Digital Payments & Financial Services Flashcards
7 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Digital Payments & Financial Services flashcards as text
Which regulatory body oversees the ACH network and establishes its operating rules in the United States?
Answer: NACHA
NACHA (National Automated Clearing House Association) governs the ACH network by publishing and enforcing the NACHA Operating Rules.
A fintech startup wants to offer FDIC-insured deposit accounts without becoming a bank. What arrangement enables this?
Answer: Banking-as-a-Service (BaaS) partnership with an FDIC-insured sponsor bank
BaaS allows fintechs to offer FDIC-insured deposits by partnering with chartered banks that hold the deposits and regulatory charter.
What is 'dynamic currency conversion' (DCC) in international card transactions?
Answer: A service offering the cardholder the option to pay in their home currency at a foreign merchant
DCC lets cardholders at foreign merchants pay in their home currency, but typically at unfavorable exchange rates with added fees benefiting the merchant or acquirer.
In mobile payment security, what does 'biometric authentication' primarily protect against compared to a PIN?
Answer: Shoulder surfing and stolen credential reuse
Biometric authentication prevents shoulder surfing and stolen PIN reuse because the biometric trait (fingerprint, face) cannot be easily observed or replicated.
Which payment innovation does the FedNow Service primarily represent for the US financial system?
Answer: A real-time interbank payment infrastructure available 24/7/365
FedNow is the Federal Reserve's real-time payment and settlement service, enabling instant fund transfers between banks at any hour, any day.
An e-commerce platform collects payments on behalf of sub-merchants and disburses funds. Under card network rules, this model is called:
Answer: Payment Facilitator (PayFac)
A Payment Facilitator (PayFac) aggregates sub-merchants under its own merchant account, collecting payments and disbursing funds, assuming underwriting responsibility.
What is 'velocity checking' in payment fraud prevention?
Answer: Monitoring the frequency and volume of transactions from an account over time to detect anomalies
Velocity checking flags suspicious patterns by tracking how many transactions an account initiates within a given period, triggering alerts when thresholds are exceeded.