U.S. Patent No. 5,484,988
U.S. Patent No. 5,484,988 - Issued on January 16, 1996 and titled "Checkwriting Point-of-Sale System", this patent describes a system through which consumers authorize electronic access to their checking accounts by presenting their paper check to the merchant. Payment is electronically made without negotiation of the check.
In one method, the merchant "swipes" the check through a check reader, which reads the Magnetic Ink Character Recognition (MICR) string numbers from the check and captures the bank and account information. Other methods for reading the check information are also addressed. This information is transmitted to the LML system for pre-authorization using LML's proprietary databases, transaction qualification standards and velocity criteria.
Once approved, the merchant's terminal prints a transaction receipt to be signed by the consumer. The paper check can be returned to the consumer as it has been converted to an electronic payment. Electronic payment is achieved without negotiation of the check.
