Exam 29: Bank Deposits,collections,and Funds Transfers

What are wholesale funds transfers? What governs these transfers?

David dies an untimely death in a boating accident two days after writing a check to his landlord.When the check is presented to his bank three weeks later,they refuse to pay.The landlord will have to file a claim in any probate proceedings if he wishes to collect on the check.

The payor bank and the drawee bank are two separate banks.

For how long is a written stop payment order valid?

Check 21 permits banks to remove an original paper check from the check collection process and send instead a substitute check.

If a payor bank gives the provisional settlement as required,it has until the midnight deadline to return the item.

Under Article 3 of the Code,collecting banks give to a transferee the same basic warranties as those given by other parties who transfer commercial paper.

Which warranties does a collecting bank give?

If First Bank receives a check for collection on Friday at 4 p.m. ,it must present the check to the payor bank by midnight Saturday.

What Article of the UCC governs electronic funds transfers?

The Wall Street Reform and Consumer Protection Act of 2010 requires that the amount of any interchange transaction fee that an issuer may receive or charge with respect to an electronic debit transaction,including those on debit cards issued by small banks and prepaid reloadable cards,must be reasonable and proportional to the cost incurred by the issuer,as determined by the Federal Reserve.

MICR enables check processing without further human involvement.

An instrument indorsed "pay any bank" may nevertheless have an individual as a holder.

Point of sale systems permit customers to charge items to a charge account at a bank.

An oral stop payment order is binding on the payor bank for 14 calendar days.

What is the effect of a payor bank's dishonor of a check?

A written stop payment order is effective until revoked in writing.

A substitute check:

Cheryl writes checks totaling $200,but she has only $100 in her account.Check #101 is for $50;#102 is for $75;#103 is for $25;and #104 is for $50.All of the checks reach the bank on the same day.In what order should the bank charge them?

Doug takes a $500 check drawn by Gail to Gail's drawee bank to cash it.Gail has over $10,000 on deposit in her account.If her bank refuses to pay Doug: