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Payments System of the Future

Glossary of Terms

Automated Clearing House (ACH):
An electronic payment mechanism that in the United States is capable of processing both credit and debit transfers. Typically used for relatively low-value, recurring payments.

Check Imaging:
Computer-scanned images of checks that can be stored or returned to customers in lieu
of traditional paper checks.

Cyberbanking:
Full-service banking-anytime, anywhere-on an electronic network, primarily through
a personal computer.

Electronic Benefits Transfer (EBT):
The electronic transmission of government benefits, such as food stamps, welfare benefits and social security, which are accessible through a smart card.

Electronic Check Presentment (ECP):
The paperless collection of checks. Checks written by businesses and consumers are
collected electronically instead of by the slower method of processing and delivering the paper checks themselves. Several ECP models exist, and the Fed is working to coordinate
a common framework.

Electronic Cash:
An electronic representation of paper money that is stored on a PC and can be used to
conduct financial transactions online. Currently, competing products and security protocols are under development, with some using "money" outside the traditional banking network.

Internet:
A collection of independently operated, interconnected computer networks. Networks are owned and maintained by a variety of organizations (e.g., universities, corporations, government). An estimated 40 million people currently use the Internet.

Payments System:
A set of contractual arrangements and operating facilities used to transfer value.

Smart Card:
A plastic card, embedded with a microchip, that combines the new financial service technologies. Such an instrument could be used for a single purpose, such as to store value, or for
multiple purposes, functioning as an ATM card, a debit card, a credit card and electronic cash.