Background of the invention
A unique identification project has been proposed by the planning commission of
India. As part of this project, a unique identifier will be assigned to each resident
which is linked to the person's demographic and biometric information. The
5 unique identifier (UID) will make it possible for residents to easily verify their
identity to both public and private agencies. The UID will guarantee identity and
not rights, benefits or entitlements.
One important aspect of the model is that Know Your Customer (KYC) and/or
10 Know Your Resident (KYR) policies and regulations are adhered to. These
policies are due diligence activities that financial institutions and other regulated
companies must perform to ascertain relevant information from their clients for
the purpose of doing business with them. These policies are becoming
increasingly important globally to prevent identity theft, financial fraud, money
15 laundering and terrorist financing.
Brief Description of the Drawings
An example of the present invention will now be described in detail, by way of
example only, with reference to the accompanying drawings, in which:
20 Figure 1 shows schematically a known authentication operating model;
Figure 2 shows schematically an operating model of a welfare disbursement
payment system;
Figure 3 shows schematically an operating model of a cash withdrawal system;
Figure 4 shows schematically an operating model of a UID-Iinked depositing
25 system;
Figure 5 shows schematically an operating model of a UID-Iinked account
accessing system; and,
Figure 6 shows schematically an operating model of a biller and credit
designating system.
30
Detailed Description
At the centre of the UID project is a form of online authentication, where
agencies can compare demographic and biometric information of a resident with
-2-
a record stored in a central database. This authentication system can be
accessed by banks and other service providers to verify an individual's details
anytime and from anywhere. An exemplary authentication platform and example
uses of the platform are described in February 2012 in the paper "Aadhaar
5 Enabled Service Delivery" by the Unique Identification Authority of India (UIDAI),
Planning Commission, which is incorporated by reference.
Figure 1 depicts the authentication operating model exemplified in the above
paper. The model includes Authentication User Agencies (AUA) 111 and
10 Authentication Service Agencies (ASA) 112. An AUA 111 is an entity that
utilises the authentication to enable one or more of their services and may
communicate with an ASA 112, which is an agency that has established secure
leased line connectivity to the Central Information Data Repository (CIDR) 113 to
transmit authentication requests on behalf of the AUA 111 and receive
15 responses from the CIDR 113. The ASA 112 and the AUA 111 may of course
be the same entity and may each directly communicate with the CIDR 113 or the
direct service provider.
In the exemplary operating model of Figure 1, a resident 114 will request
20 authentication (step 101) with an authentication device/operator 115. The
authentication device 115 will then communicate with the AUA 111 using a
specific communication protocol (step 102). The AUA 111 will request that the
ASA 112 confirm the authentication (step 103). In this model, the ASA 112
passes the user information onto the CIDR 113 which will return a yes or no
25 response depending on whether the authentication can be granted, Le. that the
demographic or biometric information presented by the user 114 matches the
information stored for that user in the CIDR 113 (step 104). The ASA 112 then
passes this yes or no response to the AUA 111 (step 105). The AUA 111 will
then send the necessary updates and confirmation to the authentication device
30 115 (step 106) depending on the individual service. The service is then
delivered to the user, most likely by the authentication device 115, but
alternatively by a further electronic system (step 107).
-3-
In order to allow service providers to communicate with the data repository CIDR
113 there has been defined a set of Application Programming Interfaces (APls)
which are outlined in the April 2012 paper 'Aadhaar Authentication API
Specification - Version 1.6' by the Unique Identification Authority of India
5 (UIDAI), Planning Commission, which is incorporated by reference. The APls
defined in the paper use XML and the authentication service is a stateless
service over HTTPS.
In addition to setting out APls which define how services should interact with the
10 CIDR, the paper also sets out an exemplary authentication flow in the case of an
operator assisted transaction at a Point of Service (PoS) terminal as follows:
"a) Resident provides [UID] Number, necessary demographic and
biometric details to terminal devices belonging to the AUAlSA (or
15 merchant/operator appointed by AUAlSA) to obtain a service offered
by the AUAlSA.
b) [UID] authentication enabled application software that is installed on
the device packages these input parameters, encrypts, and sends it to
AUA server over either a mobile/broadband network using AUA
20 specific protocol.
c) AUA server, after validation adds necessary headers (AUA specific
wrapper XML with license key, transaction id, etc.), and passes the
request through ASA server to UIDAI CIDR.
d) [UID] authentication server returns a "yes/no" 'based on the match of
25 the input parameters.
e) Based on the response from the [UID] authentication server,
AUAlSA conducts the transaction."
Although the extract above describes that the resident prOVides the necessary
30 demographic and biometric details, in practice the resident need not provide
their biometric details, in many instances merely using the UID number is
sufficient to identify the resident.
-4-
A number of the aims and potential advantages of the UID project include (see
http://uidaLgov.in/aadhaar.html, accessed 29 November 2012):
A guarantee of uniqueness and centralised, online identity verification
which would be the basis for building multiple services and applications, and
5 facilitating greater connectivity to markets.
The ability to access services and resources, anytime, anywhere in the
country.
The provision of an identity infrastructure for ensuring financial inclusion
across the country - banks can link the unique number to a bank account for
10 every resident, and use the online identity authentication to allow residents to
access the account from anywhere in the country.
A foundation for the effective enforcement of individual rights. A clear
registration and recognition of the individual's identity with the state is necessary
to implement their rights - to employment, education, food, etc. The number, by
15 ensuring such registration and recognition of individuals, would help the state
deliver these rights.
One of the potential applications of the project that has been proposed is a
universal, micropayment solution. Such a solution is described in April 2010 in
20 the paper 'From Exclusion to Inclusion with Micropayments' by the Unique
Identification Authority of India (UIDAI), Planning Commission, which is
incorporated by reference.
In particular, this paper sets out the following:
25
"In the last twenty years, India has undergone a transformation of its
economic and regulatory structures. Policy reforms in this period have
led to the increasing maturity of our markets, as well as healthy
regulation. The emphasis on de-licensing, entrepreneurship, the use
30 of technology and decentralisation of governance to the state and local
level have in particular, shifted India from a restrictive, limited access
society to a more empowered, open access economy, where people
are able to access resources and services more easily and effectively.
-5-
But despite these efforts, access to finance has remained scarce in
rural India, and for the poorest residents in the country. Today, the
proportion of rural residents who lack access to bank accounts
5 remains at 40%, and this rises to over three-fifths of the population in
the east and north-east parts of India.
This exclusion is debilitating. Economic opportunity is after all,
intertwined with financial access. Such financial access is especially
10 valuable for the poor-it offers a cushion to a group whose incomes
are often volatile and small. It gives them opportunities to build
savings, insure themselves against income shocks and make
investments. Such savings and insurance protect the poor against
potentially ruinous events-illness, loss of employment, droughts, and
15 crop failures. However due to the lack of access to financial services,
many of the Indian poor face difficulties in accumulating savings.
To mitigate the lack of financial access in India, the regulator has
focused on improving the reach of financial services in new and
20 innovative ways - through no-frills accounts, the liberalization of
banking and ATM policies, and branchless banking with business
correspondents (BCs), which enables local intermediaries such as selfhelp
groups and kirana stores to provide banking services. Related
efforts have also included the promotion of core-banking solutions in
25 Regional Rural Banks; and the incorporation of the National Payment
Corporation of India (NPCI) to provide a national infrastructure for
payments and settlements in the country.
Advancements in technology such as core banking, ATMs, and mobile
30 connectivity have also had enormous impact on banking. Mobile
phones in particular present an enormous opportunity in spreading
financial services across India. These technologies have reduced the
need for banks to be physically close to their customers, and banks
-6-
have been consequently able to experiment with providing services
through internet as well as mobile banking. These options, in addition
to ATMs, have made banking accessible and affordable for many
urban non-poor residents across the country.
5
With the poor, however, banks face a fundamental challenge that limits
the success of technology and banking innovations. The lack of clear
identity documentation for the poor creates difficulties in establishing
their identity to banks. This has also limited the extent to which online
10 and mobile banking can be leveraged to reach these communities.
Besides challenges of access and identity, a third limitation has been
the cost of providing banking services to the poor who transact in
smaller amounts, commonly referred to as micropayments. Banks
15 consider such payments unattractive since transaction costs may be
too high to bear.
The Unique Identification number (UID), which identifies individuals
uniquely on the basis of their demographic information and biometrics
20 will give individuals the means to clearly establish their identity to
public and private agencies across the country. It will also create an
opportunity to address the existing limitations in financial inclusion.
The UID can help poor residents easily establish their identity to
banks. As a result, banks will be able to scale up their branch-less
25 banking deployments and reach out to a wider population at lower
cost.
An efficient, cost effective payment solution is a dire necessity for
promoting financial inclusion. The UID number and the accompanying
30 authentication mechanism coupled with rudimentary technology
application can provide the desired micropayment solution. This can
bring low-cost access to financial services to everyone, a short
distance from their homes.
-7-
The key features of UID-enabled micropayments outlined in this
document are as follows:
5 UID Know Your Resident (KYR) sufficient for Know Your Customer
(KYC): Banks in India are required to follow customer identification
procedures while opening new accounts, to reduce the risk of fraud
and money laundering. The strong authentication that the UID will
offer, combined with its KYR standards, can remove the need for such
10 individual KYC by banks for basic, no-frills accounts. It will thus vastly
reduce the documentation the poor are required to produce for a bank
account, and significantly bring down KYC costs for banks.
Ubiquitous Business Correspondent (BC) network and BC choice: The
15 UID's clear authentication and verification processes will allow banks
to network with village-based BCs such as self-help groups and kirana
stores. Customers will be able to withdraw money and make deposits
at the local BC. Multiple BCs at the local level will also give customers
a choice of BCs. This will make customers, particularly in villages, less
20 vulnerable to local power structures, and lower the risk of being
exploited by BCs.
A high-volume, low-cost revenue approach: The UID will mitigate the
high customer acquisition costs, high transaction costs and fixed IT
25 costs that we now face in bringing bank accounts to the poor.
Electronic transactions: The UID's authentication processes will allow
banks to verify poor residents both in person and remotely. Rural
residents will be able to transact electronically with each other as well
30 as with individuals and firms outside the village. This will reduce their
dependence on cash, and lower costs for transactions. Once a
general purpose UID-enabled micropayments system is in place, a
variety of other financial instruments such as micro-credit, micro-
-8-
insurance, micro-pensions, and micro-mutual funds can be
implemented on top of this payments system.
The UID-enabled micropayments solution is just one of the many
5 developmental applications of the UID number."
As described above, the UID may provide a method of uniquely identifying a
person or a resident of a country, such that fraud may be reduced and trust and
inclusiveness may be increased. The UID platform allows for the provision of
10 further applications and services using the unique identifier.
In order to provide functionality such as that described above, there may be
established UID-enabled Bank Accounts (UEBAs). UEBAs are linked to aUlD
number and a customer can access their UEVA through a microATM device.
15 The UEBA generally operates as a prepaid account, similar to those used by
mobile operators when charging for talktime. The UEBA provides four main
features:
- a store of cash for savings, with a facility for making electronic deposits
and withdrawals in micro-amounts;
20 - a way to make payments;
- a channel for sending and receiving remittances; and,
- enabling balance queries and transaction history queries.
Other documentation which may aid in understanding the background to the
25 invention can be found at http://uidaLgov.in and http://uidaLgov.in/uidaidocuments.
html#publication, accessed on 29 November 2012.
For the purposes of introducing concepts of embodiments of the present
invention, an international payment system such as that operated by MasterCard
30 International Inc. and international remittance systems such as those described
in W02008/124584 and W02008/124580 may be used. These documents are
incorporated by reference.
-9-
The payment system operates to route and clear funds transfers from the
payment card accounts of senders to the payment card accounts of recipients.
One example of a payment system is the Banknet system, which is well-known
to those who are skilled in the art. The Banknet system is a global
5 telecommunications network linking all MasterCard card issuers, acquirers and
data processing centres into a single financial network. Typically, payment
systems such as Banknet comply with standards specifications which define the
interchange message specifications for the exchange of electronic transactions
made by cardholders using payment cards. ISO 8583 - Financial transaction
10 card originated messages is one such standard. The international remittance
systems described above may utilise these payment systems to initiate a funds
transfer.
Although embodiments of the present invention are described in the context of
15 the UIO project in India and international remittance and payment systems such
as those operated by MasterCard International Inc., it will of course be
understood that the principles of the present invention are not limited to such
systems and projects and are equally applicable to other systems and projects.
20 Traditional rural to urban migration exists in India as villagers seek to improve
their opportunities and lifestyles. In 1991,39 million people migrated from rural
areas to urban areas. Seasonal urban migration is also evident throughout India.
In cities like Surant, many migrants move into the city during periods of hardship
and return to their native villages for events such as the harvest.
25
The 2001 census showed that the total number of migrants by last residence
(rather than place of birth) was around 314 million. Out of these migrants, 268
million were intra-state migrants, 41 million were interstate migrants and 5.1
million migrated from outside of the country. Many scenarios exist where a
30 migrant worker, living in an urban environment, earns a monthly wage and
wishes to distribute their funds to their family living in a rural area.
-10-
Currently, the only options available to a citizen wishing to make such a
transaction are:
- Post Offices, which have an extensive physical network, but high
transfer fees.
5 - Banks, which do not see a value in the transfer business given the
current risks associated with it. Banks currently only target 5% of the population.
- Money transfer operators, which may not serve the sender's area as
well as the receiver's area.
- Via friends and relatives, which is not a reliable way of regularly
10 transferring money, is not immediate and there is no guarantee of full payment.
According to embodiments of the present disclosure, a UID-Iinked remote
deposit and payment system is provided which replaces existing remittance
systems and therefore obviates or alleviates the causes of fraud and security
15 risks in such systems.
The system disclosed herein allows for the transfer of funds mediated by a
central UID server such that a currently unbanked rural person has access to
funds within, for example, a banked person's sub-account. The banked person
20 holding the account can set limits and controls on how and where the funds in
the allocated sub-account can be obtained and/or spent.
There are many reasons why such a system has not been implemented in the
past. Without a way to authenticate the large unbanked population, banks saw
25 remittances as high-risk. Now that UID numbers are accepted as KYC, and
banks have access to the authentication network, the business case for such
systems is greatly improved. Previously, independent grocery stores who
wished to become agent locations had little infrastructure to provide financial
services. Banks and correspondent networks now have an incentive to work
30 with them. Though residents had access to funds, they never had access to
bank accounts. There has also been a recent positive change economically in
the balance of risk vs. reward for all parties involved.
-11-
Figure 4 depicts an operating model for a UID-linked depositing system in
accordance with an embodiment. The model includes a resident 114, a
merchant 301, a central UID server 401, an account issuer 403, a third party
financial switching network 402 which links the central UID server 401 to the
5 account issuer 403 and a main financial account 404 with designated subaccounts
405,406 and 407.
In the exemplary operating model of Figure 4, a resident 114 who wishes to
deposit funds into their financial account provides a merchant 301 with their UID.
10 The merchant may be a business correspondent, a grocer or a bank. The UID
may be entered either manually at a keypad or via an alternative method such
as OR-code, barcode, RFID tag or using biometric data such as fingerprints
where such input technologies are enabled.
15 The UID is sent to a central UID server 401 where it is used to identify an
account 404 via account data held by the central UID server 401. The account
data does not contain financial data; rather, it merely identifies the account
issuer 403 and the account holder resident 114, for example via an account
number which will typically, but not necessarily include the UID. The account
20 data is then sent via a financial switching network 402 to the account issuer 403
identified in the account data and the account 404 is credited with the amount,
less handling fees associated with the merchant 301 receiving the funds and the
financial switching network 402. Once the funds are received into the account
404, the resident 114 may receive an SMS message confirming that the funds
25 have been received.
The UID-associated account 404 will typically comprise a series of subaccounts.
For example, the sub-accounts may include: a sub-account 405 for
automatically paying the bills of the account holder 114 or a designated second
30 resident in another area (this could be a relation of the account holder); a subaccount
406 that allows that second resident to withdraw cash from that
particular sub-account, subject to spending controls (as set, for example, by the
account holder resident 114); and a sub-account 407 which can be used for one-
-12-
time transactions. In at least one embodiment, the sub-accounts 405, 406 407
are provided via the MasterCard™ InControl™ platform, elements of which
described in European Patents Nos, 1029311 and 1153375 in the name of Orbis
Patents Limited, the contents of which are incorporated herein by reference.
5
Figure 5 depicts an operating model of one embodiment of a UID-Iinked account
accessing system. The model includes an account holder resident 114, a
second resident 508, a merchant 301, a central UID server 401, an account
issuer 403, a financial switching network 402 which links the central UID server
10 401 to the account issuer 403, and a main financial account 404 with designated
sub-accounts 405,406 and 407, as described above.
In the exemplary operating model of Figure 5, the second resident 508 may
receive an SMS message indicating that funds have been credited into the sub-
15 account 406 to which they have access, along with a PIN to access the funds
(not illustrated). The second resident 508 may then access the funds by
providing the merchant 301 with their UID information (step 501). The UID may
be entered either manually at a keypad or via an alternative method such as a
OR-code, barcode, RFID tag or using biometric data such as fingerprints where
20 such input technologies are enabled. The UID is sent to a central UID server
401 (step 502) where it is used to identify a main account 404 and its subaccount
406, accessible by the second resident 508, via account data held by
central UID server 401. The account data does not contain financial data.
Rather, it merely identifies the account issuer 403, the account holder (resident
25 114) and the second resident 508 who has access to the sub-account 406. The
second resident 508 may gain access to the sub-account 406 via, for example,
an account number which will typically, but not necessarily, include the UID.
The account data is then sent via the financial switching network 402 to the
30 account issuer 403 identified in the account data (steps 503 and 504) and the
sub-account 406 is debited with the amount requested by the second resident
508. Once the funds are debited from the sub-account 406, the merchant 301
receives confirmation (step 505) and provides the second resident 508 with the
-13-
funds (step 506), less handling fees associated with the merchant 301 issuing
the funds and the third party financial switching network 402. The account
holder resident 114 may receive an SMS message confirming that the funds
have been debited from the sub-account (step 507).
5
Figure 6 depicts an operating model of a biller and credit designating system.
The model includes: a main account 404 with an account substructure
comprising sub-accounts 405, 406 and 407; a third party financial switching
network 402; two designated billers, which in this instance are an electricity
10 company 601 and a utilities company 602; and an entity to which credit is to be
designated, which in this instance is represented by a grocery 603.
In the exemplary operating model of Figure 6, the account owner, which could
be resident 114 (not illustrated), has designated two billers: electricity company
15 601; and utilities company 602, and a store credit at a local grocery store 603.
These designations are all maintained by the financial switching network 402.
Billers may be paid from the Billers sub-account 405. Store credit may be paid
from the sub-account 406, to which a designated resident (or residents) has
access (this access may be controlled via the UID-Iinked access system
20 previously discussed with reference to Figure 5).
The key benefits of the above embodiments are as follows:
- The account holding resident preserves more of his salary and has peace of
mind that the designated resident has funds access.
25 - The designated resident has immediate funds access and no bank account is
required. There is no need to risk holding lots of cash.
- The city banks are able to reach a larger customer base, increase the number
of (small) deposits and accordingly increase their revenue
- The city merchants & billers can lower their cash volumes which mean lower
30 handling costs. They are also guaranteed payment.
- The government is satisfied that every Indian is eligible to participate
- The 150,000 India Post branches will gain transfer revenue with a potential
customer upsell opportunity.
-14-
- Village merchants & billers will have lower cash volumes which mean lower
handling costs. More foot traffic means more sales.
The flow charts and descriptions thereof herein should not be understood to
5 prescribe a fixed order of performing the method steps described therein. Rather
the method steps may be performed in any order that is practicable. As used
herein and in the appended claims, the term "payment card account" includes a
credit card account or a deposit account that the account holder may access
using a debit card. The term "payment card account number" includes a number
10 that identifies a payment card account or a number carried by a payment card,
or a number that is used to route a transaction in a payment system that handles
debit card and/or credit card transactions. The term "payment card" includes a
credit card or a debit card. Although the present invention has been described in
connection with specific exemplary embodiments, it should be understood that
15 various changes, substitutions, and alterations apparent to those skilled in the
art can be made to the disclosed embodiments without departing from the spirit
and scope of the invention.
20
-15-

WE CLAIM
1. A secure distribution system comprising:
a first secure server arranged to store unique identification (UID) data
5 corresponding to a plurality of persons;
a transaction network arranged to mediate at least a portion of
transaction data corresponding toa transaction between a first of the plurality of
persons and a second of the plurality of persons;
wherein the transaction comprises the first of the plurality of persons
10 allocating at least a portion of a resource to be accessible by the second of the
plurality of persons and wherein the first and second persons are identified via
their respective UIDs.
2. The system of Claim 1 wherein, the resource comprises monies.
15
3. The system of either Claim 1 or Claim 2 wherein, the transaction network
switches the portion of the resource allocated to the second of the plurality of
persons to a sub-account of a primary account held by the first of the plurality of
persons and removes said portion of the resource allocated to the second of the
20 plurality of persons from the primary account.
4. The system of any preceding claim wherein at least one the first and
second of the plurality of persons receive notification data indicative that the
portion of the resource has been allocated to the second of the plurality of
25 persons.
5. The system of Claim 6 wherein the notification data is in the form of a
short message service (SMS) text message.
30 6. The system of any preceding claim wherein the second of the plurality of
persons receives data corresponding to a password to allow them to access the
portion of the resource at a third party.
7. The system of Claim 6 wherein the data is in the form of a short message
35 service (SMS) text message.
8. The system of any preceding claim comprising a secure terminal
arranged to receive input UID data of the first of the plurality of persons such that
the identity of the first of the plurality of persons can be verified using the UID
40 data stored on the first secure server.
9. The system of any preceding claim comprising a secure terminal
arranged to receive input UID data of the second of the plurality of persons such
that the identity of the second of the plurality of persons can be verified using the
45 UID data stored on the first secure server.
10. A method of distributing a resource from a first of plurality of persons to a
second of plurality of persons, the second person being remote from the first
person comprising the steps of:
-16-
i) receiving input unique identification (UID) data of a first of a plurality of
persons such that the identity of the first of the plurality of persons can be
verified using the UID data stored on a first secure server arranged to store
unique identification (UID) data corresponding to a plurality of persons;
5 ii) allocating a portion of the resource to a second of the plurality of persons;
iii) switching the portion of the resource allocated to the second of the
plurality of persons to a sub-account of a primary account held by the first of the
plurality of persons and removes said portion of the resource allocated to the
second of the plurality of persons from the primary account using a transaction
10 network arranged to mediate at least a portion of transaction data corresponding
to a transaction between the first and second of the plurality of persons, wherein
the transaction comprises the first of the plurality of persons allocating at least a
portion of a resource to be accessible by the second of the plurality of persons
and wherein the first and second persons are identified via their respective UIDs.
15
11. The method of Claim 10 wherein, the resource comprises monies.
12. The method Claim 10 or Claim 11 comprising the step of:
issuing notification data indicative that the portion of the resource has been
20 allocated to the second of the plurality of persons to at least one of the first and
second of the plurality of persons.
13. The method of Claim 12 wherein the notification data is in the form of a
short message service (SMS) text message.
25
14. The method of anyone of Claims 10 to 13 comprising issuing data
corresponding to a password to allow them to access the portion of the resource
at a third party to the second of the plurality of persons.
15. The method of Claim 14 wherein the data is in the form of a short
message service (SMS) text message.