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Payment Systems and Technology Flashcards

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  1. Which payment rail is best suited for sending a large corporate payment that must settle the same day with immediate finality?

    Answer: Fedwire Funds Service

    Fedwire provides real-time gross settlement (RTGS) with immediate, irrevocable finality, making it ideal for large-value same-day payments.

  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?

    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.

  3. What is the primary risk distinguishing ACH payments from Fedwire payments for a corporate treasurer?

    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.

  4. The RTP network operated by The Clearing House differs from ACH in that RTP:

    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.

  5. Which SWIFT message type is used for a standard customer credit transfer between financial institutions?

    Answer: MT103

    MT103 is the SWIFT single customer credit transfer message used to instruct cross-border payments between correspondent banks.

  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?

    Answer: 60 calendar days

    NACHA rules allow corporate account holders 60 calendar days to dispute and return unauthorized ACH debits.

  7. FedNow, launched in 2023, is best described as:

    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.