CPP CPP Card Networks & Interchange 2 — Questions and Answers
Question 1: What is a chargeback in card payment processing?
- An additional surcharge added by the merchant
- A forced transaction reversal initiated by the issuing bank on behalf of the cardholder (Correct answer)
- A fee charged by the acquirer for high transaction volume
- A penalty assessed by the card network for fraud
Correct answer: A forced transaction reversal initiated by the issuing bank on behalf of the cardholder
A chargeback is a forced reversal of a card transaction initiated by the issuing bank, typically when a cardholder disputes a charge.
Question 2: What is the typical timeframe a cardholder has to dispute a transaction and initiate a chargeback under Visa rules?
- 30 days from transaction date
- 60 days from statement date
- 120 days from transaction date (Correct answer)
- 180 days from transaction date
Correct answer: 120 days from transaction date
Under Visa rules, cardholders generally have up to 120 days from the transaction date (or expected delivery date for goods) to file a dispute.
Question 3: What is an Issuer in the card payment ecosystem?
- The company that manufactures physical payment cards
- The bank or financial institution that provides payment cards to consumers (Correct answer)
- The processor that handles transaction routing
- The merchant's bank that accepts card payments
Correct answer: The bank or financial institution that provides payment cards to consumers
An Issuer (issuing bank) is the financial institution that provides payment cards to consumers and extends credit or manages funds on their behalf.
Question 4: What is EMV technology and what problem does it primarily solve?
- Encryption technology that secures online transactions
- Chip-and-PIN card technology that reduces counterfeit card fraud at point of sale (Correct answer)
- A tokenization standard for mobile payments
- A biometric authentication system for cards
Correct answer: Chip-and-PIN card technology that reduces counterfeit card fraud at point of sale
EMV (Europay, Mastercard, Visa) chip technology generates a unique transaction code for each purchase, making counterfeit card fraud at the point of sale much more difficult.
Question 5: What is the liability shift associated with EMV chip card adoption?
- Card networks absorb all fraud losses after EMV adoption
- Liability for counterfeit card fraud shifts to the party that has not adopted EMV technology (Correct answer)
- Merchants are always liable for fraud regardless of EMV
- Issuers assume all liability once EMV is deployed
Correct answer: Liability for counterfeit card fraud shifts to the party that has not adopted EMV technology
The EMV liability shift means that if a chip card is used at a non-chip terminal, liability for counterfeit fraud shifts from the issuer to the merchant/acquirer.
Question 6: What is a card-not-present (CNP) transaction?
- A transaction where the physical card is not inserted into a terminal (Correct answer)
- Any transaction processed without real-time authorization
- A transaction where the cardholder's identity is not verified
- A declined transaction due to card expiration
Correct answer: A transaction where the physical card is not inserted into a terminal
A card-not-present (CNP) transaction occurs when the physical card is not present at the point of sale, such as in e-commerce, mail order, or phone order transactions.
CPP CPP Card Networks & Interchange 2
What is a chargeback in card payment processing?