Payment Systems Overview

Question 1

The ________ is a process and delivery system that provides for the distribution and settlement of electronic credits and debits among financial institutions.

Answer 1

ACH Network

Question 2

The ACH movement began in _____ when a group of California bankers formed the Special Committee on Paperless Entries (SCOPE).

Answer 2

1968

Question 3

The National Automated Clearing House Association (NACHA) was formed in ____ to coordinate the ACH movement nationwide.

Answer 3

1974

Question 4

What are the main benefits associated the use of the ACH Network?

Answer 4

1. Cost Reduction
2. Improved productivity over paper check
   transactions

Question 5

Who is the current private sector ACH Operator?

Answer 5

Electronic Payments Network (EPN)

Question 6

________ provide management, education, assistance, and services to link all types of financial institutions across the United States.

Answer 6

Payments Associations (WesPay, EPCOR, etc.)

Question 7

The ACH system is a _______, store-and-forward system. Transactions received by the FI during the day are stored and process later in a batch mode.

Answer 7

batch processing

Question 8

The _____ is the entity that agrees to initiate ACH Entires in o the payment system according to an arrangement with a Receiver.

Answer 8

Originator

Question 9

An ______ is the central clearing facility operated by a private organization or Federal Reserve Bank on behalf of DFIs to or from which participating DFIs transmit or receive ACH Entries.

Answer 9

Automated Clearing House Operator

Question 10

The ______ is the institution that receives payment instructions from the _____ and forwards Entires to the ACH Operator.

Answer 10

ODFI, Originator

Question 11

A _____ is a natural Person or an Organization that has authorized an Originator to initiate an ACH Entry to that Person’s or Organization’s account with the RDFI. Can either be a company or consumer, depending on the type of transaction.

Answer 11

Receiver

Question 12

Unlike a Check, which is always a debit instrument, an ACH entry may a _____, ______, or _______ entry.

Answer 12

Debit, Credit , Non-monetary

Question 13

Dividends, payrolls, and government vendor payments are examples of ACH ____ entries.

Answer 13

Credit

Question 14

Before any transaction is initiated, the Originator and ODFI execute an ______ to use the ACH Network to originate payments.

Answer 14

agreement

Question 15

The ____ is one of the worlds’s oldest forms of payment.

Answer 15

Check

Question 16

The traditional Check is a ____ payment instrument.

Answer 16

debit

Question 17

Fedwire processes each transaction as it is initiated in a real-time, gross-settlement system rather than _____ by _____.

Answer 17

processing, batch.

Question 18

The Fedwire securities are held and transferred in _____ form known as book-entry securities; unlike the Fedwire Funds Service, the Fedwire Securities Service is a ____/____ system with regard to payments

Answer 18

electronic, debit/pull

Question 19

The Fedwire Funds Service is a _____/_____ system in which only the Originator’s financial institution can remove funds from its Federal Reserve account.

Answer 19

credit/push

Question 20

______ are not true payment instruments because they do not result in a direct transfer of funds from the payor to the payee.

Answer 20

Credit Cards

Question 21

________ are used by card holders at ATMs to withdraw cash from their accounts and may be used as a means of electronic payments.

Answer 21

Debit Cards

Question 22

The Check system participant known as the Payee’s Depository Financial Institution is also know as ______

Answer 22

Bank of First Deposit (BOFD)

Question 23

The first Check participant who creates an image of the original Check, or the first bank that transfers, presents, or returns the image of the original Check, is known as the _________.

Answer 23

Truncating Bank

Question 24

When a Check is sent to another depository institution for collection, is is called a ______ Check.

Answer 24

Transit