CPP CPP Payment Networks & Card Scheme Rules 2 — Questions and Answers
Question 1: What is the 'liability shift' that occurred with EMV chip card adoption in the US in 2015?
- Fraud liability moves to whichever party (issuer or merchant) does not support EMV (Correct answer)
- Merchants are always liable for all card-present fraud
- Issuers bear all liability for counterfeit card fraud
- Networks absorb liability for all EMV chip failures
Correct answer: Fraud liability moves to whichever party (issuer or merchant) does not support EMV
The EMV liability shift means that if a counterfeit chip card is used at a non-chip terminal, the merchant (acquirer) is liable; if a mag-stripe card is used at a chip terminal, the issuer remains liable.
Question 2: Which term describes the difference between a card's authorization amount and the final settled amount?
- Completion delta
- Authorization hold (Correct answer)
- Reversal variance
- Settlement variance
Correct answer: Authorization hold
An authorization hold reserves funds on the cardholder's account; the final settlement may differ (e.g., tips at restaurants), and the difference is resolved during clearing.
Question 3: What is a 'floor limit' in card acceptance?
- The maximum transaction amount a merchant can process without obtaining an authorization (Correct answer)
- The minimum monthly volume required to maintain a merchant account
- The lowest interchange rate available to a merchant
- The maximum chargeback ratio before a merchant is terminated
Correct answer: The maximum transaction amount a merchant can process without obtaining an authorization
A floor limit is a threshold below which some merchants (typically in specific offline environments) may complete a transaction without real-time authorization.
Question 4: Under Visa's dispute resolution process, what is the first step a cardholder must typically take before a chargeback is filed?
- Contact the merchant directly to attempt resolution (Correct answer)
- File a police report
- Notify the payment network
- Request a new card from the issuer
Correct answer: Contact the merchant directly to attempt resolution
Visa's dispute guidelines require cardholders to first attempt to resolve the issue with the merchant before the issuer can file a chargeback on their behalf.
Question 5: What does 'acquirer' mean in the card payment ecosystem?
- The financial institution that processes transactions and holds the merchant's account (Correct answer)
- The bank that issued the cardholder's card
- The payment network connecting issuers and merchants
- The company that manufactures payment terminals
Correct answer: The financial institution that processes transactions and holds the merchant's account
An acquirer (or acquiring bank) is the financial institution that contracts with merchants to process card transactions and deposit funds into the merchant's account.
Question 6: What is a 'retrieval request' in the chargeback process?
- An issuer's request for a copy of the original transaction receipt before filing a chargeback (Correct answer)
- A merchant's request to reverse an authorization
- A network request to retrieve encrypted cardholder data
- A cardholder's request to retrieve a prior statement
Correct answer: An issuer's request for a copy of the original transaction receipt before filing a chargeback
A retrieval request (or copy request) is the issuer asking the acquirer for documentation of the original transaction, often a precursor step before filing a formal chargeback.
CPP CPP Payment Networks & Card Scheme Rules 2
What is the 'liability shift' that occurred with EMV chip card adoption in the US in 2015?