CPP CPP Payment Networks & Card Scheme Rules 1 — Questions and Answers
Question 1: Which organization sets the rules and interchange fees for Visa transactions in the United States?
- Visa Inc. (Correct answer)
- The Federal Reserve
- NACHA
- The Card Issuer
Correct answer: Visa Inc.
Visa Inc. establishes the network rules, interchange fee schedules, and operating regulations that all Visa participants must follow.
Question 2: What is interchange in the context of card payments?
- A fee paid by the merchant's bank to the cardholder's issuing bank (Correct answer)
- A fee charged by the payment network to the cardholder
- A penalty assessed for chargebacks
- A monthly subscription fee for POS terminals
Correct answer: A fee paid by the merchant's bank to the cardholder's issuing bank
Interchange is the fee the acquiring bank pays to the issuing bank per transaction, compensating the issuer for credit risk and funding costs.
Question 3: What is a card scheme's 'honor all cards' rule?
- Merchants must accept all valid cards of that brand regardless of product type (Correct answer)
- Issuers must approve all transactions under $25
- Acquirers must settle all transactions within 24 hours
- Cardholders must sign receipts for all purchases
Correct answer: Merchants must accept all valid cards of that brand regardless of product type
The honor-all-cards rule requires merchants who accept one Visa (or Mastercard) product to accept all valid Visa (or Mastercard) cards presented by customers.
Question 4: What does 'interchange plus' pricing mean for a merchant?
- The merchant pays the actual interchange rate plus a fixed acquirer markup (Correct answer)
- The merchant pays a flat percentage regardless of card type
- The merchant pays interchange only on debit cards
- The merchant pays a tiered rate based on monthly volume
Correct answer: The merchant pays the actual interchange rate plus a fixed acquirer markup
Interchange plus (cost-plus) pricing passes the exact interchange cost through to the merchant with a transparent, fixed processor margin added on top.
Question 5: A Mastercard chargeback reason code related to 'Fraud' falls under which dispute category?
- 10 Series (Correct answer)
- 20 Series
- 40 Series
- 50 Series
Correct answer: 10 Series
Mastercard organizes chargeback reason codes into series, with the 10 series covering fraud-related disputes such as 10.1 (EMV liability shift) and 10.4 (other fraud).
Question 6: What is the primary purpose of a payment network's BIN (Bank Identification Number) range?
- To identify the issuing institution and card product associated with a card (Correct answer)
- To encrypt cardholder data during transmission
- To route transactions to the correct acquiring bank
- To calculate the applicable interchange rate
Correct answer: To identify the issuing institution and card product associated with a card
The BIN (first 6–8 digits of a card number) identifies the issuer and card product, enabling routing, risk checks, and interchange classification.
CPP CPP Payment Networks & Card Scheme Rules 1
Which organization sets the rules and interchange fees for Visa transactions in the United States?