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Payment Systems Flashcards

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1
Q

What is the ACH Network?

A

Processing and delivery system that provides for the distribution and settlement among financial institutions of electronic credits and debits as well as non-monetary entries with or without payment related information.

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2
Q

What is an Originator?

A

Natural person or organization that has been authorized by the Receiver it initiate a credit entry, debit entry, or non-monetary entry to the Receiver’s account at the RDFI, and has authorized an ODFI to transmit the entry to the Receiver’s account.

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3
Q

What are the requirements for negotiability of a check or draft?

A
  1. Written instruction
  2. Payable to named person or to bearer
  3. Payable on demand
  4. Signed by the Drawer
  5. For a fixed amount
  6. Unconditional order to pay
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4
Q

What is a card association?

A

A governing body for the community of financial institutions, Independent Sales Organizations (ISOs), and Member Service Providers (MSPs) that support card processing.

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5
Q

What are contactless cards?

A

Cards employing RFID technology for payment transmission through an embedded computer chip.

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6
Q

What are interchange fees?

A

Fees paid to cover handling costs and credit risk from the Merchant’s account at the Acquirer to the Issuer.

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7
Q

What are interface points?

A

Points when entities or processes interact with a transaction flow.

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8
Q

What is an Acquirer?

A

An organization that represents Merchants in the processing, acceptance, and settlement of POS transactions.

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9
Q

What is a Bank of First Deposit (BOFD)?

A

First depository institution at which a check is deposited.

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10
Q

What is a Bankers’ Bank?

A

An institution owned by depository institutions that typically provides correspondent services, including check clearing and settlement services, to its owners and other banks.

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11
Q

What is a Cardholder?

A

Person issued or authorized to use a credit, charge, debit, or prepaid bank card.

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12
Q

What is a clearing house?

A

Institution comprised of member depository institutions for the purpose of exchanging, clearing, and settling check payments among members.

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13
Q

What is a closed loop card network?

A

A payment service that is provided directly to Merchants and Cardholders by the owner of the network without the involvement of financial institutions as intermediaries (ex. American Express and Discover).

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14
Q

What is a Correspondent Bank?

A

A private depository institution, Bankers’ Bank, or Federal Reserve Bank providing payment clearing or settlement services to a BOFD or Paying Bank.

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15
Q

What is a credit card?

A

Card in which payment is drawn from a short-term line of credit.

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16
Q

What is a debit card?

A

Card in which payment is drawn directly from a demand deposit account (aka an access device).

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17
Q

What is a Drawer?

A

A person ordering payment of a draft.

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18
Q

What is a Issuer?

A

Financial institution that issues a card to a Cardholder.

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19
Q

What is a Merchant?

A

Person or business that engages in the sale of goods or services and contracts with an Acquirer in order to accept card payments from Cardholders.

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20
Q

What is a Payee?

A

Party or parties due payment as indicated on a check.

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21
Q

What is a Paying Bank?

A

Depository institution associated with the routing number encoded in the MICR line on a check.

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22
Q

What is a Receiver?

A

Natural person or organization that has authorized an Originator to initiate a credit entry, debit entry, or non-monetary entry to the Receiver’s account at the RDFI.

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23
Q

What is a Receiving Depository Financial Institution (RDFI)?

A

Participating depository financial institution with respect to entries (a) it receives from its ACH Operator to the accounts of Receivers, (b) on which it is designated as the RDFI in accordance with Nacha Operating Rules Appendix Three.

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24
Q

What is a Receiving Point?

A

An organization that receives entries from an ACH Operator on behalf of an RDFI.

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25
What is a remotely created check (RCC)?
A check that is not created by the paying bank and that does not bear a signature applied, or purported to be applied, by the person on whose account the check is drawn.
26
What is a Sending Point?
An organization that transmits entries to an ACH Operator on behalf of an ODFI.
27
What is a single message transaction?
A transaction where both authorization and clearing take place through one message transmittal from Merchant's card acceptance terminal.
28
What is a Third-Party Sender?
Type of Third-Party Service Provider that acts as an intermediary in transmitting entries between an Originator and an ODFI, including through Direct Access, and acts on behalf of an Originator or another Third-Party Sender.
29
What is a Third-Party Service Provider?
An organization that performs any function on behalf of the Originator, the Third-Party Sender, the ODFI, or the RDFI. (An Organization acting as a Third-Party Sender is also a Third-Party Service Provider.)
30
What is an application programming interface (API)?
A set of specifications, standards, or conventions that enable programs to exchange information.
31
What is an open loop card network?
A multi-party network that connects Issuers and Acquirers and manages the flow of value between the two (e.g. VISA and Mastercard).
32
What is an Originating Depository Financial Institution (ODFI)?
Participating depository financial institution with respect to Entries (a) it transmits directly or indirectly to an ACH Operator for transmittal to an RDFI, and (b) on which it is designated as the ODFI in accordance with Nacha Operating Rules Appendix Three.
33
What is authorization?
The explicit instructions including timing, amount, payee, the source of funds, and other conditions given by the payer for a one-time or recurring fund transfer.
34
What is blockchain?
Digitized transactions sequentially appended and hashed for confirmation by permissioned, public owners of distributed ledgers.
35
What is distributed ledger technology (DLT)?
Technology that uses a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions with no central administrator or centralized data storage.
36
What is FedNow®?
A real-time payment service developed by the Federal Reserve Banks to process and deliver electronic credits and payment related information between financial institutions.
37
What is Fedwire® Funds Service?
A real-time gross settlement system used to settle interbank funds transfers; transactions are irrevocable and final.
38
What is Fedwire® Securities Service?
A mechanism for issuance, transfer, maintenance, and safekeeping of book-entry securities.
39
What is interoperability?
The ability to process payment instructions across payment systems or platforms that requires the use of common standards and technical compatibility between systems.
40
What is messaging?
Exchange of data between entities to support a request for, or a response to, a request about a payment or its status (could include authorization).
41
What is remote deposit capture (RDC)?
A deposit transaction delivery system that allows customers to electronically deposit checks and other monetary instruments at remote locations.
42
What is SWIFT BIC?
Bank identifier code for members of the SWIFT network.
43
What is SWIFT?
A messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes.
44
What is an ACH Operator?
An entity acting as a central facility for the clearing, delivery, and settlement of entries between or among Participating DFIs.
45
Who are Electronic Data Interchange (EDI) Participants?
1. Buyer (Payor) 2. Supplier (Payee) 3. Receiving Financial Institution 4. Sending Financial Institution
46
What are Financial Market Utilities (FMU)?
Multilateral messaging systems that provide infrastructure for transferring, clearing, and settling payments, securities, and other financial transactions between financial institution or systems.
47
What are ATM/POS and card networks?
Organizations that operate a network of systems that facilitate the routing of card authorization requests, corresponding responses, and settlement transactions between Acquirers and Issuers.
48
What is a dual message transaction?
A Merchant transmitted message containing information for authorization, with a second message required for clearing and settlement transmitted later, possibly in a batch.
49
What is a faster payments mechanism?
A means or instrument for payment clearing where settlement occurs between parties rapidly so that funds are made available to the payee either same day or real time.
50
What is a Independent Sales Organization (ISO)?
A third party used by an Acquirer to conduct and monitor day-to-day activities of its Merchant accounts.
51
What is Apple Pay?
A mobile payment and digital wallet service that lets users make payments using an iPhone, Apple Watch, iPad, or Mac.
52
What is Electronic Data Interchange (EDI)?
A data format used for machine-to-machine exchanges of data and messages for a range of payment and related processes.
53
What is Google Pay?
A digital wallet platform developed to power in-app and tap-to-pay purchases on mobile devices (phones, tablets, or watches) running an Android operating system.
54
What is Mastercard Send?
A Mastercard solution that leverages debit networks to transfer funds to virtually all U.S. debit cards and typically occur within seconds.
55
What is National Settlement Service (NSS)?
A multilateral settlement service owned and operated by the Federal Reserve Bank that allows participants in private clearing arrangements to settle their net obligations with same-day finality using participant’s reserve or clearing account balances maintained with the Federal Reserve.
56
What is payment-related information?
Information that flows directly with a payment to describe its purpose and / or instruct the receiving party how to apply the funds.
57
What is RTP®?
A core industry infrastructure owned and operated by The Clearing House that processes and delivers real-time electronic credits and payment-related information between financial institutions.
58
What is Venmo?
A streamlined person-to-person (P2P) payment method combined with a social-media overlay that is a subsidiary of PayPal, Inc.
59
What is Visa Direct?
A service offering real-time push payment capabilities utilizing Visa's global payment system.
60
What is Zelle®?
A person-to-person (P2P) payment method available to U.S. bank account holders that is owned by Early Warning Services, LLC.
61
What are wholesale payments?
Payments typically between businesses, although there is no definitive division between wholesale and retail.
62
What are retail payments?
Payments between two consumers, a consumer and a business, or between two businesses, although there is no definitive division between wholesale and retail.
63
What does batch processing, store-and-forward mean?
Transactions received during the day are stored and processed together at a later time in a batch instead of each payment being sent separately.

ePayResources APRP Exam Flashcards (6 decks)

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