CPP CPP Treasury & Cash Management in Payments

Question 1

What is 'float' in the context of payment treasury management?

Accepted Answer

The difference between a company's book balance and bank balance

Answer

Float in treasury refers to the difference between the company's internal book balance and the actual bank ledger balance, created by the delay between recording and clearing payments.

Question 2

What is a 'merchant reserve account'?

Accepted Answer

Funds held by the acquirer as security against future chargebacks or losses

Answer

A merchant reserve account is a portion of settlement funds withheld by the acquiring bank to cover potential chargebacks, refunds, or merchant default.

Question 3

What does 'next-day funding' mean for a payment service provider?

Accepted Answer

Settlement of card transaction proceeds is deposited into the merchant's bank account the business day after the transaction

Answer

Next-day funding means the acquirer or PSP deposits the merchant's net settlement proceeds into their bank account on the following business day after the processing day closes.

Question 4

In treasury management, what is 'concentration banking'?

Accepted Answer

Consolidating funds from multiple accounts into a single master account to optimize cash visibility and investment

Answer

Concentration banking (or cash concentration) sweeps balances from subsidiary or regional accounts into a central master account, improving liquidity management and reducing idle cash.

Question 5

What is a 'rolling reserve' in merchant acquiring?

Accepted Answer

A percentage of each settlement held for a defined period before release to the merchant

Answer

A rolling reserve withholds a percentage of daily settlements (e.g., 5–10%) and releases the oldest held amounts after a set period (e.g., 180 days), creating a continuously rolling collateral pool.

CPP - Certified Payment Professional Practice Test

CPP - Certified Payment Professional Practice Test

CPP CPP Treasury & Cash Management in Payments