Ecommerce Ecommerce Payments and Security 2 — Questions and Answers
Question 1: Which payment method allows customers to buy now and pay in installments, often interest-free?
- ACH transfer
- Buy Now Pay Later (BNPL) (Correct answer)
- Wire transfer
- Prepaid debit card
Correct answer: Buy Now Pay Later (BNPL)
BNPL services (e.g., Afterpay, Klarna, Affirm) split a purchase into installment payments, often with no interest if paid on time.
Question 2: What is tokenization in ecommerce payment processing?
- Converting currency at the point of sale
- Replacing sensitive card data with a randomly generated token for storage (Correct answer)
- Issuing loyalty reward tokens to repeat buyers
- Encrypting checkout page HTML
Correct answer: Replacing sensitive card data with a randomly generated token for storage
Tokenization replaces actual card numbers with a unique, non-sensitive token, reducing risk if the merchant's database is breached.
Question 3: What is the CVV/CVC code on a credit card primarily used for?
- To identify the card network (Visa, Mastercard)
- To verify the physical card is present during card-not-present transactions (Correct answer)
- To authorize recurring subscription payments
- To set the spending limit on the card
Correct answer: To verify the physical card is present during card-not-present transactions
The CVV/CVC is a 3-4 digit security code that helps verify the customer physically possesses the card during online purchases.
Question 4: What does a merchant account do in the ecommerce payment flow?
- Stores customer shipping preferences
- Holds funds from card transactions before they are transferred to the merchant's bank (Correct answer)
- Processes refund requests automatically
- Manages product inventory levels
Correct answer: Holds funds from card transactions before they are transferred to the merchant's bank
A merchant account is a specialized bank account that temporarily holds authorized transaction funds before settling to the business's bank.
Question 5: Which US regulation governs how ecommerce businesses must handle consumer financial data and privacy?
- HIPAA
- COPPA
- GLBA (Gramm-Leach-Bliley Act) (Correct answer)
- OSHA
Correct answer: GLBA (Gramm-Leach-Bliley Act)
The GLBA requires financial institutions, including some ecommerce operators, to safeguard customers' private financial information.
Question 6: What is a payment processor's role distinct from a payment gateway?
- It encrypts the checkout page
- It communicates with the card networks and banks to authorize and settle transactions (Correct answer)
- It stores payment tokens for recurring billing
- It provides the merchant with a fraud score
Correct answer: It communicates with the card networks and banks to authorize and settle transactions
The payment processor (e.g., Stripe, Square) handles the back-end communication with card networks and issuing banks to approve transactions.
Ecommerce Ecommerce Payments and Security 2
Which payment method allows customers to buy now and pay in installments, often interest-free?