CTP Payment Systems and Technology 2 — Questions and Answers
Question 1: Which payment rail is best suited for sending a large corporate payment that must settle the same day with immediate finality?
- ACH same-day credit
- Fedwire Funds Service (Correct answer)
- Corporate check
- SWIFT MT103
Correct answer: Fedwire Funds Service
Fedwire provides real-time gross settlement (RTGS) with immediate, irrevocable finality, making it ideal for large-value same-day payments.
Question 2: A treasury team wants to reduce float by collecting payments electronically. Which ACH transaction type would they use to pull funds directly from a customer's bank account?
- ACH credit (PPD)
- ACH debit (PPD) (Correct answer)
- Wire transfer
- RTP credit push
Correct answer: ACH debit (PPD)
An ACH debit (PPD for prearranged payment and deposit) allows a company to pull funds from a customer's account with prior authorization.
Question 3: What is the primary risk distinguishing ACH payments from Fedwire payments for a corporate treasurer?
- ACH has higher transaction fees
- ACH is not final until the settlement window closes and entries can be returned (Correct answer)
- ACH cannot be used for B2B payments
- Fedwire requires SWIFT codes
Correct answer: ACH is not final until the settlement window closes and entries can be returned
ACH payments are not immediately final and can be returned by the receiving bank within defined return windows, creating settlement risk absent in Fedwire.
Question 4: The RTP network operated by The Clearing House differs from ACH in that RTP:
- Batches transactions for next-day settlement
- Provides 24/7/365 real-time settlement with immediate funds availability (Correct answer)
- Is limited to government payments only
- Requires a correspondent bank relationship
Correct answer: Provides 24/7/365 real-time settlement with immediate funds availability
RTP settles transactions individually and immediately around the clock, unlike ACH which processes in batches during business hours.
Question 5: Which SWIFT message type is used for a standard customer credit transfer between financial institutions?
- MT940
- MT103 (Correct answer)
- MT202
- MT700
Correct answer: MT103
MT103 is the SWIFT single customer credit transfer message used to instruct cross-border payments between correspondent banks.
Question 6: A company experiences a fraudulent ACH debit to its account. Under NACHA rules, what is the standard return timeframe for a corporate account claiming unauthorized debit?
- 24 hours
- 2 banking days
- 60 calendar days (Correct answer)
- 6 months
Correct answer: 60 calendar days
NACHA rules allow corporate account holders 60 calendar days to dispute and return unauthorized ACH debits.
Question 7: FedNow, launched in 2023, is best described as:
- A Federal Reserve check clearing service
- An instant payment service enabling 24/7 real-time interbank settlement (Correct answer)
- A replacement for Fedwire large-value wire transfers
- A blockchain-based central bank digital currency
Correct answer: An instant payment service enabling 24/7 real-time interbank settlement
FedNow is the Federal Reserve's instant payment rail enabling banks to send and receive real-time payments with immediate settlement around the clock.
CTP Payment Systems and Technology 2
Which payment rail is best suited for sending a large corporate payment that must settle the same day with immediate finality?