Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Smart cards that have erasable memory and are modifiable are. 1) A) EPROM cards B) EEPROM cards C) contactless cards D) contact cards 2) Which statement about the payment revolution is true? 2) A) Approximately 20 percent of recurring bills are paid electronically. B) Debit card use has been declining since 2003. C) Cards and electronic payments are taking the place of cash and checks. D) By 2015, the U.S. will be a cashless society. 3) For many firms, presentment and payment processes are all of the following except: 3) A) error-prone B) secure C) costly D) time consuming 4) Payroll cards, government benefit cards, and prepaid debit cards are all examples of cards. A) contactless B) closed loop C) EEPROM D) open-loop 5) Among the forms of online B2B payments, the use of is second only to ACH in terms of frequency of use. A) purchasing cards B) Fedwire, or wire transfer C) letters of credit D) EDI 4) 5) 6) Barriers inhibiting B2B electronic payment include all of the following except: 6) A) a shortage of IT staff B) inability of trading partners to send or receive electronic payments with sufficient remittance information C) strict standard formats for remittance information D) a lack of integration of payment and accounting systems 7) The nationwide batch-oriented electronic funds transfer system that provides for interbank clearing of electronic payments for participating financial institutions is called the: A) Automated Clearing House Network. B) Receiving Depository Financial Institution. C) E-bill Presentment and Payment Network. D) Federal Reserve System. 8) The major reasons why many companies prefer to outsource some of the support services include all of the following except: A) lack of experience or resources needed for many of the support services B) the desire to concentrate on the core business C) the need to have services up and running rapidly D) for a sustainable competitive advantage 7) 8) 1
9) Payment cards are electronic cards that contain information that can be used for payment purposes. Which is not a form of payment card? A) charge cards B) purchase cards C) debit cards D) credit cards 10) Approximately percent of B2B payments are still made by check, and the barriers to electronic payments remain essentially the same. A) 50 B) 25 C) 10 D) 80 11) offer Internet Merchant Accounts, which are special accounts for credit card authorization and payment processing. A) Payment processing services B) Acquiring banks C) Credit card associations D) Issuing banks 12) are used for applications in which the data must be processed very quickly (e.g., mass-transit applications, such as paying bus or train fares) or when contact is difficult (e.g., security-entering mechanisms to buildings). A) Contact cards B) Contactless cards C) EEPROM cards D) RFID cards 13) The process of determining whether a card is active and whether the customer has sufficient funds for the purchase is called: A) authorization. B) approval. C) procurement. D) settlement. 9) 10) 11) 12) 13) 14) An advantage of e-checks is that they: 14) A) operate outside the traditional banking industry. B) involve simple processing systems. C) contain much more information then traditional paper checks. D) fit current business practices, and so require little process reengineering. 15) A is a card that has monetary value loaded onto it and is usually rechargeable. 15) A) contactless card B) contact card C) closed loop card D) stored-value card 16) According to a survey by Credit Research Foundation, the major reasons companies turn to enterprise invoice presentment and payment (EIPP) solutions are all of the following except: A) improved data that can lower invoice processing costs B) better customer service for billing and remittance C) elimination of billing disputes D) improved cash flow 17) Factors that come into play in determining whether a particular method of e-payment achieves critical mass include all of the following except: A) full traceability of the buyers B) interoperability with other enterprise systems and applications C) hardware and software independence D) degree of security of the transfer 16) 17) 2
18) A(n) has two separate chips embedded in the card (contact and contactless), which eliminates the need to carry multiple cards to support the various smart card readers and applications. A) dual-interface smart card B) hybrid smart card C) multi-debit card D) RFID card 18) 19) For sellers the main benefit of a letter of credit (L/C) is: 19) A) improved buyer satisfaction. B) reduced risk because the bank assumes the costs. C) reduced risk because the bank assures the creditworthiness of the buyer. D) greater customer loyalty. 20) CyberSource's 2008 survey of 400 merchants documented each of the following trends except: 20) A) The percentage of online revenues lost per merchant has declined slightly since 2004. B) Overall security expenditures for online fraud detection remained the same from 2006 to 2007. C) Fifty-two percent of the merchants surveyed accepted international orders outside the United States and Canada. D) Total dollars lost to fraud decreased substantially since 2004. 21) A(n) is a third-party service connecting a merchant's EC system to the appropriate acquiring bank or financial institution. A) Internet service provider (ISP) B) credit service provider (CSP) C) application service provider (ASP) D) payment service provider (PSP) 22) Unlike the physical supply chain, inefficiencies characterize the financial supply chains of most companies. Factors that create these inefficiencies include all of the following except: A) too much transparency in inventory and cash positions when goods are in the supply chain B) time required to create, transfer, and process paper documentation C) cost and errors associated with manual creation and reconciliation of documentation D) disputes arising from inaccurate or missing data 23) In global trade, a is a written agreement by a bank to pay the seller, on account of the buyer, a sum of money upon presentation of certain documents. A) trade card payment B) bank check C) letter of credit D) micropayment 24) If someone steals a smart card, the thief is usually out of luck, with the major exception of used for retail purchases. A) EPROM cards B) EEPROM cards C) contactless cards D) contact cards 25) Factors that come into play in determining whether a particular method of e-payment achieves critical mass include all of the following except: A) regulations B) dependence C) divisibility D) portability 26) Approximately 80% of merchants use the Address Verification System, which results in a number of, meaning that the merchant may reject a valid order. A) suspicious hits B) false positives C) false negatives D) positive verifications 21) 22) 23) 24) 25) 26) 3
27) The overall implementation and use of contactless payment cards has been. 27) A) rapid B) declining C) steady D) slow 28) Small online payments, typically under $10, are referred to as. 28) A) automated payments B) contactless payments C) e-micropayments D) e-minipayments SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 29) In general, smart cards are secure than conventional payment cards. 29) 30), or single purpose, store-value cards are issued by a specific merchant or merchant group. 30) 31) When a credit card is used for payment, the merchant pays a(n) of up to 3 percent of the item's purchase price. 31) 32) In the processing of card payments, involves the transfer of money from the buyer's to the merchant's account. 32) 33) A number of international, federal, and state govern all payment methods. 33) 34) The Automated Clearing House Network is a nationwide batch-oriented EFT system that provides for the interbank clearing of for participating financial institutions. 34) 35) A(n) is a legally valid electronic version or representation of a paper check. 35) 36) often are used when global B2B payments need to be made, especially when there is substantial risk associated with the payment. 36) 37) The stores the monetary value of a smart-value card. 37) 38) A is a file that includes a customer's information (IP address, name, shipping/billing address, contact numbers, etc.) and the status of that customer. 38) 39) A(n) card has an embedded antenna that passes data and applications to and from a card reader unit without contact between the card and reader. 39) 40) In a card payment system, determines whether a buyer's card is active and whether the customer has sufficient available credit line or funds. 40) 41) The number detects fraud by comparing the verification number printed on the signature strip on the back of the card with the information on file with the cardholder''s issuing bank. 41) 42) Like computers, smart cards have an underlying. 42) 4
43) A(n) is an electronic card containing an embedded microchip that enables predefined operations or the addition, deletion, or manipulation of information on the card. 43) 44) A(n) is a card that has monetary value loaded onto it and usually is rechargeable. 44) 45) Although credit cards are the instrument of choice for B2C payments, in the B2B marketplace, the major credit card companies and associations have encouraged businesses and government agencies to rely on instead of checks for repetitive, low-value transactions. 45) 46) Most merchants use the fraud detection method known as. This method compares the address entered on a Web page with the address information on file with the cardholder's issuing bank. 46) 47) The process by which companies present invoices and make payments to one another through the Internet is known as. 47) 48) The financial institution that provides the customer with a card is the. 48) 49) In addition to tracking trends in online, the CyberSource surveys also monitor the steps taken by merchants to combat it. 49) 50) The primary purpose of the smart card is to act as a mediator between the card and the host system that stores application data and processes transactions. 50) 51) With a, the money for a purchased item comes directly out of the holder's checking account. 51) 52) A smart card looks like a plastic payment card, but it is distinguished by the presence of an embedded. 52) 53) are used for those applications in which the data must be processed very quickly. 53) 5