Banking terminology
The world of fintech and payments is ever-changing, so we have created a condensed go-to glossary of key terms, concepts and acronyms to demystify commonly used terminology and help you to better understand the world of payments.
A
Account Information Service (AIS)
A service that provides account information services as an online service to provide consolidated information on one or more payment accounts held by a payment service user with one or more payment service provider(s).
Account Service Payment Provider (ASPSP)
A payment service provider that provides and maintains a payment account for a payer.
Authorization
The process of granting permission for a transaction or service. In PSD2, this involves explicit consent from the payment service user.
B
Basic Bank Account Number (BBAN)
A bank account number that identifies an account within a domestic payment system.
Basket
A collection of items or services that a customer intends to purchase. In Pay Later systems, this represents the shopping cart before payment processing.
Basket Eligibility
The process of determining whether a basket qualifies for Pay Later financing based on criteria such as total amount, product types, and customer creditworthiness.
Bank Identifier Code (BIC)
A standard format of Business Identifier Codes approved by ISO and used to identify banks worldwide.
Booking Balance
The balance of the account at the end of the pre-agreed account reporting period. It is the sum of the opening booked balance at the beginning of the period and all booked entries during the period.
Buy Now Pay Later (BNPL)
A payment method that allows customers to purchase goods or services and defer payment for a period of time, typically with installment options.
C
Card Account
A payment account linked to a payment card, used for making payments and accessing funds.
Cash Account Type
The categorization of an account based on its primary function (e.g., current account, savings account, credit account).
Certificate
A digital certificate used for signature verification and secure communication in API authentication.
Combined Service Indicator
An indicator that shows whether multiple PSD2 services are being requested simultaneously.
Confirmation of Funds (CoF)
A service that confirms whether sufficient funds are available in a payment account to cover a specific transaction amount.
Consent
Explicit permission granted by a payment service user allowing a third-party provider to access their account information or initiate payments.
Consent ID
A unique identifier for a specific consent granted by a payment service user.
Credit Available
The amount of credit that is available for use on a credit account.
Credit Limit
The maximum amount of credit that can be extended to an account holder.
Creditworthiness
An assessment of an individual's or entity's ability to repay borrowed money.
D
Debtor
The party that owes money in a transaction; the payer in a payment instruction.
Deep Link
A type of link that sends users directly to a specific page or screen in a mobile app rather than the app's homepage.
E
Eligible Accounts
Payment accounts that meet the criteria for specific services or transactions under PSD2 regulations.
European Banking Authority (EBA)
The EU authority responsible for regulatory technical standards in the banking sector, including PSD2 implementation.
F
Fintech
Financial technology; companies that use technology to provide financial services more efficiently than traditional financial institutions.
Frequency Per Day
The maximum number of times a service can be accessed per day under a given consent.
Funds Confirmation
The process of verifying that sufficient funds are available in an account to cover a specific transaction.
I
Installments
Regular payments made over time to repay a debt or purchase, typically part of a Pay Later arrangement.
International Bank Account Number (IBAN)
An internationally standardized bank account number that identifies bank accounts across national borders.
Instructed Amount
The amount specified in a payment instruction that should be transferred from the debtor to the creditor.
M
Masked PAN
A partially hidden Primary Account Number where some digits are replaced with asterisks or other characters for security purposes.
Merchant
A business entity that sells goods or services and accepts payments from customers.
Mobile Station International Subscriber Directory Number (MSISDN)
A unique number that identifies a mobile phone subscription in a GSM or UMTS mobile network.
Monthly Installments
Regular monthly payments made as part of a Pay Later arrangement to repay the total purchase amount over time.
O
Open Banking
A banking practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data through APIs.
P
Payment Account
An account held in the name of one or more payment service users which is used for the execution of payment transactions.
Payment Initiation Service (PIS)
A service that enables a third party to initiate a payment order at the request of the payment service user.
Payment Service Provider (PSP)
An entity that provides payment services to merchants and consumers.
Payment Service User (PSU)
A natural or legal person making use of a payment service in the capacity of either payer or payee.
Primary Account Number (PAN)
The unique number that identifies a payment card account.
PSD2 (Payment Services Directive 2)
European Union directive that regulates payment services and payment service providers throughout the EU and EEA.
Q
QR Code
Quick Response code; a type of matrix barcode used to provide quick access to information, often used in payment processes.
R
Recurring Indicator
A flag that indicates whether a consent is for one-time use or recurring access.
Redirect URI
A web address where users are sent after completing an action, such as authentication or authorization.
Reference Date
The date for which account information is retrieved or a transaction is processed.
Resource ID
A unique identifier assigned to a specific resource (such as an account) within a system.
S
Sandbox Environment
A testing environment that allows developers to test API functionality without affecting live data or real transactions.
SEPA (Single Euro Payments Area)
A payment integration initiative that makes it possible to transfer euros between countries as easily as domestic payments.
SEPA Credit Transfer
A euro-denominated payment from one account to another within the SEPA area.
Strong Customer Authentication (SCA)
A requirement under PSD2 that payment service providers apply two-factor authentication for electronic payments.
T
Third Party Provider (TPP)
A service provider that uses APIs provided by account servicing payment service providers to provide account information services and/or payment initiation services.
Transaction
The transfer of funds between accounts or the exchange of goods/services for payment.
Transaction Metadata
Additional information about a transaction, such as merchant details, transaction type, or reference numbers.