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L1-Credit cards

1) ACH Transactions are carried out using paper checks? T/F


False
2) Which of the following is not part of PCI standards?
Creation of financial message authorization standards.
3) Which of the following is not a biometric security?
Retina Scan
Voice
Finger Prints
PIN Number
4) Which of the following is not the activity of merchant acquirer?
Backend settlement.
5) End to end cost of handling chargebacks in us is approximately?
50 USD
6) MCHP and VSDC are applications given by master card and VISA respectively as part of
which of the option?
EMV
7) What constitutes more towards an issuers revenue?
Interchange fees
8) Payments made at toll plaza are likely to use which of the following technology?
Contact less smart card.
9) Which of the following services is not provided by third party processors to acquirers?
Merchant Account
10) When you use a credit card, the merchant requests authorization for the transaction who
ensures that the transaction is routed to the correct issuer i.e. your bank?
Card Association.
11) Which of the following is NOT associated with ISO/IEC 7816?
Internal implementation with the card
Transmit ion protocols
Security architecture
Interface requirements
12) Which of the following is the KEY component of SEPA?
Credit derivatives
13) Which of the following is not an emerging payment method?
ACH
14) Which of the following can not be federal regulation?
Specifying card size and shape.
15) What was VISA originally known as?
Bank americard

16) Which of the following more likely to support a consumer credit card?
VISA
17) If you are a high risk merchant and a merchant account is decided to you. What can you do to
try to accept credit card as a form of payment?
Apply for account to a card association
Nothing you can accept cards with out a merchant card
Approach an ISO ( Jhony answer)
Enter into an agreement with another merchant to process the transaction along with his
transactions
18) At an automated gas Station if you use a credit card for payment, what transaction happens
first?
Pre-authorization.
19) Limited term debit balance must have a name of the user written on it. T/F?
True
20) What is the reason for low presentation of plastic card in Europe as per the reading material?
Most of the standards are not adopted by Europe.
21) The principal risk of transactions is typically NOT borne by :
a) Third part network service providers
B) Acquirers
c) Merchants
d) Association
22) Which of the following does not contribute to revenues for third party processor?
Interchange fees
23) Which of the following will be the goals of the credit card issuers?
All the above.
24) Which of the following is TRUE?
Cardholders are usually anonymous in case of prepaid cards.
25) What is the share of VISA in a non-TSE card?
50% 80% 20% 60%
26) Credit scores are used by bankcard companies during
Application processing
27) Options like direct debit and credit are declined at which level;
Org Level
Highest Level
Logo Level
System level
28) Which of the following is a correct Trading Interchange Reimbursement Fee (IRF)?
IF is an expense on the acquirers income statement.
29) When an abstraction is sought who resolves the chargeback?
Association.
30) What is stored in track 1 of magnetic stripe in a plastic card?
Full name of the customer.

31) Which of the following down not pertain to card holder data security?
a) SDP
b) AVS
c) PCI
d) CISP
32) RFID Technology is more likely to be used in
a) purchasing cards
b) offering debit cards
c) co branded cards
d) prepaid cards or stored value card
33) When the outstanding balance in a credit card account is higher than the approved credit limit
then that credit card account is considered
a) blocked
b) under limit
c) No Limit
d) Over limit
34) Which of the following does not lead to a charge back
a) customer dispute
b) merchant errors
c) None of the listed options
d) Non-fulfillment of retrieval requests.
35) EMV standards are
a) agreed upon by group of issuers
b) Federal standards
c) State level standards
d) Standards developed by card associations
36) Which one of the following has lowest cost for transaction?
a) offline debit
b) check
c) credit
d) cash
37) What is the SMS in card processing is called?
Single Messaging System
Short messaging service
Short messaging system
Simple messaging system
38) An anti-fraud security that helps verify the cardholder in possession of the card is called
a) check digit
b) card verification value(CVV)
c) expiration date
d) account number
39) Which of the following is true for luhn algorithm?
a) It denotes the interest rate to be applied
b) It is used for generating the check digit
c) It denotes the maximum credit amount for the card
d) It denotes the applicants name

40) How many digits in a credit card number constitute issuer identification number?
a) First four
b) Last four
c) First six
d) Last Six
41) Which among the following is not a third party processor? (Doubt requires a check) It seems
answer is MBNA
a) Vital processing service.
b) TSYS
c) First data corporation
d) MBNA
42) Smart cards can be authorized offline (T/F) : False
43) Which of these payment types is showing a decreasing trend on year-to-year basis?
a) Checks.
b) Credit cards
c) Debit cards
d) ACH
44) Is it the mandatory that acquirer should have a direct relationship with merchant and there
cannot be any third party managing the merchants? (T/F) FALSE
45) Identify the correct flow in an authorization process?
1. Cardholder presents the credit card at POS and merchant requests authorization to acquire
2. Acquirer creates an authorization request message that is switched through associations
network to the issuer.
3. Association sends the response message to the acquirer who in turn seeds to the Pos terminal
4. Issuers review the request and decide whether to approve the request or to decline.
A) 1,2,3,4
B) 2,1,3,4
C) 4,3,2,1
D) 1,2,4,3
46) SEPA covers areas outside the European state (T/F) FALSE
47) How is a debit card more beneficial to a consumer than a ATM card?
a) it has a revolving facility
b) it charges the consumers personal banking account
c) it enables purchases in addition to use ATMs
d) it has a credit limit
48) Which is the second biggest association in terms of members?
a) Master card
b) American Express
c) VISA
d) Discover
49) Which of the following is currently most widely used electronic payment instrument in the US?
a) smart card
b) debit card
c) credit card
d) Electronic check

50) Which of the statement is TRUE regarding store cards/private label cards?
a) They are same as debit cards
b) They offer extremely high credit limits
c) They are universally accepted by all merchants
d) They can be used at issuers location.
51) Incase of dispute which of the following processes is happen after the chargeback process?
a) retrieval request
b) copy request
c) Re-presentment
d) Retrieval request response
52) Which of the following is not TRUE about private label cards?
a) Cardholders always exhibit a higher risk profile
b) Offers a dedicated line of credit under a retailer name
c) Generally offer a low credit limit
d)Accepted every where.
53) Mr. Smith uses a Debit card to pay his restaurant bill, while doing the trasaction merchant
asks a PIN to be entered, what type of card that Mr.Smith is using?
(Not found in PDF)
a) VISA
b) VISA Electron
c) AMEX
d) Maestro
54) MasterCard was originally called as:
a) Maestro
b) InterCard Bank Association
c) Bank Americard
d) International Banking Assopciation
55) In case of arbitration, who bears the arbitration?
a) Merchane
b) Loosing party
c) Card Holder
d) Card Association
56) What do u call a credit card used by the people trying to rebuild their poor credit or by
beginners establishing their credit?
a) Charge card
b) Private label card
c) Secured card
d) General purpose card
57) Which of the following is not a function of association?
a) Develop system side innovations like interchange technologies
b) Promote association brand through advertising
c) Develop operation rules and regulations
d) Set discount rates

58) Which of the following can be the consequence of NOT complying with PCI standards?
a) Change in interchange fees
b) Fines and restrictions1
c) Permanent prohibition from the association
d) All the listed options
59) What is the negative authorization by a card issuer?
a) verification of delinquency of a card account
b) verification on a available limit on card
c) verification if a cardholder has received his card statement
d) Verification on the blockage of the card.
60) Which of the following is not the reason for slow adoption of the smart cards in US?
a) Cost of cards
b) High telecom costs.
c) Cost of adopting existing terminals
d) None
61) Sears is a/an:
a) Acquirer,
b) Card Organization,
c) Issuer,
d) Processor.
62) Which of the following option cannot be based on radio frequency?
a) contact card
b) contact less card
c) Loco
d) Chip card
63) Which of the following is NOT an objective of SEPA?
a) An Encourage use of smart cards in Euro region
b) Removal of all technical, legal and commercial banners between current national markets
in euro region.
c) Efficient and competitive payments industry in the euro area
d) To create an integrated market for the payment service in the euro area
64) Which of the following statement is not correct about association payment network?
a) association payment network can do all authorization on behalf of issuer if issuers
system is down
b) Access Points at the association payment network interfaces between the
systems at association and the member processing client computer
c) Data processing center at APN does the STIP (stand-in processing) to authorize the
transaction on issuers behalf.
d) Each member processing center is linked with one or more associations data processing
center for business continuity.
65) Magnetic cards can be verified offline? T/F True
66) Commercial cards are collection-free this is aided by the fact that:
a) Payment is done through standing instructions and ACHs
b) VISA/Master card help the issuers in eliminating the collections.
c) Government legislation doen not allow collections
d) Companies are generally honest in paying their dues
67) Which of the following complies with PCI standards?

a)
b)
c)
d)

Data security policy by AMEX


None of the listed options
Site Data protection, by VISA.
Discover security and compliance by Discover

68) The act that related to truncation of paper checks to electronic form is :
a) Patriot act
b) Basel 11
c) Check21
d) Sabens-odey Act
69) In how many countries will SEPA be implemented by 2010?
a) 29
b) 33
c) 23
d) 42
70) The purpose of letter variable code is to:
a) acts as temporary storage for the body of letter
b) Encrypt a customer contact details
c) Incorporate actual account information into the body of letter
d) Ensure security of the information.
71) How do you identify a VISA Card?
a) Card number of digits is 16.
b) The cards check digit down not use luhns formula
c) The card down not have a CVV
d) Card number starts with 4.
72). which one of the following does not apply to a card association
a) Issuing cards
b) Security risk management
c) Assessment of fee based services
d) Authorization and settlement services
73) If you are mail order merchant what authorization are you more likely to use?
a) Online
b) Batch
c) No authorization required
d) Stand in
74) Which of the following is NOT the activity of an acquirer?
a) None of the listed options
b) Routing transaction to the association during authorization
c) Raising chargebacks
d) Merchant servicing
75) Smart card can be authorized off line say TRUE or False
a) True b) False
76) Which of these payment types is showing a decreasing trend on year on year basis
a) Debit cards
b) Credit cards
c) ACH
d) Checks

77) What is the master card pay pass card?


A) Both chip and magnetic stripe card.
b) Only a chip card
c) None of the listed options
d) Only a magnetic strip card
78) The card association earn their money from
a) Both issuer and acquirer
b) Issuer only
c) Acquirer only
d) Neither Issuer nor acquirer
79) It is mandatory that the acquirer should have a direct relation ship with the merchant and
there can not be any third party managing the merchants state TRUE or FALSE
a) True
b) False
80) SEPA covers areas outside European Union state TRUE or False
a) TRUE
b) FALSE
81) Which of the following services may NOT provided by third party processors
a) Payment processing
b) Market analysis
c) Settlement processing
d) Service enquiries
82) In which year did the number of debit transactions exceed credit transactions for the first
time?
a) 2004
b) Number of credit transactions is higher than debit transactions
c) 2005
d) 2002
83) Which of the statement is true regarding Store card?
a) They are same as debit cards
b) They offer extremely high credit limits
c) They are universally accepted by all merchants
d) They can be used only at the issuers location
84) Incase of a dispute which of the following processes happens after the charge back process?
a) Retrieval request
b) Copy request
c) re presentment
d) Retrieval request response
85) Next card is an example of
a) White labeler
b) Online bank
c) Universal bank
D) Monoline

86) Which vision plus module is involved in credit scoring


a) CDM
b) CMS
c) CIS
d) CTA
87) Which of the following association recently launched commercial card product?
a) American Express
b) Discover
c) Master card
d) Visa
88) The use of contact less cards will facilitate all of the following except
a) Faster transaction times
b) Greater transaction security
c) Increased usage convenience
d) Lower operational costs
89) If a customer reports change of address to a customer service representative which module
changes the customer record?
a) CMS
b) ASM
c) CTA
d) FAS
90) Merchant discount refers to
a) The amount paid to the third party processor by the issuer
b) The amount charged by the network to the Acquirer
c) The amount that an acquirer pays an issuer for a card transaction
d) The percentage amount the acquirer deducts when it pays a merchant for a given credit
card transaction
91) What would you call Mr Smith if he gets a statement with a billing of USD 200 and makes
payment of USD 50?
a) Part revolver
b) Part transactor
c) Transactor
d) Revolver
92) When a past due credit card account is set back to current by the creditor the process is
called as
a) Charge off
b) White off
c) Ageing
d) Re-Ageing
93) What is first datas Private arrangement system called?
a) First data international
b) First data resources
c) Vision plus
d) First Data net
94) Who decides the floor limit?
a) Issuer
b) Association
c) Acquirer

d) Merchant
95) Service marketed to financial institutions who,inturn, resell it to merchants called as
a) Merchant alliances
b) Indirect merchant services
c) Direct merchant services
d) Third party merchant services
96) Outsourced collection work of an issuer are usually handled by
a) ISOs
b) Collection agents
c) Acquirer
d) Third party processors
97) What is influencing leading banks to opt for in sourcing as opposed to outsourcing of
processing?
a) Lower operational costs per account because of large portfolio
b) Lower communication costs due to robust telecom infrastructure in US
c) Negative perceptions about out sourcing
d) None of the listed options
98) Research indicates that SEPA is likely to make the payments industry less profitable for
payment service provider in this scenario which of the following should the service providers
adopts to generate revenue?
a) High Volume processing
b) All of the listed options
c) Excellence in processing
d) Value added services offered to the market
99) How will an offline debit card be authenticated?
a) PIN
b) Written signature
c) Password
d) No authentication
100) The four corner payment system model for a credit card system payment system
includes____________
a) Consumer, merchant, EFT network, CFI, MFI
b) Cardholder, merchant, network, issuer, acquirer
c) Consumer, merchant, Clearinghouse, CFI, ODFI
d) Employer, employee, ACH Operator, ODFI, RDFI
101) Which of the following DOES NOT contribute to revenues for third party processor?
a) merchant fees
b) Software licensing and maintenance fees
c) Transaction processing fees
d) Interchange fees
102) Which of the following will be the business goals of the Credit cards issuer?
I) Increase market share
II) Reduce costs
III) Improve operational efficiency
IV) Improve customer Service levels
a) I, II and III
b) I, II, III and IV

c) I and II
d) II and IV
103) Which of the following statement is TRUE?
a) Cardholders are usually anonymous incase of prepaid cards
b) None of the listed options
c) Prepaid cards are same as the debit cards
d) Prepaid cards are same as the secured cards
104) Which of the following option CANNOT be based on the radio frequency?
a) Contact Card
b) Contact less Card
c) LoCo
d) Chip Card
105) Sears is a/an____________
I) Acquirer
II) Card Organization
III) Issuer
IV) Processor
a)
b)
c)
d)

II and IV
I, II and III
I, II, III and IV
I, II and IV

106) Which of the following is NOT an objective of SEPA?


a) Encourage use of smart cards in the Euro region
b) Removal of all technical, legal and commercial banners between current national payment
markets in Euro region.
c) Efficient and competitive payments industry in the Euro area
d) To create an integrated market for payment services in the Euro area
107) Which of the following is NOT the reason for the slow adoption of smart cards in US?
a) Cost of cards
b) High telecom costs
c) Cost of adapting existing terminals
d) None of the listed options
109) Which of the following statement is NOT CORRECT about Association payment Network?
a) Association payment network can do all authorizations on behalf of issuer if issuers systems
are down.
b) Access Point at Association payment network interfaces between the system at
association and the member processing centers host computer
c) Data processing center at Association payment network does the STIP (Stand-in Processing to
authorize or decline the transactions on issuers behalf
d) Each member processing center is linked to one or more associations data processing centers
for business continuity.
110) Where are card applicants credit scores maintained?
a) Merchants
b) Issuers
c) Credit beauros
d) Third party processors

111) What is CVV stands for ?


a) credit verification value
b) Card verifictation value
c) Card varience value
d) Credit varience value
112) In which type of card does a cardholder make the payment before the purchase is done?
a) Stored value card
b) Debit card
c) Credit card
d) ATM Card
113) EVV specification cannot applied to :
a) Bank ATMs
b) Magnetic Stripe cards
c) POS terminals
d) Electronic cash registers
114) Multi card does not have features of which of the following?
a) Fleet card
b) Gift card
c) Corporate (T &E) card
d) Purchase card
115) What is the main difference between high-coercivity and low coercivity cards?
a) number of card holders
b) number of card usage terminals
c) number of issuers adopting it
d) strength of magnetic strip
116) Acquired sears private label card portifolio?
a) Bank of America
b) JPMorgon chase
c) Wells Fargo
d) Citigroup
117) Which one of the following is not a card association?
a) Diners club
b) JCB
c) VISA
d) Master Card
118) Pilots will be run for SEPA implementation in which of the following years?
a) 2001 & 20011
b) 2004 & 2005
c) 2007 & 2008
d) 2009 & 2010
119) when does a personal credit score not get affected?
a) when the cardholder does not make payment for a long period of time
b) None of the listed options
c) When the cardholders account is charged-off
d) When a person marries a cardholder with a bad FICO store
120) Payment gateway is the online equivalent of the POS terminal (T/F) : TRUE

120A) If you are working at a third party processor and you need to charge portfolio setup costs
to client which of the following can be a likely client?
a) Association
b) Issuer
c) Cardholder
d) Local government
121) What is the first digit of credit card number called?
a) major industry identifier
b) check digit
c) issuer identifier
d) bank identifier
122) Which one of the following down not lead to a chargeback?
a) merchant errors
b) None
c) Non fulfillment of retrieval requests
d) Customer dispute
123) Which one of the following trends helping establishment of common standards across
industry?
a) consolidation among issuers
b) consolidation among third-party processors
c) increased focus on security
d) All the above
124) Which one of the following is strong in education segment?
e) VISA
f) Master Card
g) Discover
h) American Express

125) Usually corporate card accounts are ---------a) pay-in-full accounts


b) pre-pay accounts
c) half-pay accounts
d) revolving accounts
126) Funds settlement for customers of indirect merchant services is done by : -------a) Govt. Clearing houses
b) Card association
c) Customers themselves
d) Monocline card issuers
127) What is the visa card system is called as ---------a) VisaNet
b) Visabuxx
c) Visainterlink
d) VisaElectron

128) Which among the following is not a card transaction?


a) Adjustment
b) Chargeback
c) Deliquency
d) Reversal
129)In most countries, current direct debit IT Systems will not be able to handle new SEPA
requirements why?
a) mandate information sent with collection instruction is a specific to a country
b) many different IT systems are in use which follow different standards
c) implementing SEPA will need cutting edge research on new emerging technologies
in the areas of computer science
d) IT systems currently in use are too user-unfriendly to be used in SEPA regime.
( Need to search answer)
130) Which of these describe an independent sales organization?
a) An outside company with whom an issuer/Acquirer contracts with to provide
cardholder/merchant processing services
b) A business establishment that has authorization from an acquiring bank
c) An outside company which offers merchant accounts & process credit cards
transactions in exchange for a transaction fee
d) The organizations that provides services such as authorizations, clearing and settlement
processing of transactions, without member banks
131) Which of the following option is NOT under the purview of state regulations for cards?
a) Rules for imposing or prohibiting late fees
b) Setting cards interest rate
c) Setting interchange fees
d) Allowing or prohibiting annual fees
132) Associations are _____________
a) None of the listed options
b) Democratically run by members
c) Privately held organizations
d) Governed with the help of the federal government
133) Interchange fee can be described as ____________________
a) The amount that an acquirer pays an issuer for a card transaction
b) Amount charged by the acquirer from the merchant
c) The annual fee paid by the card holder to his card issuer
d) The amount paid by the issuer to the network
134)What is ICA stands for? (Master Card)
a) International Card Association
b) International Credit Association
c) Interchange Commission and Authorization
d) Interbank Card Association
135)The maximum length of the credit card number is ___________
a) 18
b) 17
c) 16
d) 19

136)In which of the following situations is a contact card more likely to be preferred?
a) Access to a highly secured area
b) Identification
c) Purchase Transaction
d) None of the listed option
137)What does monoline refer to?
a) A private label issuer
b) Institutions that exist only to issue credit cards and collect interest and fees from
customers
c) Universal banks offering their customers a full range of banking services including credit
cards
d) Pure internet play credit card firms exclusively doing business on the Internet
138)Phishing/Identity theft is a fraud that is related to _________________
a) Internet
b) None of the listed options
c) Card
d) Merchant
139)Setting Credit limits, card fees and interest rates is a function of _____________
a) Acquirers
b) Third party processors
c) None of the listed options
d) Association
140)The market for commercial cards is expected to touch which figure by 2007?
a) $ 5.5 million
b) $ 2 billion
c) $ 6 million
d) $ 1 million
141)How many levels of processing are present in VisionPLUS?
a) Seven
b) Three
c) Five
d) Four
141)Class priority takes precedence over Balance priority in the CTA module. State True or False
True
False
142)A small issuer is facing rising costs of software development and maintenance and licensing.
These costs are not likely to be covered by its interest and fees revenues. What is the most likely
option for the issuer?
a) Do nothing, the software maintenance costs would slowly fade away, as systems mature
b) Outsource transaction processing to a third party processor
c) Ask association for reduction in operations fees
d) Do in-house processing for other issuers
143) Merchant discount constitutes to _________ percentage of the total income of the Acquirer?
a) 1% to 4%
b) 5% to 10%
c) 11% to 14%
d) 3% to 8%

144) Who cannot be an issuer?


a) Credit Unions
b) Commercial banks
c) Associations
d) Rental merchants
145) Wal-Mart issues_______
a) Debit cards
b) Store cards
c) Stored value cards
d) Charge cards
146) which of the following standard is NOT used for Smart cards?
a) ISO 8513
b) ISO/EC 1444
c) ISO/EC 7816
d) ISO 9992
147) ITS or Interchange Tracking System in VisionPLUS is the ___________
a) Dispute processing module
b) Collections module
c) Merchant Acquiring system
d) None of the listed options
148)A credit sconng model is designed by doing all the following EXCEPT:
a) Building statistical models that assign weights to each variable
b) Studying a large number of consumers to find out common variables they exhibit
c) Asking the applicant to assign a score to himself or herself
d) Combining weighted variables to come up with a credit score
149) If you are an acquirer and receive an authorization request for $10 which is less then a
certain limit of $20, you decide to approve the transaction without requesting approval from the
issuer. What is this limit $20 is referred to as?
a) Floating limit
b) Final limit
c) Ceiling limit
d) Floor limit
150) Which of the following is NOT a reason for the introduction of smart cards?
a) Smart cards have low production costs
b) Very little data can be stored on the magnetic cards
c) Security issues with magnetic cards
d) Life of magnetic cards is small
151)Which of the following card security standards does SEPA endorse?
a) DSOP
b) DISC
c) EVM
d) PCI