AAP Flashcards

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AAP Flashcards A company or individual that has been authorized by the Receiver to initiate either a credit or debit ACH entry to their account. - ✔✔Originator A financial institution that rece ... ives payment instructions from Originators and forwards the entries to the ACH Operator. - ✔✔Originating Depository Financial Institution (ODFI) ACH Payment Transaction are accumulated throughout the day, sent to the ACH Operator, sorted by destination, and transmitted in groups at specified times. - ✔✔Batch Process, store-and-forward system An individual or a company that has authorized the Originator to initiate an ACH entry to their account with the RDFI. - ✔✔Receiver Financial institution identified by the routing number encoded on the MICR lineof a check. - ✔✔Paying Bank (Payor's Depository Financial Institution) A financial institution that receives ACH entries from the ACH Operator and posts the entries to the accounts of its depositors. - ✔✔Receiving Depository Financial Institution (RDFI) The central clearing facility for ACH transactions. - ✔✔ACH Operator A voluntary association of depository institutions that facilitate the clearing of checks or electronic items through the direct exchange of funds between memebers. - ✔✔Clearing House An entity that issues a credit or debit card to the Cardholder. - ✔✔Card Issuer The party to whom a check is made payable. - ✔✔Payee A person or entity that is issued a credit or debit account that is accessed through the use of a card. - ✔✔Cardholder Legal framework for the ACH Network - ✔✔1. ACH Rules 2. UCC 4A 3. Reg E 4. Reg CC The national trade association for electronic payments, which establishes the rules, industry standards and procedures governings the exchange of commercial ACH payments by depository finacial institutions. - ✔✔NACHA - The Electronic Payments Network An optional, variable format field of the MICR line of a check. - ✔✔Auxiliary On-Us Field Payment system to which net settlement applies. - ✔✔ACH Payment System Payment system governed by the Expedited Funds Availability Act, UCC 3, UCC 4, OFAC, Reg CC, and Reg J - ✔✔Check Payment System Payment system to which real-time, gross settlement applies. - ✔✔Wire Transfer Payment System Name the clearing and settlement methods for checks. - ✔✔1. Direct Presentment 2. Federal Reserve Bank 3. Clearing House 4. Correspondent Payment system governed by the Electron Funds Transfer Act, Reg Z, Visa, Mastercard, and Fair Credit Billing. - ✔✔Card Payment System Payment system governed by UCC 4A, OFAC, Reg J, Reg CC, OCC 235, and FRB Risk Policy. - ✔✔Wire Transfer Payment System Payment system governed by the ACH Rules, UCC 4, UCC 4A, Electronic Funds Transfer Act, Reg E, The Right to Financial Privacy, Reg D, and Reg CC. - ✔✔ACH Network Two Service provided by Fedwire - ✔✔1. Funds Service 2. Securities Service The basic types of checks in the collection cycle. - ✔✔1. On-us checks 2. Transit checks SCOPE - ✔✔Special Committee On Paperless Entries Payment system whose participants include the Payor, Payee, Bank of First Deposit, Correspondent Bank/Bankers' Bank/Clearing House, and Payor's Depository Financial Institution. - ✔✔Check Payment System Payment system whose participants include the Cardholder, Card Issuer, Acquirer, Card Network and Merchant. - ✔✔Card Payment System An entity that agrees to accept debit, credit, or stored value cards in exchange for the sale of goods and sevices. - ✔✔Merchant Provides switching facilities for the routing of credit, debit and ATM card transactions between Aquirers and Issuers. - ✔✔Card Processing Network A batch processing, store-and-forward system governed by the rules of NACHA which provides for the inter-financial institution clearing of electronic entries for participating financial institutions. - ✔✔ACH Network A real-time credit transfer system used for interbank settlement of transactions, such as Fed fund purchases, corporate payments and other large-value payments. - ✔✔Fedwire Funds Service MICR - ✔✔Magnetic Ink Character Recognition The first bank to which a check is deposited or transferred. - ✔✔Bank of First Deposit (Payee's Depository Financial Institution) The party obligated to pay on a check. - ✔✔Payor Payment systems whose participants include the Originator, Originator's Depository Institution, Reserve Banks, Beneficiary's Depository Institution, and Beneficiary. - ✔✔Fedwire Funds and Securities Services The year and location of the first ACH Association. - ✔✔1971 - California The year the routing Number Policy was adopted. - ✔✔1911 The year the Federal Reserve System was created. - ✔✔1913 The year NACHA was formed. - ✔✔1974 1. Federal Reserve Bank (FRB) 2. Electronic Payments Network (EPN) - ✔✔Name the two ACH Operators The financial institution that contracts with a merchant to initiate payment requests to a credit card association or credit card company in the context of credit and debit card payments. - ✔✔Acquirer/Processor 1) Overall customer relationship 2) Individual subsidiaries/divisions of company 3) Historical or predicted dollar value of files processed 4) Specific ACH Application - ✔✔Exposure Limits criteria should be based on. 1) Personnel practices 2) Physical security 3) Data security 4) Change control 5) Operational controls - ✔✔Tool to combat fraud risk Controls systemic risk in the ACH Network. - ✔✔Federal Reserve Bank (FRB) Risk that a party to a transaction cannot provide the necessary funds as contracted, for settlement to take place on the scheduled date. - ✔✔Credit Risk Risk that a transaction is altered or delayed due to an unintentional error. - ✔✔Operational Risk Risk that a payment transaction will be initiated or altered in an attempt to misdirect or misappropriate funds. - ✔✔Fraud Risk Risk that the inability or unwillingness of one funds transfer system participant to settle its commitments, which causes other participantes tobe unableto settle their commitments. - ✔✔Systemic Risk ODFI's must utilize these to establish the identity of each Originator that uses an Unsecured Electronic Network to enter into a contractual relationship with the ODFI for the origination of ACH transactions. - ✔✔Commercially reasonable methods Method using one type of authentication credential - ✔✔Single-Factor Authentication Method using two types of authenticatin credentials - ✔✔Two-Factor Authentication Method using two or more types of authentication credentials - ✔✔Multi-Factor Authentication Party responsible for controling Credit Risk in the ACH Network - ✔✔ODFI A method used to mitigate credit risk, also required by the ACH Rules - ✔✔Exposure Limits Parties r [Show More]

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