CCM Payment Systems & Technology Flashcards

Tokenization in payment security replaces sensitive card data with:

Answer: A randomly generated token with no exploitable relationship to the original data

Tokenization substitutes sensitive payment card data with a randomly generated token that has no mathematical relationship to the original data and is useless to fraudsters if intercepted.

Bank account reconciliation in a treasury context is primarily used to:

Answer: Match internal ledger balances with bank statement transactions to identify discrepancies

Bank reconciliation compares a company's internal accounting records to bank statements to detect outstanding items, errors, or unauthorized transactions.

The primary advantage of a netting arrangement for intercompany payments is:

Answer: It reduces the volume and cost of cross-border fund transfers between subsidiaries

Netting consolidates intercompany payables and receivables so only net amounts are transferred, significantly reducing transaction volume, banking fees, and FX conversion costs.

NACHA rules and operating standards govern which US payment system?

Answer: ACH Network

NACHA (National Automated Clearing House Association) establishes the rules, standards, and procedures that govern the ACH Network in the United States.

Which best describes the purpose of a Treasury Management System (TMS)?

Answer: To provide an integrated platform for cash visibility, payments, and financial risk management

A TMS integrates cash management, payment processing, financial risk management, and reporting into a single platform, giving treasury teams centralized visibility and control.

Multi-bank cash pooling allows a corporate treasurer to:

Answer: Consolidate balances across multiple banks to optimize interest income and borrowing costs

Cash pooling consolidates subsidiary balances across banks — either physically via sweeps or notionally via virtual offsets — so the group earns interest on the net position and minimizes borrowing.