Resources
Embedded finance & BaaS glossary.
Straightforward definitions of the industry's key terms, for product, engineering, and business teams.
- Receivables Anticipation
- A credit operation in which the holder of a future receivable receives its value in advance, subject to a discount.
- Banking as a Service (BaaS)
- A model in which a platform provides, via API, the regulated banking infrastructure so that other companies can offer financial services under their own brand.
- Chargeback
- The reversal of a transaction initiated by the card-issuing institution at the cardholder's request, who disputes the charge with the bank. In the BaaS model, the distribution of chargeback risk depends on the contract between the platform, the Payment Institution, and the merchant: in general, the risk falls on the acquirer or the merchant, not on the technology platform. Understanding the chargeback flow is critical for software companies that want to issue cards or process payments for their end customers.
- Automatic Reconciliation
- The programmatic matching process between financial events recorded on the platform (payments, refunds, settlements) and the entries in the payment account, executed via API without manual intervention. For ERPs and financial SaaS, automatic reconciliation eliminates the manual process of checking bank statements and reduces the risk of accounting inconsistencies. At Baasic, event webhooks and real-time statement endpoints are the base mechanisms for building automated reconciliation flows.
- Payment Account
- A type of regulated account that allows financial transactions (deposits, withdrawals, transfers) without the credit functions typical of a traditional bank account.
- Escrow Account
- A payment account used to hold a party's funds until a previously agreed condition is met, at which point the funds are automatically released. M&A contracts, real estate transactions, marketplaces with delivery guarantees, and secured credit operations are typical use cases. In the BaaS context, the escrow account is configured via API and the release of funds can be triggered programmatically upon event confirmation.
- Embedded Credit
- A credit offer presented to the user at the exact moment and context they need it most, within the product's native flow, without redirecting them to an external financial institution. An ERP that offers receivables anticipation at the moment an invoice is issued, or a marketplace that offers working capital on the supplier's dashboard, are examples of embedded credit. At Baasic, embedded credit is enabled via API and backed by regulated institutions, without the software needing to obtain its own credit license.
- Embedded Finance
- The incorporation of financial services (accounts, cards, payments, credit) directly inside platforms that are not banks, with the experience taking place within the product itself.
- FIDC (Fundo de Investimento em Direitos Creditórios — Receivables Investment Fund)
- A securitization structure regulated by the Brazilian Securities and Exchange Commission (CVM) in which financial receivables (trade notes, contracts, credit installments) are assigned to a fund and become collateral for raising capital from investors. For software companies that originate credit, the FIDC is the most common mechanism for scaling a loan portfolio without weighing down their own balance sheet. Baasic offers infrastructure for credit origination that can be structured together with partner FIDCs.
- Financial Float
- The time difference between the moment a payment is initiated and the moment it is definitively settled. In financial products, the float represents a window in which funds remain in the platform's custody before being passed on, which can be an additional revenue source for the operator. With the growing adoption of Pix and instant settlement, traditional float has shrunk, but it still exists in boletos, scheduled wire transfers (TEDs), and installment credit operations.
- Payment Institution (IP)
- A legal entity authorized by the Central Bank of Brazil (BACEN) to operate within the Brazilian Payment System (SPB) without holding a full banking license. There are three main categories: e-money issuer (maintains payment accounts), post-paid payment instrument issuer (issues credit cards), and acquirer (enables merchants to accept payments). Baasic connects your software to regulated Payment Institutions, allowing you to offer these services to your customers without needing to obtain the license yourself.
- Authorized Financial Institution (IFA)
- A legal entity with express authorization from the Central Bank or another competent regulator to carry out financial operations in Brazil, including taking deposits, granting credit, and issuing payment instruments. In the BaaS model, the IFA is the regulated partner that assumes responsibility for the financial operations while the technology platform (such as Baasic) provides the product and integration infrastructure. This separation is what allows software companies to offer financial services without obtaining their own license.
- KYC (Know Your Customer)
- A set of regulatory procedures for identifying and verifying customer identity in financial services.
- SCD License (Sociedade de Crédito Direto — Direct Credit Company)
- A Central Bank license category that authorizes granting loans and financing with the institution's own funds, exclusively through digital platforms, without taking deposits from the public. An SCD can assign the credit it originates to FIDCs and other securitization vehicles. For credit fintechs that want to operate in a regulated way without the complexity of a bank, the SCD is often the fastest path. At Baasic, credit operations can be structured in partnership with licensed SCDs.
- SEP License (Sociedade de Empréstimo entre Pessoas — Peer-to-Peer Lending Company)
- A Central Bank license category that authorizes the operation of peer-to-peer (P2P) credit platforms, connecting individual or corporate borrowers and investors. Unlike the SCD, the SEP does not lend its own funds: it acts as an intermediary between borrowers and investors. For platforms that want to build credit marketplaces, the SEP is the corresponding regulatory structure.
- Open Finance
- A system regulated by the Central Bank that enables standardized sharing of financial data and payment initiation between authorized institutions, with customer consent. For B2B software companies, Open Finance enables access to customers' banking history (with consent), credit score enrichment, and payment initiation without redirecting to the bank's app. Baasic makes Open Finance endpoints available as part of its embedded finance infrastructure.
- Credit Originator
- A company that identifies, qualifies, and structures credit operations for end borrowers, without necessarily holding the license to grant credit directly. In the embedded credit model via BaaS, the B2B software acts as the originator: it uses its customers' transactional data to determine eligibility and structure the offer, while the formal granting is carried out by the regulated partner financial institution. This model allows ERPs, CRMs, and SaaS B2B to offer credit without taking on balance-sheet risk.
- Pix
- Brazil's instant payment system operated by the Central Bank, available 24/7 and integrable via API.
- Credit Risk in the BaaS Model
- The probability of default in credit operations enabled via Banking as a Service, and the definition of which part of the chain absorbs that risk. In the standard model, credit risk sits with the partner financial institution (SCD, bank, FIDC) that actually grants the credit. The originator (the B2B ecosystem) may or may not share part of the risk, depending on the contractual structure, which directly impacts the compensation received per operation. Defining your risk appetite before structuring an embedded credit product is a fundamental business decision.
- Sandbox
- An isolated development environment that replicates the behavior of production APIs without moving real financial funds. In the BaaS context, the sandbox lets engineering teams integrate KYC, account opening, card issuance, and Pix processing flows before any contract or certification with the partner institution. At Baasic, sandbox access is made available right after the start of the commercial process, at no additional cost.
- SFN (Sistema Financeiro Nacional — National Financial System)
- The set of institutions, instruments, and markets that enable financial intermediation in Brazil, regulated and supervised by the National Monetary Council (CMN), the Central Bank of Brazil (BACEN), the Brazilian Securities and Exchange Commission (CVM), and the Superintendence of Private Insurance (SUSEP). For software companies that want to offer financial services, the SFN defines which activities require their own license and which can be enabled through partnership with an already authorized institution, as in the BaaS model.
- Payment Splitting
- The automatic division of a received amount among multiple parties, such as the platform, the supplier, and the financial partner, executed at the moment of settlement without manual processing. For marketplaces, ERPs with multiple suppliers, and business ecosystems, splitting eliminates manual payouts and turns a financial obligation into a programmatic event. At Baasic, splitting is configurable via API and runs in real time alongside Pix or boleto processing.
- SPI (Sistema de Pagamentos Instantâneos — Instant Payment System)
- The infrastructure operated by the Central Bank of Brazil on which Pix runs. The SPI processes settlements in real time, 24 hours a day, 7 days a week, with irrevocable finality. While Pix is the end-user experience (keys, QR codes, transfers), the SPI is the technical and regulatory layer that guarantees settlement. Integrating directly with the SPI requires BACEN authorization; via BaaS, access is provided through the regulated partner institution.
- Webhook
- An asynchronous notification mechanism in which a system sends an HTTP POST to a consumer's URL whenever a relevant event occurs.
- White-Label
- A model in which the client company offers financial services under its own brand, retaining control of the user experience.
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