Pricing Mastery Final Exam

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About This Quiz

The 'Pricing Mastery Final Exam' assesses knowledge on payment processing, focusing on interchange rates, transaction types, and related fees. It is designed for professionals seeking to understand the nuances of financial transactions in business.

Pricing Mastery Final Exam - Quiz
Questions and Answers
  • 2. 

    Review this statement and answer Questions 28 through 40.Note: Questions 28 through 33 are worth double the points of all other questions on the exam. Give extra consideration to ensuring accurate answers.Hint: The most common mistake for determining Total Competitor Fees on this statement is not subtracting ALL of the Discover fees. Look throughout the statement; two Discover line items are very easy to overlook.

  • 3. 

    Answer the following questions regarding EIRF and Level II.

  • 4. 

    Which of the following are HPS costs that impact Margin? (Check all that apply)

    • Interchange

    • Monthly Statement Fee

    • Transaction Fee

    • Monthly Discounting Cost

    • Monthly SRM Cost

    Correct Answer(s)
    A. Transaction Fee
    A. Monthly Discounting Cost
    A. Monthly SRM Cost
    Explanation
    The costs that impact Margin in HPS are Transaction Fee, Monthly Discounting Cost, and Monthly SRM Cost. Interchange and Monthly Statement Fee do not directly impact the Margin.

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  • 5. 

    How much is our monthly SRM cost on Exchange? 

    Correct Answer(s)
    $25
    25
    25.00
    $25.00
    twenty five dollars
    twenty-five dollars
    25.
    Explanation
    The correct answer is $25, 25, 25.00, $25.00. These options all represent the same amount in different formats. The dollar sign ($) indicates the currency, and the numbers 25 and 25.00 represent the cost. The other options, "twenty five dollars" and "twenty-five dollars," are written out forms of the amount. The option "25." is incomplete and does not specify the currency, so it is not a correct answer.

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  • 6. 

    Calculate 38 Basis Points on $550,000.

    • $20.90

    • $2,090

    • $14,474

    • None of the above

    Correct Answer
    A. $2,090
    Explanation
    $550,000 X .0038 = $2,090

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  • 7. 

    If you price a transaction at 9 cents and the Average Ticket is $13.00, what is the margin generated per transaction? (Assume that the merchant is processing on a Dial terminal and on HPS Exchange.)

    • 144 BP

    • 50 BP

    • 69 BP

    • 58 BP

    Correct Answer
    A. 50 BP
    Explanation
    You must first subtract the cost of a Dial transaction (2.5 cents) from the 9 cent fee and then use the Formula:
    Trans Fee Margin ÷ Average Ticket = BP Profit
    $.065 ÷ $13.00 = .0050 (50 BP)

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  • 8. 

    Convert the $25 Monthly SRM Cost to Basis Points for a merchant processing $25,000 monthly.

    • 1 BP

    • 10 BP

    • 100 BP

    • None of the above

    Correct Answer
    A. 10 BP
    Explanation
    Monthly SRM ÷ Monthly Volume = BP
    $25 ÷ $25,000 = .0010 (10 BP)

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  • 9. 

    Does this statement contain Junk Fees?

    • Yes

    • No

    Correct Answer
    A. Yes
    Explanation
    The statement is asking whether there are junk fees present. The answer "Yes" suggests that there are indeed junk fees included in the statement or situation being referred to. However, without further context or information, it is difficult to determine the specific nature or details of these junk fees.

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  • 10. 

    Does this statement show Interchange Refunds being withheld by the processor (for Returns/Credits items)?

    • Yes

    • No

    Correct Answer
    A. No
    Explanation
    There are no Returned items or Credits issued to customers, therefore no Interchange refunds issued to the processor. If Returns/Credits were present on this statement, it would be important to validate whether or not the processor passed along Interchange Refunds.

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  • 11. 

    Does this statement show daily discounting that could be leveraged as a Yellow Flag?

    • Yes

    • No

    Correct Answer
    A. No
    Explanation
    There is no daily discounting present on this statement.

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  • 12. 

    What are the primary reasons that a transaction might downgrade to EIRF? Check ALL that apply.

    • The transaction was not settled within 24 hours of being authorized.

    • The transaction was key-entered and missing AVS info.

    • The transaction was not settled within 48 hours of being authorized.

    • The transaction was over $1,000.

    Correct Answer(s)
    A. The transaction was key-entered and missing AVS info.
    A. The transaction was not settled within 48 hours of being authorized.
    Explanation
    The primary reasons that a transaction might downgrade to EIRF are if the transaction was key-entered and missing AVS info, and if the transaction was not settled within 48 hours of being authorized.

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  • 13. 

    Which of the following are true in regard to Level II processing? Check ALL that apply.

    • Level II applies to corporate cards used in a sales tax environment.

    • Level II can be utilized in any business type.

    • Level II must be indicated on the Equipment Setup screen in atlas to take effect.

    • Level II rates are higher than typical corporate card rates.

    Correct Answer(s)
    A. Level II applies to corporate cards used in a sales tax environment.
    A. Level II must be indicated on the Equipment Setup screen in atlas to take effect.
    Explanation
    Level II cannot be implemented in Restaurants or Lodging environments.
    Level II rates are LOWER than typical corporate card rates; over 1/2% lower than typical key-entered corporate card rates.

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  • 14. 

    True/False: All processors, regardless of size, pay the same Interchange rates. 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    All processors, regardless of size, pay the same Interchange rates. This means that whether a processor is a large corporation or a small business, they will be charged the same rates for Interchange fees. Interchange rates are determined by the card networks, such as Visa and Mastercard, and are the fees that processors must pay for each transaction made with their cards. The fact that all processors pay the same Interchange rates ensures fairness and equal treatment in the payment processing industry.

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  • 15. 

    DPI is an industry abbreviation for:

    • Discover Processing Index

    • Determinating Price Index

    • Discount Per Item

    • Discount Price Indicator

    Correct Answer
    A. Discount Per Item
    Explanation
    DPI stands for Discount Per Item. This industry abbreviation refers to the discount amount applied to each individual item in a transaction. It indicates the reduction in price for each item purchased, allowing customers to calculate their total savings.

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  • 16. 

    Which of the following are Interchange-related fees? (Check all that apply)

    • Assessments

    • Discount Rate

    • Batch Fee

    • DPI

    • MasterCard NABU Fee

    • PCI Compliance Fee

    • Visa FANF

    Correct Answer(s)
    A. Assessments
    A. Discount Rate
    A. DPI
    A. MasterCard NABU Fee
    A. Visa FANF
    Explanation
    Interchange-related fees are fees that are charged by payment networks such as Visa and MasterCard. These fees are typically charged to merchants for the processing of credit and debit card transactions. Assessments, Discount Rate, DPI (Data Processing Integrity) fees, MasterCard NABU (Network Access and Brand Usage) Fee, and Visa FANF (Fixed Acquirer Network Fee) are all examples of interchange-related fees. Batch Fee and PCI Compliance Fee, on the other hand, are not interchange-related fees as they are not directly related to the payment network's interchange system.

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  • 17. 

    True/False: An RM can choose the MCC code that is assigned to a merchant in order to get the best interchange rates possible. 

    • True

    • False

    Correct Answer
    A. False
    Explanation
    MCC codes are assigned by Underwriting, based on the products and services being transacted.

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  • 18. 

    For a swiped transaction, which one of the following card types would typically have the highest Interchange rate?

    • Check Card

    • Corporate Card

    • Rewards Card

    Correct Answer
    A. Corporate Card
    Explanation
    Corporate cards typically have the highest interchange rates for swiped transactions. This is because corporate cards are often used by businesses for their employees' expenses, and they usually have higher spending limits and more rewards or benefits associated with them. The higher interchange rate helps to cover the additional costs and risks associated with corporate card transactions.

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  • 19. 

    True/False: A key-entered transaction will receive the same rate as a swiped transaction if address information is provided. 

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Entering correct address information when AVS is being utilized can prevent the Key-Entered rate from downgrading to a much higher rate (EIRF).

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  • 20. 

    True/False: Entering the CVV code from the back of the customer's card will not affect the Interchange rate. 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Entering the CVV code from the back of the customer's card will not affect the Interchange rate because the CVV code is an additional security measure used to verify the authenticity of the card during online transactions. The Interchange rate is determined by various factors such as the type of card, the merchant's industry, and the transaction method, but it is not influenced by the CVV code.

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  • 21. 

    True/False: Transactions that are not settled (batched out) within 24 hours of being authorized will result in a higher Interchange Rate. 

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Transactions are allowed up to 48 hours from authorization to settlement before triggering a downgrade.

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  • 22. 

    "Small Ticket" Interchange applies to certain transactions that are $____ and under. 

    • 10

    • 15

    • 20

    • 25

    Correct Answer
    A. 15
    Explanation
    The "Small Ticket" Interchange applies to transactions that are $15 and under. This means that for transactions with a value of $15 or less, a specific interchange rate will be applied. This rate is likely to be lower than the interchange rate for transactions above $15, as it is designed to incentivize merchants to accept small ticket transactions.

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  • 23. 

    True/False: Debit cards that are Regulated by the Durbin legislation have Interchange capped at .05% and 22 cents DPI (21 cents DPI if no fraud prevention measures in place.) 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Debit cards that are regulated by the Durbin legislation have interchange fees capped at 0.05% and a maximum of 22 cents per transaction (or 21 cents if no fraud prevention measures are in place). This means that the fees charged to merchants for processing debit card transactions are limited by law to these amounts. Therefore, the statement "True" is correct.

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  • 24. 

    What factor determines whether a debit card is Regulated or not? 

    • The cardholder must enter their 4 digit PIN

    • The card was issued by a bank with at least $10 billion in assets

    • The card has either a Visa or Mastercard logo on the front

    • The card is key-entered rather than swiped

    Correct Answer
    A. The card was issued by a bank with at least $10 billion in assets
    Explanation
    The factor that determines whether a debit card is regulated or not is if the card was issued by a bank with at least $10 billion in assets.

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  • 25. 

    Durbin Regulation results in a lower cost per transaction for most debit card purchases, but can actually cost more for very small transactions. 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Merchants who normally receive the Small Ticket rate for a small transaction and pay only $0.04 DPI will pay $0.22 DPI if the card is Regulated.

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  • 26. 

    Which of the following are true regarding Interchange refunds? (choose all that apply) 

    • When a refund is issued to a customer's credit card, an Interchange refund is issued to the processor

    • All processors pass Interchange refunds on to all of their merchants

    • The Interchange refund may not necessarily match the exact amount of Interchange originally assessed on the purchase

    • Visa does not issue Interchange refunds for debit card transactions

    Correct Answer(s)
    A. When a refund is issued to a customer's credit card, an Interchange refund is issued to the processor
    A. The Interchange refund may not necessarily match the exact amount of Interchange originally assessed on the purchase
    A. Visa does not issue Interchange refunds for debit card transactions
    Explanation
    When a refund is issued to a customer's credit card, an Interchange refund is issued to the processor. This means that when a customer receives a refund, the processor also receives a refund from the Interchange. The Interchange refund may not necessarily match the exact amount of Interchange originally assessed on the purchase. This means that the refund amount may be different from the initial Interchange amount. Visa does not issue Interchange refunds for debit card transactions. This means that Interchange refunds are not applicable to debit card transactions made through Visa.

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  • 27. 

    True/False: PIN Debit is exempt from Durbin Regulation

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Debit cards issued by banks with $10+ Billion in assets are Regulated, whether transacted as PIN or signature debit

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  • 28. 

    When is it more cost effective for a merchant to use a PIN Pad? 

    • On transactions of $40 or higher

    • It depends upon several variables related to how the merchant is priced

    • PIN Debit is always more cost effective for the merchant

    Correct Answer
    A. It depends upon several variables related to how the merchant is priced
    Explanation
    The correct answer is "It depends upon several variables related to how the merchant is priced." The cost effectiveness of using a PIN Pad for a merchant depends on various factors such as the pricing structure, transaction volume, and fees associated with different payment methods. These variables can vary from one merchant to another, so it is not possible to determine a specific threshold like transactions of $40 or higher.

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  • 29. 

    The "S" in "SRM" stands for ____________. (Ensure that your answer is spelled correctly.)

    Correct Answer
    service
    Service
    Explanation
    The "S" in "SRM" stands for service. This refers to the concept of providing a service or assistance to others. It could be related to customer service, support, or any other form of service-oriented work. The capitalized "Service" is also a correct answer as it emphasizes the importance of the term in the acronym.

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  • 30. 

    The "R" in "SRM" stands for ____________. (Ensure that your answer is spelled correctly.)

    Correct Answer
    regulatory
    Regulatory
    Explanation
    The "R" in "SRM" stands for regulatory. Regulatory refers to the process of creating and enforcing rules and regulations in order to ensure compliance and maintain control over a particular industry or sector. In the context of SRM, it likely refers to the regulatory aspect of managing supplier relationships and ensuring that suppliers adhere to relevant regulations and standards.

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  • 31. 

    1 Basis Point can be expressed as which of the following? (Choose all that apply.)

    • .0001

    • 0001%

    • .01%

    Correct Answer(s)
    A. .0001
    A. .01%
    Explanation
    A basis point is a unit of measure used in finance to represent a percentage change in interest rates or other financial instruments. It is equal to one-hundredth of a percentage point, or 0.01%. Therefore, the correct answers are .0001 (which represents 0.01%) and .01% (which is the equivalent of one basis point).

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  • 32. 

    Our cost for a Dial PIN Debit transaction on Exchange is:

    • $.025

    • $.043

    • $.08

    • $.11

    Correct Answer
    A. $.043
    Explanation
    The correct answer is $.043 because it is the only option that matches the given cost for a Dial PIN Debit transaction on Exchange. The other options ($.025, $.08, and $.11) do not match the given cost and are therefore incorrect.

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  • 33. 

    If you price a transaction at 10 cents and the Average Ticket is $8.50, what is the margin generated per transaction? (Assume that the merchant is processing on an IP terminal and on HPS Exchange.) HINT: Move the decimal point 4 places to the right when looking at the results.

    • 1 BP

    • 10 BP

    • 100 BP

    • 1,000 BP

    • None of the Above

    Correct Answer
    A. 100 BP
    Explanation
    You must first subtract the cost of an IP transaction (1.5 cents) from the 10 cent fee and then use the Formula:
    Trans Fee Margin ÷ Average Ticket = BP Profit
    $.085 ÷ $8.50 = .0100 (100 BP)

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  • 34. 

    Which of the following is true regarding merchant attrition?

    • Price alone has little statistical impact on attrition

    • Selling on savings will result in keeping merchants longer

    • Our smallest merchants on average remain with Heartland the longest

    • All of the above

    Correct Answer
    A. Price alone has little statistical impact on attrition
    Explanation
    The correct answer is "Price alone has little statistical impact on attrition." This means that the price of a product or service is not the main factor that influences merchant attrition. Other factors, such as the value provided by the product or service, customer service, and overall satisfaction, may have a greater impact on whether a merchant stays or leaves.

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  • 35. 

    When entering data for an Atlas statement analysis for this statement, what value would you enter for Visa/MasterCard Volume? (Do NOT include a $ sign in your answer. Use exact numbers - no rounding.)

    Correct Answer
    85267.28
    85,267.28
    Explanation
    The value that should be entered for Visa/MasterCard Volume in the Atlas statement analysis for this statement is 85,267.28.

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  • 36. 

    When entering data for an Atlas statement analysis for this statement, what value would you enter for Visa/MasterCard Number of Transactions?

    Correct Answer
    1898
    1,898
    Explanation
    The value that should be entered for Visa/MasterCard Number of Transactions is "1898,1,898". This indicates that there were 1,898 transactions for Visa/MasterCard. The comma is used to separate thousands in the number.

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  • 37. 

    When entering data for an Atlas statement analysis for this statement, what value would you enter for Total Fees? (Do NOT include a $ sign in your answer. Use exact numbers - no rounding.)

    Correct Answer
    1533.95
    1,533.95
    Explanation
    The value that should be entered for Total Fees in the Atlas statement analysis for this statement is 1533.95. This is the correct value without any formatting or rounding. The alternative answer of 1,533.95 is incorrect because it includes a comma, which is not allowed in the answer.

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  • 38. 

    When Editing the Interchange in Atlas, using the Interchange Plus Statement Edit Feature, what would you enter for a transaction fee? Express your answer in this format: .01 (which would represent 1 cent.)

    Correct Answer
    $.10
    .10
    $0.10
    0.10
    10
  • 39. 

    When Editing the Interchange in Atlas, using the Interchange Plus Statement Edit Feature, what would you enter for Basis Points? Express your answer in this format: .01 (which would represent 1 Basis Point.)

    Correct Answer
    .0010
    .001
    Explanation
    In the given question, the correct answer is .0010 and .001. When editing the Interchange in Atlas and using the Interchange Plus Statement Edit Feature, the basis points are entered in the format of .01, which represents 1 basis point. Therefore, .0010 represents 10 basis points and .001 represents 1 basis point.

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  • 40. 

    When Editing the Interchange in Atlas, using the Interchange Plus Statement Edit Feature, what would you enter for Other Monthly Fees? (Do NOT include a $ sign in your answer. Use exact numbers - no rounding.)

    Correct Answer
    77.00
    77
    77.06
    Explanation
    GCF-Government Compliance Fee, Statement Fee, Gateway Fee, Batch Header Fee

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  • 41. 

    Should the "Statement Fee" be identified as a Junk Fee?

    • Yes, always

    • No, never

    • Yes, but only if not charging the merchant an SRM fee on our Heartland statement

    Correct Answer
    A. Yes, always
    Explanation
    Statement Fee is always considered Junk. If there is a fee that contains the words "Service" or "Regulatory" do not label as Junk if you intend to charge an SRM (Service & Regulatory Mandate Fee.)

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  • 42. 

    Is the "FANF-Visa Fixed Acquirer Network Fee" a Junk Fee?

    • Yes

    • No

    Correct Answer
    A. No
    Explanation
    The Fixed Acquirer Network Fee (FANF) is a fee assessed by Visa and is Interchange-related, not processor markup.

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  • 43. 

    Does this statement have any statement announcements of significance as Yellow Flags?

    • Yes

    • No

    Correct Answer
    A. Yes
    Explanation
    The given answer is "Yes" because the question asks whether the statement has any significant announcements as Yellow Flags. "Yellow Flags" typically refer to warnings or cautionary signals. Therefore, if the statement has any significant announcements or warnings, it can be considered as having Yellow Flags.

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Quiz Review Timeline (Updated): Nov 1, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Nov 01, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jul 10, 2014
    Quiz Created by
    HeartlandSales

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