Credit Card Network Exam Questions
With 100% Verified Answers
Roles and Fees Business Model -
correct answer ✅1. Acquirers - customer bank - provide fund
settlement services & maintain merchant accounts;
2. Processors get the last piece of the pie:
a. Accept, process & relay payment requests;
b. Provide hardware\software solutions for
payment acceptance
c. Low entry barriers
Most Fin-tech innovators (like Square, Stripe, Paypal) in the credit
card space act as independent processors;
Problem with the Checking System? -
correct answer ✅Settlement is not in Real-Time.
So, for time-critical transactions where parties need to know
whether they're getting paid right away, it's not a good solution.
Remember, this is the same issue with ACH system as well. You just
can't walk into a grocery store and easily pay with a bank transfer
either.
,Credit Card Network Exam Questions
With 100% Verified Answers
Digital wallets that we discussed in module one is one way to speed
this process up. And before that, credit card is another way to solve
this problem.
What can the banks do? -
correct answer ✅They can temporarily front the purchase.
How was the credit card was born? -
correct answer ✅Say you go to pay at a restaurant, but forgot your
money at home:
> You say to the restaurant manager "Can i write you a check" , the
manager does not know you and trust is low;
>So you pull out a note from your bank saying they have extended a
loan to this person to use as they like;
> The manager probably has heard of the bank and accepts.
> The credit card is this bank loan note;
First Credit Card was the Diner's Club in the 1950's.
This is how the credit card was born. With the first generation
actually called the Diners Club card that are geared toward
,Credit Card Network Exam Questions
With 100% Verified Answers
primarily business meals and entertainment uses. The next
generations of credit cards just make this arrangement electronic.
A credit card is a revolving line of credit to use at any time for any
purchases.
Credit Cards further explained: -
correct answer ✅- CC carries the identifying information for this
"bank loan"
- Can be used either online or offline, the bank guarantees the
merchant is paid;
- Communicated in Real-Time over electronic network. Terminals at
the merchant are connected to these Electronic Network Servers;
- Bank sends the merchant the payment less fees;
-Bank sends bill to customer to be paid back end of month or if not
paid in full charge huge interest.
-The bank assumes the risk it will be paid back by the customer.
Trust of the bank is the paramount in this case.
, Credit Card Network Exam Questions
With 100% Verified Answers
When did Visa and Mastercard come in? -
correct answer ✅-Visa - After the success of the Diners Club card,
Bank of America step into the game and built an alliance of banks
and a communication network which the eventually spun off and
became today's Visa.
-Mastercard - A competing alliance of banks in the western states
built a competing communication network, The Master Charge
network, which was also eventually spun off and became today's
MasterCard.
Using Visa as an example of how this all works: -
correct answer ✅1. Consumer first applies for revolving line of
credit (Credit Card)
2. Once approved - banks issues them a credit card (has their credit
account information: CC number & Expiration Date: This is
embedded in chip and on card)
3. Consumer now takes to store and swipes CC to buy $100 of stuff;
4.
Who are the stakeholder's in a credit card transaction? -
correct answer ✅There are 6 parties involved:
With 100% Verified Answers
Roles and Fees Business Model -
correct answer ✅1. Acquirers - customer bank - provide fund
settlement services & maintain merchant accounts;
2. Processors get the last piece of the pie:
a. Accept, process & relay payment requests;
b. Provide hardware\software solutions for
payment acceptance
c. Low entry barriers
Most Fin-tech innovators (like Square, Stripe, Paypal) in the credit
card space act as independent processors;
Problem with the Checking System? -
correct answer ✅Settlement is not in Real-Time.
So, for time-critical transactions where parties need to know
whether they're getting paid right away, it's not a good solution.
Remember, this is the same issue with ACH system as well. You just
can't walk into a grocery store and easily pay with a bank transfer
either.
,Credit Card Network Exam Questions
With 100% Verified Answers
Digital wallets that we discussed in module one is one way to speed
this process up. And before that, credit card is another way to solve
this problem.
What can the banks do? -
correct answer ✅They can temporarily front the purchase.
How was the credit card was born? -
correct answer ✅Say you go to pay at a restaurant, but forgot your
money at home:
> You say to the restaurant manager "Can i write you a check" , the
manager does not know you and trust is low;
>So you pull out a note from your bank saying they have extended a
loan to this person to use as they like;
> The manager probably has heard of the bank and accepts.
> The credit card is this bank loan note;
First Credit Card was the Diner's Club in the 1950's.
This is how the credit card was born. With the first generation
actually called the Diners Club card that are geared toward
,Credit Card Network Exam Questions
With 100% Verified Answers
primarily business meals and entertainment uses. The next
generations of credit cards just make this arrangement electronic.
A credit card is a revolving line of credit to use at any time for any
purchases.
Credit Cards further explained: -
correct answer ✅- CC carries the identifying information for this
"bank loan"
- Can be used either online or offline, the bank guarantees the
merchant is paid;
- Communicated in Real-Time over electronic network. Terminals at
the merchant are connected to these Electronic Network Servers;
- Bank sends the merchant the payment less fees;
-Bank sends bill to customer to be paid back end of month or if not
paid in full charge huge interest.
-The bank assumes the risk it will be paid back by the customer.
Trust of the bank is the paramount in this case.
, Credit Card Network Exam Questions
With 100% Verified Answers
When did Visa and Mastercard come in? -
correct answer ✅-Visa - After the success of the Diners Club card,
Bank of America step into the game and built an alliance of banks
and a communication network which the eventually spun off and
became today's Visa.
-Mastercard - A competing alliance of banks in the western states
built a competing communication network, The Master Charge
network, which was also eventually spun off and became today's
MasterCard.
Using Visa as an example of how this all works: -
correct answer ✅1. Consumer first applies for revolving line of
credit (Credit Card)
2. Once approved - banks issues them a credit card (has their credit
account information: CC number & Expiration Date: This is
embedded in chip and on card)
3. Consumer now takes to store and swipes CC to buy $100 of stuff;
4.
Who are the stakeholder's in a credit card transaction? -
correct answer ✅There are 6 parties involved:
