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Can you summarize FFIEC IT Examination Handbook > Retail Payment Systems?
FFIEC IT Examination Handbook > Retail Payment Systems
Short Summary
The provided legal document, Appendix E of the Federal Financial Institutions Examination Council (FFIEC) IT Examination Handbook, focuses on the risks associated with Mobile Financial Services (MFS) and emphasizes an enterprise-wide risk management approach. It discusses the technologies used in the mobile channel and provides guidance for integrating MFS into an institution’s risk management program. The document also provides a set of work program objectives for examiners to assess the effectiveness of an institution’s MFS risk management. The technologies covered in the document include Short Message Service (SMS), mobile-enabled websites, mobile applications, and wireless payment technologies. The document highlights the risks associated with each technology and provides recommendations for risk mitigation. Overall, the document aims to help financial institutions increase customer access to financial services through mobile devices while effectively managing the associated risks. The provided legal document, an appendix to the Federal Financial Institutions Examination Council (FFIEC) IT Examination Handbook, focuses on the schematic representation of retail payments access channels and payment methods. It categorizes retail payments into two groups based on the access channel and payment method. The document includes a schematic diagram illustrating the different payment methods and access channels, with examples of payment types in each category. It highlights that retail payments can be conducted through various electronic networks, in addition to traditional cash and check processes. The document emphasizes the continuous evolution of retail payment systems due to technological advancements, enabling financial institutions to develop new products and services while promoting economies of scale and accessibility for smaller institutions. This document, Appendix A of the Federal Financial Institutions Examination Council (FFIEC) IT Examination Handbook, provides examination procedures for evaluating the policies, procedures, business processes, personnel, and internal control systems of financial institutions and technology service providers in the retail payment systems. The scope of the examination is based on the risk profile of the institution or service provider, considering factors such as the types of retail payment products and services offered, the quality of management and staff, the adequacy of process design and control points, and the use of in-house and outsourced data processing systems. The document also emphasizes the importance of risk management and support for bankcard issuance and acquiring, EFT/POS processing, ACH processing, and electronic banking-related retail payment transaction processing. Overall, the document aims to ensure the effectiveness of internal controls and risk management processes in retail payment systems. This document provides an overview of retail payment systems, which involve transactions between consumers, between consumers and businesses, or between businesses. Retail payment systems typically have higher transaction volumes and lower average dollar values compared to wholesale payment systems. The document discusses various types of retail payments, including the purchase of goods and services, bill payment, person-to-person (P2P) payments, account-to-account (A2A) payments, and cash withdrawals and advances. It highlights the evolution of retail payment systems with advances in technology, the shift from paper to electronic payments, and the use of automated bill pay. The document also mentions the emergence of international retail payments in the ACH industry. Overall, the document provides background information on retail payment systems and the trends shaping the industry. The provided legal document, the FFIEC IT Examination Handbook’s ‘Retail Payment Systems Booklet,’ offers guidance to examiners, financial institutions, and technology service providers (TSPs) on identifying and controlling risks associated with retail payment systems and related banking activities. It highlights the importance of diligent oversight of third-party service providers and emphasizes the need for improved operational, credit, legal, and compliance risk processes for retail payment products. The document covers various retail payment instruments, clearing and settlement processes, and risk management practices. It also includes guidance on emerging technologies in retail payment systems. The booklet references other IT Handbook booklets and FFIEC guidance relevant to retail payment systems. Overall, it aims to provide comprehensive guidance for managing risks in retail payment systems. This document provides a comprehensive list of laws, regulations, and guidance related to retail payment systems. It covers various aspects of retail payment systems, including authentication, access to financial institution services and systems, expedited funds availability, check clearing, fair credit reporting, electronic funds transfer, Gramm-Leach-Bliley Act, USA Patriot Act, and Bank Secrecy Act. The document also includes specific regulations and guidance issued by the Federal Reserve Board, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and Office of Thrift Supervision. Financial institutions, including banks, credit unions, and thrift institutions, are the primary entities to which these laws, regulations, and guidance apply. Non-compliance with these laws and regulations may result in penalties, the specific amount of which depends on the particular law or regulation violated. This document, Appendix B of the Federal Financial Institutions Examination Council (FFIEC) IT Examination Handbook, provides a glossary of terms related to retail payment systems. It covers various terms and concepts such as Account Balancing Monitoring System (ABMS), Account-To-Account Payment (A2A), Acquirer Fee, Address Verification Service (AVS), Authentication, Authorization (ACH), Automated Clearing House (ACH), Automated Teller Machine (ATM), Back Office Conversion (BOC), Bank Identification Number/Interbank Card Company (BIN/ICA), Bank Secrecy Act, Bankcard, Bankcard Companies, Batch Processing, Card Issuer, Card Verification Code (CVC2), Card Verification Value (CVV2), Cash Letter, Chargeback, Check, Check 21 Act, Check Clearing, Check Image, Check Truncation, Clearance, Clearing Corporation, Clearing House Associations, Clearing House Interbank Payment Systems (CHIPS), Commercially Reasonable, Consumer, Consumer Account, Correspondent Bank, Credit Card, Credit Entry, Daylight overdraft, Debit card, Debit entry, Deferred net settlement, Depository, Depository bank, Direct debit, Direct deposit, Direct presentment, Electronic Benefits Transfer (EBT), Electronic bill presentment and payment (EBPP), Electronic check conversion, Electronic check presentment (ECP), Electronic commerce (E-Commerce), Electronic data capture (EDC), Electronic funds transfer (EFT), Electronic Funds Transfer Act (EFTA), Electronically-created payment orders, Encryption, Expedited Funds Availability Act (EFAA), Exposure limit, Federal Reserve Banks, Fedwire, Finality, Financial EDI (FEDI), Float, Gramm-Leach-Bliley Act (GLBA), Image archive, Image capture, Image exchange, Indemnifying bank, Independent sales organization, Interbank checks, Interchange, Interchange fees, Internet, Key fob, Large value funds transfer system, Lockbox, Magnetic ink character recognition (MICR), Merchant acquirer, Merchant processing, Multi-factor authentication, NACHA - The Electronic Payments Association, National Settlement Service (NSS), Net debit cap, Office of Foreign Assets Control (OFAC), On-us checks, Originating depository financial institution (ODFI), Originator, Paying bank, Payment, Payment system, Payments System Risk Policy (PSR), Payroll card account, PCI Security Standards Council, Person-to-person (P2P) payment, Point-of-sale (POS) network, Presentment fee, Private label card, Real time gross settlement (RTGS) System, Receiver, Receiving depository financial institution (RDFI), Reconverting bank, Regulation CC, Regulation E, Regulation Z, Remittance cards, Remote deposit capture (RDC), Remotely created check (RCC), Reserve account, Reserve requirements, Retail payments, Return (ACH), Routing number, Settlement, Settlement date (ACH), Single-Entry (ACH), Standard Entry Class (SEC) code, Store card, Stored-value card, Substitute check, System, Third-party sender, Third-party service provider (ACH), Truncating bank, U.S.A. Patriot Act, WEB SEC code. This document provides guidance on the risk management of retail payment systems for financial institutions. It emphasizes the need for an appropriate risk management process that identifies, measures, monitors, and limits risks associated with retail payment systems. The document highlights the importance of effective internal and external audit, information security, business continuity planning, vendor management, operational controls, and legal measures in managing and mitigating risks. It also emphasizes the need for compliance with federal and state laws, regulations, and operating rules of clearing houses and bankcard networks. The document recognizes the varying risk profiles based on the size, complexity, and nature of financial institutions’ participation in retail payment systems. It emphasizes the importance of an enterprise-wide view of retail payment activities and the consideration of risks posed by third-party service providers. Overall, the document aims to ensure that financial institutions tailor their risk management strategies to the specific risks associated with their participation in retail payment systems. This document provides an overview of payment instruments, clearing, and settlement processes used in retail payment systems. It covers various payment methods such as check-based payments, card-based electronic payments, and online person-to-person payments. The document explains the flow of information and funds in these payment systems and highlights the role of financial institutions, consumers, and merchants. It also discusses the risks and challenges associated with managing complex payment systems, including data integrity and security. Overall, the document aims to provide a comprehensive understanding of the payment instruments, clearing, and settlement processes used in retail payment systems.
Whom does it apply to?
Financial institutions, technology service providers (TSPs), examiners
What does it govern?
Retail payment systems, Mobile Financial Services (MFS)
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No specific penalties are mentioned.
Jurisdiction
U.S. Federal Government