CashEdge, an online-funds-transfer specialist, has been granted a patent that could potentially place it in a lead position in the burgeoning vendor-based online-account opening space, according to a TowerGroup analyst. CashEdge announced it was granted approval on an eight-year-old patent application that covers the “method and apparatus” to allow individuals to transfer funds between different institutions to fund a new account.
Many of these process patents are vilified as the life force of “patent trolls,” firms that gain patents to score lucrative licensing rights on commonly distributed technologies. But CashEdge already backs an existing funds-transfer product—being used at more than 600 institutions, including Bank of America, Citigroup and Wachovia—and expects this patent will be the cornerstone of its next-generation payments engine, according to the firm.
Bankers dread the maze of patent coverage and licensing, given the sometimes overlapping, confusing or overly broad claims that critics say are often granted in software or process patents. In this case, there’s a clear safe harbor for banks already involved in letting customers transfer funds online to their outside accounts, says TowerGroup senior analyst Jennifer Roth. The CashEdge patent covers “funds [that] are pulled from one account and placed into a CashEdge account, before being moved to a financial institution,” says Roth. “Banks already doing this themselves are not using a middle account that’s not owned by the accountholder.”
Roth says the patent shows a “validation” for CashEdge’s early-thought strategy on the account-to-account gambit, with initial claims on “not just on using ACH rails, but also using EFT networks,” says Roth. “Back in 2000, there wasn’t even a thought” of using EFT for account-to-account transit. Roth says, however, she is unsure how the patent would affect other account-aggregator firms with online new-account funding options, such as uMonitor and Yodlee.
