Magazine article American Banker

Autoscribe Wins Patent for Phone Payment System

Magazine article American Banker

Autoscribe Wins Patent for Phone Payment System

Article excerpt

Autoscribe Corp. wants to obliterate the age-old excuse "the check is in the mail."

The Rockville, Md., company was recently promised a patent for a service that it has been marketing for three years as an alternative to credit cards.

The service, called Auto-Pay, allows consumers to pay for goods and services over the phone using their checking accounts.

Other companies offer similar services, and Autoscribe expects to benefit greatly from the patent. It received a "notice of allowance" from the U.S. Patent Office on April 4, which means the patent will be awarded.

"Our competitors are using a technology that we invented," said Roy Michael. Autoscribe's vice president of sales and marketing. "We were the original company to send preauthorized checks produced with a laser printer and a computer through the American banking system.

"The patent will help in the growth of our client base. We expect our current competiton to drop drastically."

Autoscribe says that some of its competitors are violating what the patent will protect. The company intends to enforce its patent, said Mr. Michael

Autoscribe's software is used primarily for one-time events like credit collections, direct marketing, and initial sign-ups for services.

Auto-Pay lets companies collect funds owed to them by allowing them to print checks on their customers' behalf. If a company purchases. Auto-Pay, it produces the checks. Companies can also elect to have Autoscribe or Accelerated Payment Systems a Cockeysville, Md., company with which Autoscribe has a licensing agreement, produce the checks.

Verbal Authorization

Customers authorize the payment verbally, providing their checking account number and other check information.

Then the payee reproduces and deposits the check, which clears in about two days. The customer has the right to stop payment and receives the Auto-Pay item with the monthly bank statement.

The advantage of this process, said Mr. Micheal, is that it eliminates the time a check is in the postal system, and it provides assurance that the funds will be received promptly. But unlike some on-line home banking or point of sales services that utilize credit or debit cards, Auto-Pay cannot guarantee that the customer has sufficient funds.

On the customer side, the benefit is that Auto-Pay does not require special equipment like modems or computers.

Skeptics say such a service is susceptible to fraud. There have been cases in which a customer has authorized a sale or payment and a scam artis inflated the amount of money payable. …

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