Card Payments Flashcards
Which card brands are considered Open Loop networks?
MasterCard and Visa
Which card brands are considered Closed Loop networks?
American Express and Discover
A multi-party network that connects two financial institutions, issuing financial institution and acquiring financial institution and manages flow of value between two financial institutions.
Open Loop Network
Visa and Mastercard are examples of open loop networks
Provides payment services directly to merchants and card holders by the owner of the network, without involving third-party financial institutions as intermediaries.
Closed Loop Network
Gift Cards, Discover, and Amex
Which two broad groups do Debit Cards fall into?
- Those designated exclusively for Automated Teller Machine. (ATM)
- Those that can also be used for payment for purchases from retail merchants.
This type of card is similar to debit cards but are not linked to an individual bank account and may therefore be issued by nearly any type of business or organization.
Prepaid debit cards
An individual who has been issued or is authorized to use a credit, charge, debit or prepaid debit card.
Cardholder
The entity that issues a payment card to the cardholder and is responsible for the provision of customer service for the life of the card.
Card Issuer
An organization that represents merchants in the processing, acceptance and settlement of POS transactions. For transactions involving the Visa and Mastercard networks, they must be sponsored by a bank with a license to use the network.
Acquirer
Organizations, typically with a global reach that operate a network of systems that facilitate the routing of payment card authorization requests, corresponding responses, and settlement transactions between acquirers and issuers.
ATM/Payment Network
An entity that has agreed to accept a payment card for purchase of goods and services at its locations.
Merchant
This is used to classify the business by the goods and or services it provides.
The Merchant Category Code (MCC)
Terms commonly used to identify the method of which a merchant accepts payments are…
- Card Present
- Keyed Transaction
- Card Not Present
Is an amount charged to merchants for each card payment and paid to the Card Issuer.
Interchange Fee
Enforces compliance among network participants; and conceive and develop new payment card related technologies and services.
ATM/Payment Network
Are not true payment instruments because they do not result in a direct transfer of funds from the payor to the payee.
Credit Cards
Access devices to a stored balance
Prepaid Card/Stored Value Cards
Access Devices most commonly associated with access to balance in Checking or DDA Account
Debit/ATM/Bank Cards
A bank account from which deposited funds can be withdrawn at any time, without advance notice.
Demand Deposit Account (DDA)
These networks provide communications, transaction authorization and interbank financial settlement for their member financial institutions.
POS and ATM Networks
Are typically transmitted from the merchant POS to an acquirer, from the acquirer to a network switch, and from the network switch to the card-issuing financial institution or an organization authorized to act on behalf of the issuer.
Credit and charge card payments
The first step in the electronic payment handling
Involves the processing of an authorization request from the merchant and returning an approval or decline message.
Network Batch settlement process
The issuer remits funds for the original amount of payment to the Acquirer.
How often does the acquirer issue an electronic credit to the merchant, after subtracting the interchange and the acquirer fees?
On a periodic basis
How often does the acquirer issue an electronic credit to the issuer? Providing statements on transaction activity to the cardholder in order to collect payment?
Monthly
These transactions include capture, encryption, transmission and validation of the PIN by the Issuer system or a system authorized to process on behalf of the Issuer. Encryption process is required.
PIN (online) Debit Card
These transactions are single message transactions, meaning that when the authorization request is routed to the issuer and approved, a follow up clearing message is not routed from the acquirer to the issuer. They occur via the network settlement process and merchants are remitted funds for approved transactions from their acquirers.
PIN Debit Payments
The settlement to these transactions are concluded on the following day when transactions are settled via ACH by posting net debit or credit totals to accounts maintained at financial institutions on behalf of the Issuer and the ATM Acquirer.
ATM Transactions
Was implemented in the United States to reduce card-present-fraud.
Europay;
Mastercard;
Visa
(EMV)
This Regulation provides a number of exemptions from the registration requirements, allowing some companies to offer and sell their securities without having to register the offering with the SEC.
Regulation D
A regulation put forth by the Federal Reserve Board that outlines rules and procedures for electronic funds transfers (EFTs) and provides guidelines for issuers of electronic debit cards
Regulation E
Act that added a broad set of rules for credit card issuers that limit the assessment of certain types of fees and the interest rates that may be charged. It also requires additional cardholder disclosures and prohibits certain previously common practices that result in increased charges for cardholders.
The
Credit Card
Accountability,
Responsibility and
Disclosure Act of 2009
(CARD)
This card type deals with transactions that are authorized real-time, settlement for merchants and is guaranteed and typically occurs next day.
Credit & Debit Cards
Handles notifying Acquirer of transactions and Transmits transactions to Interchange Association.
Processor
Card payment participant that is a clearing house for the respective card brand. It does not issue cards or merchant accounts. It is not a financial institution.
Card Associations
This regulation addresses reasonableness and proportionality of penalty fees and charges and re-evaluation of rate increases.
Regulation Z - Truth Lending Act - Credit Cards
This regulation is governed by the consumer by the Consumer Protection Bureau.
Regulation Z - Credit Cards
