CFP Digital Payments & Financial Services 2 — Questions and Answers
Question 1: Which payment rail is most commonly used for real-time gross settlement (RTGS) of high-value interbank transactions in the US?
- ACH
- Fedwire (Correct answer)
- RTP
- SWIFT
Correct answer: Fedwire
Fedwire Funds Service is the Federal Reserve's RTGS system used for large-value, time-critical interbank settlements in the US.
Question 2: A merchant notices higher chargeback rates on card-not-present transactions compared to card-present. What is the PRIMARY reason?
- Higher interchange fees online
- Absence of physical card verification and PIN (Correct answer)
- Slower settlement timelines
- Currency conversion costs
Correct answer: Absence of physical card verification and PIN
Card-not-present transactions lack physical authentication (chip, PIN, signature), making them more susceptible to fraud and disputed chargebacks.
Question 3: What does the term 'interchange fee' refer to in the card payment ecosystem?
- Fee charged by the card network to the merchant
- Fee paid by the acquiring bank to the issuing bank per transaction (Correct answer)
- Annual fee charged to cardholders
- Currency conversion fee on international transactions
Correct answer: Fee paid by the acquiring bank to the issuing bank per transaction
Interchange fees are paid by the merchant's acquiring bank to the cardholder's issuing bank for each transaction processed.
Question 4: Under Regulation E in the US, how many business days does a consumer have to report an unauthorized electronic fund transfer to limit liability to $50?
- 2 business days (Correct answer)
- 10 business days
- 30 calendar days
- 60 calendar days
Correct answer: 2 business days
Under Reg E, reporting within 2 business days of learning about the loss caps liability at $50; delays increase potential liability.
Question 5: Which ISO standard defines the message format used in most card payment and ATM networks globally?
- ISO 27001
- ISO 8583 (Correct answer)
- ISO 20022
- ISO 31000
Correct answer: ISO 8583
ISO 8583 is the international standard for financial transaction card-originated interchange messaging used by Visa, Mastercard, and ATM networks.
Question 6: A fintech enables split-the-bill payments by routing funds simultaneously to multiple recipients from one transaction. What payment feature does this leverage?
- Multi-currency wallets
- Disbursement or payouts API (Correct answer)
- Micropayment channels
- Standing order instructions
Correct answer: Disbursement or payouts API
Disbursement or payouts APIs allow platforms to distribute funds from a single inbound payment to multiple recipients in one workflow.
Question 7: What is the key distinction between a 'closed-loop' and an 'open-loop' payment system?
- Closed-loop systems settle in real time; open-loop systems do not
- Closed-loop systems are usable only within a single network; open-loop systems work across multiple networks (Correct answer)
- Closed-loop systems require bank accounts; open-loop do not
- Closed-loop systems charge no interchange; open-loop systems always charge interchange
Correct answer: Closed-loop systems are usable only within a single network; open-loop systems work across multiple networks
Closed-loop systems (e.g., Starbucks app, gift cards) are accepted only within the issuer's own network, while open-loop systems (e.g., Visa debit) work across any accepting merchant.
CFP Digital Payments & Financial Services 2
Which payment rail is most commonly used for real-time gross settlement (RTGS) of high-value interbank transactions in the US?