Payment Systems and Technology Flashcards

A treasury department is evaluating whether to adopt a blockchain-based payment solution. Which characteristic of distributed ledger technology is most relevant to settlement finality?

Answer: Immutability of confirmed transactions once written to the ledger

Once confirmed on a blockchain ledger, transactions are cryptographically immutable, providing a form of settlement finality that cannot be unilaterally reversed.

Tokenization of payment card data primarily benefits corporate card programs by:

Answer: Replacing sensitive card numbers with non-sensitive tokens to reduce breach impact

Tokenization substitutes actual card numbers with unique tokens so that even if intercepted, the data cannot be used to make unauthorized charges.

Which emerging payment technology allows buyers to pay vendors directly from bank accounts via API, bypassing card networks entirely?

Answer: Open banking / Pay-by-bank (account-to-account payments)

Open banking APIs enable account-to-account (A2A) pay-by-bank transfers that bypass card networks, reducing interchange costs for both parties.

Central bank digital currencies (CBDCs) are most likely to impact corporate treasury by:

Answer: Enabling programmable, instant settlement of interbank transactions with reduced counterparty risk

CBDCs can enable programmable money with smart contract features and real-time RTGS-level settlement, potentially reducing counterparty and settlement risk in large transactions.

When a company implements an in-house bank (IHB), which payment efficiency is typically achieved for intercompany transactions?

Answer: Intercompany payments are settled via internal book transfers without using external bank rails

An IHB nets intercompany obligations and settles them as internal book entries, avoiding external payment fees and reducing liquidity fragmentation.

What does 'payment netting' achieve in a multinational treasury structure?

Answer: It offsets intercompany payables and receivables so only the net amount is settled externally

Netting consolidates intercompany payables and receivables, reducing the number and gross value of external payments and lowering transaction costs and FX exposure.

PCI DSS (Payment Card Industry Data Security Standard) compliance is relevant to treasury operations when the company:

Answer: Processes, stores, or transmits cardholder data as part of card payment acceptance or issuance

PCI DSS applies to any entity that processes, stores, or transmits payment card data, requiring security controls to protect cardholder information.