Faster Payments Operations Overview

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Questions and Answers

What does the receiver FI do after receiving a message from RTP?

It sends the transaction instructions back to the sender.

It conducts validations to ensure correctness and security. (correct)

It creates a pacs.008 message to notify the sender.

It immediately informs the sender of the transaction status.

What action does RTP take during the settlement stage?

It validates that the response was received before processing. (correct)

It generates a pacs.008 message for the sender.

It holds transactions until manual verification is completed.

It issues a notification to the receiver FI about the transaction.

What does the ‘message receiver confirmation’ indicate?

That the payment was rejected during processing.

That a manual review of the transaction is required.

That the funds are not yet available to the receiver.

That the transaction has been successfully settled. (correct)

Which process does the Sending FI NOT perform before sending a payment instruction to RTP?

Validates the response from RTP. (D) Signup and view all the answers

What happens if the response is not received by RTP within the time-out period?

RTP will notify the sender FI of the failed response. (D) Signup and view all the answers

What must be included by the receiver Financial Institution when accepting a request to return funds?

A reference to the original credit transfer’s unique ID (C) Signup and view all the answers

What must ODFIs ensure when initiating a Same Day ACH reversal?

The sender’s name reflects the original RDFI (A) Signup and view all the answers

Which code is associated with transactions deemed questionable by Same Day ACH standards?

Code R17 (D) Signup and view all the answers

What information is required for Mastercard's transaction identifier codes?

Transaction date, Trace ID code, BankNet reference number, and payment settlement date (B) Signup and view all the answers

What is recommended for ODFIs regarding monitoring and tracking transactions classified under Code R17?

Set reasonable monitoring and tracking parameters (B) Signup and view all the answers

What is a key responsibility of participants in the FedNow system concerning payment messages?

Validate messages before submission to the network. (B) Signup and view all the answers

Which of the following is NOT mentioned as a validation requirement for payment messages in FedNow?

Validating the participant's identity. (D) Signup and view all the answers

How does FedNow support liquidity management during payment processing?

It enables FI-to-FI liquidity management transfers. (A) Signup and view all the answers

What action is expected from participants when issues arise in the payment flow?

Sign off from receiving credit transfer messages. (A) Signup and view all the answers

What mechanism does RTP utilize to ensure participants are active on the system?

System-level messages. (D) Signup and view all the answers

Which step occurs immediately after the sender initiates a payment message?

The sender FI authenticates the sender (B) Signup and view all the answers

Which requirement is necessary for participants during non-Fedwire hours?

To establish liquidity transfer arrangements with each other. (D) Signup and view all the answers

What type of messages are used in RTP to confirm the status of payment messages?

Message status reports and confirmations. (C) Signup and view all the answers

What is one of the responsibilities of the sender's financial institution during the validation stage?

Earmarking funds for debit (D) Signup and view all the answers

What is a recommended practice for participants to avoid unnecessary message rejections?

Refer to a reliable time server. (B) Signup and view all the answers

What happens if the timeout period expires before the FedNow network receives a response from the receiver FI?

FedNow will notify the sender, aborting the transaction (A) Signup and view all the answers

Which of the following is NOT a part of the payment validation checks performed by the payer's FI?

Recipient notification (B) Signup and view all the answers

What is the primary function of the pacs.008 message in the payment transaction process?

To carry payment instructions from the sender's FI (B) Signup and view all the answers

What is required for FedNow to settle the payment after processing the pacs.002 message?

A valid response from the receiver FI within the timeout period (A) Signup and view all the answers

During which stage does the receiver FI process the pacs.008 message?

Validation stage (D) Signup and view all the answers

What does the term 'pacs.002' refer to in the context of the payment transaction process?

A response from the receiver FI to the pacs.008 message (C) Signup and view all the answers

What initiates a funding reversal request by the Transaction Initiator?

An unsuccessful payment transfer (A) Signup and view all the answers

Which message is used when a FedNow participant decides to honor a return request?

camt.056 (D) Signup and view all the answers

What condition must be met for a FedNow participant to return a payment?

The payment must have been rejected without prior acceptance. (C) Signup and view all the answers

What happens after the Sending FI receives a funding reversal transaction request?

It submits the request for approval or decline. (D) Signup and view all the answers

Which scenario allows a liquidity management transfer to be returned?

If it is deemed unnecessary by a participant. (C) Signup and view all the answers

How does the return request message follow the transaction processing in the FedNow Service?

It is processed as a customer credit transfer. (A) Signup and view all the answers

Which of the following statements about Faster Payments transactions is true?

Most transactions are final and irrevocable once settled. (B) Signup and view all the answers

In the context of returning funds, what does the pacs.004 message signify?

It indicates a payment return has been initiated. (C) Signup and view all the answers

What is the purpose of a 'notification of change' in the ACH Network?

To notify the ODFI of invalid or erroneous information. (C) Signup and view all the answers

Which of the following is NOT mentioned as a method to mitigate message rejections in Faster Payments?

Implementing automatic transaction reversals. (A) Signup and view all the answers

What must a sending FI do if FedNow does not receive the pacs.008 message?

Wait a minimum of 25 seconds before inquiring about its status. (D) Signup and view all the answers

Which of the following is a responsibility of the sending FI during the payment message flow?

Send a payment status request if the message is not found. (C) Signup and view all the answers

Which service specifically helps validate card eligibility for push-to-card transactions?

Mastercard Send. (B) Signup and view all the answers

What is a recommended analysis for participants in the payment network?

Analyzing transaction errors. (A) Signup and view all the answers

What should a sending FI do if FedNow indicates 'message is not found'?

Resend the message with the same previously used message ID. (A) Signup and view all the answers

Which aspect is emphasized in the Faster Payments networks regarding rejected messages?

Specific actions must be taken by each party involved. (D) Signup and view all the answers

Study Notes

Faster Payments Operations and Process Flows

Faster Payments systems require participants to follow specific procedures for originating and/or receiving messages, including testing, fraud prevention, compliance, participant availability, account validation, and message validation.
Participants need stable network connections, sufficient liquidity, and an active participant profile before sending or receiving transactions.

Requirements for Financial Institutions

FedNow: Participants must establish a participant profile aligned with their needs and risk tolerance. Continuous availability and immediate fund availability are required. Notification of system unavailability and monitoring/alerting capabilities are necessary. A robust information security program, including compliance with FedLine security, is expected, along with an annual compliance assessment. All messages require digital signatures.
RTP: Participants must follow operating rules and technical specifications, including testing and audited settlement account management, and sufficient funds to settle obligations. An OFAC compliance program is also necessary. Sending messages compliant with RTP rules and technical specifications are required. The sender must also provide the receiver's name and account for the transaction. Sending participants must first transmit a sign-on request.
Same Day ACH: Participants need to comply with Nacha Operating Rules, including U.S. law, sanctions programs, risk assessments, risk management programs, and security policies and procedures for information processing and storage.
Mastercard Send: Participants must register for required programs and services, meet program eligibility, and follow service standards. They must also establish a settlement account. Originators cannot use the APIs in the Mastercard Test Facility (MTF) or production environments until approved and onboarded and given unique keys and a partner reference ID.
Visa Direct: Originating acquirers (either directly or through merchants or service providers), must validate sender data and comply with anti-money laundering (AML) laws and regulations. Originators must also notify Visa before processing any Original Credit Transactions and ensure all stages of transaction processing (submission, settlement, dispute management, reporting) are in place. Originators are responsible for Know Your Customer (KYC) screening, and fraud checks on all parties. Visa also recommends velocity limits to protect from high-risk or sanctioned transactions.

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Description

Explore the essential processes and requirements for Faster Payments systems, focusing on the roles of financial institutions. This quiz covers the key aspects of operating procedures, compliance, and the technical necessities for participating in systems like FedNow and RTP.