Card Payments

Question 1

Which card brands are considered Open Loop networks?

Answer 1

MasterCard and Visa

Question 2

Which card brands are considered Closed Loop networks?

Answer 2

American Express and Discover

Question 3

A multi-party network that connects two financial institutions, issuing financial institution and acquiring financial institution and manages flow of value between two financial institutions.

Answer 3

Open Loop Network
Visa and Mastercard are examples of open loop networks

Question 4

Provides payment services directly to merchants and card holders by the owner of the network, without involving third-party financial institutions as intermediaries.

Answer 4

Closed Loop Network
Gift Cards, Discover, and Amex

Question 5

Which two broad groups do Debit Cards fall into?

Answer 5

1. Those designated exclusively for Automated Teller Machine. (ATM)
2. Those that can also be used for payment for purchases from retail merchants.

Question 6

This type of card is similar to debit cards but are not linked to an individual bank account and may therefore be issued by nearly any type of business or organization.

Answer 6

Prepaid debit cards

Question 7

An individual who has been issued or is authorized to use a credit, charge, debit or prepaid debit card.

Answer 7

Cardholder

Question 8

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.

Answer 8

Card Issuer

Question 9

An organization that represents merchants in the processing, acceptance and settlement of POS transactions. For transactions involving the Visa and Mastercard networks, they must be sponsored by a bank with a license to use the network.

Answer 9

Acquirer

Question 10

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.

Answer 10

ATM/Payment Network

Question 11

An entity that has agreed to accept a payment card for purchase of goods and services at its locations.

Answer 11

Merchant

Question 12

This is used to classify the business by the goods and or services it provides.

Answer 12

The Merchant Category Code (MCC)

Question 13

Terms commonly used to identify the method of which a merchant accepts payments are…

Answer 13

1. Card Present
2. Keyed Transaction
3. Card Not Present

Question 14

Is an amount charged to merchants for each card payment and paid to the Card Issuer.

Answer 14

Interchange Fee

Question 15

Enforces compliance among network participants; and conceive and develop new payment card related technologies and services.

Answer 15

ATM/Payment Network

Question 16

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

Answer 16

Credit Cards

Question 17

Access devices to a stored balance

Answer 17

Prepaid Card/Stored Value Cards

Question 18

Access Devices most commonly associated with access to balance in Checking or DDA Account

Answer 18

Debit/ATM/Bank Cards

Question 19

A bank account from which deposited funds can be withdrawn at any time, without advance notice.

Answer 19

Demand Deposit Account (DDA)

Question 20

These networks provide communications, transaction authorization and interbank financial settlement for their member financial institutions.

Answer 20

POS and ATM Networks

Question 21

Are typically transmitted from the merchant POS to an acquirer, from the acquirer to a network switch, and from the network switch to the card-issuing financial institution or an organization authorized to act on behalf of the issuer.

Answer 21

Credit and charge card payments

Question 22

The first step in the electronic payment handling

Answer 22

Involves the processing of an authorization request from the merchant and returning an approval or decline message.

Question 23

Network Batch settlement process

Answer 23

The issuer remits funds for the original amount of payment to the Acquirer.

Question 24

How often does the acquirer issue an electronic credit to the merchant, after subtracting the interchange and the acquirer fees?

Answer 24

On a periodic basis

Question 25

How often does the acquirer issue an electronic credit to the issuer? Providing statements on transaction activity to the cardholder in order to collect payment?

Answer 25

Monthly

Question 26

These transactions include capture, encryption, transmission and validation of the PIN by the Issuer system or a system authorized to process on behalf of the Issuer. Encryption process is required.

Answer 26

PIN (online) Debit Card

Question 27

These transactions are single message transactions, meaning that when the authorization request is routed to the issuer and approved, a follow up clearing message is not routed from the acquirer to the issuer. They occur via the network settlement process and merchants are remitted funds for approved transactions from their acquirers.

Answer 27

PIN Debit Payments

Question 28

The settlement to these transactions are concluded on the following day when transactions are settled via ACH by posting net debit or credit totals to accounts maintained at financial institutions on behalf of the Issuer and the ATM Acquirer.

Answer 28

ATM Transactions

Question 29

Was implemented in the United States to reduce card-present-fraud.

Answer 29

Europay;
Mastercard;
Visa
(EMV)

Question 30

This Regulation provides a number of exemptions from the registration requirements, allowing some companies to offer and sell their securities without having to register the offering with the SEC.

Answer 30

Regulation D

Question 31

A regulation put forth by the Federal Reserve Board that outlines rules and procedures for electronic funds transfers (EFTs) and provides guidelines for issuers of electronic debit cards

Answer 31

Regulation E

Question 32

Act that added a broad set of rules for credit card issuers that limit the assessment of certain types of fees and the interest rates that may be charged. It also requires additional cardholder disclosures and prohibits certain previously common practices that result in increased charges for cardholders.

Answer 32

The
Credit Card
Accountability,
Responsibility and
Disclosure Act of 2009
(CARD)

Question 33

This card type deals with transactions that are authorized real-time, settlement for merchants and is guaranteed and typically occurs next day.

Answer 33

Credit & Debit Cards

Question 34

Handles notifying Acquirer of transactions and Transmits transactions to Interchange Association.

Answer 34

Processor

Question 35

Card payment participant that is a clearing house for the respective card brand. It does not issue cards or merchant accounts. It is not a financial institution.

Answer 35

Card Associations

Question 36

This regulation addresses reasonableness and proportionality of penalty fees and charges and re-evaluation of rate increases.

Answer 36

Regulation Z - Truth Lending Act - Credit Cards

Question 37

This regulation is governed by the consumer by the Consumer Protection Bureau.

Answer 37

Regulation Z - Credit Cards