Payments Systems and Instant Payments Quiz
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Questions and Answers

Which payment type is characterized by the ability to settle transactions in real time using a shadow account?

  • Visa Direct
  • FedNow
  • Same Day ACH
  • TCH RTP (correct)

    • What is a key feature that differentiates instant payments from Same Day payments?

  • Same Day payments are always completed within seconds.
  • Instant payments are irrevocable. (correct)
  • Instant payments can be reversed if needed.
  • Same Day payments provide faster fund availability.

    • In which payment type do settlement positions occur on a net basis with three processing windows?

  • FedNow
  • Same Day ACH (correct)
  • Visa Direct
  • Mastercard Send

    • Which of the following payments takes up to 30 minutes for funds to be available, and is processed only once daily?

    <p>Visa Direct (A)</p> Signup and view all the answers

    What is a fundamental characteristic of Same Day ACH in regard to settlement?

    <p>It settles transactions on a net basis. (B)</p> Signup and view all the answers

    Which faster payment option is known to provide continuous availability of funds with settlement occurring in seconds?

    <p>FedNow (A)</p> Signup and view all the answers

    Which payment option does not involve a fixed settlement window, allowing more flexibility in transaction organization?

    <p>Mastercard Send (C)</p> Signup and view all the answers

    What is a common risk associated with instant payments not applicable to Same Day payments?

    <p>Funds are irrevocable after processing. (A)</p> Signup and view all the answers

    What is the primary function of the ACH Network?

    <p>To enable direct payments and deposits to any financial institution in the US. (A)</p> Signup and view all the answers

    Which entity operates the FedACH network within the ACH ecosystem?

    <p>Federal Reserve (D)</p> Signup and view all the answers

    How often does the ACH Network settle payments during weekdays?

    <p>Four times daily (D)</p> Signup and view all the answers

    Which statement accurately describes Same Day ACH transactions?

    <p>They allow for transactions of up to $1 million to be completed on the same business day. (B)</p> Signup and view all the answers

    What role does the ODFI play in an ACH transaction?

    <p>It creates payment instructions based on the originator's requests. (C)</p> Signup and view all the answers

    Which of the following describes the nature of ACH transactions?

    <p>They utilize a batch-processing system with store-and-forward capabilities. (A)</p> Signup and view all the answers

    What is the purpose of the National Settlement Service (NSS) in the ACH Network?

    <p>To provide a settlement system for the processing of ACH payments. (A)</p> Signup and view all the answers

    What are typical processing times for ACH payments?

    <p>Generally one to two days depending on the timing of submission. (A)</p> Signup and view all the answers

    What defines micro-entries according to Nacha?

    <p>ACH credits of less than $1, and any offsetting debits (B)</p> Signup and view all the answers

    What is the purpose of a Payment Return message in value messages?

    <p>To return previously received funds (A)</p> Signup and view all the answers

    Which of the following describes non-value messages?

    <p>They contain details or the status of a value message. (C)</p> Signup and view all the answers

    What distinguishes liquidity management transfers (LMT) from other credit transfers?

    <p>They involve transfers between FedNow Participants' Master Accounts. (C)</p> Signup and view all the answers

    What do Standard Entry Class Codes (SECs) indicate in ACH Network payments?

    <p>The payment message type, indicating value or non-value messages. (A)</p> Signup and view all the answers

    What is required from originators of micro-entries to ensure security?

    <p>To use fraud detection and monitor transaction volumes. (B)</p> Signup and view all the answers

    Which API allows originating entities to request the creation of a Funding Transaction for Mastercard Send?

    <p>Funding API (C)</p> Signup and view all the answers

    What is an error code in rejection messages used for?

    <p>To inform the reason for rejection. (C)</p> Signup and view all the answers

    What is required for financial institutions that do not have a direct connection to the Federal Reserve?

    <p>No profile is necessary (D)</p> Signup and view all the answers

    Which profile must service providers adhere to when serving other depository institutions?

    <p>Authorized Connection Profile (B)</p> Signup and view all the answers

    What determines the profile requirements for financial institutions using the FedNow service?

    <p>The type of organization and connection set up (B)</p> Signup and view all the answers

    Which of the following combinations of participant type and connection set up does not require a profile?

    <p>Financial institution with no connection (C)</p> Signup and view all the answers

    What is the role of a Federal Reserve Master Account in accessing FedNow services?

    <p>It allows financial institutions without their own accounts to participate (D)</p> Signup and view all the answers

    What must all financial institutions connected via any setup follow?

    <p>Participation Profile requirements (D)</p> Signup and view all the answers

    Under what condition can a financial institution access the FedNow service?

    <p>By having a Federal Reserve Master Account (B)</p> Signup and view all the answers

    What profile must be followed by a financial institution maintaining a direct connection while serving as a service provider?

    <p>Authorized Connection Profile (D)</p> Signup and view all the answers

    What is a requirement for an RDFI to comply with General Rules?

    <p>Conduct an annual audit of compliance (D)</p> Signup and view all the answers

    Which entity lacks eligibility requirements in the FedACH environment?

    <p>Non-FI third-party service providers (D)</p> Signup and view all the answers

    What is required from a third-party service provider regarding ACH activities?

    <p>Conduct a risk assessment and implement a risk management program (B)</p> Signup and view all the answers

    What must a sponsor ensure regarding connected third parties in the Mastercard Send program?

    <p>They adhere to Mastercard Send Program Standards (B)</p> Signup and view all the answers

    What is a key responsibility for an ODFI regarding third-party access?

    <p>Monitoring participants' compliance with ACH regulations (C)</p> Signup and view all the answers

    Which statement about third-party access is true for Direct Exchange?

    <p>All types of institutions may grant third-party access (A)</p> Signup and view all the answers

    What must a third-party service provider do regarding their annual audit?

    <p>Retain proof of the audit's completion (A)</p> Signup and view all the answers

    Which of the following is NOT a general requirement for same-day ACH participation?

    <p>Establishing direct connections with Federal Reserve (C)</p> Signup and view all the answers

    What is the primary responsibility of the Originating Depository Financial Institution (ODFI)?

    <p>To submit entries to the ACH Network (A)</p> Signup and view all the answers

    Which statement about ODFIs is true?

    <p>ODFIs are responsible for rule-compliant return entries. (A)</p> Signup and view all the answers

    Which of the following is NOT a requirement for RDFIs according to the operating rules?

    <p>Ensure that sensitive information is kept secured (D)</p> Signup and view all the answers

    What action must ODFIs take concerning transactions that are not credit entries between natural persons?

    <p>Obtain authorization from the receiving entity (A)</p> Signup and view all the answers

    Which is a responsibility of Receiving Depository Financial Institutions (RDFIs)?

    <p>Provide funds availability for receivers (C)</p> Signup and view all the answers

    What must RDFIs ensure for Same Day ACH transactions for the first processing window?

    <p>Funds must be posted by 1:30 pm (ET) (D)</p> Signup and view all the answers

    Which requirement must ODFIs fulfill regarding fraud detection?

    <p>Implement their own commercially viable fraud detection systems (C)</p> Signup and view all the answers

    What is a common characteristic of both ODFIs and RDFIs in terms of their compliance?

    <p>Both must comply with Nacha operating rules (B)</p> Signup and view all the answers

    Study Notes

    General Study Notes

    • Focus on factual accuracy, concisely, and engagingly.
    • Use clear and understandable terminology.
    • Avoid repetition of information and words.
    • Include key facts, figures, and entities.
    • Present information as independent bullet points.
    • Use appropriate Markdown formatting for headings and bullet points.
    • Apply real world knowledge

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    Description

    Test your knowledge on the various types of payment systems, particularly focusing on instant payments and Same Day ACH. This quiz will cover key features, settlement characteristics, and the operational aspects of different payment options. Challenge yourself and learn more about how modern transactions are processed.

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