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Welcome to our Glossary

Discover the terms that change the financial technology industry.

Second Payment Services Directive (PSD2)

PSD2 is a European regulation that overhauls electronic payment services and is slowly coming into effect since 2019. PSD2 aims to increase security levels in payment services, as well as promote innovation practices and the adoption of new technologies in banking services. The most important regulatory change is the opening of banks’ payment services to other companies, orThird-Party Payment Service Providers, making the regulatory framework a key element in the development of Open Banking (See Open Banking). PSD2 sets the stage for a more competitive environment in the banking and payment sector and underscores the importance that Application Programming Interfaces (APIs) will have in enabling financial institutions to adapt to the newer and more innovative set of services.

Security Token

A security or authentication token is a device that allows a user to access a highly secured network-based service, such as bank accounts. Security tokens add a second layer of security called two-factor authentication. The user holds a personal identification number or PIN, which identifies him as the device’s owner. The device is set to display a unique number that allows the user to access the service. The unique number relayed by the device constantly changes to allow an extra level of security.


The process by which a merchant will receive funds from a customer for a transaction. Once a customer buys a service or goods, the issuing bank will send the funds to the payment processor used by the seller. These funds are then dispersed to the merchant. The term settlement is used to refer to the number of funds that are transferred to the merchant from the acquirer for the specific amount of the sale for the acceptance of the card transaction. The transfer of funds to the merchant is known as funding and is the final step in the settlementprocess.

Service Level Agreement (SLA)

An agreement covering the level of services to be delivered from a vendor to a customer. In addition to listing the deliverables and the steps required to fulfill expectations, SLAs also cover the general standards of the service that need to be maintained for the full term of the agreement. SLAS also lay out the penalties to occur should the provider be unable to deliver at the level promised.

Serverless Computing

A cloud computing model that allows the application development without entering in contact with a physical server. In this model, the service provider is the one in charge of provisioning, managing, and scaling the servers.

Society for Worldwide Interbank Financial Telecommunications (SWIFT)

Financial Infrastructure that securely transmits transactional and financial information between their more than 11,000 affiliated financial institutions using standardized messages.

Software Development Kit (SDK)

Group of software development tools assembled in one package. An SDK assists the creation of an application with components such as a compiler, a debugger, and APIs, providing the developer to create and develop the product.

Strong Customer Authentication (SCA)

European requirement introduced in PSD2with the purpose of reducing fraud by having more information from online transactions, thus, making online payments more secure. At the checkout least two authentication methods are asked to the customer. Among these methods are something the customer knows (ex.Passwords), something the customer has (ex. mobile phone, electronic device with a unique code), and something the customer is (ex. Biometrics).