The finance world can be a complicated place. Excel sheets, proprietary programs and more each make the lives of our colleagues in the finance space more difficult. Adding to that is the use of financial abbreviations – shortenings of often already difficult to comprehend jargon into three or four letters.
Today, we hope to make finance that little bit easier by decrypting the jargon and compiling a list of 25 of the most common abbreviations, initialisms and acronyms in finance.
25 common abbreviations in finance explained
2FA: Two Factor Authentication
2FA is now an expectation, rather than a nice-to-have.
It is the process of locking down online accounts with a second layer (or second factor) of protection beyond a username and password. This often involves tying a phone number, email or authentication application to your account which generates an OTP or TAN that must be entered to access the account.
Since the implementation of the SCA requirement, 2FA has become a mandatory process for online payments in the EEA and UK.
3DS: Three-Domain Secure
3D Secure is an additional security protocol for online credit and debit card payments.
When making a payment online, you’ll be led to a card authentication page (belonging to your bank) where you must enter a password or code that is sent to a separate device you own. While first introduced in 1999, the protocol really came into action following the SCA regulations came into effect.
The ‘3D’ or ‘three-domain’ in the name refers to the three different parties involved with the payment process: the Acquirer domain, the Issuer domain, and the Interoperability domain. You can learn more about 3D Secure and its progress in our dedicated article.
A2A: Account to Account
Account to account is a type of payment where money is transferred directly from one bank account to another. Importantly, it does not involve any third parties or intermediaries, making the payment process faster and less complex.
The simplicity offered by this payment method allows for almost instantaneous payment. And with real-time payment and open banking becoming more common, A2A payments are seen as the gold standard of digital payments.
B2B: Business to Business
Business to business simply refers to interactions between two separate companies. These differ in nature to B2C or ‘business to consumer’ relationships due to increased regulatory and hierarchical oversight.
For payments, this of course involves payments that are made between two different businesses, like a procurement manager purchasing goods from a supplier or a marketing team paying for Google Ads.
BSP: Billing and Settlement Plan
BSP refers to a kind of business process. It facilitates the flow of data and funds between travel agencies and airlines by acting as an intermediary.
This simplifies selling, reporting and remitting procedures as, rather than every agent having an individual relationship with each airline, information is consolidated through the BSP. In turn, airlines can then allow agents to make one single payment to settle bookings. 
CVC: Card Validation Code
You know that three letter code on the back of your credit card? That’s referred to as a card validation code (CVC)… or card validation value (CVV)… or card security code (CSC) – you get the idea.
It’s a security feature implemented to reduce card fraud. Specifically, it’s used during card-not-present transactions or situations where the cardholder cannot show physically present a card to the merchant. Think online payments. However, the CVC is no longer considered secure enough, hence the introduction of 3D Secure. 
DBI: Descriptive Billing Information
Descriptive billing information is the name we at AirPlus give to the supplementary data that we collect and aggregate from GDSs, travel agencies and self-booking tools. This data can then be included in invoices, account statements and reporting tools.
Up to nine different fields can be customized in the invoice for information such as cost center, personal ID, project number and more. This naturally allows for more detailed reporting and aids the administrative processes associated with travel expense reconciliation.
EDI: Electronic Data Interchange
Electronic data interchange is the complex-sounding name for a simple concept: the exchange of business documents via a standard electronic format.
Rather than relying on physical, paper-based distribution, documents like purchase orders, invoices and other important documents can instead be sent from computer to computer. Benefits include faster processing, fewer errors and generally better interoperability.
A contemporary example of EDI in practice is e-invoicing, which is gaining in popularity. In fact, the whole EDI software market is expected to grow to $40.04 billion by 2029 – that’s a CAGR of 11.6%. 
ERP: Enterprise Resource Planning
Enterprise resource planning refers to a software platform that generally provides accounting features, such as accounts receivable, accounts payable and payroll, alongside additional modules such as tangible and intangible assets and supply chain management.
The ERP can be considered the ‘brains’ behind a business that helps with not only calculating but tracking multiple different data points and workflows within the company.
ESG: Environmental, Social and Governance
ESG works as a framework for identifying a business’ strategy when it comes to environmental, societal, and governmental topics. The business can then be scored and ranked based on this, with higher scores reflecting that they are taking appropriate actions in each category.
For example, implementing an internal carbon reduction program shows environmental initiative, addressing diversity issues shows societal initiative, and acting ethically via business decisions shows governmental initiative. This ultimately can inform investors whether or not to invest and is actually linked to higher financial returns. 
We’ve written extensively about ESG and its role in sustainable finance in our dedicated article.
Fintech: Financial Technology
This one is a portmanteau rather than an acronym like the others on this list.
Fintech is worth noting here though as it refers to a growing ecosystem of innovative and fast-moving startups or technology firms that are entering the financial market. They focus on leveraging technology to improve processes in the space (e.g. through automation) while emphasizing integration with other services and providers.
FX: Foreign Exchange
When it comes to business travel or even cross-border payments, you will likely find yourself needing to pay in another currency. Foreign exchange or forex for short simply refers to the process of exchanging one currency to another.
The whole market can be complex and expensive, especially considering that the value of currencies can fluctuate significantly due to market forces. There are also plenty of legal requirements to consider.
MCC: Merchant Category Code
A merchant category code is a four-digit code that is assigned to merchants and used by all major card providers to identify their principal trade, profession, or line of business. It’s used to track transactions for analysis and reporting purposes, among other things.
When setting up your AirPlus Virtual Card, you can select the MCC of the merchant you are purchasing with for increased safety.
NFC: Near Field Communication
Near field communication is a technology that enables contactless communications using close-proximity radio frequency identification. Put simply, it allows two devices to interact and exchange information – like a mobile phone and POS system.
It is particularly popular for facilitating in-store mobile payment, offering a contactless way to pay using your mobile wallet of choice.
OTP: One-Time Password
A one-time password is just that: a password that is intended for a single use. These are usually sent to a separate device like a phone via SMS, email or mobile app.
OTPs are used as a secure method for proving your identity when accessing an online account or making a payment. This authentication method has become more prominent thanks to PSD2 and SCA requirements, which necessitate the use of an additional device to show proof of ‘possession’.
PaaS: Payments as a Service
What happens when you cross payments with the subscription economy? That’s right – you get Payments as a Service. PaaS is a business model where third-party providers offer online payment processing and management services to other businesses or organizations.
Essentially all aspects of the payment workflow can be outsourced in this way, from acceptance and processing to fraud detection, reporting and analytics. As we covered before, one industry in particular that can benefit from PaaS is Travel Trade.
PCI DSS: Payment Card Industry Data Security Standard
PCI DSS is a worldwide security standard that outlines how companies that process, store or transmit payment card data must reinforce protection of their data and secure it against unauthorized third-party access.
As a service provider and credit card issuers, we’re naturally subject to this and ensure compliance through regular annual audits – you can see our certification for proof.
POS: Point of Sale
Point of sale can refer to either the physical location a transaction takes place or, more often, the payment system used to process the payment.
We are now in an age of smart devices, and POS systems are starting to catch on. This move to digital is part of a greater shift towards accessibility and convenience in shopping, as the payment method and where we are paying is changing.
Did you know that Europe’s POS estate grew by 8% in 2021, with growth of 30% predicted by 2026?  You can learn more on how POS technology is evolving in our dedicated article.
PSD2: Payment Services Directive 2
With an increasing number of payments taking place online, the EU set out to regulate payment services and providers in the name of increasing competition in the payments market and the security of online payments. The result of this was Payment Services Directive 2.
PSD2 has had lasting implications to payments in the region, most noticeably for users is the requirement for strong customer authentication, which we’ve already covered.
RTP: Real-Time Payment
Real-time payments are easy to define: It refers to a subset of payment rails that enable instantaneous transactions, offer 24/7 coverage (or close to it), are open loop, and utilize the ISO 20022 messaging standard.
We’ve already spoken about the impact of real-time payment on the world stage: Over 70.3 billion real-time payment transactions were processed globally in 2020, with more expected as adoption of this standard increases worldwide.
SCA: Strong Customer Authentication
Strong customer authentication or ‘SCA’ refers to the one of the key regulatory requirements of the EU’s PSD2 that’s been in force since January 2021 (or March 14th 2022 in the UK).
The regulation outlines how online and card payments need to be authenticated. Essentially, when you make a payment, you’re required to pass a 2FA check to ensure that you (as the cardholder) are the one initiating or authorizing the payment. Th goal is of course to make credit card payments more secure – you can read how successful SCA was here.
SME: Small and Medium-Sized Enterprises
This one is very much self-explanatory. It’s a way of grouping companies based on their size, differentiating smaller businesses from their larger counterparts.
This distinction is necessary as structural, workflow, legal, and other aspects can change significantly as the scale of the business increases, particularly when it comes to larger, multinational corporations.
TAN: Transaction Authentication Number
A transaction authentication number is a unique, temporary code that’s generated to authenticate a specific transaction.
It works in a similar way to an OTP, often being used by online banking services and financial institutions as an additional layer of security to protect against fraud and unauthorized access – especially in the case your login credentials have been compromised.
Just like with an OTP, you should never share a TAN with anyone else.
UATP: Universal Air Travel Plan
UATP is a global corporate travel payment network that’s owned and issued by airlines. Thousands of merchants worldwide accept the UATP network, whether for air, rail, car rental and travel agency payments.
As a side note, AirPlus is a card issuer for UATP – with the AirPlus Company Account being the most successful settlement account within the UATP network.
VCC: Virtual Credit Card
A virtual credit card takes all the essential parts of a regular credit card – the 16-digit code, the expiry date and CVC – while removing the non-essential parts, namely the plastic card itself. Virtual cards offer numerous benefits over their physical counterparts, as they can be generated in seconds and offer much more security and control.
Understanding more financial jargon
And there we have it – 25 finance abbreviations and jargon explained to help you gain a better understanding of the payment industry.
This is far from an exhaustive list, but it’s a great starting point. Another great way to learn of the latest trends and more in payment is our newsletter. Sign up today so you don’t miss our latest release.
Banner photo by Markus Winkler on Unsplash
 From hardware to software: How smart POS devices are reinventing payments | Handpoint white paper, Nov 2021