Q&A Hero

Q: (p. 322) The independent regulatory commission is a regulatory agency run by a small group of commissioners independent of political control.

Q: (p. 321) The Equal Protection Clause has been interpreted to give the federal government wide power to regulate business.

Q: ________ are used for applications in which the data must be processed very quickly (e.g., mass-transit applications, such as paying bus or train fares) or when contact is difficult (e.g., security-entering mechanisms to buildings). A) Contact cards B) Contactless cards C) RFID cards D) EEPROM cards

Q: A special system that handles file management, security, input/output, and command execution and provides an application programming interface for a smart card best defines A) networking operating system. B) mobile operating system. C) smart card operating system. D) BIOS.

Q: (p. 320) Competitive markets operate more efficiently when their participants have enough information to make informed choices.

Q: An electronic card containing an embedded microchip that enables predefined operations or the addition, deletion, or manipulation of information on the card best defines A) pocket card. B) smart card. C) EPROM card. D) secure card.

Q: (p. 319) Externalities are costs of production borne by the enterprise that causes them.

Q: Which of the following is an online fraud detection tool that matches a customer's transaction against a file containing customer information that is flagged if the customer is a known problem? A) negative list B) profile list C) boycott list D) compliance list

Q: (p. 319) When companies dominate an industry, they may engage in unfair or destructive competition.

Q: Key tools used in combating online fraud include A) negative lists. B) manual reviews. C) address verification. D) all of the above.

Q: Discuss the World Bank study of the regulation of doing business in nations other than the U.S.

Q: In 2010, the median number of fraud detection tools used by merchants was A) 10.7. B) 2.9. C) 7.3. D) 4.6.

Q: (p. 340) Poorer countries generally have heavier regulation. How does this impact business?

Q: How is the cost of regulation calculated?

Q: Approximately 80 percent of merchants use the Address Verification System, which results in a number of ________, meaning that the merchant may reject a valid order. A) suspicious hits B) false negatives C) false positives D) positive verifications

Q: Discuss Congress oversight? Does it influence agency actions?

Q: ________ offer Internet Merchant Accounts, which are special accounts for credit card authorization and payment processing. A) Acquiring banks B) Issuing banks C) Credit card associations D) Payment processing services

Q: Explain the process of rulemaking

Q: According to a CyberSource survey, online revenue losses due to fraud in 2010 were A) $5.5 billion. B) $150 million. C) $2.7 billion. D) $9 billion.

Q: What is regulation? What is the first step in the creation of a new regulation?

Q: Which of the following participants in the online card payment process is the financial institution that provides card services to banks? A) issuing bank B) credit card association C) acquiring bank D) processor

Q: Which of the following participants in the online card payment process is the data center that processes card transactions and settles funds to merchants? A) processor B) merchant C) customer D) acquiring bank

Q: What is an independent regulatory commission? How did the first independent regulatory commission come into existence?

Q: A(n) ________ is a third-party service connecting a merchant's EC system to the appropriate acquiring bank or financial institution. A) Internet service provider (ISP) B) payment service provider (PSP) C) application service provider (ASP) D) credit service provider (CSP)

Q: What was the scenario during the first wave of federal regulation of business?

Q: Basic configurations for processing online payments include each of the following except A) using a POS operated by an acquirer. B) using a POS operated by a payment service provider. C) owning the payment software. D) contracting with an online cash checking company.

Q: What are some of the objectives that justify social and political regulations?

Q: Which of the following is an example of a charge card? A) MasterCard B) EuroPay C) Diner's Club card D) Visa

Q: List some of the market failures that justify regulation.

Q: Forms of payment cards include each of the following except A) credit cards. B) purchase cards. C) charge cards. D) debit cards.

Q: (p. 325) What is deregulation?

Q: An electronic card that contains information that can be used for payment purposes best describes A) host card. B) payment card. C) funds card. D) pocket card.

Q: (p. 324) What is an executive agency?

Q: (p. 322) What is an independent regulatory commission?

Q: The process of determining whether a card is active and whether the customer has sufficient funds for the purchase is called A) settlement. B) approval. C) authorization. D) procurement.

Q: Factors that come into play in determining whether a particular method of e-payment achieves critical mass include each of the following except A) dependence. B) ease of use. C) divisibility. D) regulations.

Q: Define the Commerce Clause

Q: Which of the following is a peer-to-peer encrypted digital currency created in 2009 by Satoshi Nakamoto? A) Bitcoin B) PayPal C) Kindle D) DotCoin

Q: Explain the term "natural monopoly."

Q: Which statement about the payment revolution is true? A) Cards and electronic payments are taking the place of cash and checks. B) Debit card use has been declining since 2003. C) Approximately 20 percent of recurring bills are paid electronically. D) By 2015, the U.S. will be a cashless society.

Q: (p. 341) Which of the following is NOT a part of the principles of good regulation set forth by the World Bank? A. Increase court involvement in business matters. B. Focus on enhancing property rights. C. Expand the use of technology. D. Make reform a continuous process.

Q: With letters of credit, credit risk is reduced because payment is accessed via the credit worthiness of the issuing bank.

Q: (p. 340-341) Which of the following statements about regulations is false? A. Regulation varies widely around the world. B. Poor countries regulate business in a consistent manner. C. Poor countries regulate business the most. D. Heavier regulation brings bad outcomes.

Q: Cash Concentration or Disbursement (CCD) is a type of ACH entry for B2B transactions.

Q: (p. 337-338) The burden of regulation can be measured or characterized by all of the following methods EXCEPT: A. impact of regulation on innovation. B. total dollar cost. C. cost of administering the regulatory process. D. impact of regulation on unemployment.

Q: The consolidator EIPP model links one seller to many buyers.

Q: (p. 335) The general rule that federal courts should defer to agency rules that are based on reasonable interpretations of ambiguous statutes is known as the _____ doctrine. A. laissez-faire B. Act of State C. Chevron D. Bernal

Q: Companies such as Walmart are likely to use the Seller Direct EIPP model.

Q: (p. 335) The _____ Act requires each agency to set up an adjudication process leading to trial before an administrative law judge. A. Congressional Accountability B. Administrative Procedure C. Congressional Review D. Apportionment

Q: The information divide is the gap between people with effective access to digital and information technology and those without.

Q: (p. 334) The _____ Act mandates that most new rules cannot go into effect until 60 days after they have been sent to Congress for analysis. A. Congressional Review B. Administrative Procedure C. Congressional Accountability D. Apportionment

Q: Mobile proximity payments involve a special mobile phone equipped with an integrated chip or smart card, a specialized reader that recognizes the chip when the chip comes within a short distance of the reader, and a network for handling the payment.

Q: (p. 332) Which of the following is true about guidance? A. It is legally binding. B. It is issued exclusively by Congress. C. It is intended to clarify official regulations. D. It does not affect existing rules.

Q: Mobile payment refers to payment transactions initiated or confirmed using a person's desktop computer.

Q: (p. 332) In addition to regulations, agencies issue larger volumes of _____ in documents such as memoranda, circulars, compliance manuals, and advisory opinions. A. rules B. policies C. principles D. guidance

Q: E-checks cannot be used with in-person purchases.

Q: (p. 331) After publication in the _____ final regulations are codified in the: A. Code of Federal Regulations; Official Congressional Directory. B. Federal Register; Code of Federal Regulations. C. Code of Federal Regulations; Federal Register. D. Federal Register; United States Reports.

Q: The Purchase Order Processing NACHA system does not require specialized readers for each checkout counter.

Q: (p. 331) When ready, rules in their final wording are printed in the: A. Federal Register. B. Code of Federal Regulations. C. Official Congressional Directory. D. United States Reports.

Q: An e-check is a legally valid electronic version or representation of a paper check.

Q: (p. 330) Executive-branch agencies have to submit proposed and final rules to the ____, whereas independent regulatory commissions must follow procedures in the: A. Office of Administration; Congressional Review Act. B. Office of Management and Budget; Sherman Antitrust Act. C. Office of Personnel Management; Emergency Economic Stabilization Act. D. Office of Information and Regulatory Affairs; Administrative Procedures Act.

Q: With the stored value micropayment model, up-front payments are made to a debit account from which purchases are deducted as they are made.

Q: (p. 330) Which of the following statements is true about rulemaking in the U.S. regulatory process? A. Proposed rules are sent by independent regulatory agencies to the Office of Information and Regulatory Affairs. B. Publication of a proposed rule opens a period, usually 60 to 90 days, during which the public can comment to the agency. C. Rulemaking for lesser regulations to be completed often takes years. D. An OIRA staff of about 50 scrutinizes a proposed rule to see if it is really needed.

Q: Regardless of the vendor's point of view, there is substantial evidence that consumers are not willing to use their credit or debit cards for micropayments under $5.

Q: (p. 330) What is a "significant regulatory action"? A. A rule to control risk in financial markets. B. A rule with an annual effect on the economy of $100 million or more. C. A rule that gives the federal government wide power to regulate business. D. A rule to bring "Relief, Recovery, and Reform."

Q: (p. 329) Proposed rules are sent by executive branch agencies to the _____ where a staff of about 50 scrutinizes the proposed rule to see if it is really needed, if all alternatives have been examined, and whether its costs are justified. A. Office of Administration B. Office of Management and Budget C. Office of Information and Regulatory Affairs D. Office of Personnel Management

Q: One benefit of smart cards versus standard cards is that they are more secure.

Q: In most cases, smart cards are more secure than credit cards and can be extended with other payment services. In the retail arena, many of these services are aimed at those establishments where payments are usually made in cash and speed and convenience are important.

Q: (p. 329) The _____ is a daily government publication containing proposed rules, final rules, and notices of public meetings by regulatory agencies, and presidential executive orders. A. Federal Register B. Code of Federal Regulations C. Official Congressional Directory D. United States Reports

Q: Most contact cards are EPROM.

Q: (p. 329) When an agency decides to promulgate a rule and the draft is ready, the agency publishes it as a proposed rule in the: A. Code of Federal Regulations. B. Official Congressional Directory. C. United States Reports. D. Federal Register.

Q: Contact and proximity are two types of smart card readers.

Q: (p. 329) The basic steps of the rulemaking process were set forth in the: A. Congressional Review Act. B. Sherman Antitrust Act. C. Administrative Procedures Act. D. Emergency Economic Stabilization Act.

Q: Technically speaking, a smart card reader is actually a read/write device. The primary purpose of the smart card reader is to act as a mediator between the card and the host system that stores application data and processes transactions.

Q: (p. 329) A _____ is a decree issued by an agency to implement a law passed by Congress. A. veto B. rule C. revocation D. stratagem

Q: Thirty-eight percent of all merchants use negative lists, which are files that include a customer's information and the status of that customer. A customer's transaction is matched against these files and flagged if the customer is a known problem.

Q: (p. 327-328) Which of the following is true about regulatory statutes? A. A bill containing regulatory authority has to be passed by at least one house of the Congress. B. After the bill containing regulatory authority is passed, it is assigned exclusively to an independent commission. C. Statutes contain all the specific rules needed. D. Federal regulation originates in an act of Congress.

Q: Over 80 percent of all merchants use the manual review method, which relies on staff to manually review suspicious orders.

Q: (p. 327) Government activity that guides the behavior of citizens, groups, and corporations to reach economic or social goals is known as: A. autarky. B. national treatment. C. regulation. D. liberalization.

Q: Card verification number (CVN) methods are useless against a fraudster who possesses the stolen credit cards.