Glossary

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Merchant Bank

A merchant bank is a type of bank that is specialized in commercial loans, investments, fundraising, and financial advising. Merchant banks may focus on specific industries and offer their services to corporate entities instead of the general public. They provide...

API Banking

API banking is a protocol that enables a bank’s data to be accessed by third parties. The APIs used in banking are obliged to comply with governmental regulations. API Banking offers a fast and secure financial environment and paves the way for services such as...

Application Programming Interface (API)

Application Programming Interface, or API, is a type of software functioning as an intermediary communicator between multiple applications. It is essentially an interface between two programs, unlike a user interface that connects a user to a program. Regulated and...

Term Deposit Account

A term deposit account is a type of bank account used for investment purposes in short and fixed terms. It has a minimum deposit limitation and offers fixed terms such as a couple of months or years. Term deposit accounts have higher interest rates than savings...

Payment Account

A payment account is a bank account that allows the deposit and withdrawal of funds. The account also allows the account holder to send and receive money from and to third parties.

Business Account

A business account is a type of bank account that is only used for business transactions. The account is opened in the name of a business rather than a person. Business accounts are used for making payroll, asset and inventory payments and saving emergency funds....

Integrated Banking System

Integrated Banking System is a concept that defines a seamless, holistic and embedded experience in banking activities. It is demanded by both businesses and customers instead of cumbersome procedures imposed by legacy banks.

Neobanks

Neobanks are online-only banking institutions without banking license that offer seamless financial services to match and replace traditional banking operations. Neobanks offer high quality digital banking interfaces such as a mobile application or a web platform to...

Retail Fintechs

Retail fintechs are institutions aiming to offer solutions in customer transactions for businesses. They are of great importance as customer behavior is dramatically changed with the arrival of e-commerce and digitalization. From one-click payment options to instant...

Commercial Fintechs

Commercial fintechs, or B2B Fintechs, are institutions specialized in automating the financial activities of businesses to offer more efficient ways to access capital. The automation offered by commercial fintechs does not only cover the technical infrastructure but...

Embedded Insurance

Embedded insurance allows brands to offer their own insurance services to their customers via integrated insurance policies. It paves the way for a new revenue stream for companies to evaluate insurance policies as an add-on product. Embedded insurance is also more...

Embedded Investments

Embedded investments are the methods of investment that cluster multiple options on a single online platform or mobile application. These methods aim to simplify the complex investment activities for end-users with user-friendly interfaces and automation. On a...

Embedded Lending

Embedded lending is the integration of lending services into an institution’s operations. It allows companies to offer loans to their customers at the point of sale. Customers do not need to contact their banks and wait for approval. Embedded lending is very...

Embedded Card Payments

Embedded card payment is the method of payment that is done by the use of branded debit, prepaid or virtual cards. These cards can be provided by fintech institutions specialized in card issuing programmes (Cards as a Service) and offered to businesses with...

Embedded Payments

Embedded payments are the integration of payment services into a business’ transactional operations. The integration works on online environments and obviates the need for cash or physical cards to make a payment. Embedded payment offers consumers a seamless checkout...

Embedded Banking

Embedded banking is a part of embedded finance that focuses on the integration of legacy banking services into third-party institutions via APIs. It offers financial functions such as payment processing, card issuing, contactless and QR payment and lending. Embedded...

Embedded Finance

Embedded finance is the integration of financial services to non-financial businesses. It enables businesses to offer financial services, such as lending or insurance, at the point of sale by themselves. Embedded finance is a beneficial concept both for businesses and...

Fintech as a Service Platform

Fintech as a Service Platform, or FaaS Platform, is a service platform model that embeds single or multiple financial services to non-financial companies with end-to-end solutions. These platforms offer ready-to-use infrastructures for financial facilities such as...

Fintech API

Fintech API, or Fintech Application Programming Interface, is an intermediary software allowing communication between financial systems. It is an essential component of automation and the digitalisation of current financial operations. Fintech APIs also pave the way...

Fintech as a Service (FaaS)

Fintech as a Service, or FaaS, is a third-party service model that provides non-financial businesses with financial capabilities. The model streamlines the whole process to embed a financial operation into a business, including technical infrastructure, API...

Fintech

Fintech, or Financial Technology, is a concept that combines new technologies with financial services. It is a field where improvements, automation and innovations on financial services are developed into applicable methods and offered as services. Fintech originated...

Accumulative Account

An accumulative account is a type of bank account that is used for collecting funds for investment purposes. The funds inside the accumulative account cannot be used for payment but used for the investment instrument preferred by the account holder. In some countries,...

Transportation Financing

Transportation financing is a financing option to help businesses meet their transportation necessities. It is available both for small companies in need of acquiring vehicles and transportation companies seeking to enhance their fleets. Transportation financing...

Trade Financing

Trade financing is a financing option to provide businesses with the liquidity required in their trading activities. Trade financing assists businesses to increase their operational efficiency, earnings and revenue. Both importers and exporters prefer to use letters...

Agriculture Financing

Agriculture financing, or agrifinance, is a financing option for agricultural purposes. It aims to aid farmers to reduce the risk of their operations, increase their production and income. Agricultural financing also has an altruistic purpose as success in agriculture...

Working Capital Loan

A working capital loan is a type of loan that is borrowed to finance a company’s daily operations. It is a short-term loan plan to aid a company cover payroll, rent and debt payments. Working capital loans are suitable for companies with cyclical sales and unstable...

Money Market Lending

Money market lending is a type of loan used for money market investments such as commercial papers or overnight reserves. Money market loans provide liquidity to those who invest in short-term debt products at the wholesale level and retail level.

State Supported Loans

State supported loans are the types of loans where the state takes the position of a lender. The terms and conditions of state supported loans are generally limited to specific financial activities or enterprises. They offer both long-term and short-term repayment...

Investment Loan

An investment loan is the type of loan used for investment purposes such as the purchase of real estate or property. Investment loans generally are issued considering 2 different strategies: Fix and Flip: A short-term strategy aiming to sell the asset quickly for a...

Overdraft

An overdraft is a situation where the bank account does not have enough funds to complete a transaction or withdrawal, but the bank allows the completion of the order anyway. Basically, an overdraft is a type of short-term loan to cover any emergency. An overdraft...

Credit Line

A credit line, or line of credit (LoC), is a loan limit that allows an individual or a business to borrow money recursively, without undergoing an approval process each time. Staying with the issued loan limit the borrower can access the loan and after repayment, can...

Target2

Target2, or Trans-European Automated Real-time Gross Settlement Express Transfer System, is a real-time gross settlement (RTGS) system that is developed and operated by Eurosystem to process Euro payments instantly. It is both available in Eurozone and non-Eurozone...

Global Payment Initiative (GPI)

Global Payment Initiative (GPI), or SWIFT gpi, is an initiative of SWIFT messaging system to enhance the capabilities of regular SWIFT transactions. GPI aims to increase the payment speed and enable end-to-end tracking while improving the visibility of charges in a...

Society for Worldwide Interbank Financial Telecommunication (SWIFT)

Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a messaging system for global bank-to-bank electronic fund transfers. The SWIFT infrastructure is installed on a network with more than 11,000 member institutions. Each member of the Society for...

SEPA Direct Debit

SEPA Direct Debit, or SDD, is a payment scheme that allows recurring Euro transactions across the SEPA member countries. It is mainly used for paying bills and subscriptions by allowing consumers to automate their payments. There are two types of SEPA Direct Debit...

SEPA Instant Credit Transfer

SEPA Instant Credit Transfer, also known as SEPA Instant Payment or SCT Inst, is a payment scheme that provides instant crediting for merchants and suppliers. The scheme is emerged upon the need for a pan-European payment system and harmonise the transactions in a...

SEPA Credit Transfer (SCT)

SEPA Credit Transfer, or SCT, is a payment scheme that facilitates electronic payments between two different bank accounts. SEPA Credit Transfer is based on straight-through-processing which bundles initiation, processing and reconciliation without any deduction from...

Account Servicing Payment Service Provider (ASPSP)

Account Servicing Payment Service Provider (ASPSP) is a financial institution that provides a payment account with online access. Account Servicing Payment Service Providers (ASPSPs) use APIs with “read-write” access to financial data. This enables trusted third...

Single European Payments Area (SEPA)

Single European Payments Area, or SEPA, is an initiative that streamlines the cashless Euro transactions across 36 member countries in Europe. Single Euro Payments Area brings a single payment scheme for all the members to enable both time and cost-effective...

Payment Initiation Service Provider (PISP)

Payment Initiation Service Provider (PISP) is a financial institution that facilitates online payments without any need for a credit or debit card. Unlike Account Information Service Providers (AISPs), Payment Initiation Service Providers (PISPs) have “read-write”...

Account Information Service Provider (AISP)

An Account Information Service Provider, or AISP, is an intermediary financial institution authorised to access “read-only” financial data of an individual or SME and share it with other institutions. Account Information Service Providers (AISPs) are a part of the...

Third-Party Payment Service Provider (TPP)

A Third-Party Payment Service Provider, or TPP, is an authorised Payment Service Provider (PSP) that is able to access customer accounts and conduct transactions on behalf of businesses. The concept, Third-Party Payment Service Provider, is emerged from the Open...

Non-Bank Payment Service Providers

Non-Bank Payment Service Providers, or non-bank PSPs, are authorised Payment Institutions (PIs) or Electronic Money Institutions (EMIs) that enable merchants to conduct a complete payment process with their customers. Non-Bank Payment Service Providers act as...

Deliverable FX (DFX)

Deliverable FX, or DFX, is basically a Forex transaction when two currencies are exchanged on the same value date. Unlike CFD and Options methods in FX trading, Deliverable FX is not an investment method but a payment service. Therefore, institutions providing DFX...

Strong Customer Authentication (SCA)

Strong customer authentication, or SCA, is a regulation set by PSD2 for Payment Service Providers (PSPs) for their customer authentication methods. SCA increases the security of payments by mandating Multi-Factor Authentication (MFA) in every electronic payment....

PSD2

PSD2, or Payment Service Providers Directive 2, is the European regulatory directive for Payment Institutions and Electronic Money Institutions operating in the EU. In 2013, PSD2 is introduced as an amendment on PSD which was constituted in 2007. The most notable...

ACH as a Service

ACH as a Service, or Automated Clearing House as a Service, is a service model that puts bank-to-bank transfers in order on behalf of businesses. Although card and electronic payment methods seem to be dominant today, wire transfers and checks are still in broad use...

Ledger as a Service

Ledger as a Service, or LaaS, is a ledger reconciliation service that settles transactions into one reliable source for businesses. Ledger management comes with significant regulatory compliance and back-end challenges when done in-house. Ledger as a Service untangles...

KYC as a Service

KYC as a Service, or Know Your Customer as a Service, is an on-boarding service that bundles every stage to conduct the KYC process properly on behalf of an institution. The service aims to mitigate the onboarding experience by improving data control, security and...

Regulatory Compliance as a Service

Regulatory Compliance as a Service, or Compliance as a Service, is a service model providing a framework to comply with regulations for companies. Regulatory compliance is an ongoing burden for institutions that requires considerable effort and know-how. Regulatory...

Operations as a Service

Operations as a Service, or OaaS, is an umbrella term containing both Infrastructure as a Service and Platform as a Service models offered by licensing banks to other businesses. The service model covers all operational and technical needs to provide an institution...

Credit As a Service

Credit as a Service, or CaaS, is a service model that enables a company to integrate credit and lending options into their own services and products. The credit infrastructure is offered as a complete package by Credit as a Service provider. Companies can embed it to...

Cards As a Service

Cards as a Service is an end-to-end service model that provides white-label cards and enables institutions to issue their own, branded debit or credit cards. Cards as a Service providers offer a seamless process by undertaking necessary steps to issue a card such as...

Multicurrency Safeguarding Account

Multicurrency Safeguarding Account is a type of safeguarding account with the ability to segregate multiple currencies. It is required for Payment Institutions and Electronic Money Institutions operating on a global scale and with different currencies. The number of...

Safeguarding Audit

A safeguarding audit is an annual audit conducted by regulator bodies to review fund segregation operations of PIs or EMIs. After the audit is completed, the institution receives a report with gap analysis and remediation plan from the regulator. The institution is...

Authorised PI License

Authorised PI License, or Authorised Payment Institution License, is necessary for any Authorised PI to provide payment services. Authorised PI License enables institutions to provide account information and payment initiation services as well as their core payment...

Authorised EMI License

Authorised EMI License, or Authorised Electronic Money Institution License, is required for any EMI to conduct its operations as an Authorised EMI. The difference between a Small EMI License and Authorised EMI License is that the latter has extra capabilities to...

Small PI License

Small Payment Institution License, or Small PI License (SPI License), is an obligatory license for any Small PI to provide payment services. There is a set of mandatory requirements changing from country to country to be met by the Small PI. For example, in the UK,...

Small EMI License

Small Electronic Money Institution License, or Small EMI License, is required for any Small EMI to enable its capability to issue electronic money and operate payment services. Small Electronic Money Institutions must comply with the standards of their regional...

Segregated Client Funds

Segregated accounts are used in order to separate client funds and institutions’ operational funds. Segregation of client funds is a primary obligation for any Payment Institution (PI) or Electronic Money Institution (EMI) to acquire a license and operate. One type of...

Safeguarding Acknowledgment Letter

A safeguarding acknowledgement letter is a formal document addressed to a regulatory body as an assurance that a safeguarding account is successfully opened and operating for an institution. The letter is sent by the bank that opens the safeguarding account. It is an...

Statement Letter

A statement letter is basically a document sent by a bank to state the summary of all financial activities of a business. Statement letters may be requested by financial institutions or regulators to evaluate the financial activities and capabilities of a business...

PSP Licensing

Payment Service Provider Licensing is a mandatory step for any PSP to operate. PSPs need to ensure the regulatory institutions with a sound business plan for 3 years in advance, financial projections, risk management plan and eligible AML and CTF policies. The...

PI and EMI Regulations

Payment Institutions (PIs) and Electronic Money Institutions (EMIs) are two main types of financial institutions obliged to be in compliance with both shared and different regulations. EMIs need extra compliances due to their ability to issue e-money. Every region, or...

EMI Directive

The E-Money Directive, or Electronic Money Directive, is the regulation standard for all electronic payment systems in the European Union. Directive 2009/110/EC defines the concept “e-money” and frames electronic money services to regulate and standardize the market....

Safeguarding Requirements According to PSD2

Every Authorised Payment Institution (PI) and Electronic Money Institution (EMI) in the European Union must comply with the safeguarding requirements as instructed in the Payment Services Directive 2 (PSD2). Article 10 (points 1 to 6 of Annex I) in PSD2, it is...

Electronic Money Institution License (EMI License)

Electronic Money Institution License, also known as EMI License, is a basic requirement to issue and redeem electronic money. EMI License enables businesses with the ability to hold client funds without any time limitation. EMI Licenses are issued by designated...

Payment Institution License (PI License)

Payment Institution License is a basic requirement to provide payment services and issue electronic money. With a payment Institution license, a financial entity is enabled to carry out payment transactions, money remittances, and direct debit/credit transfers, etc....

Safeguarding Account

A safeguarding account operates as a segregated account to keep clients’ funds separated from a company’s working capital. Obtaining a safeguarding account is compulsory for Electronic Money Institutions (EMIs) and Payment Institutions (PIs). A safeguarding account...

Small Payment Institution (SPI)

A Small Payment Institution, also known as Small PI or SPI, is a type of payment service provider with limited volumes of monthly transactions. For a Small Payment Institution, the monthly average of the yearly amount of transactions shall not exceed 3,000,000 Euros....

Small E-Money Institution (SEMI)

A Small E-Money Institution, also known as Small EMI or SEMI, is a type of Electronic Money Institution with the ability to issue electronic money. It is limited to providing payment services only. Small E-Money Institutions cannot provide account information or...

Settlement Services

Settlement services are used in interbank operations for the balance settlement of an operation between two entities. The sending and receiving parties mostly use different banks and a final bank with settlement services is required for clearing. When an electronic...

Settlement Account

A settlement account is a transactional bank account functioning as quick access to accumulated cash. It works as a facilitator between businesses for daily settlements. A settlement account is very practical for fund accumulation and safekeeping. With ensured speed...

Real Time Gross Settlement (RTGS) System

Real Time Gross Settlement System (RTGS) is a type of gross fund transfer system between two banks processed in real-time. The receiving bank settles the transaction without any delay just after the sending bank completes the transfer successfully. Real Time Gross...

Non-Bank PSP

A non-bank PSP is a third-party financial institution that provides retail payment services. Non-bank payment service providers must be either an authorized payment institution or an electronic money institution. Working with a non-bank PSP, a merchant is able to...

Payment Service Provider (PSP)

 A payment service provider, also known as a PSP, is a third-party financial institution that provides merchants and businesses with a variety of services such as virtual/physical/soft POS provision, payment gateway, card storage, dealer collection platforms, and...

Authorised Payment Institution

An authorised payment institution or API, is a designation by license across Europe which enables a company to offer payment services within a specified region. These payment services can include payment accounts, processing payments, merchant services, and payment...

Segregated Bank Account

A segregated bank account keeps a company’s clients’ funds separate from the company’s own money. This allows the company to hold the clients’ funds in a separate account so that there is no chance of interference or mishandling of money that does not belong to the...

Prefunding Account

A Prefunding Account is required to pay in advance for transactions processed by a bank or an e-money institution. It is most commonly used for managing international money transfers instantly or with very little delay. When a user sends money from one country to...

Deferred Net Settlement

Net settlement is the daily resolution of all of the transactions that have taken place on a given day. Most financial institutions will undertake this on a daily basis, to settle all of the outstanding debits and credits that were entered into the system. Deferred...

Clearing

In banking terms, clearing refers to the process of settling all transactions between financial institutions. Clearing is a way of simplifying the arduous task of settling millions of transactions on any given day. It ensures that both sides of the transaction are...

Authorised EMoney Institution

An Authorised EMoney Institution or otherwise known as an AEMI, is a type of financial institution authorised to issue e-money. AEMI’s are quite limited in the services they can provide to their customers. An AEMI can only provide payment services as well as hold...

Platform Business Model

Platform Business Model is used to describe a company that is able to profit off of a platform where different groups (consumers and producers) interact with each other. Platform businesses do not need to manage supply chains and logistics like linear businesses and...

Anti-Money Laundering (AML)

AML is a commonly used acronym in the financial industry for Anti-Money Laundering. It refers specifically to the set of rules and regulations that governing bodies implement to prevent money laundering in the financial and business sectors. Almost every country has...

Know Your Customer/Client (KYC)

KYC, Know Your Client (or Customer) is a standard guideline for the financial industry service providers in any business relationship. It is essentially a checklist to ensure that they have confirmed their client’s identity as well as any ongoing risks with...

Alternative Payment Methods (APM)

APMs or Alternative Payment Methods are defined as any form of payment other than cash or major card networks such as Mastercard, Visa, etc. The most popular alternative payment methods are prepaid cards, digital wallets, mobile payments, and BNPL (Buy Now Pay Later)...

Competition and Markets Authority

The Competition and Markets Authority, or CMA, is the governing body for improving competition amongst businesses and reducing anti-competitive behavior in the UK. While it is operated by the UK government, it is a non-ministerial department which is often a...

Designated Client Accounts

In traditional banking terms, a designated client account allows one to hold their client’s funds across separate accounts. It is of great utility to businesses who routinely hold money for their clients, including lawyers, real estate firms, and accountants....

CTF Audits

CTF or Counter-Terrorism Funding is a set of regulations and laws that limit access and usage of financial services and additional funding to groups that are deemed to be terrorists. The European Commission is the governing body behind any Counter-Terrorism Funding...

AML Audits

AML or Anti-Money Laundering is a regulation that governing bodies implement in order to ascertain that a company is not an accessory to money laundering. An AML Audit occurs when a company is put to the test to ensure that they have a proper Anti-Money Laundering...

Payment Licenses

Payment licenses allow companies, brands, or platforms to accept and process payment transactions, usually over a digital system. There are numerous different payment licenses available geographically. For example, the EU Payment License is in use within the European...

E-Money License

E-Money is a digital alternative to fiat currencies and allows both businesses and customers to make cashless payments and transfers. As can be expected, the European Union and other governing bodies around the world implement strict regulations surrounding businesses...

EU Payment License

The EU Payment License allows businesses to operate as payment institutions throughout the European Union. The license allows companies to operate freely within the EU as a common market and removes any additional requirements or regulations that they would otherwise...

FCA Payment License

The FCA or Financial Conduct Authority is a financial regulatory body that is based in the United Kingdom while operating independently of the UK government. The agency regulates the operations of companies that accept payments, including online payments and e-money....

CORE Banking Providers

A core banking provider is the system provider behind the development of CORE (Centralized Online Real-time Environment) systems that allow banks to create a network of customized products to meet their customer’s needs. The term “core banking” refers to the network...

Core Banking Platforms

Core banking platforms are back-end systems at the heart of a legacy bank’s digital infrastructure, processing all banking data and transactions. A middleware then links this core to the application layer, where a bank offers its customers online banking, mobile...

End-To-End BaaS Infrastructure Solutions

Fintechs and brands that provide financial services require Banking-as-a-Service to offer embedded finance to their users. They require full and in-depth, end-to-end BaaS infrastructure solutions from BaaS providers in order to offer a wide range of services in a...

Banking as a Service API

Banking as a Service API enables safe data communication between the bank and a fintech company. This enables the fintech - or brands that work with this fintech - to offer financial services to its users on their own app/web interfaces. These financial services may...

BaaS Provider

BaaS Providers (or Banking as a Service Providers) are companies that build platforms integrated with banking products and services, enabling their customers - fintechs and non-financial companies - that want to offer financial services to their user base. BaaS...

Banking as a Service (BaaS)

Banking as a Service or BaaS is an end-to-end service model where BaaS Providers, partnering with licensing banks, furnish banking processes such as deposit accounts, payments, money transfer, loans, insurance with modern API-driven platforms. The banking services and...

2022 Copyright © European Merchant Bank UAB. All rights reserved.
European Merchant Bank UAB is licensed by European Central Bank (License No. 3)
Swift BIC: EUEBLT22
Bloomberg Dealing Code: EUEB

2022 Copyright © European Merchant Bank UAB. All rights reserved.
European Merchant Bank UAB is licensed by European Central Bank (License No. 3)
Swift BIC: EUEBLT22
Bloomberg Dealing Code: EUEB