Fintech Terminology / Glossary / Dictionary - I

Initial Coin Offerings (ICO)

A process or event in which a company attempts to raise capital by selling a new cryptocurrency or token. An initial coin offering (ICO) is the cryptocurrency industry’s equivalent of an initial public offering (IPO). A company seeking to raise money to create a new coin, app, or service can launch an ICO as a way to raise funds. Investors purchase the tokens in the hope that the value of the cryptocurrency will increase, or to later exchange for services offered by that company.

Installment Loan

Installment loans can be commercial loans or personal loans that borrowers will repay with regularly scheduled payments or installments. These are loans that are paid back on a fixed plan where each installment amount and total number of installments is fixed. These loans are fixed-rate loans. For example loan taken for a single large purchase such as a car, the borrower receives a lump sum and repays the loan over a set term in monthly payments, or installments.

Issuer/Issuing Bank

An issuing bank or an issuer is a financial institution (a bank or credit union), which offers a payment card (credit or debit cards) directly to consumers/organizations. 
It is part of the 4-party model of payments. The parties in the 4-party model are:
Consumer (also called a cardholder): Makes purchases and promises to pay the Issuing Bank for them.
Issuing Bank (also called an Issuer): The consumer's bank. Transfers money for purchases to the Acquiring Bank. Is liable for purchases made by the consumer if the consumer does not pay.
Acquiring Bank (also called an Acquirer): The merchant's bank. Accepts money for purchases. Is liable for charges made by the merchant if it does not provide goods or services purchased.
Merchant: Sells goods and services and accepts credit, debit or prepaid cards as promise for payment.

Interchange Fee

Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card-based transactions. When a customer makes a purchase using a credit or debit card, the interchange fee is paid by the merchant's acquiring bank to the cardholder's issuing bank. Interchange fees have been the subject of regulatory scrutiny and discussions within the financial industry due to their potential impact on merchants and consumers. The structure and regulation of interchange fees can vary across countries and regions.

Interest-Free Loans

An interest-free loan is a loan on which the borrower is not required to pay any interest for a specified period or throughout the entire loan term. It may be offered by different entities, including governments, charitable organizations, or individuals. 

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