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Principle of Banking
Chapter 5
| Term | Definition |
|---|---|
| Magnetic ink character recognition (MICR) | Number printed in magnetic ink near the bottom of the front of a check to facilitate automated processing. |
| Smart phone | A mobile phone enabled to access the Internet. |
| Tablet | Handheld computer devices, with screens typically larger than smart phones and smaller than laptop computers, and using a touchscreen rather than a keyboard and mouse. |
| Electronic fund transfer (EFT) | A transfer of money from one bank account to another that is initiated through an electronic terminal, telephone, computer, or magnetic tape. |
| Originating Depository Financial Institution | The term adopted by NACHA – The Electronic Payments Association to refer to the bank that receives payment instructions from the originator and then forwards those instructions (entries) to the automated clearing house (ACH) operator. |
| Receiving Depository Financial Institution (RDFI) | The bank that receives automated clearing house (ACH) entries form the ACH operator and then posts them (either as credits or debits) to the accounts of its depositors, the receivers. |
| Settlement | The conclusion of a transaction, including completing all necessary documentation and making the necessary payments; the point at which claims and obligations are satisfied. |
| Daylight overdraft | (1) A negative balance created in an account when payments made during business hours exceed incoming funds actually received; (2) an overdraft in a bank’s reserve account at a Federal Reserve Bank during business hours. |
| Direct Deposit | A process by which funds are deposited electronically to bank accounts. Commonly used for payroll and Social Security payments. |
| Electronic Benefit Transfer (EBT) | A system for electronic payment of government-sponsored benefit programs using plastic cards and point-of-sale (POS) technology. |
| Radio Frequency Identification (RFID) | An automatic identification method that relies on storing and remotely retrieving data using devices that can be attached to, or incorporated into, products such as tags or transponders. |
| Remote Deposit Capture (RDC) | A service that allows consumers or businesses to scan checks and transmit the scanned images or automated clearing house data in an encrypted form to a bank for posting and clearing. |
| Electronic Check | An electronic version of a paper check that includes the date, payee name, payment amount, and signature. Checks bear a digital signature security code proving payment was authorized by the account holder. |
Created by:
Sharon.Spence
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