5 minute 16 Apr, 2021

FinTech Dictionary Of Terms And Acronyms

Swati Bucha

People wonder exactly what ‘FinTech’ dictionary meaning is. FinTech is a short form for ‘financial technology’ – something that has actually been around for a very long time. Simply put, FinTech refers to the technology that is driving innovation in the financial services industry. The term has become far more widely used in the last five years, with new terminology associated with FinTech also springing up.

New buzzwords, jargon and acronyms are commonplace when talking about the industry, and so we hope to explain, in clear terms, exactly what some of them mean in this exhaustive FinTech Dictionary.

Banking and Payments

A2A (Account-to-Account): Payments that involve the transfer of funds between two accounts owned by a single party.

Accounts Payable (AP): Amounts due to vendors or suppliers for goods or services received.

Accounts Receivable (AR): Amounts owed for goods or services delivered that have not yet been paid for.

ACH (Automated Clearing House): An electronic network that coordinates automated money transfers and electronic payments. It is a way to move money between banks without using wire transfers, paper checks, card networks, or cash.

ACH Authorization: A payment authorization that gives the lender permission to electronically take money from your bank, prepaid card account, or credit union when your payment is due.

ACH Credit: A transaction pushing funds into an account.

ACH Debit: A transaction pulling funds from an account.

ACH Return: A credit or debit entry initiated by an RDFI or Receiving Depository Financial Institution or ACH Operator that returns a previously originated credit or debit entry to the ODFI or Originating Depository Financial Institution within the time frames established by NACHA or National Automated Clearing House Association rules.

ACH Reversal: An entry, (credit or debit entry) that reverses an erroneous entry. It must be made available to the RDFI within five banking days following the settlement date of the erroneous entry.

Address Verification Service (AVS): A security system that works to verify that the billing address entered by the customer is the same as the one associated with the cardholder’s credit card account.

B2B (Business-to-Business): A model where a transaction or business is conducted between one business and another, such as a manufacturer and retailer.

B2B2B (Business-to-Business-to-Business): A model where a business indirectly sells to another business through a middleman, such as a manufacturer sells to a wholesaler who then sells to a retailer.

B2B2C (Business-to-Business-to-Consumer): This is an indirect distribution – it is a model where a business accesses the consumer market through another business, such as IT services to bank to bank’s customers.

B2C (Business-to-Consumer): Also known as direct-to-consumer – it is a model where a business sells products or services to customers without a middleman.

Bank Identification Number (BIN):  The term bank identification number (BIN) refers to the initial four to six numbers that appear on a payment card. This number identifies the institution that issues the card and is key in the process of matching transactions to the issuer of the charge card. It may also be referred to as an Issuer Identification Number (IIN).

C2B (Consumer-to-Business): A model where consumers provide a product or service to businesses. This is a rapidly growing model and often takes the form of brand sponsorships on social media.

C2C (Consumer-to-Consumer): A model where payments take place between two different consumer accounts for goods or services. This is done often through an online marketplace like eBay, Etsy, or Craigslist.

Closed Loop Payment System: A system that operates without intermediaries, where the end parties have a direct relationship with the payments system.

Credit Bureau: A company that collects, researches, and maintains credit information, and sells that data to lenders, creditors, and consumers in the form of credit reports. The most recognizable credit bureaus are Equifax, Experian, and TransUnion.

Credit Score: A three-digit number that represents how likely a person is to pay back a loan based on their payment history. A higher score is better.

Digital Wallet: A software application used with a mobile payment system to facilitate electronic payments for online transactions as well as purchases at physical stores.

Funding Source: Any financial institution, bank, or other funding entity providing liquidity to accommodate various payment flows.

Good Funds: Funds considered equivalent to cash and guaranteed to be available upon demand.

Issuer/Issuing Bank: Any financial institution (a bank or credit union), which offers a payment card (credit or debit cards) directly to consumers (or organizations) and is liable for the use of the card. This financial institution is also responsible for the billing and collecting of funds for purchases that were made using that card.

Ledger: A book in which the monetary transactions of a business are published in the form of debits and credits.

Merchant: A retailer, or any other person, firm, or corporation that agrees to accept credit cards, debit cards, or both.

Origination: The process by which a consumer applies for a new loan, and the lender or card issuer processes that application.

Originator (ACH): The entity that starts an ACH payment transaction. The Originator is the consumer, business, or government organization that initiates the payment process and is authorized to do so.

P2P (Peer-to-Peer): A decentralized platform where two individuals interact directly with each other, without intermediation by a third party. Instead, the buyer and the seller transact directly with each other via the P2P service.

Personal Identification Number (PIN): A confidential individual code used by a cardholder to authenticate card ownership for ATM.

Point-of-Sale (POS): The specific time and place where a retail transaction is completed.

Same Day ACH: Delivery of available funds within the same business day.

Settlement: The movement of funds from one financial institution to another, which ultimately completes a transaction.

Underwriter: A party that evaluates and assumes another party’s risk for a fee.


CRM (Customer Relationship Management): One of the many different approaches that allows a company to manage and analyze its own interactions with its customers.

Horizontal Market: A non-specialized market that covers a wide range of industries.

LOI (Letter of Intent): A document declaring the preliminary commitment of one party to do business with another. The letter outlines the chief terms of a prospective deal.

Software and technology

API (Application Programming Interface): A computing interface which defines interactions between multiple software intermediaries.

BaaS (Banking as a Service): The supplying of complete banking processes that allows brands to easily embed financial services into their products without having to worry about building banking infrastructure or obtaining a license.

Encryption: The technique of scrambling sensitive data automatically in a terminal or computer before transmission for security purposes using an algorithm and key.

POP (Point-of-Purchase): occurs when a consumer check is received at a point of sale and converted into ACH immediately.

POS (Point-of-Sale): occurs when a consumer initiates a payment, typically via card, at a point of sale.

SaaS (Software as a Service): A software licensing and delivery model in which software is licensed on a subscription basis and centrally hosted.

FinTech has been a buzzword in the world of finance, and the market is maturing. In case you want to know how the FinTech industry is evolving, have a look at this infographic.

(Disclaimer: This (FinTech Dictionary) will be updated periodically. In case you want us to add new terms and definitions, please reach out to me at

Swati Bucha Swati Bucha

People wonder exactly what ‘FinTech’ dictionary meaning is. FinTech is a short form for ‘financial ...


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