Glossary

Acquirer

An acquirer (sometimes referred to as an acquiring bank) is an organisation that manages the merchant’s account and processes payments on behalf of a merchant by accepting payment from an issuing bank.

The acquirer is responsible for receiving the credit and debit card transaction details, which are then passed to the card issuer via the card scheme for authorisation. Once authorised, the acquirer completes the processing of the transaction by arranging for the transaction to be settled.

Challenger Banks

Challenger banks compete with traditional, established, high-street banks. Holding a banking licence and operating almost exclusively online, their focus is on utilising technology to enhance the products and services they offer. Neobanks and digital banks are challenger banks with no physical presence, reaching customers from web platforms and mobile apps.

Cloud Banking

Cloud banking allows banks to move all or part of their infrastructure to virtual environments. Moving to the cloud, banks have access to a scalable, manageable technology model that reduces IT hardware, maintenance and development costs. It also allows greater flexibility, and products and services can be launched more quickly.

Correspondent bank

A financial institution authorised to provide services on behalf of another financial institution. Domestic banks often use a correspondent bank as their agent to finish transactions that either start or end in a foreign country​.

Cross-Border Payments

Cross-border payments are transactions that occur between accounts based in different countries (i.e. non-domestic payments). Typically, cross-border payments are made via an incumbent correspondent banking network, which involves the money travelling between multiple organisations, resulting in the process being slow and costly.

Discover how to reduce the cost of cross-border payments

De-risking

De-risking is a process whereby banks withdraw some or all services from customers, sectors or regions they determine to be higher risk. Many banks have exited entire sectors and regions that sit beyond their risk appetites.

Direct Debit

A Direct Debit is an instruction made to a bank, by a customer, that permits an organisation to make authorised collections from the customer’s bank account. Direct Debits are a convenient, reliable and secure way to make variable recurring payments.

Embedded Finance

A financial solution offered to end customers by a traditionally non-financial service provider is known as embedded finance. Examples include retailer Buy Now Pay Later offers and insurance sold as a point-of-sale add-on.

Faster Payments

The Faster Payments Service (FPS) allows the submission of GBP payments with a guaranteed delivery time for the beneficiary to receive funds in near real-time. The current guaranteed delivery time is two hours although payments are typically credited within 15 seconds.

Find out more about the Faster Payments system opening up

Financial Inclusion

Financial inclusion for consumers or businesses refers to their ability to access banking services. Banking Circle is committed to improving access – increasing financial inclusion by levelling the playing field so that everyone can benefit from access to financial services, which in turn helps with economic growth.

Foreign Exchange Fee / FX Fee

FX fees are typically charged as a mark up to the mid-market (AKA interbank) rate. The mid-point between the buy and the sell prices of the two currencies on the global currency markets determines this rate.

Providers that process FX payments often add a high commission to this rate in order to make a profit from the transaction. Fees may also be added when a transaction has to pass through multiple correspondent banks to reach the recipient.

Interchange Fee

An interchange fee is a fee paid by a merchant bank (acquiring bank) to the card issuer for the acceptance of card-based transactions. The interchange fee charged is often higher for Card Not Present (CNP) transactions, where the risk of fraud is higher.

ISO 20022

ISO 20022 is a global standard for payments messaging. Utilisation of this common language and model for all payments data provides higher quality data and optimised local and cross-border payments.

Issuer

An issuer (sometimes referred to as an issuing bank) is a financial institution that issues cards on behalf of credit and debit card networks. An issuer assumes responsibility for paying the acquiring bank on behalf of the customer.

Local Clearing or​ Local payment rails

Payments made through payment rails (payment platform or payment network) of the country in which the recipient is based, i.e. DKK via NETS, GBP via Faster Payments or EUR via SEPA​

Merchant

A merchant is an individual or company that conducts business either to provide wholesale or retail products to end users.

Find out more about the challenges faced by merchants in our white paper.

Nostro

​A physical account which Bank A holds with Bank B. Nostro is Latin for ‘our’, reflecting ‘our money on your books’.

Open Banking

Open Banking has opened up the financial ecosystem by providing access to consumer banking, transaction and other financial data from banks and NBFIs through APIs. Such increased collaboration between entities has resulted in improved customer experiences, access to new products and services, and lower costs for end users.

Payment conversion

Converting one currency into another i.e. EURO into GBP (Pound sterling). Also known as foreign exchange (FX).

Payment Gateway

A payment gateway is a secure application that automates a transaction, allowing a merchant to accept forms of electronic payment by facilitating communication between the issuer and acquirer.

The payment gateway acts as a mediator between the transactions that occur on a website and the payment processor, and is responsible for acquiring transaction authorisation and data encryption. Payment gateways usually charge merchants a per-transaction fee to process payments.

RegTech

Regulatory Technology

RegTech is being used to digitise regulatory and compliance checks within the financial services industry, improving efficiency and reducing costs. RegTech has already begun to transform financial services by delivering solutions that help to prevent fraud, identify payments associated with money laundering, and automate due diligence.

Settlement Account

A settlement account is a physical bank account that can be used to settle transactions. Banking Circle Settlement Accounts can come with safeguarding capability to support regulated activity and can be linked to underlying Virtual IBAN accounts for streamlined reconciliation in 25 currencies.

Settlement Timescales or Settlement Cycle

​The length of time between a payment being sent and received, i.e. T = today, T+1 = Next day​.

Transaction Fee

A transaction fee is a cost which is charged when sending and receiving money; typically when funds are being transferred internationally.

Virtual IBAN

Virtual IBAN accounts are a reconciliation tool that allows businesses to receive and send payments using unique, addressable IBANs (International Bank Account Numbers), with payments rolling up into a master settlement account. Banking Circle Virtual IBAN enables our Clients to receive and pay out on behalf of their underlying customers in 25 currencies via local and cross-border payment rails.

Vostro

​A physical account which Bank A holds on behalf of Bank B. Vostro is Latin for ‘your’, reflecting ‘your money on our books’.

Webhooks

A push notification through API for any event driven action, i.e. incoming credits, payment rejections​.

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