Payment Systems Flashcards
7 cards from real APRP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Payment Systems flashcards as text
What is the primary purpose of a 'reserve account' held by an acquirer from a high-risk merchant?
Answer: To protect the acquirer against potential chargeback losses and fraud from that merchant
Reserve accounts are a financial buffer that acquirers maintain from high-risk merchants' proceeds to cover potential future chargebacks or fraud losses.
In EMV chip card transactions, what is 'offline data authentication' (ODA) designed to verify?
Answer: That the chip card is genuine and not a counterfeit
Offline data authentication uses cryptographic techniques (SDA, DDA, or CDA) to verify the chip card's authenticity without requiring a connection to the issuer.
What does 'interchange optimization' mean for a merchant accepting card payments?
Answer: Ensuring transactions qualify for the lowest possible interchange category through proper data submission
Interchange optimization involves submitting complete transaction data (e.g., Level 2 or Level 3 data for B2B cards) to qualify transactions for lower interchange tiers.
Which body in the US payment system is responsible for regulating large-value payment systems under the Dodd-Frank Act as 'systemically important financial market utilities' (SIFMUs)?
Answer: Financial Stability Oversight Council (FSOC) with oversight by the Fed, SEC, or CFTC depending on the FMU
Dodd-Frank designated certain FMUs as SIFMUs, subject to enhanced oversight by FSOC with primary supervision by the Fed, SEC, or CFTC based on function.
What is a 'batch file' in the context of ACH processing?
Answer: A file containing multiple ACH entries grouped together for submission to the ACH network
An ACH batch file groups multiple payment entries (credits or debits) into a single transmission sent to the ACH operator for processing.
In the card payment lifecycle, what happens during the 'clearing' phase?
Answer: Transaction details are exchanged between acquirer and issuer to reconcile and establish settlement obligations
Clearing is the post-authorization process where acquirers and issuers exchange transaction records through the card network to calculate net settlement positions.
Which risk type is most directly addressed by requiring merchants to implement 3D Secure (3DS) authentication for card-not-present transactions?
Answer: Fraud risk from unauthorized use of stolen card credentials in e-commerce
3DS adds an authentication step (e.g., OTP or biometric) in CNP transactions to verify the cardholder is legitimate, directly reducing fraud from stolen card data.