AAP Terminology Flashcards
ACH Credit
ACH credit entries occur when an Originator initiates a transfer to move funds into a Receivers account. (Receivers account credited)
ACH Debit
ACH debit transactions are when funds are collected from a Receivers account and transferred to an Originator’s account, even though Originator initiated the entry. (Receiver account debited)
Check Clearing
Physical path check follows
Check Collection
Process of ensuring funds represented by check are debited from and credited to appropriate accounts
Local Checks
All checks are classified as local items
On-Us Checks
Payor AND payee both have accounts at the same F.I.
Transit Checks
Checks sent to another DFI for collections (sometimes through one or more intermediary F.I.’s)
May be cleared and collected via: electronic check following rules and regs for ARC, BOC, POP
Open Loop Network
Multi-party network connects two F.I.’s issuer/acquirer and manages flow of value between them. (Ex. Mastercard or Visa)
Closed Loop Network
Provides pmt services directly to merchants and card holders by the owner of network without involving thrid-arty f.i. as intermediaries. (Ex. Gift Cards, Discover, & American Express)
FinCEN?
Financial Crimes enforcement network
Gateway
ACH Operator or participating DFI party to an IAT transaction, Entry or exit point from the U.S.
Direct Deposit vs. Direct Payment
Direct Deposit = deposit of funds for payroll, employee expense reimbursement, government benefits and other refunds/annuities and interest pmts. Any pmt from business or government to consumer.
Direct Payment = for making a payment, credit or debit, individuals or organizations.
Cash Concentration Vs. Cash Disbursement
Referring to Corporate to Corporate (CCD) transactions:
concentration = debit: consolidates all available funds into a single account
disbursement = credit: controlled so that cash can be fully invested during the day and funding requirements.
Helps improve cash flow, reduce excess balances and increase interest earned.
