Glossary
AI Finance Glossary
Plain-English definitions of AI, accounting, and SaaS-finance terms.
Categories
A
ACH Transfer
An electronic bank-to-bank transfer processed through the Automated Clearing House network, used for payroll, bill payments, and business transactions.
Arbitrage
Simultaneous purchase and sale of equivalent assets to profit from price discrepancies across markets.
B
BSA (Bank Secrecy Act)
U.S. primary anti-money laundering law requiring financial institutions to assist in detecting and preventing financial crimes.
Batch Processing
Grouping payment transactions for processing together at scheduled intervals rather than individually in real time.
Beneficial Ownership
Identification of natural persons who ultimately own or control a legal entity above a defined ownership threshold.
Blockchain in Finance
Distributed ledger technology applied to financial transactions for transparency, immutability, and disintermediation.
Buy Now Pay Later
Point-of-sale financing allowing consumers to split purchases into installments, often interest-free.
C
CDD (Customer Due Diligence)
Process of verifying customer identity and assessing risk before and during a financial relationship.
Chargeback
A forced reversal of a payment transaction initiated by a customer through their bank, placing the financial liability back on the merchant.
Contactless Payment
Payment via tap, NFC, or QR code without requiring physical card insertion or swiping.
Cross-Border Payment
Financial transaction where payer and recipient are in different countries, requiring currency conversion or international routing.
Currency Conversion Fee
Fee charged when converting between currencies in a payment transaction, including exchange rate margin.
D
E
EDD (Enhanced Due Diligence)
More intensive customer due diligence applied to higher-risk customers, including PEPs and high-risk jurisdictions.
EMV Chip
Payment card microprocessor chip generating a unique cryptogram for each transaction, preventing card fraud.
Embedded Finance
The integration of financial services — payments, lending, banking, or insurance — directly into non-financial platforms and software products.
F
FATF Guidelines
International standards from the Financial Action Task Force setting AML and counter-terrorism financing requirements.
FX Hedging
Using financial instruments to reduce currency risk exposure on foreign-denominated revenues or expenses.
Float
The time gap between when a payment is initiated and when funds are actually debited or credited, creating a temporary balance discrepancy.
I
IBAN
International Bank Account Number standardizing account identification for cross-border transactions.
ISO 20022
Global financial messaging standard enabling richer, more structured payment data across institutions.
Interchange Fee
The fee paid by a merchant's bank to a cardholder's bank for processing a card transaction, forming the largest component of merchant payment processing costs.
L
M
O
P
PCI DSS
The Payment Card Industry Data Security Standard — a set of security requirements for organizations that handle cardholder data, mandated by card networks.
Payment Facilitator
Entity that aggregates merchant payment acceptance under a master account, enabling sub-merchant onboarding.
Payment Gateway
Software infrastructure that processes, verifies, and authorizes online and in-person payment transactions between merchants and customers.
R
S
SAR (Suspicious Activity Report)
Confidential report filed by financial institutions with FinCEN when they detect potentially illegal activity.
SEPA
Single Euro Payments Area enabling standardized electronic payments across 36 European countries.
SWIFT Code
Unique identifier (BIC) for financial institutions used in international wire transfers.
Sanctions Screening
Process of checking customers, counterparties, and transactions against government sanctions lists to prevent prohibited activity.
Standby Letter of Credit
Bank guarantee drawn only if an obligor fails to fulfill a contractual or financial obligation.