Copyright © 1999, Financial Services Technology Consortium. All rights reserved. FSML and Echeck...

Copyright © 1999, Financial Services Technology Consortium. All rights reserved.

FSML and Echeck

Milton M. Anderson

Financial Services Technology Consortium

[email protected]

W3C Signed-XML Workshop

April 15-16, 1999


Check Fundamentals

UCC Section 3-104. Form of Negotiable Instruments: “Draft”; “Check”; “Certificate of Deposit”; “Note.”

(1) Any writing to be a negotiable instrument within this article must

(a) be signed by the maker or drawer; and

(b) contain an unconditional promise or order to pay a sum certain in money and no other promise, . . .

(c) be payable on demand or at a definite time; and

(d) be payable to order or to bearer.


Writing and Signing

Writing includes electronic recording per Fed Evid R 1001(1)

Sign includes any symbol executed or adopted by a party with present intention to authenticate a writing per UCC Section 1-201(39)

Black’s Law Dictionary


Payee

ElectronicCheckbook

Payer

Endorsement

Check

E-Mail

Payee’s Bankcredit account

AccountsReceivable

Payer’s Bankdebit account

Clear and settle echeck

Invoice

Electronic Checkbook

Deposit

E-Mail or WWW

Signature

Certificates

Signature

Certificates

Invoice

Check

Signature

Certificates

AccountsPayable

Electronic Check Concept

Invoice

Check

Signature

Certificates


PayeePayer

Payee’s BankPayer’s Bank

Electronic Funds Transfer

Deposit

Echeck

Write Echeck,Sign

Electronic Check Cash and Transfer Flow

Endorsed

Echeck

PostEFT

Credit

Verify Signatures,

Debit Echeck,TransferDeposit

as EFT Credit

Verify Signatures,Endorse,

Write Deposit,Sign


PayeePayer

Payee’s Bank


Write Deposit,Sign

Payer’s Bank

Clear and Settle Echeck

Deposit

Echeck

Write Echeck,Sign

Certified Electronic Check Flow

Endorsed

Certified

Echeck

Endorsed

Certified

Echeck

Verify Signatures,

Credit DepositVerify

Signatures,Debit Echeck

Certified

Echeck

Certified

Echeck

Verify Signatures,

CertifyEcheck


check

payer’s signature

action

payer’s account

payer’s cert

attachment

invoice

payer’s bank’ssignaturepayer’s

bank’s cert

Check

public key references

signatures

endorsement

endorser’s signature

action

endorser’s account

endorser’s cert

endorser’s bank’ssignature

endorser’s bank’s cert

Endorsement


signatures

deposit

depositor’s signature

action

depositor’s account

depositor’s cert

depositor’s bank’ssignature

depositor’s bank’s cert

Deposit


signatures

Electronic Check Signatures and Endorsement


Payer System

Check writing

Email or web

interface

NetworkAccountspayableinterface

Payeedirectory

Incominginvoice processing

Accountspayable

User interfaceprocessing

Electroniccheckbookinterface

User interfaceElectroniccheckbook

Check register


Electronic Checkbook Card Functions

check signing,endorsing

cryptoroutines

Privatesigning

keys

signer public key,signer personal data

check writing

checkbookadminstration

check log/register,certificates,

root public keys

Con

nect

or

Keygeneration

checkbookinitialization


Depositprocessing

Echeckdatabase

EcheckprocessingCryptographic

verification

X.509 certificateand account

data base

FSMLdocument

processing

SMTP mail processing

Firewall andother security

functions

Secure maildirectory

FSMLdocument log

Deposits from the Internet

DemanddepositaccountsystemsOn-us

echecks

Deposits

Deposit and check displays

Researchworkstation

Interface toclearing and

settlement

Clearing via X9.46 files to other banks

Echeckarchiving

Servermanagement

Statementing

Echeckarchive

Administrativereports

Bank of First Deposit Echeck Server Functions


Conclusion

• Echeck is in use at the US Treasury Financial Management Services for paying DoD suppliers

• Echecks are being cleared by Bank Boston, Bank of America, Federal Reserve Bank of Boston

• $700,000 peak day so far• Systems being upgraded from trial to production• Wider range of attached documents• Other financial instruments• FSML 1.50 is done, FSML 2.00 will use XML


PayeePayer

E-Mail

Payee’s Bank


Write Deposit,Sign

Payer’s Bank

Clear and Settle Echeck

Deposit

E-Mail or WWW

Echeck

Write Echeck,Sign

Electronic Check Basic Flow

Endorsed

Echeck

Endorsed

Echeck

Verify Signatures,

Credit Deposit

Verify Signatures,

Debit Echeck


PayeePayer

Payee’s Bank

Send Invoice

Post Payment

Payer’s BankClear and Settle Echeck

Deposit

Echeck

Write Echeck,Sign

Electronic Check Lockbox Flow

Endorsed

Echeck

Endorsed

Echeck

Verify Signatures,

Credit Deposit

Verify Signatures,

Debit Echeck

Invoice

Invoice

Lockbox

Invoice


Write Deposit,Sign


Public Key Signature Security Fundamentals

Signer

Privatesigning

key

Publicsignature

verificationkey

Key pair generation

Public key infrastructurePrivat

e ke

y poss

essi

on

and c

ontrol


Payee System

Check and attachmentverification

Email or web

interface

Network, to bankEmail

or webinterface

Payerdirectory

Advice of paymentprocessing

Network, from payer

Electroniccheckbookinterface

Userinterface

processing

User interfaceElectroniccheckbook

Check register

Accounts payable

Endorsement and deposit processing


Echeckdatabase

EcheckprocessingCryptographic

verification

X.509 certificateand account

data base

FSMLdocument

processing

Interface fromclearing and

settlement

FSMLdocument log

Demanddepositaccountsystems

Echecks

Deposit and check displays

Researchworkstation

Interface toclearing and

settlement

Returns via X9.46 files to other banks

Echeckarchiving

Servermanagement

Statementing

Echeckarchive

Administrativereports

X9.46 files from other banks

Returned echecks

Returns

Paying Bank Echeck Server Functions


CustomerCard

initialization

Bankecheckserver

Marketingand sales

Bank accountadministrative

systems

Bank Certification

Authority

7. X.509 certificates and account blocks

12. CRL

8. PIN mailer

9. Electroniccheckbook,

smart card reader,

software,instructions

4. Electronic checkbook issuance instructions

3. Echeck account information

1. Sales contact 2. Account

agreement and customer data

11. Account activation

10. Card sent notification

5. Public key, certificate request, account block request

6. X.509 certificates, account block

Echeckbook Distribution & Public Key Infrastructure

Copyright © 1999, Financial Services Technology Consortium. All rights reserved. FSML and Echeck...

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Transcript of Copyright © 1999, Financial Services Technology Consortium. All rights reserved. FSML and Echeck...