Apple's Patent Background

Apple begins their background of their patent by stating that card purchases, such as via credit cards, debit cards, gift cards, and the like, may often be made in person or remotely. For example, an in-person transaction may involve handing a card to a store clerk or swiping a card through a point-of-sale system. In-person transactions may be facilitated by an identity verification process, such as, for example, showing the store clerk a picture identification, signing a receipt, and/or entering a personal identification number.

Cardholder-present transactions rely upon several security mechanisms to deter fraud, including a physical card with raised numbers, holographic images, signature line, card verification values embedded within the payment card's magnetic stripe, and/or various information protection mechanisms embedded into integrated circuits.

Cardholder-Not-Present Transactions

In contrast, remote transactions may occur without identity verification or physical fraud deterrents found in modern payment cards. For example, a consumer may purchase an item online or via the telephone without presenting a physical card to the vendor. These transactions may be known as cardholder-not-present, card-not-present, or customer-not-present transactions because the customer and card are not present at the point of sale. Cardholder-not-present transactions may be more susceptible to fraudulent abuse than traditional in-person transactions because the purchaser's identity is not verified. That is, the purchaser may be required to enter the card number and a security number located on the card; however, this information may be easily copied off of a card and used in a fraudulent manner. In addition, although a billing address may be requested and compared to the billing address associated with a card, goods may be shipped to addresses other than the billing address.

Accordingly, a card owner may not realize that a fraudulent cardholder-not-present transaction has occurred until a billing statement is received. It is generally preferable to detect the fraudulent activity as soon as possible so that additional use of the card may be prevented. It stands to reason, and widely publicized studies corroborate the fact, that losses can be more easily recouped when the fraud is timely discovered. While a consumer may be at least partially protected from liability when fraud has occurred, the issuing bank, acquiring bank, or merchant may bear the loss if goods have been sent to an unauthorized card user.

These costs are passed on to the consumer in the form of higher prices on goods and services, higher banking fees, and higher interest rates. In addition, even if the consumer is ultimately not held responsible for unauthorized charges, it may still be very time-consuming and frustrating to have the charges reversed. For many consumers, the theft of one's financial identity has a demoralizing psychological affect. Therefore, it may be desirable to reduce the possibility of fraud in cardholder-not-present transactions.

Apple's Solution: Real-Time Authorization of Cardholder-Not Present Transactions

Apple's invention covers an electronic device that will be able to deliver real-time authorization of cardholder-not-present transactions. The electronic device may be a handheld device, such as an iPhone or iPod touch, or it may be a computer such as an iMac or MacBook Pro. Regardless of the form the electronic device takes, the device may run an application enabling a cardholder to approve or decline cardholder-not-present transactions in real time, near real-time, or after the transaction is initially authorized or settled. That is, in addition to a card transaction being sent to an issuing bank for approval, details of the transaction may be sent to the cardholder for approval before the transaction is authorized. If the cardholder doesn't recognize the transaction, it may be declined immediately, thereby preventing the cardholder and the merchant from becoming victims of identity theft.

Providing iWallet Holders Automatic Approval Options

Additionally, if the cardholder does not respond to an authorization request in real-time (i.e., within a short period of time), the authorization request may be responded to automatically based on customizable settings configured by the cardholder. For example, the cardholder may enable automatic approval of all missed authorizations. In another example, the cardholder may enable automatic approval of only transactions below a certain value and/or with certain merchants. Many automatic response settings may be available, and the cardholder may be able to combine the settings, for example, so that transactions up to a first value are automatically approved at a first merchant, while transactions up to a second value different from the first value are automatically approved at the second merchant.

Providing iWallet Holders with Flagging Options

Further, even after an authorization response has been sent to the issuing bank or credit card association (e.g., Visa, MasterCard, American Express, and so forth), the cardholder may flag an approved transaction as unauthorized. In this way, the cardholder may quickly notify the issuing bank, the credit card association, the acquiring bank, and/or the merchant that a previously approved transaction is fraudulent. If the merchant has not yet shipped goods purchased in the transaction, the merchant may cancel the flagged transaction, thereby avoiding a potentially costly loss. The issuing bank, once notified of the fraudulent activity, may choose to contact the cardholder to determine whether the card should be cancelled to prevent potential further fraud. In other embodiments, the payment application may display the issuing bank's customer service phone number to expedite the process of resolving the fraud and preventing further misuse of the cardholder's account information.

This functionality may be combined with parental controls, enabling parents to provide children with credit, debit, or prepaid cards, while allowing unauthorized or inappropriate charges to be identified and declined before goods are shipped or services rendered. Parental Controls was covered in our March 6, 2011 report.

A New Hand Gesture for Related to Payment Confirmation

This cardholder-not-present authorization functionality may also be combined with a distinctive gesture, such as a reverse swipe of a virtual control on a touchscreen and/or acceptance of a modal confirmation dialog, to reduce the possibility of a transaction being accidentally declined and/or to reasonably ensure that the end user understands and accepts that he or she is declining a fraudulent financial transaction or authorizing a legitimate transaction. The gesture is referred to as a Motion Based Payment Confirmation.

NFC Enabled iOS & OS X Devices Required

Apple's patent figures are noted below as follows: FIG. 2 is a front view of an iPhone that may incorporate Near Field Communication (NFC) technology as noted with the large "N" in the top left corner. The iPhone has an eWallet or iWallet application as noted by the icon on the iPhone's Home Screen; FIG. 3 is a front view of an iMac that includes NFC technology as shown at the bottom right corner. NFC or an equivalent will be required for the iWallet to function.

Patent FIG. 4 noted above is a schematic diagram of participants in a cardholder-not-present financial transaction.

Apple Introduces MobilePay Interface for iTunes

Apple's Patent FIGS. 5-7 shown below are screenshots of an application for registering a card for cardholder-not-present authorization; an application that is identified as being "MobilePay."

Apple's patent FIG. 8 shown below is a screen shot of an application for remote authorization of cardholder-not-present transactions; FIGS. 9-13 are screen shots of the application of FIG. 8 illustrating exemplary settings for remote authorization of cardholder-not-present transactions.

Apple's patent FIGS. 14-16 shown above are screenshots of an application for remote authorization of cardholder-not-present transactions; FIGS. 17 and 18 are screen shots of the application of FIGS. 14-16 illustrating flagging of automatically approved cardholder-not-present transactions.

Apple's patent FIG. 19 shown above is a screen shot of the application of FIGS. 14-18 illustrating line item details of a transaction in accordance with aspects of the present disclosure.

Patent Credits

Apple's patent application was originally filed in Q1 2009 by inventors Brandon Casey, Gary Wipfler and Erik Cressall.

Notice: Patently Apple presents a detailed summary of patent applications with associated graphics for journalistic news purposes as each such patent application is revealed by the U.S. Patent & Trade Office. Readers are cautioned that the full text of any patent application should be read in its entirety for full and accurate details. Revelations found in patent applications shouldn't be interpreted as rumor or fast-tracked according to rumor timetables. Apple's patent applications have provided the Mac community with a clear heads-up on some of Apple's greatest product trends including the iPod, iPhone, iPad, iOS cameras, LED displays, iCloud services for iTunes and more. About Comments: Patently Apple reserves the right to post, dismiss or edit comments.

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