Chapter 11: Payment Systems for Electronic Commerce
1. The use of mobile telephone carriers as a micropayment system has been held back by the mobile carriers’ substantial
charges for providing the service.
a.
True
b.
False
True
1
Moderate
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Bloom’s: Comprehension
2. Credit cards provide assurances for both the consumer and the merchant.
a.
True
b.
False
True
1
Easy
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3. Online and telephone purchases include a minimal degree of risk for merchants and banks.
a.
True
b.
False
False
1
Easy
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4. A debit card removes the amount of the sale from the cardholder’s bank account and transfers it to the seller’s bank
account.
a.
True
b.
False
True
1
Easy
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5. American Express and Discover Card are examples of open loop systems.
a.
True
b.
False
Chapter 11: Payment Systems for Electronic Commerce
False
1
Easy
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6. The level of fraud in online transactions is much lower than either in–person or telephone transactions of the same
nature.
a.
True
b.
False
False
1
Easy
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7. A front-end processor handles chargebacks and any other reconciliation items through the interchange network and the
acquiring and issuing banks.
a.
True
b.
False
False
1
Easy
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United States – BUSPROG: Technology
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8. Credit card issuers charge interest on any unpaid balance.
a.
True
b.
False
True
1
Easy
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9. Charge cards involve lines of credit and accumulate interest charges.
a.
True
b.
False
False
1
Easy
10. Concerns about electronic payment methods include privacy and security, independence, portability, and convenience.
a.
True
b.
False
True
1
Easy
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11. Digital cash can be easily traced back to its origin.
a.
True
b.
False
False
1
Easy
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12. 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.
a.
True
b.
False
True
1
Easy
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13. In an online storage system, the merchant must contact the consumer’s bank to receive payment for a purchase.
a.
True
b.
False
True
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Easy
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Bloom’s: Knowledge
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Bloom’s: Knowledge
14. A two-part lock provides anonymous security but signals when someone is attempting to double spend cash.
a.
True
b.
False
True
1
Easy
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United States – BUSPROG: Technology
Bloom’s: Knowledge
15. For merchants, payment cards provide fraud protection.
a.
True
b.
False
True
1
Easy
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Bloom’s: Knowledge
16. Payment card service companies charge merchants per-transaction fees and monthly processing fees for processing
payments.
a.
True
b.
False
True
1
Easy
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17. Digital cash ought to be anonymous, just as currency is.
a.
True
b.
False
True
1
Easy
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18. Using digital cash provides an audit trail.
a.
True
b.
False
False
19. Offline cash storage is similar to money kept in a wallet.
a.
True
b.
False
True
1
Easy
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20. In an offline cash storage system, a consumer does not personally possess digital cash, instead a trusted party holds the
consumers’ cash accounts.
a.
True
b.
False
False
1
Easy
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21. Smart cards are safer than magnetic strip credit cards because the information stored on a smart card can be encrypted.
a.
True
b.
False
True
1
Easy
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22. The Check Clearing for the 21st Century Act permits banks to eliminate the movement of physical checks entirely.
a.
True
b.
False
True
1
Easy
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1
Easy
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Bloom’s: Knowledge
23. Typically, server-side digital wallets store a customer’s information on the customer’s computer.
a.
True
b.
False
False
1
Easy
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24. Magnetic strip cards can send and receive information.
a.
True
b.
False
False
1
Easy
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25. 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.
a.
True
b.
False
26. 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
b
1
Easy
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27. The term _____ refers to all payments less than $10.
a.
mini payments
b.
small payments
Bloom’s: Knowledge
Chapter 11: Payment Systems for Electronic Commerce
c.
minitransactions
d.
microtransactions
b
Easy
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Bloom’s: Knowledge
28. 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.
d
1
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United States – BUSPROG: Technology
Bloom’s: Comprehension
29. Payment cards with disposable numbers are known as _____.
a.
charge cards
b.
single-use cards
c.
credit cards
d.
store-branded cards
1
United States – BUSPROG: Technology
Bloom’s: Knowledge
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
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Bloom’s: Knowledge
31. 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
b
Easy
32. A _____ handles chargebacks and any other reconciliation items.
a.
front-end processor
b.
back-end processor
c.
clearing house
d.
payment gateway
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Bloom’s: Knowledge
33. 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
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Bloom’s: Knowledge
34. 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.
United States – BUSPROG: Technology
Bloom’s: Knowledge
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
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Bloom’s: Knowledge
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Bloom’s: Knowledge
36. 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
b
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Easy
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37. 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
38. 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
39. 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
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Easy
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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.
Chapter 11: Payment Systems for Electronic Commerce
a.
back-end processor
b.
front-end processor
c.
server-side digital wallet
d.
client-side digital wallet
United States – BUSPROG: Technology
Bloom’s: Knowledge
41. 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.
United States – BUSPROG: Technology
Bloom’s: Comprehension
42. _____ 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
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Bloom’s: Knowledge
43. 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
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Bloom’s: Knowledge
44. 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
45. 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
d
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46. 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
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47. 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
48. 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
1
Easy
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49. _____ 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
b
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50. A _____ can be used as a hardware-based digital wallet.
a.
database
b.
personal computer
c.
server
d.
smartphone
d
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51. With a(n) _____, a user can pay off the entire card balance or pay a minimum amount each billing period.
credit card
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52. Businesspeople often use the term _____ as a general term to describe all types of plastic cards that consumers use to
make purchases.
payment card
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53. Prepaid cards sold with the intention that they be given as presents are called _____.
gift cards
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54. _____ are responsible for evaluating their customers’ credit standings and establishing appropriate individual credit
limits.
55. Visa and MasterCard are _____ that are operated by the banks which issue credit cards to individual customers.
56. To process payment cards for Internet transactions, an online merchant must set up a(n) _____ with an acquiring bank.
57. _____ are fees charged by banks for providing payment card processing services to merchants.
58. _____ 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.
59. _____ 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.
60. _____ 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.
61. _____ can be accomplished by purchasing goods or services with ill-gotten electronic cash and selling them for
physical cash on the open market.
62. 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.
63. Near field communication chips embedded in mobile phones are called Osaifu-Keitai in Japan, which translates
approximately to _____.
64. A(n) _____, serving a function similar to a physical wallet, holds credit card numbers, electronic cash, owner
identification, and other owner contact information.
65. Google Wallet, Microsoft Windows Live ID, and Yahoo! Wallet are examples of _____ digital wallets.
66. Google Wallet, which uses the _____ technology that MasterCard developed for its credit cards, is available for
mobile devices.
67. In phishing, _____ use the collected information.
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.
69. 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.
70. A _____ is a three- or four-digit number printed on a credit card, and is required for card not present transactions.
71. In phishing, the collection of information is done by _____.
72. _____ are created when a hacker plants zombie programs on a large number of computers.
73. 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) _____.
74. When the e-mails used in a phishing expedition are carefully designed to target a particular person or organization, the
exploit is called _____.
75. U.S. laws define _____, as unlawful activities conducted by a highly organized, disciplined association for profit.
76. What is the difference between a credit card and a charge card?
77. What are the advantages and disadvantages of payment cards?
78. Processing a payment card transaction online involves two general processes. Describe these processes.
79. What are the disadvantages of using paper checks?
80. How are phishing attacks used for identity theft?