Other Payment Systems Flashcards
What year was the Federal Reserve System created?
Bonus: What led to its creation?
1913
Bonus: The wider use of paper checks and the continuing development of the check clearing house movement.
What does MICR stand for?
Bonus: What year was it first printed on checks?
Magnetic Ink Character Recognition
Bonus: 1956
Payor
The party obligated to pay on a paper check, who is also known as the payer, maker, check writer or drawee.
Payee
The party or parties due payment indicated on a check.
Payee’s
Depository
Financial
Institution
The first depository institution at which a check is deposited. Also known as: Bank of First Deposit (BOFD) or depository bank
Correspondent Bank
A private depository institution, bankers’ bank or Federal Reserve Bank providing payment clearing or settlement services to a BOFD, Collecting Bank, or Paying Bank
Collecting Bank
Any bank, other than the payor bank that handles a check for collection.
Bankers’ Bank
an institution owned by depository institutions that typically provides correspondent
services, including check clearing and settlement services to its owners and other banks
Payor’s Depository Financial Institution
The depository institution associated with the routing number encoded in the MICR line on a check. Typically called the “Paying Bank” or, occasionally, “Payor Bank”
Check Clearing
The path/processes a check navigates, ending at check collection.
Clearing House
an institution comprised of member depository institutions for the purpose of
exchanging, clearing, and settling check payments among members.
Check Collection
The process of ensuring the funds represented by the check are debited from and credited to the appropriate accounts
Fedwire Funds Service is a:
real-time gross settlement system
Define: Real-Time Systems
A system in which each transaction is processed as it is initiated.
Gross Settlement
A system that settles each transfer individually, rather than processing by batch.
Cardholder
An individual who has been issued or is authorized to use a credit, charge, debit or prepaid debit card
Card Issuer
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
Acquirer
An organization that represents merchants in the processing, acceptance and settlement of POS transactions. For transactions involving the Visa® and Mastercard® networks, Acquirers must be sponsored by a bank with a license to use the network.
ATM/Payment
Network
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. In addition to the technical
services, networks also (a) develop, establish and promote a network brand; (b) develop
and administer transaction processing and operating rules and standards; (c) enforce
compliance among network participants; and conceive and develop new payment card-related
technologies and services.
Merchant
An entity that has agreed to accept a payment card for the purchase of goods and services at its locations. The Merchant Category Code (MCC) is used to classify the business by the goods and or services it provides. Terms commonly used to identify the method of which a merchant accepts payments are Card Present, Keyed Transactions
and Card Not Present, also referred as Retail, Moto and e-commerce. An Interchange Fee is an amount charged to merchants for each card payment and paid to the Card Issuer.
