Deck 11: Payment Systems for Electronic Commerce

Question 1

A debit card removes the amount of the sale from the cardholder's bank account and transfers it to the seller's bank account.

Answer 1

True

Question 2

Online and telephone purchases include a minimal degree of risk for merchants and banks.

Answer 2

False

Question 3

Charge cards involve lines of credit and accumulate interest charges.

Answer 3

False

Question 4

In an offline cash storage system, a consumer does not personally possess digital cash, instead a trusted party holds the consumers' cash accounts.

Question 5

The level of fraud in online transactions is much lower than either in-person or telephone transactions of the same nature.

Question 6

In an online storage system, the merchant must contact the consumer's bank to receive payment for a purchase.

Question 7

Credit cards provide assurances for both the consumer and the merchant.

Question 8

Using digital cash provides an audit trail.

Question 9

Digital cash ought to be anonymous, just as currency is.

Question 10

Payment card service companies charge merchants per-transaction fees and monthly processing fees for processing payments.

Question 11

Credit card issuers charge interest on any unpaid balance.

Question 12

A two-part lock provides anonymous security but signals when someone is attempting to double spend cash.

Question 13

Digital cash can be easily traced back to its origin.

Question 14

In an online cash storage system, a trusted third party, such as an online bank, coordinates all transfers of digital cash and holds the consumers' cash accounts.

Question 15

Concerns about electronic payment methods include privacy and security, independence, portability, and convenience.

Question 16

American Express and Discover Card are examples of open loop systems.

Question 17

A front-end processor handles chargebacks and any other reconciliation items through the interchange network and the acquiring and issuing banks.

Question 18

The use of mobile telephone carriers as a micropayment system has been held back by the mobile carriers' substantial charges for providing the service.

Question 19

For merchants, payment cards provide fraud protection.

Question 20

Offline cash storage is similar to money kept in a wallet.

Question 21

In the context of fees deducted by acquiring banks, _____ are charged at rates which depend on the merchant's industry.

A) acquirer fees
B) interchange fees
C) chargeback fees
D) interest fees

Question 22

Payment cards with disposable numbers are known as _____.

A) charge cards
B) single-use cards
C) credit cards
D) store-branded cards

Question 23

In the context of payment acceptance and processing, closed loop systems:

A) include additional payment processing units.
B) involve paying the merchants directly.
C) work similar to an open loop system.
D) make use of an intermediary, such as a bank.

Question 24

Internet payments for items costing from a few cents to approximately a dollar are called _____.

A) double spending
B) micropayments
C) money laundering
D) chargebacks

Question 25

The Check Clearing for the 21st Century Act permits banks to eliminate the movement of physical checks entirely.

Question 26

A set of connections between banks that issue credit cards, the associations that own the credit cards, and merchants' banks is called a(n) _____.

A) check processing system
B) zombie farm
C) interchange network
D) near field communication system

Question 27

Typically, server-side digital wallets store a customer's information on the customer's computer.

Question 28

A _____ handles chargebacks and any other reconciliation items.

A) front-end processor
B) back-end processor
C) clearing house
D) payment gateway

Question 29

Smart cards are safer than magnetic strip credit cards because the information stored on a smart card can be encrypted.

Question 30

_____ are also called "electronic funds transfer at point of sale cards," especially outside the United States.

A) Debit cards
B) Credit cards
C) Gift cards
D) Prepaid cards

Question 31

A(n) _____ is a bank that does business with sellers that want to accept payment cards.

A) issuing bank
B) acquiring bank
C) mortgage bank
D) advising bank

Question 32

The term _____ refers to all payments less than $10.

A) mini payments
B) small payments
C) minitransactions
D) microtransactions

Question 33

Some online merchants accept direct deductions from customers' checking accounts which are done through a network of banks called the _____.

A) Automated Cash Holding
B) acquiring banks
C) Automated Clearing House
D) issuing banks

Question 34

A disadvantage of using paper checks is the delay that occurs between the time that a person writes a check and the time that check clears the person's bank.

Question 35

Whenever additional parties are included in payment card transaction processing, the system is called a(n) _____system.

A) open loop
B) offline transaction
C) point of purchase
D) direct payment

Question 36

Magnetic strip cards can send and receive information.

Question 37

A _____, offered by companies such as American Express, carries no spending limit, and the entire amount billed to the card is due at the end of the billing period.

A) credit card
B) charge card
C) debit card
D) smart card

Question 38

Which of the following is true about credit cards?

A) It has no spending limit.
B) It has no interest charged on unpaid balances.
C) It is the same as a charge card.
D) It protects the consumer by an automatic 30-day dispute period.

Question 39

When a cardholder successfully contests a charge, the acquiring bank must retrieve the money it placed in the merchant account in a process called a _____.

A) click-through
B) chargeback
C) dispute
D) recharge

Question 40

A _____ obtains authorization for a payment card transaction by sending the transaction's details to the interchange network and storing a record of the approval or denial.

A) back-end processor
B) front-end processor
C) server-side digital wallet
D) client-side digital wallet

Question 41

_____ is a criminal act in which the perpetrator gathers personal information about a victim and then uses that information to obtain credit.

A) Pharming
B) Identity theft
C) Due diligence
D) Money laundering

Question 42

A _____ is a stored-value card with an embedded microchip that can store information.

A) credit card
B) debit card
C) charge card
D) smart card

Question 43

Visa and MasterCard are _____ that are operated by the banks which issue credit cards to individual customers.

Question 44

The delay that occurs between the time that a person writes a check and the time that check clears the person's bank is known as _____.

A) load
B) payback
C) prepayment
D) float

Question 45

With a(n) _____, credit theft is much more difficult because the key to unlock the encrypted information is a PIN.

A) smart card
B) debit card
C) credit card
D) identification card

Question 46

Anonymous digital cash is digital cash that cannot be:

A) handled by a trusted third party.
B) held in online storage systems.
C) traced back to the person who spent it.
D) served as a substitute for government-issued physical currency.

Question 47

A _____ can be used as a hardware-based digital wallet.

A) database
B) personal computer
C) server
D) smartphone

Question 48

Prepaid cards sold with the intention that they be given as presents are called _____.

Question 49

_____ are fees charged by banks for providing payment card processing services to merchants.

Question 50

_____ are responsible for evaluating their customers' credit standings and establishing appropriate individual credit limits.

Question 51

A _____ requires no download time or installation on a user's computer.

A) server-side digital wallet
B) client-side digital wallet
C) hardware-based digital wallet
D) mobile-based digital wallet

Question 52

_____ is spending a particular piece of electronic cash twice by submitting the same electronic currency to two different vendors.

A) Double spending
B) Blind signing
C) Money laundering
D) Spear phishing

Question 53

_____ allows for contactless data transmission over short distances and can also be used if a smartphone is equipped with a chip similar to  those that have been used on payment cards for a number of years.

Question 54

_____ is a technique used by criminals to convert money that they have obtained illegally into cash that they can spend without having it identified as the proceeds of an illegal activity.

Question 55

A _____ stores information on a customer's computer.

A) server-side digital wallet
B) client-side digital wallet
C) hardware-based digital wallet
D) mobile-based digital wallet

Question 56

The basic structure of a _____ involves a perpetrator who sends e-mail messages to a large number of recipients who might have an account at a targeted Web site.

A) due diligence process
B) money laundering process
C) phishing attack
D) chargeback scheme

Question 57

_____ is a general term that describes any value storage and exchange system created by a private entity that does not use paper documents or coins and that can serve as a substitute for government-issued physical currency.

Question 58

To process payment cards for Internet transactions, an online merchant must set up a(n) _____ with an acquiring bank.

Question 59

With a(n) _____, a user can pay off the entire card balance or pay a minimum amount each billing period.

Question 60

Businesspeople often use the term _____ as a general term to describe all types of plastic cards that consumers use to make purchases.

Question 61

In phishing, the collection of information is done by _____.

Question 62

What are the advantages and disadvantages of payment cards?

Question 63

Processing a payment card transaction online involves two general processes. Describe these processes.

Question 64

_____ are created when a hacke r plants zombi e program s o n a larg e numbe r o f computer s.

Question 65

A(n) _____, serving a function similar to a physical wallet, holds credit card numbers, electronic cash, owner identification, and other owner contact information.

Question 66

What are the disadvantages of using paper checks?

Question 67

When the right to use a zombie farm is sold to an organized crime association that wants to launch a phishing attack, the attack is called a(n) _____.

Question 68

_____ are cards that hold value that can be recharged by inserting them into the appropriate machines, inserting currency into the machine, and withdrawing the card; the card's strip stores the increased cash value.

Question 69

How are phishing attacks used for identity theft?

Question 70

What is the difference between a credit card and a charge card?

Question 71

U.S. laws define _____, as unlawful activities conducted by a highly organized, disciplined association for profit.

Question 72

A _____ is a three- or four-digit number printed on a credit card, and is required for card not present transactions.

Question 73

Google Wallet, which uses the _____ technology that MasterCard developed for its credit cards, is available for mobile devices.

Question 74

_____ can be accomplished by purchasing goods or services with ill-gotten electronic cash and selling them for physical cash on the open market.

Question 75

Google Wallet, Microsoft Windows Live ID, and Yahoo! Wallet are examples of _____ digital wallets.

Question 76

In phishing, _____ use the collected information.

Question 77

Near field communication chips embedded in mobile phones are called Osaifu-Keitai in Japan, which translates approximately to _____.

Question 78

When the e-mails used in a phishing expedition are carefully designed to target a particular person or organization, the exploit is called _____.

Question 79

A(n)  _____, also called a stored-value card, can store more than 100 times the amount of information that a magnetic strip plastic card can store.

Question 80

When a bank buys accounts from another bank, it performs a series of procedures called _____, which include checking the new customers' credit histories and banking records.