APRP Payment Systems 2

Question 1

Which network rule governs the time frame within which an issuer must respond to an authorization request in card payment systems?

Accepted Answer

Authorization response time limit

Answer

Network rules specify authorization response time limits to ensure timely approval or decline decisions during card transactions.

Question 2

In ACH payment processing, what is the primary function of an ODFI (Originating Depository Financial Institution)?

Accepted Answer

It originates ACH entries on behalf of its customers and assumes responsibility for them

Answer

The ODFI initiates ACH entries at the request of its originators and is responsible for the entries it submits to the ACH network.

Question 3

Which payment rail is most commonly used for large-value, time-critical interbank transfers in the United States?

Accepted Answer

Fedwire Funds Service

Answer

Fedwire is the Federal Reserve's real-time gross settlement system used for large-value, time-critical transfers between financial institutions.

Question 4

What does 'settlement risk' refer to in the context of payment systems?

Accepted Answer

The risk that one party will fail to deliver on its obligation after the counterparty has already fulfilled theirs

Answer

Settlement risk, also called Herstatt risk, occurs when one party has already settled but the counterparty defaults before completing its leg of the transaction.

Question 5

A merchant's payment processor offers 'interchange-plus' pricing. What does this pricing model mean?

Accepted Answer

The processor passes through the actual interchange cost plus a fixed markup

Answer

Interchange-plus pricing passes the actual interchange fee set by the card network to the merchant, plus a separate transparent markup from the processor.

APRP - Accredited Payments Risk Professional Practice Test

APRP - Accredited Payments Risk Professional Practice Test

APRP Payment Systems 2