Glossary
Glossary
2FA (Two-Factor Authentication)
A security process requiring users to provide two different authentication factors to verify their identity before accessing systems or accounts, typically combining something they know (password) with something they have (phone) or something they are (biometric).
3-D Secure (3DS1, 3DS2)
A security protocol for online card payments that adds a step to verify the cardholder's identity; 3DS1 was the original version, while 3DS2 improves user experience and security by supporting mobile devices and biometric authentication.
ACH (Automated Clearing House)
An electronic network for processing batches of financial transactions, such as direct deposits, bill payments, and money transfers, commonly used in the United States for domestic payments.
Acqui-hire
A business strategy in which a company acquires another primarily to gain access to its talented employees, rather than its products, services, customers, or other business assets. The main goal is to quickly build or strengthen a high-performing team by integrating the acquired company's staff into the workforce of the acquiring company.
Acquirer (Acquiring Bank)
A financial institution that processes credit or debit card payments on behalf of merchants, enabling them to accept card transactions.
AISP (Account Information Service Provider)
A licensed entity that accesses read-only financial data from multiple bank accounts with customer consent, aggregating and consolidating account information to provide users with a unified view of their finances across institutions.
Alternative Data
Non-traditional information—such as utility payments, rent, social media activity, or online transaction history—used to supplement conventional credit data and improve the accuracy of credit risk assessments, especially for those with thin credit files.
Alternative Investment
An asset class outside traditional stocks, bonds, and cash—such as private equity, hedge funds, real estate, commodities, or cryptocurrency—often pursued for diversification, higher returns, or unique risk-return profiles.
AML (Anti-Money Laundering)
Laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. AML programs require financial institutions to monitor transactions, report suspicious activity, and verify customer identities.
API (Application Programming Interface)
A set of protocols and tools for building software that allows different applications to communicate with each other; in fintech, APIs enable secure data sharing and integration between financial services, third-party developers, and customer-facing applications.
API Rate Limiting
The practice of restricting the number of API requests a user or application can make within a specified time period to prevent abuse, manage server load, and ensure fair access to resources.
Asset Allocation
The investment strategy of dividing a portfolio among different asset categories (stocks, bonds, real estate, cash, etc.) to balance risk and return based on an investor's goals, risk tolerance, and time horizon.
AUM (Assets Under Management)
The total market value of the investments that a financial institution, fund, or advisor manages on behalf of clients, serving as a key metric to measure size, performance, and revenue potential.
Authorization
The process by which a payment processor or issuing bank approves or declines a transaction based on factors such as available funds, fraud checks, and transaction limits; it reserves funds but does not transfer them until settlement occurs.
B2B Payment (Business-to-Business Payment)
A transaction between two businesses, such as supplier invoices or wholesale purchases, often involving higher amounts, longer payment terms, and methods like ACH or wire transfers.
BaaS (Banking-as-a-Service)
A model where licensed banks provide their infrastructure, compliance, and regulatory capabilities to non-bank fintech companies via APIs, enabling them to offer banking products (accounts, cards, loans) under their own brand.
Banking
The business of accepting deposits, providing loans, and offering payment services, conducted by licensed financial institutions that create money through lending while maintaining capital reserves and operating under regulatory oversight to ensure financial stability.
Batch Processing
The method of processing multiple transactions together at scheduled intervals (e.g., end-of-day) rather than in real time, commonly used in ACH, card settlements, and back-office operations to improve efficiency.
BIC (Bank Identifier Code) / SWIFT Code
An international bank code used to identify financial institutions globally in cross-border transactions, facilitating secure and accurate routing of funds through the SWIFT network.
Big Data
Extremely large and complex datasets that require advanced tools and techniques to capture, store, manage, and analyze, often used in fintech for risk modeling, customer insights, fraud detection, and personalized services.