#1
What does EFT stand for in the context of financial transactions?
Electronic Fund Transfer
ExplanationEFT stands for Electronic Fund Transfer, which involves the electronic exchange of money from one account to another.
#2
In EFT, what is the purpose of a 'routing number'?
To identify the financial institution
ExplanationRouting numbers uniquely identify financial institutions in electronic fund transfers, ensuring accurate routing of funds.
#3
Which technology is commonly used for secure communication in EFT transactions?
SSL/TLS
ExplanationSSL/TLS (Secure Sockets Layer/Transport Layer Security) protocols are commonly employed for secure communication in electronic fund transfer transactions, safeguarding sensitive data.
#4
What is the primary function of a 'token' in EFT security?
Physical device used for transaction verification
ExplanationTokens serve as physical devices used for transaction verification, adding an extra layer of security to electronic fund transfers.
#5
What is a 'pre-authorized debit' in the context of EFT?
An electronic debit initiated by the payee with the account holder's consent
ExplanationA pre-authorized debit is an electronic debit initiated by the payee with the account holder's consent, providing a convenient method for recurring payments.
#6
Which of the following is NOT a common type of Electronic Funds Transfer (EFT)?
ATM (Automated Teller Machine)
ExplanationATM is not a type of EFT but rather a physical device used for accessing funds from a bank account.
#7
What consumer right is protected by the Electronic Funds Transfer Act (EFTA) in the United States?
Right to timely and accurate disclosures
ExplanationEFTA ensures consumers have the right to receive timely and accurate information regarding their electronic transactions.
#8
Which type of EFT transfer is known for processing transactions in real-time?
RTGS
ExplanationRTGS (Real Time Gross Settlement) is known for processing transactions instantly, providing real-time fund transfer capabilities.
#9
What is the primary benefit of EFT for consumers?
Convenience and time savings
ExplanationEFT offers consumers convenience and time savings by enabling quick and easy electronic transactions without physical visits to banks.
#10
What is the maximum amount allowed for a single ACH transaction in the United States?
$10,000
ExplanationThe maximum amount allowed for a single ACH transaction in the United States is $10,000, providing a standard limit for electronic transfers.
#11
What information is typically required for an EFT transaction?
Account Number and Routing Number
ExplanationEFT transactions typically require the account number and routing number to accurately identify the sender and receiver's financial institutions.
#12
Which federal agency enforces the Electronic Funds Transfer Act (EFTA) in the United States?
Consumer Financial Protection Bureau (CFPB)
ExplanationThe CFPB is responsible for enforcing the EFTA, safeguarding consumers in electronic financial transactions.
#13
What is the purpose of a digital signature in the context of secure electronic funds transfers?
To verify the authenticity of the sender
ExplanationDigital signatures ensure the authenticity and integrity of electronic transactions by verifying the sender's identity.
#14
Which of the following statements is true regarding the liability of consumers for unauthorized EFT transactions?
Consumers have limited liability if they report unauthorized transactions promptly.
ExplanationConsumers are protected by limited liability if they promptly report unauthorized electronic transactions, minimizing financial losses.
#15
What role does the Federal Reserve play in the EFT system?
Processing and clearing EFT transactions
ExplanationThe Federal Reserve plays a crucial role in processing and clearing electronic fund transfer transactions, ensuring smooth financial operations.
#16
Which law governs international EFT transactions and sets standards for cross-border payments?
UNCITRAL Model Law on Electronic Transferable Records
ExplanationThe UNCITRAL Model Law on Electronic Transferable Records governs international EFT transactions, establishing standards for cross-border payments.
#17
What is the purpose of the Electronic Payments Association (NACHA) in the context of EFT in the United States?
Developing rules and standards for ACH transactions
ExplanationNACHA develops rules and standards for Automated Clearing House (ACH) transactions, ensuring efficiency and security in electronic fund transfers.