I85PREP
⌘ K
CTP study materials
CTP study resources

CTP (AFP): Payments, Technology and Banking Relationships

CTP · Work through your exam, one topic at a time.

All guide sections

Payments, Technology and Banking Relationships

Payments

Payments fundamentals

Payments is about moving value securely, efficiently, and with clear finality. Candidates should know the major rails, their settlement characteristics, and the controls that prevent fraud and error.

Concepts

  • U.S. rails: Fedwire (real-time gross settlement, irrevocable, high value), CHIPS (net settlement for USD international payments), ACH (batch, next-day and same-day, returnable in limited cases), checks, cards, and instant rails such as RTP and FedNow (24/7, credit-push).
  • Cross-border: SWIFT messaging (not settlement), correspondent banking, ISO 20022, FX conversion, and cut-off times.
  • Payment lifecycle: initiation, authorization, validation, clearing, settlement, finality, and reconciliation.
  • Controls: segregation of initiation and approval, positive pay, dual approval, callback verification, and sanctions screening.
  • Costs: wire fees, ACH fees, card interchange, and the value of float.

Traps

Treating ACH as irrevocable; assuming SWIFT moves money; confusing Fedwire finality with ACH returns; forgetting same-day ACH windows and limits; overlooking that instant payments are credit-push and generally final.

Rule of thumb

Match the rail to the risk: high-value, time-critical, irrevocable payments go by wire; recurring low-value vendor payments by ACH; instant payments for urgent disbursements where finality is acceptable. Always separate payment initiation from approval.

Technology and Banking Relationships

Technology and bank connectivity

Treasury technology turns data into visibility and control. A treasury management system (TMS) supports cash positioning, forecasting, payments, bank account management, and reporting; the ERP is the accounting system of record. Bank connectivity options include host-to-host file transfer, SWIFT for corporates, and APIs.

Concepts

  • TMS versus ERP: the TMS is treasury-specific and often bank-agnostic; the ERP holds the general ledger.
  • Connectivity: host-to-host, SWIFT MT and ISO 20022, APIs, SFTP, digital certificates, and encryption.
  • Bank account management: account inventory, signatories, mandates, and KYC refresh.
  • Relationship management: RFP process, service level agreements, fee analysis, compensating balances, and credit commitments.
  • Controls and continuity: access controls, business continuity, disaster recovery, and vendor risk.
  • Data formats: MT940, BAI2, and CAMT for statements and reconciliation.

Traps

Assuming a TMS replaces the ERP; confusing API connectivity with file-based batch; ignoring bank fee analysis and earnings credit rates; overlooking that SWIFT is a messaging network, not a bank; treating SLA metrics as optional.

Worked example

An earnings credit rate of 0.50% on an average collected balance of $2,000,000 yields about $10,000 of annual credit (2,000,000 × 0.005), which offsets bank fees. If fees exceed the credit, the firm pays the difference; unused credit often does not carry forward. Compare total relationship value, not just headline fees.