplies, pay all necessary bills, and accomplish all transactions typically occurring in a multitude of more complicated manners, the consumer actually enjoys the “one stop shop” convenience in all forms and results in having no need for cash. The consumer is also benefited by the full gamut of services that are provided by the merchant as if it were a virtual banking environment, with a record of such activities, in that the consumer device (as well as the node) are immediately readable in that display means are provided linked to the account information such that the consumer can know at any given time the precise amount of money remaining on the device and the transactional history that caused such a result, thereby overcoming the heretofore known need in the industry to provide statements (or their equivalents) to the consumer. It should be appreciated by one of ordinary skill in the art that by providing on demand consumer account information to the consumer on a portable device, the consumer's use of such a device is a tremendous advantage over the heretofore used card-swipe systems. In the card system, there is no mechanism for the consumer to view balance and transactional information as the card is but an account information provider encrypted in a magnetic swipe portion. Thus the Federal Reserve's indicated need to provide account information as a predicate to permitting scoring for creditworthiness for the so-called “unbanked” or “underbanked” is herein provided to both the consumer and the merchant, as well as optionally to a banking institution. In this manner, the merchant and/or banking institution can now exercise the ability to provide credit to this consumer class as the historical transactional information is stored and rendered available to both sides of the transaction.

Moreover, to the extent cash is still necessary, the portable device leaves a cash reserve thereupon, for use in the system of the instant invention.

In this manner, one of ordinary skill in the art can well see that virtually inevitably, cash in all of its forms becomes an item of the past, all are benefited, the costs are lessened, and while the traditional credit card networks may suffer, the merchants with, or without the banks, also enjoy the benefits of fractional-reserve banking: the 10:1 leverage. This is a far greater reward for all involved.

Likewise, the system enables the capture of fractional metallic currency values by a financial institution that can thereupon utilize the same as part of its fractional-reserve. In particular, under the preferred embodiment, there are two types of devices that are employed: a portable device and a node device. Both are intended, under this embodiment, to be linked to an account within the same financial institution.

In particular, a portable device is employed herein. The portable device has a number of features, including security (like a biometric reading means or other), a display, a microprocessor, memory, and the like. In this manner, the portable device is actually an interface to the account at the merchant, which optionally ties to a specific banking institution. (It should be appreciated by one of ordinary skill that the specific phrases “bank,” “institution,” “financial institution” and the like are utilized herein virtually synonymously for all such banking institutions that provide accounts and can take advantage of Regulation D and/or fractional-reserve banking.)

The portable device is also the equivalent of the piggy bank in the sense that it is a recordation and display device for all money, including fractional metallic currency, in this embodiment. The piggy bank, instead of an animate object holding actually coinage, is an account with a merchant and/or financial institution, devoted solely and captive therewith, in which the user has deposited currency for use of the device. In this regard, overcome is the necessity to have containers for change, as the use of the portable device is developed, as explained herein, there will be a steady decline to zero of the need for use of any coinage (and even paper currency) whatsoever, while the amounts of money per transaction of under the minimum paper value (a fraction of, e.g., a dollar) accumulate or decline as transactions occur.

It should be appreciated that in this embodiment, the consumer can also receive the equivalent of a stored value card from the merchant with a predetermined, prepaid amount, which is utilizable either solely at the merchant's facility such that the transaction does not result in any reduction in the fractional-reserve of the banking institution, or in other facilities. Thus, once the equivalent of a stored value card is purchased, the money is given to the merchant. Should the equivalent of a stored value card be utilizable solely at the merchant's facility, it should be appreciated that the funds never leave the captive fractional-reserve of the facility. The traditional stored value card as used herein, can also include merely adding the amount to a patron's portable device. In this manner, the fractional-reserve of the bank is optionally increased—and never decreased. Even though the amount is decreased from the portable device when the recipient uses the same, the net to the merchant never changes when the device is utilized solely by the merchant.

Likewise, a check from a consumer can be cashed and the amount kept captive, at least in large part on the portable device. In this manner, for example, the employee of a large “one stop shop store” can also receive pay via the portable device, and be capable of using the same to acquire virtually all needed purchases from that merchant in the manner explained hereinabove. Thus, the payroll payment from the employee is forever captive—once the pay check is “cashed” the money never leaves the bank, as it is passed to the (also captive) portable device, and used therefrom for purchases from the merchant. The fractional-reserve amount of the bank, heretofore reduced by payroll, is now completely captive.

In certain instances, such employee may cash the check, place a portion (if not all) on the captive device, and wish to extract cash. Yet, based upon the purchasing patterns of such people, it is adduced that but a small fraction will ever leave the merchant, and hence will forever remain captive to the merchant. This amount is predicable, based upon the behavior of the employees, as the use by each is tracked from payroll through the use of the portable device.

It should also be appreciated that a non-employee can cash checks. The check cashing industry is in the billions of dollars. To give to the recipient a portable device with most, if not all, of the paycheck thereupon not only induces intra-merchant purchases (and hence a predicable captive amount) but the ability for the employee to avoid taking cash and spending on ill-conceived items, for purchases at the merchant, where it is “one stop shop” are generally of items of use, rather than items of entertainment or the like. This, like the piggy bank analogy, assists in increasing the saving-nature of the check casher who is now more inclined to avoid impulse cash expenses in favor of actual necessary purchases.

It should be further appreciated that the merchant, while not a banking institution, becomes a virtual one for transactions, and optionally “buddies” with a specific banking institution to create a reliable multi-million dollar addition to that institution's fractional reserve. Not only does the stored value card equivalent remain captive, but the inducement to check cashing also increases captivity. Hence the advantage to all concerned is clearly established as a significant feature of the instant invention.

The portable device has an encrypted interface with a node device. The node device, in distinction from the portable device, is actually linked to a point of sale device “POS” (whether an actual POS device or its equivalents, like a passive or active vending machine). The portable device is independently battery powered and is with a customer. On the other hand, the node device is generally considered to be with a vendor. Importantly, both devices through encryption interfaces connect with the banking institution. In this manner, it can be observed that the transaction(s) between the portable device and the node device remain within the constraints of but one banking institution, in this preferred embodiment. In this manner, while currency passes electronically for services or goods between the portable device and node device (customer and vendor, e.g.), the actual underlying money never leaves the banking institution.

Observably, as more transactions occur, the merchant with (or without) the banking institution maintains, as captive, the total amount of money exchanged between the parties—it merely moves from one account to another. In this manner, the reserve for which fractional leverage can be had by a bank is increased. Likewise, in light of maintenance of the records of transactions available to consumer, merchant and bank alike, the lending/borrowing power is thereby increased as well. Since the preferred embodiment is intended to also capture the fractional metallic currency market, conceptually, the bank has now garnering portions of the aforementioned approximately $33 billion in coinage in circulation adding the same to its reserve—a situation heretofore unknown and practically impossible to achieve. Thus, whereas coinage has been a nuisance and typically invokes a charge for conversion, in this manner, coinage has now become a captive asset of the bank, and transactions involving the same are also beneficially added to the reserve of that bank.

Likewise, benefits enure to customers as well. Rather than have the nuisance and inconvenience of cash, checks or metallic currency, customers can utilize a “fob” styled (a “fob” is a small device attached to a short strap, ribbon or chain) simple portable device for all fractional exchanges, from purchases from active vendors, to passive vendors, POS devices and others. No longer must the customer keep cash, checks or coinage. Instead, money is converted, and added (at the bank if no consumer transaction is invoked) on an as needed basis. As a result of the design, the customer can view on the portable device the balance and transactional history, and the merchant with (or without) the bank has the full record of each transaction as well reported by the portable device when engaged at the merchant and/or banking institution and via communications per transaction by the node device(s).

Observably, it is within the letter, sprit and intent of this invention to permit the elimination of all forms of currency and virtually all forms of consumer banking. Even so, capturing a heretofore ubiquitous $33 billion coinage that has heretofore been but a nuisance, and transform the same to an asset captured by the reserve of a bank is an observably beneficial feature.

Further, it is a feature of the invention to permit inter-bank transactions, as may be desired in the future. As this may be cumbersome, the instant invention demonstrates utility specific to a single bank (but all of its branches and affiliates) to increase the reserve of that bank. Clearly, inter-bank exchanges can be affected as the case my be, without deviating from the spirit and scope of the claimed invention.

The portable device is activated by an optional security interface which may take the form of a number of different variations. Such security is important to the extent that the portable device may not be “hacked” or otherwise misappropriated and the amount of money in the account to which it is linked stolen. In this respect, it is a goal to employ a biometric interface (like a thumb scanner) to read the thumb print of the owner, compare it to that of the owner (pre stored) and thereupon permit use of the device. Other security features are also considered. The user can lock down the device by engaging a code through the interface, and unlock the same by engaging the same code. Other security interface mechanisms can be employed without deviating from the letter, scope and claims of the subject invention. Importantly, the security feature must balance user compliance issues with power constraints in order to achieve maximum efficacy.

The goal of the portable device is to engage a battery source (that is preferably rechargeable optionally by a solar panel) for daily operations without a “down” time. Thus, all hardware components and their relative draw-down on the battery are considered for optimal performance.

The portable device also contains an operator interface for entry of instructions (as in a push button and a wheel, a display for indicating the progress of security, the transaction, and balance and transaction reporting, memory for storing instructions and permitting changes based upon transactions, a processor with digital input/output (“I/O”) support to process the pre-encoded algorithms and to regulate the operation of the hardware, power management for controlling the power supply, a wireless communication interface (which includes a properly determined antenna) for proximate engagement with the bank and with a plurality of node devices, and an optional wired communication interface for a hardwired connection, if so desired.

In the preferred embodiment, wireless communication utilized the “Bluetooth®” standard encryption. Observably, any electromagnetic spectra frequency can be employed, as well as ultrasonic devices, as well as any standardized encryption algorithm provided both sides that can “speak” effectively. It should be appreciated by one of ordinary skill in the art that while the present, preferred embodiment uses Bluetooth®, any such communication system that provides substantially the same results can be employed without deviating from the scope, spirit and claims of the subject invention.

BlueTooth® is a specification for the use of low-power radio communications to wirelessly link phones, computers and other network devices over short distances. The name “Bluetooth” is borrowed from Harald Bluetooth, a king in Denmark more than 1,000 years ago. Bluetooth® technology was designed primarily to support simple wireless networking of personal consumer devices and peripherals, including cell phones, PDAs, and wireless headsets. In this manner it is currently an ideal communication method herein, but the invention is not limited thereto. Wireless signals transmitted with Bluetooth® cover short distances, typically up to 30 feet (10 meters). Bluetooth® devices generally communicate at less than 1 Mbps.

Bluetooth® networks feature a dynamic topology called a piconet or PAN. Piconets contain a minimum of two and a maximum of eight Bluetooth® peer devices. Devices communicate using protocols that are part of the Bluetooth® Specification. The Bluetooth® standard utilizes the same 2.4 Ghz range as 802.11b and 802.11g, typically used in WiFi systems.

The node device has components similar to those of the portable device, save for one preferred change. Since the node device is generally not portable, it has sustaining power supply via wall power, and its communications to the merchant and/or banking institution can be through normal telephone communications (whether twisted pair, voice over IP, Internet direct, cable, or the like).

In operation of the method and system, agreements are executed between customers and vendors. Each are given, respectively, portable and node devices, and the communication system established. Each portable device is initiated by placing thereupon currency, preferably (but not for limitation) fractional metallic currency equivalents. In this respect, a bank can capture the actual metallic currency and “credit” the portable device therewith. The portable device, which is both a “credit” and “debit” device (herein considered a “cre-bit” device) then lists debits when transactions occur at designated nodes.

Nodes are widely dispersed, much like their predecessors of magnetic swiping machines. Thus, it is perceived that nodes will be in retail establishments, attached to POS devices, in vending machines both passive and active, and the like.

In this manner, it is a general feature of the instant invention to provide a system, method and devices for capturing a heretofore $33 billion fractional metallic currency market and adding the same to the fractional-reserve of at least one bank, while simultaneously eliminating the nuisances associated with transactions and bulk of fractional metallic currencies.

A system, method and apparatus for increasing the asset base of a banking institution having a captive account therein with at least one merchant for fractional-reserve banking at the banking institution, having a consumer portable device for encrypted containment of currency amounts linked to a consumer account and enabled to perform commercial transactions that affect the balance of the consumer account; a node device for encrypted containment of currency amounts linked to the captive account at the banking institution and enabled to perform commercial transactions that affect the balance of the captive account; an encrypted interface between said portable device and said node device for communication therebetween to accurately affect a commercial transaction between the two that comprises a credit to one and a debit to the other; transacting a commercial transaction between the two devices such that one of the accounts is debited for the transaction a specific amount and the other account is credited said specific amount debited commensurate with the commercial transaction; and communicating the transaction to the banking institution such that the balances of each respective account are properly credited and debited in accordance with the commercial transaction. In this case, a consumer can also receive an electronic equivalent of a stored value card from the merchant with a predetermined, prepaid amount, which is utilizable solely at the merchant's facility such that the transaction does not result in any reduction in the fractional-reserve of the banking institution. Likewise, a check from a consumer can be cashed and the amount kept captive on the portable device.

Under a preferred embodiment, the accounts and transactions are based on fractional currency, resembling but replacing cash, checks and metallic currency (coinage). In this manner, money is eliminated from the transaction in respect of the operators of the portable and node devices, and virtually the entire transaction remains captive to the initiating merchant. Observably, since the money remains captive, the amount never changes despite the transactions, and hence the fractional-reserve leverage never changes. This is of obvious advantage to the initiating merchant and optionally the related bank, as it can now capture heretofore non-capturable money and encroach upon, if not entirely subsume the multi-billion dollar currency market, adding the same to its reserve for fractional-reserve banking.

In order to effect the same, the portable device comprises a microprocessor, display for displaying the balance and communications with an operator of the device, an operator interface for entering and receiving transaction related and balance related data, power, memory, and wireless communications for communicating with the banking institution and node device.

The portable device further has a security system for ensuring the accuracy of the transaction and operators of the respective portable and node devices.

Likewise, the node device comprises a microprocessor, display for displaying the balance and communications with an operator of the device, operator interface means for entering and receiving transaction related and balance related data, power, memory, and communication for communicating with the banking institution and portable device.

Preferably, the microprocessor of the portable device is an ARM Processor, the display means is an LCD display approximately one inch by one inch, the operator interface comprises a mouse-type button, LED and wheel, power is provided by a battery, memory comprises memory selected from the group consisting of SRAM, Flash, ROM and combinations thereof, and the communication is via a Bluetooth® chip.

It should also be appreciated that biometrics can be included, as indicated hereinabove for added security upon determination of the power management issues associated therewith, without deviating from the spirit and claims of the subject invention.

Lastly, it should be appreciated that the present currency rounds to the nearest hundredth of a dollar. This is a result of the penney, which represents the smallest amount of U.S. currency. Yet, mathematically, numbers are rounded. The instant system, method and apparatus completely overcomes this limitation. Rather than rounding, there is an electronically inherent opportunity to capture the >10−3 quantities of money which themselves can reface reserves, thus creating a true and honest exchange of goods, services and currency to the benefit of the National good.

Other features of the present invention will become apparent from the following detailed description considered in conjunction with the accompanying drawings. It is to be understood, however, that the drawings are designed solely for purposes of illustration and not as a definition of the limits of the invention, for which reference should be made to the appended claims.

BRIEF DESCRIPTION OF THE DRAWINGS

In the drawings, wherein similar reference characters denote similar elements through the several views:

FIG. 1 is an overall diagrammatical view of the steps involved in the method and system of the preferred embodiment of the instant invention utilizing the proprietary devices further shown herein;

FIG. 2 is an overall diagrammatical view of the components that comprise the system, method and devices of the preferred embodiment of the instant invention;

FIG. 3 is a block diagrammatical view of the components of the portable device in accordance with the preferred embodiment of the instant invention;

FIG. 4 is a block diagrammatical view of the node device in accordance with the preferred embodiment of the instant invention;

FIG. 5 is a flow chart schematical representation of the portable device operation with the node device, in accordance with a preferred embodiment of the subject invention;

FIG. 6 is an exploded side view of the portable device showing specific components and layout in accordance with a preferred embodiment of the subject invention;

FIG. 7 is an exploded back view of the portable device showing specific components and layout in accordance with a preferred embodiment of the subject invention;

FIG. 8 is a perspective bottom view of the portable device in closed manner, in accordance with a preferred embodiment of the subject invention;

FIG. 9 is a perspective side view of the portable device view in closed manner, in accordance with a preferred embodiment of the subject invention; and

FIG. 10 is a perspective front view of the portable device in closed manner, in accordance with a preferred embodiment of the subject invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

In accordance with the subject invention, FIG. 1 shows the system and components 200, merchant offering an SVC-type portable device at step 202 to a consumer. The merchant, in this scenario may then be considered a “sponsoring company” as that term has been defined by the Federal Reserve as it is operating as a virtual bank, providing to the consumer the device at step 202 which operates, within the constraints of the method and system of the device, to provide the full gamut of services, earmarked in FIG. 1, as discussed hereinbelow.

In particular, at step 202 the merchant may choose to optionally interface with a bank 4. In consideration of the recognition by the Federal Reserve that merchants may be “sponsoring companies” it is within the purview of the subject invention to provide an interface with a bank 4 as an option, and not a requirement. Should the option be invoked, then the fractional-reserve banking component of the instant invention is also enhanced as detailed hereinabove. However, should the merchant not select the interface, then the merchant remains a sponsoring company not subject to Regulation D but compliant with Regulation E's requirement of consumer disclosure, providing to the consumer the full gamut of services shown in FIG. 1.

At step 204, a selection is made of closed or open loop device, as these terms are known in the art and as utilized hereinabove. Thereafter, at step 206, the customer procures the mobile device and elects deposit/withdrawal functions and/or credit function. It should be appreciated that as a result of the fact that the method, system and devices of the instant invention provide on-demand account information, as well as the ability to track usage, there is provided the ability to determine creditworthiness of the consumer and hence to provide credit either via the merchant or, should the merchant have so elected, via the interface with bank 4.

Observably, at step 208 the device procured by the customer provides statement equivalents, as shown hereinbelow, with transactions, histories and balances via a display, also as shown and described hereinbelow.

At step 210, the device in either the open or closed loop mode provides at least the following demonstrable services to the consumer: general spending and purchases via step 212, government benefits (like government checks or payments) via step 214, check cashing and/or writing via step 216, child support payments or receipts via step 218, credit functions via step 220, savings abilities via step 222, insurance abilities via step 224, ATM, money transfers and/or travelers' checks via step 225, employee related benefits (like payroll and employee payments, loan receipts and all other “payroll card functions”) via step 226, and any other category of banking-related services via miscellaneous provision at step 228.

In accordance with the subject invention, FIG. 2 shows the system and components 2, wherein banking institution 4, having been elected in FIG. 1, is seeking to capture some of the fractional currency in this preferred embodiment and to add the same to its asset base (reserve) for fractional-reserve banking 6. Portable device 8 has an account with Merchant 21 which can include any of the known forms of banking, including an SVC-styled arrangement and a captive account associated with node device 10 which are resident in banking institution 4 for the purposes of enabling fractional currency-based and other transactions. Such accounts are established in advance of enabling the system and apparatus, and generally remain in bank 4. Indeed, despite the fact that transactions occur between two accounts, where the two accounts are with the same merchant and/or bank, the underlying currency merely moves from one location to another, but remains intra-bank 4 (or intra-merchant, as the case may be). In this manner, the actual asset base of the bank remains unchanged, while the currency moves between accounts. Thus, the fractional-reserve banking remains unchanged, despite the differences between account balances, as the asset base of the bank is not depleted with such transactions, thereby achieving a hereinbefore indicated objective and feature of the invention set forth.

It should be appreciated that portable device 8 also accommodates SVC-styled transactions in the full gamut shown in FIG. 1. As to an SVC-styled modality, the traditional card is itself replaced with a portable device 8, in this preferred embodiment, which provides the full reporting functionality as indicated. It has amounts (like a gift card or stored value card, except it is interactive and not a plastic card with a magnetic strip). Yet it operates in the same manner, except insofar as the lack of necessity (albeit availability) to handle more than a finite transaction as determined by the amount deposited thereupon. Nonetheless, it can serve the same function as an SVC to provide a finite amount to the captive, fractional-reserve of a bank or merchant. Once acquired, it is used with node device 10.

It should be further appreciated that when a check is cashed at merchant 21, the amount is, as well placed largely, if not exclusively, on a portable device 8. In this manner, observably, the amount has become captive, optionally for fractional-banking at the associated bank. As aforesaid, while an amount (prelimited or not) may be removed from portable device 8 for checks cashed and added thereupon the percentage is relatively predeterminable, based upon the recorded usage of customers, in order to provide actuarial-styled analyses to determine the amount of the fractional-reserve. Alternatively, and preferably, when the check is cashed, an amount of cash is given, and the remainder placed upon portable device 8, thereby eliminating any unpredictability once portable device 8 is engaged with that amount, that there will be any reduction in the net fractional-reserve of banking institution 4.

Communication between node device 10 and banking institution 4 is determined based upon an encrypted interface 1 (item 20), and can be achieved through the Internet, telephone system, intranet or any other suitable means known to one of skill in the art. As with encrypted interface 1 (20), node device 10 communicates with portable device 8 through encrypted interface 2 (item 22), and portable device 8 via encrypted interface 3 (item 24) with banking institution 4. It should be appreciated that portable device 8 communicates in close proximity, utilizing a limited power output, to node device 10. In banking institution 4 is an additional receiver for engaging communications with portable device 8. With a limited dispersive angle transceiver mechanism in portable device 8 and low power output, limited power is used, and the device 8 must be proximate to the receiver for communications to occur, thereby enhancing privacy. As indicated, Bluetooth® is a preferred encryption and communication modality, although other such modalities may be used provided the specifications are compatible with the underlying letter and spirit of the claimed invention.

Node device 10 takes the form of a multiplicity of transactional devices, including an active vendor 12, a passive vendor 14 (like a parking meter, as discussed), a POS device 16, or other (gift card usage, stored value card usage, check cashing, etc. as shown in FIG. 1) 18. Each of these devices is enabled to communicate with the account resident in the same banking institution 4 as portable device 8. Clearly, each person has a portable device 8 and an associated account with the merchant and optionally banking institution 4 to enable a multiplicity of transactions to occur via node device 10, without depleting the asset base of banking institution 4 (when optionally secured) while permitting financial transactions.

FIG. 3 shows a component design for portable device 8, in accordance with a preferred embodiment thereof. In particular, processor 26 is provided with digital input/output (“I/O”) support 26 A for interfacing with optional security interface 30 (like a biometric or other device), wireless communication interface 40 (for Bluetooth®, for example), power management 38 for controlling power usage and supply, battery 36 and optional wired communication interface 42 (like an IEEE 1394, USB, or the like). On the other hand, processor 26 also engages display 28 for interfacing with the user, operator interface 29 (like a wheel, pushbuttons, keypad, and the like) and memory 32. In this manner portable device 8 is rendered fully operational. It should be appreciated that display 28 is an “on demand” feature of portable device 8, permitting the customer, through the operator interface 29, to not only immediately know the account balance, but to see the list of transactions that have occurred. In this manner, the heretofore long felt need of the Federal Reserve to provide transactional information to the consumer and merchant (a/k/a “sponsoring company”) with or without the bank, is resolved.

FIG. 4 shows a component design for node device 10, having similarly named components to that shown in FIG. 3. It should be appreciated that while the selection of individual components for portable device 8 require consideration of power consumption in order to enable a more efficient use of battery 36, in node device 10, it is assumed that power supply 36A is employed which can be wired to a 110 v wall current hence rendering power consumption of less concern. In FIG. 4, there is shown processor 26B, digital I/O support 26C, power management 38A, wired communication interface with bank 42A, and portable device interface 44, which, function in accordance with the indicated naming. Likewise, processor 26B engages display 28A for interface with the operator via operator interface 29A which can be a keyboard, and memory 32A. It should be appreciated that memory in portable device 8 as well as node device 10 renders the account and transactional information concomitant with that stored in banking institution 4 (FIG. 2).

FIG. 5 shows a flow chart (schemata) for the protocol of portable device 8 to node device 10. The flow commences with power-save mode 46 (and ends at the same point). If radio frequency activation occurs (as in automatic, close proximity to node device 10, thereby automatically engaging), power on occurs at step 50. Likewise, if button activation is selected at step 52 for portable device 8, power on occurs at step 50, and validation of biometric information occurs at step 52. It should be appreciated that other forms of validation can be employed, including entry of a code. In either respect, once power is on, the network is established to receive discovery packets at step 51. Thereupon packets are sent at step 54, reply packets are awaited at step 56, received at step 58, and protocol start messages are sent at step 60. Server information and public keys are thereupon received at step 62, with a reception of encryption start packet at step 64, and reception of transaction information in encrypted form at step 66. Client encryption keys are engaged at step 68, encryption package sent started at step 72, and a waiting for button step occurs at step 79. At this point, validation occurs at step 74 (if not theretofore), account information, user identification and data, in encrypted form, are sent at step 76, reply is awaited at step 78, transaction acknowledgment received at step 80, display is updated with the transaction results at step 82, and LED is lit at 84 indicating a completed transaction at step 84, the network is closed at step 86, and the device return to power-save mode at step 46.

FIGS. 6, 7, 8, 9 and 10 show exploded perspective views of portable device 8 with the components laid thereupon, conforming with the numbers indicated above. In this preferred embodiment, 26 is a processor with memory, 40 a Bluetooth® chip, 38 a power management chip, 26A a digital I/O chip, 28 a display (in this instance LCD), with optional biometric interface to 34A a button (mouse-type), 34C an LED, 42 a USB interface, 34 B a thumbwheel, 36A power inlet for charging the battery, 36B a battery connector, and 36 a battery.

While there have been shown, described and pointed out fundamental novel features of the invention as applied to preferred embodiments thereof, it will be understood that various omissions and substitutions and changes in the form and details of the device illustrated and in its operation may be made by those skilled in the art without departing from the spirit of the invention. It is the intention, therefore, to be limited only as indicated by the scope of the claims appended hereto.