Moving your money across borders for a purchase or a family member will pit you against a host of alien languages you would better understand so you know where you are treading on.
Since a banking glossary is necessary for the regular person to figure out the complicated language of money transactions, we’ve compiled a handy glossary for the essential banking terms.
So, join us as we uncover the basic explanations for some of the most essential banking terms in this glossary. Let’s begin.
The Glossary of Essential Banking Terms
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What is Account Verification?
Simply registering an account and creating basic information will not suffice for a financial institution to give you a green light with all transactions immediately. Varying from service to service, you may be required to submit proof of address, ID with photo, or even a selfie of you holding your ID card might be asked for.
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What is a Bank Transfer?
It is the type of money transfer where the bank is the medium for the transaction and funds are collected from a bank account.
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What is Cash Pickup?
One of the most widely used kinds of money transfers still in use, whoever a transfer is made for is required to visit a physical location to collect the money.
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What is the Currency Code?
A currency code consists of three alphabetical characters and represents a country’s currency in a standardized abbreviated format for more practical use, such as GBP, TRY, EUR, and so on. It is vital to be careful when making a cross-currency transfer or a conversion.
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What is the Delivery Method?
In terms of money transfer, a delivery method can range from a bank transfer, to cash pickup, mobile transfer or, in some countries, a home delivery where the cash is delivered by the institution in person.
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What is Domestic Money Transfer?
The far less complex of a sum of money’s travel – a domestic money transfer stays within the originating country’s border, writing off any unfamiliar jurisdictional red tape and charges.
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What is an Exchange Rate?
The rate at which a unit of a certain currency will be exchanged for another. Even Google will help you with exchange rates when you type a certain amount of currency into the target currency in the search field. Currency code is instrumental in getting quicker answers, especially should currencies in question be not so common globally.
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What is International Money Transfer?
International money transfer is the driving force behind the wealth of nations globally. Funds travel over borders, making their way from one jurisdiction to another, from a bank to another, if not more. International money transfer is having its rules rewritten as fintech companies or even cryptocurrencies are essentially disbanding conventional yet cumbersome methods used for decades now.
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What is a Mobile Wallet?
Thanks to the immense internet penetration and smartphone integration into our lives, you can carry a mobile wallet around you and transfer funds in and out via a software/mobile app.
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Sending Limit/Transfer Limit
This is the amount your bank or money transfer solution provider sets based on a couple of criteria on a daily or single transfer basis.
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What is SWIFT?
Society for Worldwide Interbank Financial Telecommunication, legally S.W.I.F.T. , refers to a network where financial institutions worldwide transfer and receive information about financial transactions in a trustworthy, standardized and secure environment.
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What is a Transfer Fee?
The payment method, the speed at which you would like your money to be transferred, might incur different charges and these charges for the finalization of the transaction are called transfer fees.
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What is Transfer Speed?
The time that is sometimes optional to transfer your money around is called transfer speed. Different service providers might offer varying service fees depending on the speed you would like your money to be sent over.
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What is Wire Transfer?
Traditionally bank transfer, wire transfer is funds being transferred electronically from one bank account to another. It has been the primary innovation after physical transfer of money and despite being aged quite a lot with its caveats now outweighing its benefits, it still is used widely.
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What is an Overdraft?
An overdraft happens when money is withdrawn from a bank account and the available balance goes below zero. In this case, the bank covers the deficit but often charges a hefty fee for this facility. It’s like having a safety net, but one that comes at a cost!
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What is Collateral?
Collateral is something of value like a car, house, or even stocks-that secures a loan. Think of it as a trusty sidekick that assures the bank it will get something back if a loan isn’t repaid.
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What is an Automated Teller Machine (ATM)?
An ATM is a vending machine, but for cash. It lets you withdraw money, check account balances, or deposit funds without ever needing to see a bank teller. It’s banking on-the-go, anytime you need it.
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What is a Credit Score?
A credit score is a numerical expression based on an analysis of your credit files to represent the creditworthiness of an individual. Think of it as a financial grade that influences the credit and loan facilities banks are willing to offer you.
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What is Online Banking?
Online banking allows you to manage your finances from your computer or mobile device. It’s like having a bank branch in your pocket, where you can transfer funds, pay bills, and see your balances without waiting in line.
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What is Blockchain Technology?
Blockchain is the backbone behind the buzzword ‘cryptocurrency’. It’s a complex yet fascinating ledger system where transactions are recorded securely and transparently. In the banking and fintech world, it’s revolutionising the way data is handled, ensuring integrity and trust without the need for intermediaries.
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What is a Digital Wallet?
A digital wallet, not too different from a mobile wallet, allows you to store payment information and make transactions digitally through a smartphone or online service. It’s like having a virtual purse that never gets heavy, no matter how much ‘money’ it contains.
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What is Peer-to-Peer (P2P) Payment?
P2P payments allow individuals to transfer funds from their bank accounts or credit cards directly to another individual’s account via a fintech platform. This method is often favored for its simplicity and speed, bypassing traditional banking pathways.
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What is Robo-Advising?
Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. A robo-advisor can suggest the best investments for your personal goals, based on data and not gut feelings.
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What is Neobanking?
Neobanks are essentially banks without any physical branches, operating entirely online. They offer traditional banking services but with lower fees and higher convenience, appealing especially to tech-say consumers.
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What is Contactless Payment?
This technology allows you to pay by simply tapping your card or smartphone near a point-of-sale terminal that supports contactless payments. It’s quick, secure, and you don’t even have to enter a pin or sign a receipt.
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What is Financial API (Application Programming Interface)?
Financial APis allow different software systems to communicate with each other. In fintech, these APIs enable apps to access bank data and conduct transactions, offering seamless integration of different financial services for a more cohesive user experience.
Ready to Empower Your Finances with Essential Banking Terms?
Whether you’re making your first international transfer with Jeton, exploring investments, or setting up a digital wallet, understanding these essential banking terms is the first step towards financial empowerment.
Navigating the world of finance doesn’t have to be a challenge. Keep this glossary of essential banking terms close and you’ll be just fine when it comes to your basic day-to-day transactions!
Explore Jeton for secure, swift, and smooth transactions that redefine modern banking. Join Jeton today and start managing your money with ease and confidence. Let’s make your financial journey not just easier, but smarter.
