Payment Systems Overview Flashcards
The _____ is a processing and delivery system that provides for the distribution and settlement of electronic credits and debits among financial institutions
ACH Network
The ACH movement began in ___ when a group of California bankers formed the Special Committee on Paperless Entries(SCOPE)
1968
In 1974, ___ was formed to coordinate the ACH movement nationwide
Nacha (National Automated Clearing House Association)
The main benefits associated with the use of the ACH network are ___ and improved productivity over paper check transactions
Cost reduction
ACH Operators may be private companies or the Federal Reserve Bank. The current private sector operator is the ___
Electronic Payment Network
___ provide management, education, assistance, and services to link all types of financial institutions (commercial banks, savings banks and credit unions) across the United States.
Payments associations
The ACH system is a ___ store-and-forward system. Transactions received by the financial institution during the day are stored and processed later in a batch mode.
batch processing
The ___ is the entity that agrees to initiate ACH Entries into they payment system according to an arrangement with a Receiver.
Originator
An ___ is the central clearing facility operated by a private organization or a Federal Reserve Bank (FRB) on behalf of DFIs to or from which participating DFIs transmit or receive ACH entries.
ACH Operator
The ___ is the institution that receives payment instructions from the ___ and forwards Entries to the ACH Operator
ODFI, Originator
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. A ___ can either be a company or a consumer, depending on the type of transaction.
Receiver, Receiver
Unlike a check, which is always a debit instrument, an ACH entry may be either a ___, ___, or a ___, entry.
Credit, Debit, Non-Monerary
Dividends, payrolls, and government vendor payments are examples of ACH ___.
Credits
Before any transaction is initiated, the Originator and ODFI execute an ___ to use the ACH network to originate payments.
Agreement
Among other things, the ___ should bind the originating company to the ___, define the parameters of the relationship between the two parties, identify processing requirements for the specific application(s), and establish liability and accountability for procedures related to certain application(s).
Agreement, Operating Rules.
The ___ is one of the world’s oldest forms of payment, and today exists as one of the most common methods of payment, both in the US and Internationaly.
Check
The traditional Check is a ___ payment instrument that is widely accepted and used by businesses, governments, and and consumers as payment for virtually any form of commerce.
Debit
Fedwire processes each transaction as it is initiated in a real-time, gross-settlement system, rather than ___ by ___
Processing, batch
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.
Electronic, debit/pull
The Fedwire Funds Service is a ___ system in which only the Originator’s financial institution can remove funds from its Federal Reserve account.
credit/push
___ are not true payment instruments because they do not result a direct transfer of funds from the payor to the payee.
Credit cards
___ are used by cardholders at ATMs to withdraw cash from their accounts and may be used as a means of payment, either on-line or off-line, for goods or services purchased as a retail establishment.
Debit Cards
Unlike a ___ card, where the cost of goods is charged to an account that is paid later and to which interest may be applied, the cost of goods charged against a ___ card is taken directly from a demand deposit account.
Credit, debit
The two banking conventions that advanced paper check processing are ___ and ___.
Routing numbers, MICR
The check system participant known as the payee’s depository financial institution is also known as ___.
Bank of first deposit
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 ___.
Truncating bank
When a check is sent to another depository institution for collection, it is called a ___ check.
Transit
What type of card is similar to a debit card but the balance is not associated with a DDA or other financial institution account.
Prepaid/Stored value card
The use of a ___ debit card results in immediate funds transfer.
PIN/Online
Each transfer of funds on this payment system is considered irrevocable: ___.
Wire transfer payment system
