Deck 5: The Payments System

Question 1

A hybrid card is provided by:

A) Debit MasterCard.
B) Visa Debit.
C) Diners Club.
D) A and B.

Answer 1

D

Question 2

Credit cards are mostly used during:

A) recessions.
B) weekends.
C) long weekends.
D) the holidays

Answer 2

D

Question 3

According to Herrington and Weaven (2007), electronic banking has led to:

A) higher accounting fees.
B) a decrease in customer service.
C) lower account fees.
D) an increase in efficiency.

Answer 3

C

Question 4

Which of the following is a non- cash payment instrument?

A) Debit transaction payment.
B) Cheques.
C) Credit transaction payment.
D) All of the above.

Question 5

Australia has an inefficient ATM system because of:

A) increased cost.
B) absence of interchange fee renegotiations.
C) its remote geographical regions.
D) A and B.

Question 6

Why do Australians borrow increasingly heavily?

A) Poor spending habits.
B) Increasing interest rates on mortgage loans.
C) Use of credit cards to meet day- to- day expenses.
D) All of the above.

Question 7

RBA (2009a) reports that Australia's 'Big Four' banks charge customers an average foreign ATM withdrawal fee of $ , independent of the level of interchange fee charged by the foreign institution.

A) 7
B) 4
C) 3
D) 2

Question 8

Which of the following is a disadvantage of using credit cards?

A) Credit card fraud.
B) Risk of overspending.
C) Fees and charges may not be what you initially anticipated.
D) All of the above.

Question 9

Which of the following companies are providers of credit cards?

A) American Express.
B) MasterCard.
C) Visa.
D) All of the above.

Question 10

All electronic funds transfers are governed by the Electronic Funds Transfer Code 2001 issued by:

A) ATM network.
B) ASIC.
C) RBA.
D) APCA.

Question 11

Which of the following barriers to entry were created by the ATM network?

A) Incentives are low for existing network owners to negotiate easy access to the system for new entrants since these are typically direct competitors.
B) High entry cost.
C) Negotiations might result in uncompetitive terms and conditions for new entrants.
D) All of the above.

Question 12

According to the RBA (2009c), the direct charging levy for foreign ATM transactions ranges from $_ to $ for cash withdrawals.

A) 2; 5
B) 1; 2
C) 4; 7
D) 0.5; 1

Question 13

In order to assist customers to adapt to the new direct charging regime, provides them with in- depth information about the changes on its website.

A) ATM network
B) RBA
C) ACCC
D) APCA

Question 14

Which of the following is an example of a co- branded credit card?

A) David Jones Amex.
B) Myer MasterCard.
C) Go Visa.
D) All of the above.

Question 15

Electronic banking can be made through:

A) ATMs.
B) the internet.
C) the telephone.
D) all of the above.

Question 16

Which of the following has an independent clearing system?

A) Credit cards.
B) BPAY.
C) Trade in CGS.
D) All of the above.

Question 17

APCA was established in:

A) 1982.
B) 1998.
C) 1992.
D) 2008.

Question 18

have become more important over the last decade.

A) Bank branches
B) Bank at Australia Post
C) ATMs
D) Branches: Non- financial institutions

Question 19

Which of the following is a POA?

A) NBFIs.
B) ATMs.
C) Bank branches.
D) All of the above.

Question 20

The real- time gross settlement (RTGS) system was introduced in:

A) 1988.
B) 2008.
C) 1978.
D) 1998.

Question 21

If we exclude the number of , we can observe that the number of as an access point for cash has increased significantly from 1998 to 2008.

A) EFTPOS terminals; ATMs
B) ATMs; EFTPOS
C) ATMs; bank branches
D) bank branches; ATMs

Question 22

Which of the following clearing systems does APCA take care of?

A) ACDES.
B) BECS and HVCS.
C) APCS and CECS.
D) All of the above.

Question 23

Which of the following is an argument in favour of the use of credit cards?

A) Source of emergency funds.
B) Convenience and financial flexibility.
C) Overseas use.
D) All of the above.

Question 24

EB does not have any security issues.

Question 25

A credit transaction payment is initiated by the payee.

Question 26

High value payments are cleared on a deferred net settlement basis.

Question 27

are linked to a cheque or savings account, and the purchase amount is directly debited from the cardholder's account at the time the transaction is undertaken.

A) EFTPOS
B) Debit cards
C) Credit cards
D) All of the above

Question 28

A debit transaction payment is initiated by the payer.

Question 29

Which of the following measures was adopted by the RBA to improve the efficiency of the ATM system?

A) Fixing the cost of entry.
B) Direct charging.
C) Increasing licences.
D) A and B.

Question 30

In 2009, the RBA reported that there were:

A) access difficulties to the ATM system by new entrants.
B) a lack of competitive pressures on interchange fees for foreign ATM usage.
C) A and B.
D) none of the above.

Question 31

ESAs are credit- only accounts and thus their holders are required to ensure that sufficient liquidity is available at all times to settle financial transactions.

Question 32

Until , POA also included bank agencies and agencies of NBFIs.

A) 2000
B) 2005
C) 1980
D) 1990

Question 33

are not linked to designated savings or cheque accounts.

A) EFTPOS
B) Debit cards
C) Credit cards
D) None of the above

Question 34

Cheques are no longer important.

Question 35

ATM networks are owned by:

A) credit unions.
B) large financial institutions.
C) building societies.
D) all of the above.

Question 36

Consumers' increasing demand for internet banking services is not met by most Australian financial institutions.

Question 37

While cash withdrawals at a customer's own financial institution are free of charge (an exemption is cash advances using credit cards), the use of a 'foreign' institution's ATM typically results in a transaction fee to be paid by the customer.

Question 38

The number of access points has _ from June 1998 to June 2008.

A) stayed the same
B) doubled
C) fallen
D) tripled

Question 39

One of the reasons for the recent slowdown in the use of credit cards is:

A) unemployment.
B) inflation.
C) the GFC.
D) barriers to entry.

Question 40

POA refers to:

A) payments of Australian debts.
B) payments of assets.
C) all the financial institutions in Australia.
D) the ways in which the Australian payments system can be accessed.

Question 41

The Auto- Offset facility allows simultaneous settlement of non- batch payments for two ESA holders.

Question 42

The EFT Code governs online banking transactions, any debit card transactions, as well as credit card transactions that are signature- less.

Question 43

Most card providers do not apply the interest- free period on new purchases if credit card debt is carried over from previous months.

Question 44

In order for financial institutions to participate in RITS, they are required to hold an exchange settlement account (ESA) with the ASX.

Question 45

The Australian Paper Clearing System (APCS) looks after cheques and other paper- based payments such as payment orders.

Question 46

Account holders are free of liability in cases of initial and consequential losses arising from the malfunctioning of a financial institution's systems or equipment.

Question 47

Another way for fraudsters to obtain credit card details is through cold calls.

Question 48

Credit cards can be used for national or international online (internet) and telephone purchases, and are a convenient payment method for purchases made while overseas.

Question 49

EB provides better, faster and more convenient services to customers.

Question 50

Electronic banking has led to a decrease in fees.

Question 51

Approximately 73% of Australia's adults used online banking services around the year 2000.

Question 52

Within days of the (stimulus) package being announced, scammers had a phishing email designed to get people's personal information.

Question 53

The cost of entry to the ATM system is set at $10,000 (excluding GST).

Question 54

Bilateral agreements allow customers of one financial institution to access their funds through ATMs of a foreign institution.

Question 55

The RBA's major role is to ensure that none of the arrangements made in the payments system contravene the Trade Practices Act 1974, unless they are judged to be in the best interest of the public.

Question 56

There are two types of direct entry payments: credit transactions and debit transactions.

Question 57

Since interchange fees are no longer a form of income for ATM owners they are not allowed to directly charge non- customers at the time of ATM usage.

Question 58

Unauthorised transactions where there is no liability to account holders include those in which a forged, expired, cancelled or faulty card or PIN was used; losses caused by negligence or fraud by employees of any party (other than the account holder) associated with the transaction; losses caused by multiple debiting of a transaction; or losses caused after the notification by an account holder of a stolen or lost card, or other electronic device.

Question 59

Honeymoon rates might be attractive since they present a promise for a low- interest period, but they also bear the risk of accruing significant levels of debt, which are ironically driven by high interest rates and charges.

Question 60

The more features that are attached to a credit card, the lower its fees and charges.

Question 61

Settlement of low value payments occurs at 10 am on the business day after the transaction has been made and is referred to as 'the 10 am batch'.

Question 62

The APRA's control over the payments system is set out in the Payment Systems (Regulation) Act 1998 which empowers the Bank to designate the payments system, and to determine rules and regulations for participation in it.

Question 63

Two major features of RITS are the System Queue and the Auto- Offset facility.

Question 64

EB offers greater accessibility and functionality.

Question 65

Skimming refers to the electronic copying of card details (from the magnetic stripe) to produce counterfeit cards.

Question 66

Since customers pay the same foreign ATM transaction fee, independent of the interchange fee set by the institutions taking part in the transaction, they have no incentive to prefer one foreign ATM over another.

Question 67

Are Australian- issued credit cards accepted overseas?

Question 68

Trades in Commonwealth Government, semi- government and private debt securities are cleared through Austraclear, foreign exchange transactions through the Continuous Linked Settlement Bank (CLS Bank) and equity trades through CHESS (Clearing House Electronic Sub- register System).

Question 69

Are credit cards suitable for everyone?

Question 70

What are the advantages and disadvantages of EB?