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Payment Systems Terminology
Terms in this set (34)
Image Replacement Document (IRD)
A "substitute check" - a negotiable instrument used in the United States to represent the digital reproduction of an original paper check
Automated Clearing House (ACH)
An electronic network for financial transactions in the United States that processes large volumes of credit and debit transactions in batches. There are two such networks available, one operated by the Federal Reserve the other a private network.
Electronic Payments Network (EPN)
The only private sector ACH operator in the U.S.
a term that refers to the system operated by the card associations and member banks of those associations to provide for the standardized electronic exchange of financial and non-financial data associated with sale and credit data between merchant acquirers and card issuers on various types of MasterCard and Visa transactions. this system ties the "acquiring" and the "issuing" side of the card system together.
Electronic Data Capture (EDC)
an acronym that refers to the process of electronically transmitting the data needed for authorizing, capturing, and settling a credit card transaction.
a situation in which checks are sent to the drawee bank or its local clearinghouse via courier. mainly used for larger checks.
a financial institution that provides settlement services for financial instruments and commodities derivatives and securities transactions. one type of such institution is a local or regional co-operative association of banks, S&Ls and credit unions to clear (settle) checks and other negotiable withdrawal instruments
a value transfer transaction that makes use of the linked network of 12 Fed district banks which transfers funds for banks (and by extension their customers) by debiting or crediting banks' reserve accounts.
step seven in the check clearing process, when the check is returned to the drawee bank for payment.
an acronym that refers to the process of validating a cardholder's given address against the issuer;s records, to determine accuracy and deter fraud.
an acronym used that refers to the any location where credit card transactions are performed with the cardholder present, such as a retail store.
a bank that is a member of the Federal Reserve system and that maintains a depository account for a non-menber bank and contacts with the non-memenr bank to provide clearing services for the non-member.
a communications network for relaying payment instructions of international transactions.
a check deposited with the same bank on which it is drawn.
the amount of time that transpires from the point of receipt of the check at a lockbox or company mail room and the rime when the check is deposited at the bank. as with other types of float, it is typically measured in "dollar-days," the product of dollar * number of days of delay.
a payment card whose funds are withdrawn directly from the cardholder's checking account at the time of sale (online network) or after batch settlement (off-line on a credit card network).
sometimes called "availability float," this is the delay in availability incurred after deposit as a result of the time it takes for a check to settle through the clearing process and actual value to transfer. as with other types of float, it is typically measured in "dollar-days," the product of dollars * number of days delayed.
the balance that reflects all credits and debits posted to an account as of a certain time, regardless of the availability to the account holder.
sometimes called the "available balance," this balance reflects how much of a deposit balance is immediately spreadable - that is, can actually be used (drawn on) by the account holder
a check that is re-routed back to the drawee bank either for insufficient funds or other reasons.
Federal Open Market Committee
a committee of the Federal Reserve that makes most of the monetary policy for the U.S. in its eight regularly scheduled meeting per year.
the process of verifying that a credit card has sufficient funds (credit) available to cover the amount of the transaction and is not on a negative data base of cancelled or stolen cards.
Payable Through Draft
an instrument that gives the payor 24 hours to deuced whether to honor or refers payment after it has been presented to the payors' bank. frequently used for claim reimbursement by insurance companies, which use the 24-hour period to verify the signature and endorsements.
the information coded at the bottom of the check in magnetic ink and used by the clearing agent, often a Federal Reserve bank, branch, of RCPC, to process the check.
a situation in which a bank is permitted to add a check or checks it is clearing and an accompanying listing to whatever checks the local Fed district bank is sending to the distant Fed office. in this way, the clearing bank can miss the local Fed's cutoff time but still meet the distant Fed's cutoff.
Receiving Depository Financial Institution
the bank receiving an ACH value transfer request. depending on whether it is a debit or credit ACH transactions, it could be either the depositing bank or drawee bank.
a process that allows paper checks received in payment for an account receivable to be electronically scanned and converted into an electronic payment.
formerly the NY Clearing House Association now the major provider of value transfer services for international transactions.
Merchant Identification Number (MID)
a numerical code used to identify the merchant during processing of daily transactions, rejects, adjustments, chargebacks, end-of-month processing fees, etc.
an acronym referring to credit or debit card transactions initiated via mail, email, or telephone. also known as card-not-present transactions.
the percentage of sales transaction (ticket) that the bankcard acquirer or T&E card issuers charges the merchant for the settlement of the transactions
a credit card transaction that is billed back to the merchant after the sale has been settled.
the average dollar amount of a merchant's typical sale
Credit Card Associations
an organization licensed as a member of Visa/MasterCard as an affiliated bank or bank/processor alliance that is in the business of processing credit card transactions for businesses. these organizations "receive" the credit card transaction from the merchant, "fund" the payment to the merchant and pass the transaction on to the Interchange network for presentment to the issuing bank or entity.
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