Payment Systems and Technology Flashcards

In a virtual account management (VAM) structure, what key treasury benefit does it provide over maintaining multiple physical bank accounts?

Answer: It consolidates liquidity notionally while retaining sub-account visibility without moving funds physically

VAM creates a hierarchy of virtual sub-accounts under a master account, providing visibility and allocation without the cost of maintaining separate physical accounts.

What is the purpose of a payment factory in a multinational treasury operation?

Answer: To centralize payment execution across subsidiaries through a single platform and bank relationship

A payment factory centralizes and standardizes payment processing for multiple entities, improving control, reducing bank fees, and enabling payment netting.

Which technology standard enables treasury management systems to connect directly to banks for automated payment initiation and balance reporting?

Answer: Host-to-host connectivity / SFTP

Host-to-host (H2H) connectivity via SFTP or direct API links the corporate TMS to bank systems for straight-through payment processing and real-time reporting.

ISO 20022 is significant for corporate treasury because it:

Answer: Provides a richer, standardized data format enabling better payment reconciliation and remittance information

ISO 20022's structured data format carries far more remittance detail than older formats, dramatically improving straight-through reconciliation rates.

A company wants to reduce exposure to check fraud. Which electronic payment control is most effective as a direct replacement for paper checks?

Answer: Virtual card (single-use account numbers)

Virtual cards generate unique, single-use account numbers for each transaction, eliminating the fraud exposure inherent in reusable check or card details.

SWIFT gpi (global payments innovation) was introduced primarily to address which pain point in cross-border payments?

Answer: Lack of transparency, speed, and end-to-end tracking in correspondent banking

SWIFT gpi provides a unique transaction reference (UETR) enabling banks and corporates to track cross-border payments in near real-time and confirm delivery.

When evaluating a TMS for payment processing, which integration capability is most critical to achieving straight-through processing (STP)?

Answer: Bidirectional ERP integration for automated payment file generation and bank statement import

Bidirectional ERP-TMS integration eliminates manual data entry by automatically generating payment files from approved invoices and importing bank statements for reconciliation.