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AAP Exam Study Cards > Terminology > Flashcards

Terminology Flashcards

1
Q

A card, code or other means of access to a consumer’s account, or any combination thereof, that may be used by the consumer to initiate electronic fund transfers. This does not include electronic devices, such as telephones, personal computers or terminals, typically used in such transfers.

A

Access Device

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2
Q

A card or other means of access to a Consumer Account held by a Depository Financial Institution that is issued by an entity other than the Depository Financial Institution or a party that has contracted directly with the Depository Financial Institution to issue such cards or other means of access and can be used at the point of sale to initiate POS entries.

A

ACH Card

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3
Q

An electronic funds transfer system governed by the Nacha Operating Rules that provides for the interbank clearing of electronic entries for participating financial institutions.

A

ACH Network

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4
Q

An entity that acts as a central facility for the clearing, delivery and settlement of entries between or among participating DFIs. It may be a Federal Reserve Bank or an entity that executes an annual agreement with Nacha.

A

ACH Operator

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5
Q

The rate at which an Originator’s or Third-Party Sender’s debit entries are returned for administrative reasons (Return Reason Codes R02, R03, or R04)

A

Administrative Return Rate

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6
Q

An Administrative Return Rate of three percent (3%).

A

Administrative Return Rate Level

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7
Q

An ACH record that contains supplemental data related to an entry. This information may be needed to completely identify an account holder(s) or provide information concerning a payment to the RDFI and the Receiver.

A

Addenda Record

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8
Q

A contract between entities that defines the operational and legal relationship between the two business entities when transferring funds electronically through the ACH Network.

A

Agreement

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9
Q

is the coordinating organization for America’s federated national standards system. Membership comes from industry trade associations and the Federal Government.

A

ANSI

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10
Q

The Accredited Standards Committee group that deals with standards involving dealings between financial institutions.

A

ASC X9

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11
Q

The Accredited Standards Committee responsible for the development of uniform standards for inter-industry electronic interchange of business transaction data. The data interchange standards consist of transaction set standards, a data dictionary and transmission control standards.

A

ASC X12

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12
Q

The process of generating a message/data-specific code that can be used to positively identify the sender of the message/data, and to protect the message/data from insertion, modification, deletion or replay. The code is generated using a confidential set of keys and a complex mathematical algorithm (the Data Encryption Standard - DES). The code is appended to the message/data that is to be protected. The message/data is in a readable form.

A

Authentication

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13
Q

For most consumer debit entries, a written agreement with the originating company that is signed or similarly authenticated by an employee, customer, or member to allow payments processed through the ACH Network to be withdrawn from the Receiver’s account at a financial institution. It can also be a written agreement that defines the terms, conditions, and legal relationship between trading partners.

A

Authorization

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14
Q

An optional, variable format field of the MICR line of a check. It is positioned to the left of the routing number (or the external processing code, when such a code is present). Data located within this field is bracketed by on-us symbols.

A

Auxiliary On-Us Field

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15
Q

Funds available for use on the current day.

A

Available Balances

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16
Q

Funds that are available for use immediately to make payments, to invest, etc.

A

Available or Collected Funds

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17
Q

Schedule of deposited checks showing when the funds will be available.

A

Availability Schedule

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18
Q

Number of days required to collect items before the customer has available balances.

A

Availability

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19
Q

Any day on which a participating depository financial institution is open to the public during any part of the day for carrying on substantially all its banking functions. With reference to an ACH Operator, any day on which the applicable facility of such ACH Operator is being operated.

A

Banking Day

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20
Q

A group of records or documents considered as a single unit for the purpose of data processing.

A

Batch

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21
Q

A person designated as the recipient of funds (i.e., a person who has applied for and is entitled to Federal benefits payable by law.)

A

Beneficiary

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22
Q

The accounting entry that reflects the bank balance. It may or may not reflect funds available for immediate use.

A

Book or Ledger Balance

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23
Q

The disbursement division for the U.S. Department of the Treasury.

A

Bureau of the Fiscal Service

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24
Q

The financial institution or merchant that authorizes the issuance of a card to a consumer (or another organization) and is liable for the use of the card. The issuer retains full authority over the use of the card by the person to whom the card is issued. Any bank or organization that issues, or causes to be issued, bank cards to those who apply for them. Also referred to as the access device issuer.

A

Card Issuer

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25
Q

The transfer of funds from diverse accounts into a central account to effect more efficient cash management.

A

Cash Concentration

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26
Q

The transfer of funds from a central account to diverse accounts to effect more efficient cash management.

A

Cash
Disbursement

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27
Q

Any item that is immediately convertible into cash such as a paper or electronic collection instrument.

A

Cash Item

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28
Q

A deposit of checks by a financial institution at another financial institution or the Federal Reserve Bank. The checks within this are drawn on various paying banks or may be drawn only on the financial institution receiving it.

A

Cash Letter

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29
Q

A master file maintained by the ACH Operator to verify the file’s routing numbers and other pertinent information of participating depository financial institutions.

A

Central Information File (CIF)

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30
Q

A letter, digit or other symbol that is used as part of the organization, control, and/or
representation of data.

A

Character

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31
Q

The final character of a routing number that may be used to test the validity of a
specific routing number. Some financial institutions also calculate this for
their account numbers.

A

Check Digit

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32
Q

Process of collecting the paper or electronic items from the drawee banks after being
deposited by a customer.

A

Clearing

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33
Q

The balance of an account maintained by a financial institution at a Federal Reserve
or correspondent bank.

A

Clearing Balance

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34
Q

A voluntary association of depository institutions that facilitates the clearing of
checks or electronic items through the direct exchange of funds between members.

A

Clearing House

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35
Q

A large dollar wire transfer system operated by the Clearing House Interbank
Payments System Company.

A

Clearing House
Interbank
Payments
Systems (CHIPS)

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36
Q

An individual, sole proprietorship, or corporation engaged in a commercial enterprise.

A

Company

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37
Q

The record(s) contained within an ACH file that describes the Originator(s) of an ACH
transaction(s).

A

Company
Batch/Header
Record

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38
Q

The balances a company must maintain at a bank to compensate for credit
accommodations and credit services.

A

Compensating
Balances

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39
Q

A validation process that is used to ensure that a transmission complies with ASC X12
syntax rules.

A

Compliance
Checking

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40
Q

Usually refers to an individual engaged in transactions other than commercial.

A

Consumer

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41
Q

A deposit account held by a financial institution and established by a natural person
primarily for personal, family, or household use and not for commercial purposes.

A

Consumer
Account

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42
Q

A bank that accepts deposits and performs banking services for other banks. This arrangement exists between local banks and banks located
throughout the world.

A

Correspondent
Bank

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43
Q

The department within a financial institution that is responsible for establishing credit
policies and procedures.

A

Credit
Department

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44
Q

An entry to the record of an account to represent the transfer or placement of funds
into the account.

A

Credit Entry

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45
Q

A maximum amount a customer is allowed to borrow or become obligated to pay
based on the customer’s credit rating, historical or predicted funding requirements,
and the type of obligation.

A

Credit Limit

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46
Q

Classification of a customer’s ability to repay debts and various obligations.

A

Credit Rating

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47
Q

The risk that a party to a transaction cannot provide the necessary funds, as
contracted, in order for settlement to take place.

A

Credit Risk

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48
Q

Occurs when the movement of fraudulent or illegal payment
transactions from one payments channel to another (e.g., check payments to ACH) is
met with inconsistent risk management practices and lack of information sharing
across payment channels about fraud.

A

Cross-Channel
Risk

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49
Q

The basic units of information in the EDI standards, containing a set of values that
represent a singular fact. They may be single character codes, literal descriptions, or
numeric values.

A

Data Element

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50
Q

Converting plain text using a key and a transformation technique into scrambled
text, which protects the confidentiality of the information being transferred.

A

Data Encryption

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51
Q

The electronic exchange of information between two data processing points.

A

Data Transmission

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52
Q

A card that resembles a credit card in its uses but results in a debit to the
consumer’s transaction account in response to the consumer’s purchases. It may be machine readable, allowing for the activation of an automated teller
machine or other automated payment equipment.

A

Debit Card

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53
Q

An entry to the record of an account to represent the transfer or removal of funds
from the account.

A

Debit Entry

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54
Q

A data element separator in an Addenda Record, designated by an asterisk (*).

A

Delimiter

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55
Q

Regulation E requires a financial institution receiving ACH transactions to make
available a periodic statement with descriptive information included. See Regulation
E for details on the requirements.

A

Descriptive
Statements

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56
Q

Is a situation in which an Originator or third-party (either a DFI’s Third-
Party Service Provider or an Originator’s Third-Party Sender) transmits ACH files
(transactions) directly to an ACH Operator using a financial institution’s routing and
transit number and settlement account.

A

Direct Access

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57
Q

Via ACH is the electronic transfer of funds into a customer’s checking
or savings accounts from an employer, another company, or a government agency.
The funds being deposited can represent a variety of products, such as payroll,
interest, pension, dividends, etc.

A

Direct Deposit

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58
Q

Is the electronic transfer of funds for making payments, whether the
customer sends or receives a payment. With these payments via ACH, customers canpay bills or tuition, donate to a favorite charity, make a purchase, or send money to a friend or family member electronically from a checking or savings account.
Customers can initiate a payment from their bank or credit union’s online bill
payment service, or they can authorize the company or government agency that
they pay to initiate a payment on a recurring or one-time basis.

A

Direct Payment

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59
Q

A check clearing process in which a bank sends checks directly to the drawee bank or
Federal Reserve Bank. Used to accelerate the collection of checks.
Also refers to the arrangement where financial institutions exchange payment files
with each other that use the Nacha formats (or are covered by the Nacha Operating
Rules) but without using an ACH Operator.

A

Direct Send

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60
Q

The exchange of data from the computer of the sending party directly to the
computer of the receiving party. A third-party value-added service is not used in a
direct transmission.

A

Direct
Transmission

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61
Q

The electronic transfer of government benefit funds to individuals using card
technology, ATMs and POS terminals.

A

Electronic Benefits
Transfer (EBT)

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62
Q

Defines the electronic transmission of routine business documents. Generically, this
term is used to describe the transfer of information.

A

Electronic Data
Interchange (EDI)

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63
Q

The conversion of application data to and from the X12 standard format, usually to a
readable format.

A

EDI Translation

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64
Q

Computer software used to perform the conversion of application data to and from
the X12 standard.

A

EDI Translator

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65
Q

To alter, adapt or refine information, especially to bring about conformity to a
standard or to suit a particular purpose or function. Based on the Nacha Operating
Rules, ACH Operators are responsible for editing all ACH files submitted for
processing. However, the ACH Operator does not make the changes but may reject
the file indicating editing changes are required or may pend the file based on its
agreement.

A

Edit

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66
Q

Is the banking day specified by the Originator on which it
intends a batch of entries to be settled.

A

Effective Entry
Date

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67
Q

Is an electronic remittance processing system developed by the U.S. Treasury
for taxpayers to make federal tax deposits and federal tax payments.

A

Electronic Federal
Tax Payment
System (EFTPS)

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68
Q

A generic term used to describe any ACH, wire or consumer debit card transaction.

A

Electronic Funds
Transfer (EFT)

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69
Q

A set of message standards approved by the United Nations for international
electronic data interchange. It is a set of international standards for the electronic exchange of business documents, such as invoices, purchase orders, and shipping notices, between different computer systems.

A

Electronic Data
Interchange for
Administration,
Commerce, and
Transportation
(EDIFACT)

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70
Q

An electronic sound, symbol, or process attached to or logically associated with an
agreement, authorization, Written Statement of Unauthorized Debit, or other record
and executed or adopted by a person with the intent to sign the record.

A

Electronic
Signature

71
Q

A data security technique used to protect information from unauthorized inspection
or alteration. Information is encoded so that data appears as a meaningless string of letters and symbols during delivery or transmission. Upon receipt, the information is decoded using an encryption key.

A

Encryption

72
Q

An electronic request representing the transfer of funds or a non-monetary
transaction in the ACH Network.

A

Entry

73
Q

An entry that (a) is a duplicate of an entry previously initiated by the Originator or
ODFI; (b) orders payment to or from a Receiver different than the Receiver intended
to be credited or debited by the Originator; or (c) orders payment in a dollar amount
different than was intended by the Originator, or (d) orders payment of a debit entry
on a date earlier than the Receiver was intended to be debited by the Originator, or
payment of a credit entry on a date later than the Receiver was intended to be
credited by the Originator.

A

Erroneous Entry

74
Q

Procedures required for resolving a consumer’s allegation that entries were
improperly charged to the consumer’s account. Regulation E outlines minimum requirements and the liability and consequences for the bank and its
customers.

A

Error Resolution

75
Q

Any entry that requires special attention or processing. Examples include return
entries, stop payments, notification of change, dishonored return claims, etc.

A

Exception Entry

76
Q

Any point in time that: (a) a written agreement between an Originator and a
Receiver is in effect; or (b) the Receiver has purchased goods or services from the
Originator within the two-year period immediately preceding such point in time.

A

Existing
Relationship

77
Q

An entry initiated by an RDFI that due to the return reason has a longer return
timeframe than the normal two-day window. This entry must be
transmitted to its ACH Operator so that it is available to the ODFI by opening of
business the banking day following the 60th calendar day following the settlement date of the original entry.

A

Extended Return
Entry

78
Q

An entry initiated by an RDFI that due to the return reason has a longer return
timeframe than the normal two-day window. An Extended Return entry must be
transmitted to its ACH Operator so that it is available to the ODFI by opening of
business the banking day following the 60th calendar day following the settlement
date of the original entry.

A

Extended Return
Entry

79
Q

The time that transpires between the granting and receiving of availability on items
deposited for clearing at the Federal Reserve Bank by financial institutions.

A

Federal Reserve
Bank Float

80
Q

This directory provides basic routing information for Fedwire® Funds Service, Fedwire Securities Service, and FedACH® transactions. This information is synchronized with the Federal Reserve FedACH® and Fedwire® databases daily and is provided solely as a service to financial institutions and other authorized users to help process and settle their transactions efficiently.

A

Federal Reserve
Banks’ E-Payments
Routing Directory

81
Q

The Federal Reserve, the central bank of the United States, was founded by Congress
in 1913 to provide the nation with a safer, more flexible, and more stable monetary
and financial system. It consists of a seven-member Board of Governors in
Washington, D.C., twelve (12) regional Reserve bank districts, and member
depository institutions that are subject to reserve requirements. All national banks
are members; state-chartered banks may elect to become members. State members
are supervised by the Board of Governors and the Reserve Banks. Reserve
requirements established by the Federal Reserve Board apply to nonmember
depository institutions as well as member banks. Both classes of institutions have
access to Federal Reserve discount borrowing privileges and Federal Reserve
services on an equal basis.

A

Federal Reserve
System

82
Q

A wire service operated by the Federal Reserve Bank to move funds electronically via the wire network for real time gross settlement.

A

Fedwire® Funds
Service

83
Q

One or more consecutive character positions within an ACH entry mapped to
contain specific information. For credit, debit or ATM cards, a defined area within an
information track of the magnetic stripe of fixed or variable length.

A

Field

84
Q

A group of ACH batches initiated into the ACH Network or sorted for delivery to ACH receiving point(s). It must be transmitted electronically via data transmission between the sending point and the receiving point. It may be delivered to an endpoint via direct data transmission or other agreed upon secure media. It may contain one or more batches of entries.

A

File

85
Q

The first record of an ACH file containing information necessary to route, validate
and track the ACH entries contained within the file.

A

File Header Record

86
Q

Electronic data interchange for financial transactions/applications between
companies and financial institutions, including payment and remittance advice, account analysis, and balance reporting.

A

Financial EDI

87
Q

A data segment of predetermined length and positioning within an electronic message.

A

Fixed Field

88
Q

The risk that a payment transaction will be initiated or altered in an attempt to
misdirect or misappropriate funds.

A

Fraud Risk

89
Q

The time at which the funds resulting from a funds transfer are made available to the Receiver.

A

Funds Availability

90
Q

An ACH Operator or a Participating DFI that acts as an entry point to or exit point from the United States for ACH payment transactions.

A

Gateway

91
Q

A publication assembled by the Bureau of the Fiscal Service of the U.S. Department of the Treasury that specifies the procedures to be used in ACH transactions originated on behalf of the United States Federal Government.

A

Green Book

92
Q

A CCD entry originated by a Health Plan to a Health Care Provider with respect to a
health care claim. A Health Care EFT Transaction must be accompanied by one
Addenda Record that contains the ASC X12 835 TRN (Reassociation Trace Number)
data segment in the Payment Related Information field.

A

Health Care EFT
Transaction

93
Q

A payment to an intended third-party payee that was not made or completed by the
Originator, Third-Party Sender, or ODFI of a corresponding debit entry authorized by
the consumer Receiver (or any Receiver with respect to an ARC, BOC, or POP entry)
for the purpose of funding the payment to the third-party payee. A partial or
erroneous payment to the intended third-party payee is not an Incomplete
Transaction.

A

Incomplete
Transaction

94
Q

The number used by the Originator to identify the Receiver. For a CIE entry this is
the account number by which the Originator (payor) is known to the Receiver
(payee). For a WEB credit (P2P) entry this is the name of the consumer Originator.

A

Individual
Identification
Number

95
Q

The interchange header and trailer segments envelop one or more functional groups
or interchange related control segments and perform the following functions: (1)
defines the data element separators and the data segment terminators, (2) identifies
the sender and receiver, (3) provides control information for the interchange, and
(4) allows for authorization and security information.

A

Interchange
Control Structure

96
Q

Is used in the ACH Network for the settlement date inserted by the
ACH Operator. It is equivalent to the number of elapsed days since the beginning of
the current year.

A

Julian Date

For example, January 1 of any given year would be Julian date
“001” and in a non-leap year December 31 would be Julian date “365.”

97
Q

A set of instructions governing the enciphering and deciphering of messages.

A

Key

98
Q

The administrative responsibility for the distribution of unique data security keys.

A

Key Management

99
Q

Occurs from an institution’s failure to enact appropriate policies, procedures or
controls to ensure it conforms to laws, regulations, contractual arrangements and
other legally binding agreements and requirements.

A

Legal Risk

100
Q

“Live” refers to an entry that affects a funds transfer rather than a non-monetary
entry such as a prenotification.

A

Live Dollar Entry

101
Q

Describes data in a form that is processable by a mechanical device without the
need for further translation such as MICR.

A

Machine Readable

102
Q

A data element/segment requirement designator that indicates the presence of a
specified data element is necessary to ensure processing. If not included in an ACH record will cause the ACH Operator to pend or reject that
entry, batch, or file.

A

Mandatory

103
Q

An interim procedure in which credits and debits are recorded in individual
accounts in a manner that allows financial institutions to reflect deposit
information prior to actual posting.

A

Memo Posting

104
Q

A procedure between two parties that allows each party to verify that received
data is genuine and has not been altered.

A

Message
Authentication

105
Q

An 8-byte code that is the unique result of the application of the DES algorithm to a
particular string of data in the process of message authentication. The MAC is
appended to the clear text (readable) message. Changing the string of data in any
way will result in a different MAC being generated.

A

Message
Authentication
Code (MAC)

106
Q

The magnetic ink character recognition inscription at the bottom of a paper check.

A

MICR Line

107
Q

A service offered by the Federal Reserve that effects settlement between two
parties involved in an electronic funds transfer(s). The parties provide the Federal
Reserve with their respective ACH debit and credit activity. The Federal Reserve
accordingly debits and credits the accounts held at the Federal Reserve for
settlement.

A

Net Settlement
Service (NSS)

108
Q

A transaction in which the sending and receiving accounts are both at the same
financial institution. The transaction need not be sent through the ACH Network
but may instead be retained by the financial institution and posted to the
appropriate account.

A

On-Us Entries

109
Q

The risk that a transaction is altered or delayed due to an unintentional error.

A

Operational Risk

110
Q

A participating depository financial institution that transmits entries directly or
indirectly to an ACH Operator for transmittal to an RDFI. ODFIs must abide by the
provisions of the Nacha Operating Rules

A

Originating
Depository
Financial Institution
(ODFI)

111
Q

An organization or natural person that has authorized an ODFI (directly or through
a Third-Party Sender) to transmit, for the account of that organization or natural
person, a credit entry, debit entry, or non-monetary entry to the Receiver’s account
at the RDFI.

A

Originator

112
Q

The rate at which an Originator’s or Third-Party Sender’s debit entries, excluding
RCK entries, are returned, regardless of reason, as calculated in accordance with
the Rules, Article Two (ODFI Return Rate Reporting Regarding an Originator’s or
Third-Party Sender’s Administrative Return Rate or Overall Return Rate).

A

Overall Return Rate

113
Q

An Overall Return Rate of fifteen percent (15%).

A

Overall Return Rate
Level

114
Q

Negative balances in customers’ demand deposit or savings accounts after the
close of business and following the posting of all transactions to the demand
deposit system.

A

Overdrafts

115
Q

An association of member financial institutions and business entities organized to
develop and enhance the ACH payment mechanism. Through the association,
members receive standardized specifications, a legal framework for the protection
of participants, a link to the nationwide ACH Network and educational programs
and materials.

A

Payment
Association

116
Q

Any device, instrument, or system that accomplishes the transfer of money.
Payment mechanisms include cash, checks, ACH Network, automated teller, and
point-of-sale or card systems.

A

Payment
Mechanism

117
Q

A communications system having the provisions to provide settlement information.

A

Payment System

118
Q

A file containing ACH entries for future release into the ACH Network according to
effective entry date.

A

Pending File

119
Q

A summary report provided to the account holder at specific intervals, usually
monthly, containing information concerning the posting of credits and debits to a
transaction account. When an account has ACH activity, a statement must be
provided at least monthly showing such activity.

A

Periodic Statement

120
Q

A credit entry initiated by or on behalf of a holder of a consumer account that is
intended for a consumer account of a Receiver. The entry may be a transfer of
funds to the Originator’s own consumer account at another FI or it may be a
transfer of funds to another Receiver consumer’s account. This entry uses the
Internet-Initiated/Mobile entry (WEB) Standard Entry Class Code.

A

Person-to-Person
Entry (P2P)

121
Q

Is the requirement to pay in advance or immediately for all ACH
transactions to be processed by the financial institution (ODFI). The funds must be
good funds and settled prior to the ODFI’s processing date.

A

Prefunding

122
Q

The physical delivery of a negotiable instrument by a holder to the drawee for
payment or acceptance.

A

Presentment

123
Q

Any organization performing data processing services regarding ACH transactions
including service bureaus, Third- Party Service Providers, ACH Operators, etc.

A

Processor

124
Q

Agency of the federal government responsible for determining entitlement and
authorizing a payment to be made, such as the Social Security Administration.

A

Program Agency

125
Q

The non-public personal information (NPPI), including financial information, of a
natural person used to create, or contained within, an entry and any related
addenda record.

A

Protected
Information (NPPI)

126
Q

The conditional settlement of debits and credits transferred via the ACH Network.
Until declared final by the Federal Reserve, provisional settlement may be reversed
by the Federal Reserve.

A

Provisional
Settlement

127
Q

An individual, corporation or other entity who has authorized an Originator to
initiate a credit entry, debit entry, or non-monetary entry.

A

Receiver

128
Q

A Participating Depository Financial Institution that receives ACH entries from the
ACH Operator to the accounts of Receivers. Must agree to abide by the
Nacha Operating Rules.

A

Receiving
Depository
Financial Institution
(RDFI)

129
Q

A site where entries are received from an ACH Operator for processing. It may be
the RDFI, its data center or a data processing service bureau authorized to receive
entries on behalf of an RDFI.

A

Receiving Point

130
Q

A person authorized by the government to receive recurring payments from the
government.

A

Recipient

131
Q

A procedure to recover funds from a financial institution that were paid to that
financial institution on behalf of a depositor after the depositor’s death or legal
incapacity.

A

Reclamation

132
Q

Any ACH batch or file that has not been accepted by an ACH Operator because it
cannot be processed, usually because of technical error. Also a term used for
entries that do not post automatically to Receivers’ accounts with the RDFI (i.e.,
exception entries).

A

Rejects

133
Q

Occurs when negative publicity regarding an institution’s business practices leads
to a loss of revenue or litigation.

A

Reputation Risk

134
Q

A portion of a financial institution’s funds that must be in the form of cash or
readily available securities for the protection of depositors. Reserve or clearing
balances are used to effect settlement between financial institutions.

A

Reserve
Requirement

135
Q

A financial institution that sends ACH entries to a correspondent bank.

A

Respondent

136
Q

Any ACH entry that has been submitted back to the ODFI by the RDFI or by the ACH
Operator because it cannot be processed.

A

Returns

137
Q

ACH entries or files sent within required deadlines to “correct” or reverse
previously originated erroneous entries or files.

A

Reversals

138
Q

A nine-digit number (eight digits and a check digit) that identifies a specific financial
institution. Also referred to as the ABA number.

A

Routing Number

139
Q

Consist of logically related data elements in a defined sequence. A data
segment consists of a segment identifier, one or more data elements each
preceded by an element’s separator, and ending with a segment terminator.

A

Segment

140
Q

Provides the purposes and formats of the segments used in the construction of
transaction sets. The directory lists each segment by name, purpose, identifier, the
contained data elements in the specified order, and the requirement designator for
each data element.

A

Segment Directory

141
Q

A unique character appearing at the end of a segment to indicate the termination
of the segment. For ACH addenda records that require data segments, an asterisk (“*”) must be used as the delimiter between the data elements and the backslash
(“\”) or tilde (“~”) must be used as the terminator at the end of a data segment.

A

Segment
Terminator

142
Q

The process by which a financial institution assesses its creditworthiness and
thereby establishes its ability to utilize Federal Reserve intraday credit. As a result
of this process, the financial institution will obtain a “cap” with the Federal Reserve.
During the self-assessment, a FI will assess itself with regard to the following
factors:
(1) creditworthiness: asset quality, capital adequacy, earnings, liquidity,
holding company strength;
(2) credit policies: sound credit standards, customer
controls, effective implementation;
(3) operational controls: ability to monitor and
control institution’s position across payment systems, ability to monitor and control
customers’ positions across all payments systems. The rating that is assigned as a
result of the self-assessment process will determine by how much, if any, a financial
institution may overdraw its Federal Reserve account on an intraday basis.

May also refer to the risk assessment all Depository Financial
Institutions are required to conduct as an assessment of their ACH activity.

A

Self-Assessment

143
Q

The amount by which a financial institution may overdraw its Federal Reserve
account on an intraday basis. De Minimis Cap is a daylight overdraft cap of up to 40
percent of an institution’s risk-based capital (or in the case of a U.S. branch or
agency of a foreign bank, its appropriate U.S. capital equivalent) which requires the
filing of an annual Board of Directors’ resolution. A financial institution’s position is
monitored on a real time basis by the Federal Reserve.

A

Sender Net Debit
Cap (De Minimus
Cap)

144
Q

The process that generates a transaction set to be electronically exchanged (e.g., an
Accounts Payable System).

A

Sending Application

145
Q

A processing site from which entries are transmitted to the ACH Operator. It may
be the ODFI on its own behalf or a financial institution or a Third-Party Service
Provider on behalf of the ODFI.

A

Sending Point

146
Q

A transfer of funds between two parties in cash, or on the books of a mutual
depository institution, to complete one or more prior transactions, made subject to
final accounting. Settlement for the ACH system occurs through the Federal
Reserve Bank system.

A

Settlement

147
Q

The date on which an exchange of funds with respect to an entry is reflected on the
books of the Federal Reserve Bank(s). With respect to non-monetary entries, the
date specified in this field of the entry. The ACH Operator inputs
this date in Julian Date format.

A

Settlement Date

148
Q

Three-character code within an ACH company/batch header record that identifies
payment types within an ACH batch (e.g., CCD, CTX, PPD, etc.).

A

Standard Entry
Class Codes

149
Q

An advance authorization by a Receiver of future entries to the Receiver’s
consumer account that requires further affirmative action by the Receiver to
initiate those future entries.

A

Standing
Authorization

150
Q

The advice, either paper or electronic, prepared by the ACH Operator stating the
dollar value of an ACH file. This advice may include multiple files presented that
day.

A

Statement of ACH
Activity

151
Q

An Entry to a consumer account that is initiated by a Receiver’s affirmative action in
accordance with the terms of a Standing Authorization.

A

Subsequent Entry

152
Q

The Society for Worldwide International Financial Telecommunication, it is a
worldwide interbank telecommunications network.

A

SWIFT

153
Q

An electronic mechanism that routes transaction data captured from a plastic card
and an electronic funds transfer terminal to the authorizing data processor in order
to obtain the authorization of the card-issuing institution.

A

Switch

154
Q

The risk that the inability of one funds transfer system participant to settle its
commitments will cause other participants to be unable to settle their
commitments.

A

Systemic Risk

155
Q

The risk or exposure that an institution is subject to over time.

A

Temporal Risk
(Exposure)

156
Q

The end of a segment in an addenda record, designated by a backslash “\” or tilde
“~”.

A

Terminator (also
called Segment
Terminator)

157
Q

A 15-character code uniquely identifying each entry within a batch in an ACH file.
The first eight characters of the trace number constitute the routing number of the
ODFI (without the 9th character check digit). The last seven characters represent a
number assigned, in ascending order to entries within each batch, by the ODFI.

A

Trace Number

158
Q

Occurs when there is a probability of loss associated with a business transaction
denominated in a foreign currency, due to changes in the exchange rate. This is also
called transaction exposure.

A

Transaction Risk

159
Q

The two digit code in the ACH record that determines whether an entry is a debit or
a credit to a savings, DDA, or general ledger account, a credit to a loan account, or a
debit to a loan account (reversal entries only) or a non-monetary entry to any of
the previously listed accounts.

A

Transaction Code

160
Q

A standard message format as defined by ANSI X12 that prescribes the exchange of
information between two businesses using electronic means. A type of EDI
transaction set is the EDI 820 for transmitting information relating to payments.

A

Transaction Set

161
Q

An identifier that uniquely identifies the transaction set. This identifier is the first
data element of the transaction set header segment.

A

Transaction Set ID

162
Q

A process whereby checks are presented by transmission of information describing
the check rather than by the delivery of the check itself.

A

Truncation

163
Q

A fee paid by an ODFI to the respective RDFI for a debit entry (except for a debit IAT
entry) that is returned to the ODFI with a Return Reason Code of R05, R07, R10,
R11, R29 or R51.

A

Unauthorized Entry
Fee

164
Q

The rate at which an Originator’s or Third-Party Sender’s debit entries are returned
on the basis that they were unauthorized (Return Reason Codes R05, R07, R10, R11,
R29 or R51), as calculated in accordance with Article Two, Subsection 2.18.2.4(d)
(ODFI Return Rate Reporting Regarding an Originator’s or Third-Party Sender’s
Unauthorized Entry Return Rate).

A

Unauthorized Entry
Return Rate

165
Q

An Unauthorized Entry Return Rate of one half of one percent (0.5%).

A

Unauthorized Entry
Return Rate
Threshold

166
Q

Funds deposited that are not yet collected by the depository bank.

A

Uncollected Funds

167
Q

Value Added Network. A communications network used for sending and receiving
information. This network provides various features in addition to the
transportation of data.

A

VAN

168
Q

A data segment within an electronic message the length of which is determined
using delimiters.

A

Variable Length
Field

169
Q

“Storage” of pending files until release for a particular settlement date, or storage
of entries received until settlement date and posting to the Receiver’s account.

A

Warehouse

170
Q

The term that generically refers to large dollar, real time gross settlement
electronic funds transfers. Examples of domestic payment systems offering
financial wire transfer services include Clearing House Interbank Payment System
(CHIPS), offered by The Clearing House, and Fedwire, provided by the Federal
Reserve System.

A

Wire Transfer

171
Q

A written notice submitted to the RDFI by a Receiver requesting recredit to the
Receiver’s account with the RDFI for a debit to the Receiver’s account that was not
authorized by the Receiver; was improper; was part of an incomplete transaction;
or was an improperly reinitiated entry.

A

Written Statement
of Unauthorized
Debit

172
Q

Return on investment, usually expressed as a percentage of investment.

A

Yield

173
Q

A non-monetary entry transmitted by an Originator to the account of a Receiver to
convey payment related remittance data to the Receiver. Must (1) use an appropriate transaction code; and (2) be transmitted as(i) a CCD or CTX entry to a non-consumer account of the Receiver or (ii) an IAT entry
to the account of any Receiver. Must be accompanied by at least one addenda
record.

A

Zero Dollar
Payment

AAP Exam Study Cards (45 decks)

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