APRP Payment Systems & Technology 5 — Questions and Answers
Question 1: Under Visa's dispute resolution framework, what is the term for a merchant's response that challenges a chargeback and provides evidence the original transaction was valid?
- Arbitration
- Representment (Correct answer)
- Pre-arbitration
- Compliance filing
Correct answer: Representment
Representment is the process by which a merchant (through their acquirer) re-presents a transaction to rebut a cardholder's chargeback with supporting documentation.
Question 2: Which cryptographic technique is used in HSMs (Hardware Security Modules) to protect PIN blocks during ATM transactions?
- AES-256 in GCM mode
- Triple DES (3DES) with zone-key encryption (Correct answer)
- RSA-2048 asymmetric encryption
- SHA-256 hashing
Correct answer: Triple DES (3DES) with zone-key encryption
Triple DES with zone-key encryption has been the standard for encrypting PIN blocks as they traverse payment networks, though migration to AES is underway.
Question 3: A payment processor experiences a system outage and approves transactions using stored authorization rules without contacting the card issuer. This is called:
- Stand-in processing (Correct answer)
- Fallback processing
- Force-post authorization
- Offline deferred capture
Correct answer: Stand-in processing
Stand-in processing allows the card network to approve transactions on behalf of an issuer using predefined parameters when the issuer's authorization system is unavailable.
Question 4: In open banking frameworks, what protocol standard is most commonly used to allow third-party providers to access bank account data with customer consent?
- SOAP/WSDL
- OAuth 2.0 with REST APIs (Correct answer)
- ISO 8583 over TCP/IP
- SWIFT MX (ISO 20022)
Correct answer: OAuth 2.0 with REST APIs
Open banking APIs typically use OAuth 2.0 for delegated authorization and REST/JSON for data exchange, as mandated by frameworks like PSD2 in Europe and the UK Open Banking Standard.
Question 5: What risk does 'transaction laundering' (undisclosed aggregation) pose that differs from standard merchant fraud?
- It results in higher interchange rates for the acquirer
- It conceals the true nature of processed transactions, potentially including illegal goods or services (Correct answer)
- It bypasses EMV authentication requirements
- It inflates the acquirer's chargeback ratio above VAMP thresholds
Correct answer: It conceals the true nature of processed transactions, potentially including illegal goods or services
Transaction laundering hides the identity and nature of the actual merchant, enabling illegal businesses to process payments through a seemingly legitimate merchant account.
Question 6: Which NACHA SEC code is used for recurring consumer mortgage and insurance payments authorized via a written agreement?
- WEB
- TEL
- PPD (Correct answer)
- CCD
Correct answer: PPD
PPD (Prearranged Payment and Deposit) is the SEC code for ACH debits or credits to consumer accounts authorized via written, standing authorization.
Question 7: A fintech company routes card transactions through multiple acquirers based on transaction size and geography to optimize cost and approval rates. This practice is known as:
- Interchange optimization
- Payment orchestration (Correct answer)
- Dynamic currency conversion
- Split settlement
Correct answer: Payment orchestration
Payment orchestration involves intelligently routing transactions across multiple processors, gateways, and acquirers to maximize approval rates and minimize processing costs.
APRP Payment Systems & Technology 5
Under Visa's dispute resolution framework, what is the term for a merchant's response that challenges a chargeback and provides evidence the original transaction was valid?