Neobank and Banking Glossary

account aggregation

Account aggregation is a financial technology service that consolidates a user's financial data from multiple accounts, such as bank accounts, credit cards, investments, and loans, into a single, unified dashboard. Instead of logging into each institution separately, users can view balances, transactions, and overall net worth in one place. This is typically achieved through secure APIs or screen scraping, and is a core feature in many neobanking and personal finance apps for enhanced financial management.

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account information service

An account information service (AIS) allows customers to aggregate and view financial data from multiple bank accounts and credit cards in a single dashboard. Using open banking APIs, it securely retrieves transaction history and balances to help users track spending and manage their finances. Neobanks and fintech apps commonly offer AIS for budgeting and expense tracking.

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account number

An account number is a unique identifier assigned to a customer's account at a neobank or financial institution. It is essential for conducting transactions such as deposits, withdrawals, and transfers. Unlike traditional banks, neobanks often issue virtual account numbers for digital payments, enhancing security and flexibility. The format may vary but typically consists of a series of digits.

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account statement

An account statement is a summary of all financial transactions in a neobank or fintech account over a specific period, typically monthly. It includes deposits, withdrawals, fees, and interest earned. Statements are usually digital, accessible via mobile app or online, and used for budgeting, tax records, or reconciliation. They provide a clear snapshot of account activity and current balance.

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account switching service

An account switching service is a regulated process that automatically moves recurring payments, direct debits, and account balances from an existing bank account to a new one, typically offered by neobanks to reduce switching friction. It includes redirecting incoming transfers, updating payment mandates, and closing the old account on behalf of the customer.

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account top-up

Account top-up refers to the process of adding funds to a neobank or fintech account via methods like bank transfer, debit card, or cash deposit. It ensures you have sufficient balance for payments or withdrawals. Neobanks often provide instant, fee-free top-ups, making it a key feature when comparing digital banking options.

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annual fee

An annual fee is a recurring yearly charge levied by a neobank or fintech for access to premium accounts or card services. It can cover benefits such as higher interest rates on savings, free ATM withdrawals abroad, or travel insurance. Unlike traditional banks, neobanks may offer fee-free basic accounts, with annual fees only for upgraded tiers.

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annual percentage yield

Annual percentage yield (APY) measures the total interest earned on a deposit account over a year, accounting for compound interest. Neobanks often advertise competitive APYs on savings accounts because they have lower overhead than traditional banks. When comparing accounts, the APY reflects the true return, including how frequently interest compounds (e.g., daily or monthly). A higher APY means more earnings on your savings.

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anti-money laundering

Anti-money laundering (AML) refers to the laws, regulations, and procedures that neobanks and fintechs use to prevent criminals from disguising illegally obtained funds as legitimate income. Measures include customer due diligence, transaction monitoring, suspicious activity reporting, and compliance programs to detect and deter financial crimes.

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APY / AER

APY (Annual Percentage Yield) in the US and AER (Annual Equivalent Rate) in the UK express the interest you earn over a year including the effect of compounding. They let you compare savings accounts on a like-for-like basis. A rate can be variable, meaning the provider can change it, or introductory, meaning it drops after a promotional period.

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ATM fair-use allowance

An ATM fair-use allowance is the amount or number of cash withdrawals a plan lets you make each month before fees apply. Beyond the allowance, neobanks typically charge a flat fee or a percentage of the amount withdrawn. Higher-tier plans usually raise the allowance, so heavy cash users should weigh the plan fee against the ATM savings.

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atm fee reimbursement

ATM fee reimbursement is a neobank perk that automatically refunds fees from out of network ATM withdrawals. For example, if a user pays a $3 fee, the neobank credits $3 back to the account, typically subject to monthly caps. This eliminates cash access penalties, making neobanks more competitive with brick and mortar banks.

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ATM usage fee

An ATM usage fee is a charge incurred when you withdraw cash from an ATM outside your neobank's network. Neobanks often reimburse or waive these fees, but some may pass on operator charges. This fee varies by provider and can affect the cost of accessing cash, especially when traveling or using non-network ATMs.

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ATM withdrawal fee

An ATM withdrawal fee is a charge incurred when using an automated teller machine to withdraw cash. In neobanking, many digital banks offer fee-free withdrawals up to a certain limit or reimburse surcharges from third-party ATM operators. Exceeding those limits or using out-of-network machines may result in fees, typically ranging from $2 to $5 per transaction. Understanding these policies helps avoid unexpected costs when accessing cash.

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atm withdrawal limit

ATM withdrawal limit is the maximum amount of cash you can withdraw from an ATM in a single transaction or within a specified period, typically per day. Neobanks often set lower limits than traditional banks, sometimes adjustable via app settings. Exceeding the limit incurs fees or declines.

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auto-save

Auto-save is a neobank feature that automatically moves small sums from a checking account to a savings account, often by rounding purchases up to the nearest dollar. It helps users build emergency funds or savings goals without manual effort, fostering consistent saving habits.

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banking license

A banking license is a regulatory authorization granted by a financial authority that permits a company to operate as a bank, accept deposits, and offer lending services. For neobanks and fintechs, holding a banking license allows them to function as a full service bank, often enabling them to sidestep partnerships with traditional banks and offer insured deposits and direct lending.

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BIC

BIC (Bank Identifier Code) is a unique alphanumeric code that identifies a specific bank or financial institution for international wire transfers. Also known as a SWIFT code, it typically consists of 8 or 11 characters. Neobanks and fintechs require BIC alongside account numbers to process cross border payments efficiently and securely.

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bill splitting

Bill splitting is a neobank feature that lets users divide shared expenses, like restaurant bills or rent, among multiple people. Users can split equally or set custom amounts, and the app manages payment requests and tracking. This simplifies group payments and avoids awkward money conversations.

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biometric login

Biometric login is an authentication method that verifies a user's identity using unique biological traits such as fingerprints, facial recognition, or voice patterns. Unlike passwords, these traits are nearly impossible to replicate, offering stronger security. Neobanks and fintech apps commonly integrate biometric login via smartphone sensors (e.g., Face ID, Touch ID) for quick, frictionless access to financial accounts.

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borderless account

A borderless account is a type of bank account offered by neobanks and fintech companies that enables users to hold, send, and receive multiple currencies without traditional international banking fees. It often includes features like real-time exchange rates, multi-currency wallets, and international IBANs. Ideal for freelancers, travelers, and businesses operating globally.

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budgeting tools

Budgeting tools in neobanking apps enable users to automatically categorize transactions, set spending limits, and monitor their financial goals. They often provide visual dashboards, alerts for overspending, and insights into spending patterns. These tools help users maintain financial discipline and make informed decisions.

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business account

A business account is a digital bank account designed for companies, offering features like multi-user access, expense management, and integrations with accounting tools. Unlike personal accounts, it supports higher transaction volumes, invoicing, and often earns interest on balances. Neobanks provide these accounts with lower fees and faster onboarding than traditional banks.

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card freezing

Card freezing is a security feature offered by neobanks and fintech apps that allows you to temporarily disable your physical or virtual card. This action blocks all transactions, protecting against unauthorized use if the card is lost or stolen. Unlike permanent cancellation, freezing preserves your card details and account, letting you reactivate it instantly when found.

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card limit

A card limit is the maximum amount a user can spend or withdraw using a debit or credit card within a set period, such as daily or monthly. Neobanks enable users to adjust these limits directly in their apps, offering flexibility for security and budgeting. Limits can apply per transaction or cumulatively, helping prevent overspending and fraud.

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Cardless withdrawal

Cardless withdrawal allows ATM cash access without a physical debit card. Users initiate via a banking app, generate a one-time code or NFC tap, then enter it at the ATM. This enhances security by reducing card skimming and eliminates the need to carry a card. Common among neobanks and digital-first financial services.

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cashback

Cashback is a reward program where a percentage of a purchase amount is returned to the customer. Neobanks and fintechs often offer cashback on debit or credit card transactions. For example, spending $100 with 2% cashback yields $2 back. Cashback can be credited immediately to the account or as a statement credit, providing a simple way to save on everyday spending.

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challenger bank

A challenger bank is a digital-first financial institution that competes with traditional banks by offering lower fees, higher interest rates, and innovative mobile features. They are typically newer, technology-driven, and focus on user experience. Examples include Monzo, Chime, and N26.

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chip and pin

Chip and PIN is a security feature for card payments where an embedded microchip encrypts transaction data, and the cardholder must enter a Personal Identification Number (PIN) to authorize the payment, replacing the need for a signature. This reduces the risk of fraud from counterfeit cards. Neobanks typically issue chip and PIN cards as standard.

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client money safeguarding

Client money safeguarding is a regulatory requirement for fintechs and neobanks to protect customer funds by holding them in segregated accounts with trusted banks, separate from the company's operational funds. This ensures that if the firm fails, client money is returned to customers, providing a safety net akin to deposit insurance but for non-bank entities. It builds trust in digital finance.

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compound interest

Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods. In neobanking, it often applies to savings accounts or investments. The effect can significantly grow savings over time, as interest earns interest.

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contactless payment

Contactless payment is a secure transaction method using near-field communication (NFC) technology. Users tap a card or mobile device near a terminal to pay quickly without physical contact. This technology is widely adopted by neobanks and fintech apps for its speed and convenience, enhancing the user experience in digital payments.

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credit card

A credit card is a payment card that allows the cardholder to borrow funds from the issuing financial institution to pay for goods and services, subject to a credit limit. Interest is charged on any outstanding balance not paid by the due date. Fintech credit cards often include features like real-time transaction alerts, no foreign transaction fees, and rewards programs, distinguishing them from traditional cards.

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credit score

A credit score is a numerical representation of an individual's creditworthiness, typically derived from credit history. In fintech, alternative credit scoring models leverage data like bank transactions, bill payments, or cash flow to evaluate risk, especially for those with thin credit files. Lenders use these scores to determine loan eligibility and interest rates.

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cryptocurrency wallet

A cryptocurrency wallet is a digital application or device that securely stores the private keys needed to access and manage your cryptocurrency assets. It enables you to send, receive, and monitor balances across blockchain networks. Wallets are categorized as hot (online) or cold (offline), each offering different levels of convenience and security. For neobank users, integrating a cryptocurrency wallet allows seamless management of digital assets alongside traditional banking services.

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Currency basket

Currency basket refers to a portfolio of selected currencies with assigned weights, used as a benchmark for exchange rates or as a basis for multicurrency accounts. Neobanks may offer accounts or cards pegged to a basket, reducing volatility versus a single currency.

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currency conversion

Currency conversion is the process of exchanging one currency for another at a specific exchange rate. In neobanking, it typically leverages real-time mid-market rates with minimal or no markup, making international transactions more affordable and transparent compared to traditional banks.

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currency conversion fee

A currency conversion fee is a charge applied when converting one currency to another, typically for international transactions. Neobanks and fintechs often impose this fee on foreign purchases, ATM withdrawals, or cross-border transfers. It is usually a percentage of the transaction amount, ranging from 1% to 3%, and may be hidden in the exchange rate margin.

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currency conversion rate

Currency conversion rate is the exchange rate applied when converting funds from one currency to another. Unlike interbank rates, neobanks and fintechs often include a markup or fee, making their rate slightly less favorable. This rate determines the final amount received in the target currency. The rate may be displayed as a real-time quote or a fixed rate for the transaction.

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currency exchange

Currency exchange is the service of converting one currency into another, often at real-time rates. In neobanking and fintech, it enables low-fee, transparent international transfers and multi-currency accounts. Users can hold, send, or spend in different currencies with competitive exchange rates, bypassing traditional bank margins. This facilitates global commerce and travel.

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currency hedging

Currency hedging is a strategy used by neobanks and fintechs to protect against adverse exchange rate fluctuations. By using financial instruments like futures, options, or swaps, they lock in exchange rates for future transactions, ensuring stable costs and revenues. This is crucial for businesses and individuals dealing with multiple currencies, offering predictability and reducing financial risk.

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currency wallet

A currency wallet is a digital wallet that stores and manages multiple fiat currencies, enabling users to hold, exchange, and transfer funds across different currencies. Typically offered by neobanks and fintech apps, it supports real-time currency conversion and often includes low or no foreign transaction fees, making it ideal for travelers and international businesses.

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current account

A current account is a transactional bank account designed for everyday spending, offering debit card access, direct debits, and mobile payment integration. Neobanks provide them with real-time notifications, fee-free international spending, and budgeting tools, often without monthly maintenance fees.

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Daily spending limit

A daily spending limit is a monetary cap set by a neobank on the total amount a user can transact within a 24 hour period. This limit applies to purchases, withdrawals, and transfers, and helps prevent overspending and fraud. Neobanks often allow users to customize their limit within predefined ranges, and some offer temporary increases upon request.

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debit card

A debit card is a payment card linked directly to a transaction account, enabling immediate deduction of funds for purchases and ATM withdrawals. In neobanking, debit cards are often issued virtually or physically, offering features like real-time spending notifications, fee-free ATM networks, and integration with budgeting tools. Unlike credit cards, they don't extend credit, relying solely on available balance.

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Deposit Guarantee Scheme (DGS)

A Deposit Guarantee Scheme is the EU framework that protects eligible deposits at licensed banks up to EUR 100,000 per depositor, per bank. A neobank that holds a full banking licence in an EU country is covered by that country's DGS. A safeguarded EMI is not.

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Deposit insurance

Deposit insurance protects your money held in a bank account if the financial institution fails. In the US, the FDIC insures up to $250,000 per depositor per bank. For neobanks, deposits are often held in partner banks with similar coverage, so always confirm that your neobank's partner bank is insured.

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deposit protection

Deposit protection safeguards funds held in a neobank account, typically up to a specified limit per depositor per institution (e.g., £85,000 in the UK via FSCS). This government-backed scheme ensures customers are reimbursed if the neobank fails, covering cash deposits but not investments. Unlike traditional banks, neobanks often partner with licensed banks to offer this protection.

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deposit protection scheme

A deposit protection scheme is a government backed or industry funded safety net that guarantees to reimburse depositors up to a certain limit (e.g., £85,000 per person per bank in the UK via FSCS) if a bank or neobank fails. It ensures customer savings are not lost, providing trust in the financial system.

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digital account

A digital account is a fully online financial account offered by neobanks and fintech firms, enabling users to manage money, make payments, and access banking services via mobile app or website without physical branches. It often includes instant transfers, budgeting tools, and lower fees.

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digital wallet

A digital wallet is a software-based system that securely stores users' payment information and passwords for various payment methods and websites. It facilitates electronic transactions, contactless payments, and storage of digital assets like cryptocurrencies and loyalty cards. Examples include Apple Pay, Google Wallet, and PayPal.

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direct debit

Direct debit is an automated payment method where a bank or fintech withdraws funds from a consumer's account to pay bills or subscriptions on a recurring basis. It is commonly used for rent, utilities, and loan payments. Neobanks often allow seamless setup and management directly in their apps.

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Dynamic currency conversion

Dynamic currency conversion (DCC) is a service offered at point-of-sale terminals and ATMs that displays the transaction amount in your home currency. The exchange rate is set by the merchant or ATM operator, often including a markup of 1-3% or more. While convenient, DCC usually costs more than letting your bank convert the currency. You have the right to decline DCC and pay in the local currency instead.

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e money license

A e money license is a regulatory permit that allows a company to issue electronic money and offer payment services. Required for fintechs and neobanks in jurisdictions like the EU under PSD2, it enables digital wallets, prepaid cards, and remittances while ensuring consumer protection and anti-money laundering compliance.

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easy access savings

Easy access savings refers to a type of savings account that allows you to withdraw money at any time without penalty or notice. These accounts typically offer variable interest rates and often have no minimum balance requirements. They are ideal for emergency funds or short-term savings goals due to their high liquidity. However, interest rates are usually lower compared to fixed-term savings accounts.

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Electronic Money Institution (EMI)

An Electronic Money Institution is a regulated firm licensed to issue electronic money and provide payment accounts, but it is not a bank. Many neobanks operate as EMIs. Customer funds at an EMI are protected by safeguarding rather than a deposit guarantee scheme, which is a different and generally weaker protection than the deposit insurance offered by a licensed bank.

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Exchange Rate

Exchange rate is the price of one currency in terms of another. Neobanks and fintech apps typically use real-time mid-market rates for currency conversion, applying a small markup for profit. This rate fluctuates constantly based on market forces like supply and demand. When making international transfers or spending abroad, check the rate offered to avoid hidden fees.

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exchange rate margin

Exchange rate margin is the difference between the interbank exchange rate and the rate a neobank offers to customers when converting currencies. It represents the cost of the transaction. A lower margin indicates better value. Neobanks often advertise competitive or zero margins, but may include fees elsewhere. Understanding this term helps users compare the true cost of international transfers.

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expense tracking

Expense tracking is the automatic recording and categorization of all financial outflows, often through linked accounts. In neobanking, it provides real time insights, budgeting tools, and spending analysis to help users manage their money effectively, identify patterns, and control unnecessary costs.

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faster payment

A faster payment is an electronic transfer that settles funds between bank accounts in near real time, typically within seconds. Unlike slower methods like BACS, faster payments operate 24/7, including weekends and holidays. Neobanks and fintechs integrate this system to enable instant money movement for customers, supporting person-to-person payments, bill payments, and merchant transactions with immediate availability.

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FDIC insurance

FDIC insurance protects deposits at insured US banks up to USD 250,000 per depositor, per insured bank, per ownership category. Many US neobanks are not banks themselves but place customer money with a partner bank, where it can become eligible for pass-through FDIC insurance. The protection depends on the partner bank and on records being kept correctly.

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fee-free ATM

A fee-free ATM is an automated teller machine that does not charge a transaction fee to the cardholder, allowing users to withdraw cash without incurring additional costs from the ATM operator. Many neobanks and fintechs offer fee-free ATM networks through partnerships or reimbursement policies to reduce banking expenses.

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fee-free spending abroad

Fee-free spending abroad means using a debit or credit card that charges no foreign transaction fees on international purchases or ATM withdrawals. This perk, common with neobanks and fintechs, eliminates the typical 1%, 3% fee per transaction. However, users may still incur network ATM fees or unfavorable exchange rates if the provider uses a marked-up rate instead of the mid-market rate. Always check the terms.

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financial conduct authority

The Financial Conduct Authority (FCA) is the UK regulator overseeing financial firms, including neobanks and fintechs. It ensures consumer protection, market integrity, and competition. Neobanks must be authorized by the FCA to operate legally.

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financial dashboard

A financial dashboard is a centralized interface within a neobank or fintech app that consolidates real-time data on account balances, transactions, spending trends, and net worth from linked accounts. It provides users with an at-a-glance overview of their financial health, often including budgeting tools, alerts, and customizable widgets for actionable insights.

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fixed term savings

A fixed term savings account, also known as a fixed deposit or time deposit, allows you to deposit a lump sum for a specified period, such as 1, 2, or 5 years. In return, the bank pays a guaranteed interest rate, often higher than standard savings accounts. Early withdrawals typically incur penalties. These accounts are ideal for savers with a lump sum who want predictable, risk-free returns.

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foreign currency account

A foreign currency account (multicurrency account) allows holding, sending, and receiving money in multiple currencies without converting to local currency. It helps travelers, expats, and businesses avoid exchange fees and manage international transactions. Neobanks often offer these with competitive exchange rates and low fees.

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foreign exchange rate

Foreign exchange rate is the price of one currency in terms of another, such as 1 USD = 0.92 EUR. Neobanks and fintech apps offer live rates for international transfers, often with a small markup. Unlike traditional banks, they typically use mid-market rates and charge transparent fees. Rates fluctuate constantly due to market forces, so locking in a rate can be beneficial for large transfers.

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foreign transaction fee

A foreign transaction fee is a charge imposed by a bank or fintech for purchases made in a foreign currency or processed by a foreign bank. Typically 1%, 3% of the transaction amount, it applies to card payments abroad or online from international merchants. Many neobanks waive these fees to offer fee-free global spending.

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forward rate

Forward rate is the agreed upon exchange rate for a currency pair to be delivered on a future date. Unlike the spot rate, it is determined by interest rate differentials between the two currencies. Neobanks and fintechs use forward rates to offer hedging tools, allowing businesses to lock in rates and manage currency risk in international transactions.

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Fraud detection

Fraud detection in fintech refers to systems and algorithms that identify and prevent unauthorized transactions, identity theft, and account takeover. Neobanks use real-time monitoring, machine learning, and behavioral analytics to flag suspicious activity, protecting customer funds and ensuring regulatory compliance. This is crucial for digital-only banks to maintain trust and security.

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free debit card

A free debit card is a debit card issued by a neobank or fintech that charges no monthly fees, annual fees, or hidden costs. It usually comes with no minimum balance requirements, free ATM withdrawals within a specified network, and real time transaction notifications. These cards are part of a digital banking account that provides standard banking services through a mobile app, aiming to eliminate traditional banking fees.

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FSCS

The Financial Services Compensation Scheme is the UK deposit guarantee scheme. It protects eligible deposits at authorised banks and building societies up to GBP 85,000 per person, per banking licence, if the institution fails. Money held at a UK EMI neobank is usually safeguarded rather than FSCS protected, so it is worth checking which applies before depositing large balances.

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FSCS protection

FSCS protection refers to the UK Financial Services Compensation Scheme, which safeguards eligible deposits up to £85,000 per person per financial institution. For neobanks that hold funds with FCA regulated partner banks, customer deposits are covered by this scheme. This means if the bank fails, the FSCS will compensate you, making it a crucial factor for choosing a safe digital bank account.

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FX markup

FX markup is the fee or margin added to the interbank exchange rate when converting one currency to another. Neobanks and fintechs typically offer lower or zero FX markup compared to traditional banks, making them cost effective for international payments and travel.

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GDPR compliance

GDPR compliance in fintech refers to adherence to the General Data Protection Regulation, a European Union law governing data privacy and security. For neobanks, this means implementing robust data protection measures, obtaining explicit consent for data processing, ensuring data portability, and providing rights like access and erasure. Noncompliance can result in hefty fines.

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high interest savings

High interest savings accounts are deposit accounts offered by neobanks and fintechs that provide a significantly higher annual percentage yield (APY) compared to traditional banks. These accounts often have no monthly fees and low minimum balances, making them attractive for savers seeking better returns on their cash. The high interest is typically variable and influenced by market rates. Useful for emergency funds or short-term savings goals.

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high yield savings

A high yield savings account is a savings account offered by online banks, neobanks, or credit unions that pays a significantly higher annual percentage yield (APY) compared to traditional brick-and-mortar bank savings accounts. These accounts often have no monthly fees, low minimum balances, and are FDIC insured. The higher interest rates allow savers to earn more on their deposits.

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hold multiple currencies

Hold multiple currencies is a feature offered by neobanks and fintech apps that allows users to store, send, and receive money in different foreign currencies within a single account. Instead of converting funds immediately, users maintain separate balances for each currency, enabling them to take advantage of favorable exchange rates and avoid conversion fees. This functionality is essential for frequent travelers, freelancers, and businesses dealing with international transactions.

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IBAN

IBAN (International Bank Account Number) is a standardized alphanumeric code used to identify bank accounts for cross-border transactions. It includes a country code, check digits, and account details, reducing errors in international transfers. Neobanks and fintechs rely on IBANs to facilitate seamless global payments, enabling faster and cheaper fund transfers across different banking systems.

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inactivity fee

An inactivity fee is a charge imposed by a financial institution, including some neobanks, when an account has no user-initiated transactions (e.g., deposits, withdrawals) for a specified period, typically months or years. This fee aims to cover maintenance costs or encourage account activity. Not all providers impose it; consumers should check terms.

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instant access savings

Instant access savings is a savings account offered by neobanks and fintechs that permits unlimited deposits and withdrawals without penalty or notice. It typically provides competitive interest rates, real-time balance visibility, and instant transfers to external accounts. Unlike fixed-term deposits, it offers full liquidity, making it ideal for emergency funds or short-term goals. However, rates may be lower than those of accounts with withdrawal restrictions.

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instant account opening

Instant account opening is a digital process enabling customers to open bank or fintech accounts in minutes without visiting a branch. It includes identity verification through document upload, biometric checks, and e-signatures. Neobanks leverage AI and open banking APIs to verify data, providing faster onboarding and reducing friction, which improves customer acquisition.

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instant payment

Instant payment refers to a digital payment system where funds are transferred from the payer's account to the payee's account in real time, 24/7/365, with immediate availability. Unlike traditional transfers that may take hours or days, instant payments settle within seconds, enabling rapid commerce, peer-to-peer transfers, and bill payments. Examples include SEPA Instant, FedNow, and UPI.

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Instant transfer

Instant transfer is a digital payment that moves funds between bank accounts in seconds, often available 24/7. Unlike standard transfers that can take days, instant transfers leverage real-time payment networks like Faster Payments or RTP to enable immediate availability. Many neobanks offer this feature for a small fee, facilitating faster peer-to-peer payments and bill settlements.

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interbank exchange rate

The interbank exchange rate is the average rate at which major banks trade currencies among themselves. It serves as the benchmark for most currency conversion transactions, though consumer rates typically include a markup. This rate fluctuates constantly based on market supply and demand and is usually the most favorable rate available, often used by financial institutions for large-scale trades.

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interbank rate

The interbank rate is the exchange rate at which banks trade currencies among themselves, often called the mid market rate. It excludes retail margins and fees. Fintechs use this rate as a benchmark to offer transparent currency conversion. This rate fluctuates continuously based on global market conditions.

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interchange fee

Interchange fee is a per-transaction fee paid by a merchant's acquiring bank to a cardholder's issuing bank, compensating for credit risk and processing costs. Set by card networks like Visa and Mastercard, it typically ranges from 1% to 3% plus a flat fee. Neobanks often leverage lower interchange rates or pass savings to customers through fee-free or reduced-cost transactions.

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Interest compounding

Interest compounding is the process of earning interest on both the original deposit and the interest that has already been accrued. In neobanking, this feature can significantly boost savings over time, as interest earns interest. The more frequent the compounding (daily, monthly), the faster your money grows.

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interest on savings

Interest on savings refers to the money earned by depositors for keeping funds in a savings account. Neobanks often offer competitive rates due to lower overhead costs. The rate is typically expressed as an annual percentage yield (APY) and may be variable, helping customers grow their idle cash over time.

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Interest rate

Interest rate is the percentage charged by a lender on borrowed funds or earned on deposits, expressed annually as APR or APY. For neobanks, it determines loan costs or savings yields, typically variable, and is a key factor in comparing financial products.

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interest rate tier

An interest rate tier is a structure where the interest rate applied to a deposit account or loan changes based on the account balance or loan amount. Typically, higher balances earn higher rates on savings, while loans may have lower rates for larger amounts. This system incentivizes customers to maintain larger balances or borrow more.

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issuer fee

Issuer fee refers to charges imposed by the card issuing institution (bank or neobank) on the cardholder for services or features. Common examples include annual fees, foreign transaction fees, and late payment fees. Neobanks often advertise no issuer fees to attract customers, emphasizing cost savings.

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joint account

A joint account in neobanking is a shared bank account owned by two or more people, enabling collaborative management of funds for expenses like household bills, rent, or travel. Neobank joint accounts typically offer equal digital access, instant notifications, and built-in budgeting tools, often with FDIC insurance up to standard limits.

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Know your customer

Know your customer (KYC) is the regulatory process of verifying a client's identity before providing financial services. In neobanking, KYC is performed digitally using documents, facial recognition, and biometrics to prevent fraud, money laundering, and terrorist financing. It is a mandatory step for opening accounts and complying with anti-money laundering laws.

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linked account

A linked account is an external bank account connected to your neobank or fintech app. It enables seamless transfers, funding, and balance aggregation across multiple institutions. Linking typically requires verifying ownership through micro-deposits or instant authentication. This feature simplifies managing finances by centralizing accounts in one interface.

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Maintenance fee

A maintenance fee is a periodic charge levied by neobanks or fintechs for keeping an account active. Often monthly, it covers administrative costs. Some institutions waive it if certain conditions are met, like a minimum balance or direct deposit. This fee is common in traditional banking but less frequent among neobanks due to their low-cost model.

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metal card

Metal card is a premium payment card made from metal (e.g., stainless steel, titanium) rather than plastic. It is often offered by neobanks and fintechs as a status symbol, and typically comes with higher fees or spending requirements. Metal cards are known for their weight, durability, and exclusive perks such as travel insurance or cashback.

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Mid market rate

Mid market rate is the exchange rate between two currencies at which banks and large institutions trade with each other. It is the midpoint of the bid and ask rates, free from any fees or markups. This rate serves as the baseline for currency conversion, but consumers often receive a rate that includes a margin added by the service provider.

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mobile check deposit

Mobile check deposit is a feature offered by neobanks and fintech apps that lets users deposit paper checks by snapping photos of the front and back with their smartphone camera. The funds are typically credited to the account after verification, eliminating the need to visit a branch or ATM.

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mobile payment

Mobile payment is a digital transaction made via a mobile device like a smartphone or tablet. It allows users to pay for goods, services, or bills using apps, mobile wallets, or contactless technologies such as NFC. Examples include Apple Pay, Google Pay, and QR code payments. It's a key feature of neobanks and fintechs, enabling convenient, secure, and fast transactions without physical cards or cash.

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monthly account fee

A monthly account fee is a recurring charge that neobanks and traditional banks levy on checking or savings accounts each month. It covers maintenance costs and is often waived if you meet requirements, such as a minimum balance or direct deposit.

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monthly fee

A monthly fee is a recurring charge that neobanks or fintechs may impose for maintaining an account, typically to cover operational costs or premium features. Unlike traditional banks, many neobanks waive monthly fees if certain conditions are met, such as a minimum balance or direct deposit. This fee is often disclosed upfront and can range from $0 to $15 per month.

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multi currency account

A multi currency account is a bank account that lets you hold, send, and receive money in several currencies without automatic conversion. Ideal for travelers, freelancers, and businesses, it often features low or no exchange fees, real time rates, and instant transfers. This account simplifies international transactions and reduces currency conversion costs.

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multi currency card

A multi currency card is a payment card that allows users to hold, manage, and spend multiple currencies from a single account. Often offered by neobanks, it enables travelers and businesses to avoid high foreign exchange fees, lock in exchange rates, and seamlessly switch between currencies. Users can load funds in various currencies and use the card for transactions or ATM withdrawals abroad.

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Multi-currency account

A multi-currency account lets you hold, receive, and spend balances in several currencies inside one app, often with local account details in each. It is useful for travellers, expats, and freelancers who get paid or spend in more than one currency, because it lets you convert on your own terms instead of paying a card FX markup on every transaction.

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multi-currency wallet

A multi-currency wallet is a digital wallet that lets users hold, send, receive, and exchange multiple currencies in a single account. Often offered by neobanks and fintech platforms, it facilitates international transactions, travel spending, and online shopping with real-time currency conversion and competitive exchange rates. Users can manage balances across currencies and sometimes access a linked debit card. This contrasts with standard bank accounts that support only one currency.

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no foreign transaction fee

A no foreign transaction fee feature means that a financial account, typically a credit or debit card, does not charge the standard 1%, 3% fee on purchases made in a foreign currency or processed by a foreign bank. This benefit reduces costs for international travelers and online shoppers buying from abroad, making cross-border transactions cheaper.

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online banking account

An online banking account is a digital deposit account offered by neobanks and fintech companies, accessible solely through web or mobile applications. Unlike traditional bank accounts, it has no physical branches, often features no monthly maintenance fees, competitive interest rates, and real-time transaction capabilities. These accounts support core banking functions like deposits, withdrawals, payments, and fund transfers entirely online.

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open banking

Open banking is a regulated system where banks and financial institutions securely share customer financial data with authorized third-party providers via APIs, with explicit customer consent. This enables innovative services like account aggregation, budgeting applications, and personalized lending products. By fostering competition and transparency, open banking empowers consumers and drives fintech innovation.

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overdraft fee

An overdraft fee is a charge applied when a transaction exceeds the available balance in a checking account. Neobanks often offer overdraft protection or limited fee-free overdrafts. However, many fintechs have eliminated these fees to improve customer experience. Understanding the policy helps avoid unexpected charges.

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overdraft interest rate

Overdraft interest rate is the annual percentage rate (APR) applied to the negative balance when you spend more than your account holds. Neobanks charge this daily on the overdrawn amount, often higher than standard loan rates. It compounds until repaid, making timely repayment crucial to avoid mounting costs.

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overdraft protection

Overdraft protection is a bank service that links your checking account to a savings account, credit card, or line of credit. When you make a transaction that exceeds your balance, funds are automatically transferred from the linked account to cover it, preventing declined payments and overdraft fees. However, transfer fees or interest may apply.

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Payment gateway

A payment gateway is a technology that authorizes credit card or direct payment processing for ecommerce websites, online stores, and brick-and-mortar businesses. It encrypts sensitive payment data to ensure secure transactions between the customer and merchant.

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Payment initiation

Payment initiation is a service that enables a third-party provider to initiate a payment from a user's bank account to a merchant or another account, typically using APIs like PSD2. It bypasses card networks, offering a faster and often cheaper alternative. Neobanks and fintechs leverage payment initiation for direct account-to-account transfers, reducing reliance on traditional payment rails.

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payment initiation service

A payment initiation service enables a third-party provider, with your consent, to initiate a payment directly from your bank account to a merchant. This service, part of open banking, bypasses card networks and often uses APIs for secure, real-time transfers. It's commonly used for online purchases, offering lower fees and faster settlement.

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payment link

A payment link is a URL that, when clicked, directs a customer to a secure payment page where they can complete a transaction. It enables businesses to accept payments without needing a physical terminal or complex integration, commonly used for invoices, e-commerce, or person-to-person payments via messaging apps.

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Peer to peer payment

Peer to peer payment is a direct electronic transfer of funds between individuals using a mobile app or online platform, bypassing traditional banks. Services like Venmo, Zelle, and Cash App enable instant, low-cost money exchanges for splitting bills, paying rent, or sending gifts.

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peer to peer transfer

A peer to peer transfer (P2P transfer) allows individuals to send money directly to each other using a mobile app or online platform, bypassing traditional bank transfers. Typically instant or same-day, these transfers are common in neobanks and fintech apps for splitting bills, paying rent, or sending gifts. They often require only an email or phone number, not account details.

P2P transfers are usually free or low-cost, with security features like encryption and fraud monitoring. Popular examples include Venmo, Zelle, and Cash App.

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pockets

Pockets are virtual sub-accounts within a neobank app that let you segregate funds for specific purposes, like bills, savings, or spending categories. You can deposit money into each pocket, often with custom names and icons, and track progress toward goals. Some neobanks allow automatic transfers or envelope budgeting features, making it easier to manage money without leaving the main account.

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prepaid card

Prepaid card: a payment card preloaded with funds, not linked to a bank account or credit line. Spending is limited to the loaded amount. Unlike debit or credit cards, it does not require a bank account or credit check. Useful for budgeting, gifting, or unbanked individuals. Can be used for purchases, ATM withdrawals, and online transactions.

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PSD2

PSD2 (Payment Services Directive 2) is an EU regulation that mandates banks to open customer data to third-party providers via APIs, enabling open banking. It aims to increase competition, innovation, and security in payments, allowing services like account aggregation and payment initiation with user consent.

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push notification for transactions

A push notification for transactions is an instant alert sent to a user's mobile device when a transaction occurs, such as a purchase, transfer, or payment. It typically includes details like amount, merchant, and time, helping users monitor account activity in real time to detect fraud or unauthorized use. Neobanks and fintech apps use these to enhance security and user engagement.

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qr code payment

QR code payment allows customers to make payments by scanning a Quick Response code with a smartphone. The code contains payment details, and the transaction is processed via a connected app or payment platform. Common in neobanks and fintech apps for peer to peer transfers, in store purchases, and bill payments. It's fast, contactless, and reduces need for physical cards or cash.

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Real time payments

Real time payments are electronic payment systems that enable immediate fund transfer from payer to payee, processing 24/7/365 with final settlement in seconds. Unlike traditional bank transfers that may take days, real time payments offer near instantaneous availability of funds, critical for neobanks and digital finance platforms.

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real-time balance

Real-time balance refers to the current available funds in a financial account that are updated instantly as transactions occur, eliminating the delays typical of traditional banking. This feature is crucial for neobanks and fintech apps, providing users with an accurate and up-to-date view of their spending power.

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Recurring payment

A recurring payment is a transaction automatically debited from a customer’s account at predetermined intervals, such as weekly, monthly, or annually. Neobanks and fintech platforms streamline these payments for subscriptions, memberships, or installment plans via direct debits or open banking APIs, ensuring timely, hands-free settlements.

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reference number

A reference number is a unique alphanumeric code assigned by a financial institution to a transaction, account, or customer request. It allows users to track payments, transfers, or support tickets. In neobanking, reference numbers are displayed in app receipts and emails to ensure accurate identification and dispute resolution.

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Regulatory license

Regulatory license is an official authorization granted by a financial authority to a neobank or fintech to operate legally. It ensures compliance with laws on capital requirements, consumer protection, and anti-money laundering. Without it, operations are illegal. Examples include e-money or banking licenses.

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regulatory sandbox

A regulatory sandbox is a controlled framework established by financial regulators that allows fintech companies to test innovative products, services, or business models with real consumers under relaxed regulatory requirements for a limited period.

For example, the UK Financial Conduct Authority (FCA) operates a sandbox where firms receive tailored permissions, consumer safeguards, and regulatory guidance. This fosters innovation while ensuring market integrity and consumer protection. Successful testing can lead to full authorization.

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Reward points

Reward points are loyalty points earned by neobank customers through card spending or account activities. They can typically be redeemed for cashback, travel perks, gift cards, or merchandise. Accrual rates vary by transaction type, and points may expire if unused. Neobanks often offer bonus points for referrals or category-specific spending.

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round-up savings

Round-up savings is an automated feature that rounds each debit card purchase to the nearest dollar and transfers the spare change into a savings or investment account. For example, a $3.50 coffee becomes $4.00, with $0.50 saved. This micro-saving strategy helps users build savings effortlessly with everyday spending.

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Round-ups

Round-ups are an automated saving feature that rounds each card purchase up to the nearest unit of currency and moves the difference into a savings pot. A EUR 2.60 coffee saves EUR 0.40. It is a low-effort way to build a small balance, though the amounts are modest and should not replace a deliberate savings plan.

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Safeguarding

Safeguarding is the rule that requires an EMI or payment institution to hold customer money separately from its own funds, usually in a segregated account at a partner bank or in low-risk assets. If the firm fails, safeguarded funds are returned to customers after an administration process. Unlike a deposit guarantee scheme, there is no fixed insured amount and repayment can take time.

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Saving goal

A saving goal is a feature in neobanks and fintech apps that lets users set a specific financial target, like a vacation or emergency fund, within a separate automated savings account. Users can name the goal, track progress, and set up automatic transfers. It helps compartmentalize funds for short or long term objectives.

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savings account

A savings account is a deposit account offered by neobanks and fintechs that earns interest on your balance. Unlike checking accounts, savings accounts are designed for storing money you don't need immediately. They typically offer competitive interest rates, no monthly fees, and easy access via mobile apps. However, they may have withdrawal limits and are not meant for daily transactions. Some neobanks offer high-yield savings accounts with automated savings features.

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savings calculator

A savings calculator is a tool that estimates the growth of deposits over time based on variables like initial amount, monthly contributions, interest rate, and compounding frequency. It helps users visualize potential savings for goals like retirement or emergency funds. Neobanks often integrate these calculators to encourage financial planning.

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savings goal

A savings goal is a specific financial target set within a neobank or fintech app to save money for a particular purpose, such as an emergency fund, vacation, or major purchase. Users allocate funds periodically, track progress visually, and often earn interest. Goals help automate saving and encourage disciplined spending.

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savings interest rate

A savings interest rate is the annual percentage yield (APY) that a neobank pays on your deposited funds. Unlike traditional banks, neobanks often provide competitive rates due to lower overhead. This rate determines how much interest your savings earn over a year, typically compounded daily or monthly. A higher rate accelerates the growth of your balance through compound interest.

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savings pot

A savings pot is a neobank feature that lets you create separate, goal-oriented sub-accounts within a single savings account. You can label each pot for specific purposes like an emergency fund, vacation, or rent, and set up automated transfers to build savings gradually. This digital envelope system helps with budgeting and tracking progress without opening multiple accounts.

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Scheduled payment

A scheduled payment is a prearranged transfer of funds set to occur on a specific date, often recurring (e.g., rent, subscriptions). Neobanks automate these from a user's account, reducing late fees and manual effort. Users define the amount, frequency, and recipient; the bank executes without further action. This feature supports budgeting and bill management in digital-only banking.

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SEPA

SEPA (Single Euro Payments Area) is the system that lets euro transfers move between accounts across participating European countries at the same low cost as a domestic payment. SEPA Instant settles within seconds. A euro account that supports SEPA is important for receiving salaries and paying euro bills without conversion.

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SEPA transfer

A SEPA transfer is a standardized electronic payment in euros within the Single Euro Payments Area (SEPA), enabling cross-border transactions between bank accounts in 36 European countries as easily as domestic transfers. SEPA transfers are typically low cost, processed within one business day, and commonly used for EU direct debits, salary payments, and online purchases.

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sort code

A sort code is a six digit code used in the UK to identify a specific bank branch for routing payments. In fintech and neobanking, sort codes are essential for setting up direct debits, receiving salaries, and making bank transfers. They are typically displayed alongside an account number for seamless transactions.

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spending categories

Spending categories are predefined labels that neobanks and fintech apps automatically assign to transactions, such as 'Groceries', 'Dining', or 'Transportation'. These categories enable users to view aggregated spending by area, set budgets, and receive insights. For example, a neobank might show you spent 30% of your income on dining. This feature simplifies personal finance management without manual tracking.

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spending limit

A spending limit is a maximum amount a neobank customer can spend using their debit card or account over a set period, typically daily, weekly, or monthly. These caps help manage budgets and prevent fraud. Users can often adjust limits via the app, but some may require bank approval. Exceeding the limit triggers a declined transaction until the next period or the limit is raised.

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spot rate

Spot rate is the current market exchange rate for immediate currency conversion. It reflects the price at which one currency can be traded for another for settlement within two business days. Neobanks and fintechs use real time spot rates to offer competitive foreign exchange services without hidden markups.

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strong customer authentication

Strong customer authentication (SCA) is a regulatory requirement under the EU's Payment Services Directive 2 (PSD2) that mandates two-factor authentication for electronic payments. It combines at least two independent elements: knowledge (e.g., password), possession (e.g., phone), and inherence (e.g., fingerprint). SCA aims to reduce fraud and enhance online payment security.

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Sub account

A sub account is an additional account linked to a primary neobank account, allowing you to allocate funds for specific goals, like savings or spending. Each sub account often has its own balance and transaction history, helping you organize money without opening separate accounts.

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subscription management

Subscription management refers to tools and services that help neobanks and fintech companies handle recurring billing, invoicing, customer lifecycle, and payment collections for subscription-based financial products. It automates payment retries, handles plan changes, and provides analytics on churn and revenue. This enables seamless recurring revenue streams and improves customer retention for digital banking and fintech offerings.

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sweeping

Sweeping automatically transfers excess funds from a checking account to a high-yield savings or investment account, often daily or when a threshold is met. This maximizes interest earnings or reduces fees by keeping balances low. Many neobanks offer sweeping to help customers optimize cash without manual transfers.

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SWIFT code

A SWIFT code is an 8-11 character alphanumeric identifier assigned to financial institutions for international wire transfers. It specifies the bank, country, location, and branch. Neobanks and fintechs use SWIFT codes to process cross-border payments, ensuring funds reach the correct institution. Without a SWIFT code, international transfers can be delayed or misrouted.

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SWIFT transfer

A SWIFT transfer is an international wire payment that uses the SWIFT network (Society for Worldwide Interbank Financial Telecommunication) to securely transmit transaction instructions between banks. Unlike domestic transfers, it involves multiple intermediary banks, each deducting fees, and typically takes 1-5 business days. Neobanks often offer SWIFT transfers with transparent fees and real-time tracking, though slower than newer alternatives like instant cross-border payments.

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transaction fee

A transaction fee is a charge imposed by a neobank or fintech for processing a payment, transfer, or other financial transaction. It can be a flat fee, a percentage of the transaction amount, or both, and often applies to services like peer-to-peer transfers, foreign exchange, or ATM withdrawals. These fees are distinct from monthly account fees and may vary by transaction type or account tier.

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Transaction limit

A transaction limit is the maximum amount or number of transactions a user can conduct within a specific period, such as daily or monthly, set by neobanks to manage risk and comply with regulations. It applies to withdrawals, transfers, or card payments. Exceeding the limit may result in declined transactions or fees.

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transaction reference

A transaction reference is a unique identifier assigned to each financial transaction, such as a payment or transfer. It helps users track and reconcile transactions in their account statements, and is often used by banks and fintech apps to provide a clear audit trail.

For neobanks, transaction references are generated automatically and can be searched or referenced for customer support queries.

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two-factor authentication

Two factor authentication (2FA) is a security process requiring two distinct verification factors to access a fintech account: typically a password (knowledge) plus a one time code from an authenticator app or SMS (possession), or a biometric scan (inherence). This layered approach prevents account takeover even if login credentials are stolen.

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Unspent balance

Unspent balance refers to the amount of money remaining in a neobank or fintech account after all withdrawals, transfers, and purchases have been deducted. It represents the available funds that can be used for future transactions, such as spending, savings goals, or bill payments. Tracking your unspent balance helps manage cash flow and avoid overdrafts.

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virtual card

A virtual card is a digital payment card with no physical embodiment, providing a unique card number, CVV, and expiration date for online transactions. It enhances security by limiting exposure of the primary account and is commonly used for subscriptions, one-time purchases, or budget control in neobanks and fintech apps.

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virtual debit card

A virtual debit card is a digital payment card that exists only in electronic form. It is linked to a bank account or prepaid balance and provides a unique card number, expiration date, and CVV for online transactions. Unlike physical cards, it is used for secure one time payments or to control spending limits without a plastic card.

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