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 role of a 'payment facilitator' (PayFac) in the merchant acquiring ecosystem?
Answer: It sponsors merchants under its own master merchant account, handling onboarding and settlement
A PayFac aggregates sub-merchants under its master merchant account, enabling faster onboarding and taking on liability for those merchants.
Which concept describes the practice of using a single transaction to offset obligations between multiple counterparties, reducing gross settlement to a net amount?
Answer: Multilateral netting
Multilateral netting consolidates obligations among multiple parties so only net positions are settled, reducing liquidity needs and credit exposure.
What distinguishes a 'closed-loop' payment system from an 'open-loop' payment system?
Answer: Closed-loop systems are usable only within a specific merchant or network; open-loop systems are accepted broadly
Closed-loop systems (e.g., Starbucks gift cards) are accepted only within a defined network, while open-loop systems (e.g., Visa) are accepted across many merchants.
In the context of card networks, what is a 'floor limit'?
Answer: A transaction value threshold below which offline authorization may be accepted without real-time approval
A floor limit allows merchants to accept transactions up to a specified amount without seeking online authorization, used historically in environments with limited connectivity.
Which NACHA rule category addresses the requirements that originators must obtain proper consumer authorization before initiating ACH debit entries?
Answer: Authorization Requirements
NACHA's Authorization Requirements rules mandate that originators obtain written or verifiable authorization from consumers before pulling funds via ACH debit.
What is 'payment latency' and why does it matter to risk managers?
Answer: The delay between a transaction's authorization and its final settlement, which creates exposure windows for fraud and reversals
Payment latency is the gap between authorization and settlement; during this window, funds are not yet final, creating risk of fraud losses, reversals, or counterparty default.
Which of the following is an example of a 'push-to-card' payment use case?
Answer: An insurance company disbursing a claim payment directly to a policyholder's Visa card
Push-to-card payments use networks like Visa Direct or Mastercard Send to push funds to a recipient's debit or prepaid card in near real time.