FAQs

A standing order is an instruction a banking account holder gives to their banking account provider to pay a set amount to another account at regular intervals. The intervals are generally weekly, monthly, quarterly or annually. The payer of the standing order has full control, where they set it up themselves, choose the amount to be paid and the frequency of the payments. Standing orders either cover a set period of time or continue until they are cancelled.

A spot contract involves the buying or selling of currency for immediate settlement on the date of the spot transaction. The trade is completed at the current rate at the time you wish to make it. The price you receive for buying or selling is dependent on the market exchange rate at the time and date you want to make the transaction. A spot contract is the most basic of all FX products on the market.

Fiat money is a government-issued currency that has been established as money but holds no intrinsic value. The value of fiat money comes from a government maintaining a specific value, or two or more parties agreeing its value. The vast majority of fiat currencies are paper currencies, such as the dollar, pound or euro.

Fiat money gives governments and central banks greater control over an economy because they can limit how much money is printed and therefore how much fiat currency is in circulation. However, because the value of fiat money is not backed by a physical commodity such as gold, its value can collapse in the event of hyperinflation, or if a central bank prints too much of it.

FX and forex are both abbreviations for foreign exchange, which is the conversion of one currency into another. The FX market is the most liquid in the world, with trillions of dollars exchanged every day. Many of these exchanges are done for practical purposes, but the vast majority come from traders who try to make a profit. FX markets are open 24 hours a day, five days a week, although are closed for bank holidays and public holidays.

A payment gateway is a service that a merchant uses to accept card payments from their customers (cardholders). Payment gateways are the consumer-facing interfaces, such as chip & PIN readers you see in-store or payment processing portals found online. Payment gateways may be provided by a bank to its customers, or a specialised payment service provider.

The payment gateway is a mediator between transactions and the payment processor. It is responsible for acquiring authorisation for the transaction.

An issuer (also known as a card issuer or issuing bank) is a bank or financial institution that issues payment cards to customers or cardholders on behalf of debit and credit card networks.

The issuer is responsible for paying the acquirer any transactions that have been made on cards they issued. The issuer is also responsible for debiting funds from the cardholder’s account.

The cardholder is the person holding a debit or credit card issued by a bank or financial institution.

Cardholders may use contactless terminals or a chip & PIN reader to indicate their agreement to proceed with a transaction. An authorisation code is then given to the merchant by the cardholder’s card issuer that appears on the receipt given to the cardholder. The card issuer will then debit the transaction from the cardholder’s account.

A merchant is an individual or company that sells goods and/or services to customers (cardholders). The selling can take place face-to-face in shops, over the phone, or over the internet.

Card transaction details are entered into the merchant’s terminal and are then sent to the acquirer who processes the transaction and sends it to the issuer for authorisation and settlement.

A virtual IBAN is an IBAN account number that does not reference an actual bank account but allows payments to be routed to a physical bank account. The owner of a virtual IBAN can send and receive payments around the world quickly and easily, often in multiple currencies.

The main advantage of a virtual IBAN is that it eliminates the need to establish and maintain multiple banking relationships, thereby saving the owner of a virtual IBAN time and money. In effect, virtual IBANs enable you to manage multiple relationships and currencies through a single account.

IBAN stands for International Bank Account Number. It is an internationally agreed code that uniquely identifies a bank account. IBANs are composed of up to 34 alphanumeric characters, depending on the country in which the account is held. They help banks process transfers around the world.

Not all countries require an IBAN, but the system is used throughout Europe and is recognised in many other areas around the world. Because every IBAN follows a set structure, it is possible for individuals to generate their own IBAN if they do not know it. Your IBAN will usually appear on bank statements, but there are a range of tools online that enable you to validate or find an IBAN.

An acquirer (also known as an acquiring bank) is a bank or financial institution that processes card payments on behalf of a merchant. The acquirer allows merchants to accept card payments from an issuer (also known as an issuing bank).

The acquirer is responsible for receiving the card transaction details from the merchant’s terminal, which are passed to the issuer via the card scheme for authorisation. Once authorisation has been granted, the acquirer completes the processing of the transaction.

The acquirer will then arrange for the card transaction to be settled and will typically credit the merchant’s nominated bank account with the funds.

Cross-border payments are transactions involving parties that are situated in at least two different countries. Typically, cross-border payments are made using country-specific regulations, which can result in slow and expensive processes. Having an understanding of country-specific requirements can speed up payment times and make the process less cumbersome.

A card scheme is a payment network that is linked to debit and credit cards to process payments. Banks and other financial institutions need to become members of specific card schemes to issue cards that can operate on a card scheme. Card schemes manage the operation and clearing of payments in accordance with the rules of that card scheme. Card schemes are an intrinsic part of the card payment cycle and no card payments can be made without them.

A scheduled payment is a one-off or regular payment that can be sent from your account on a set date, time and frequency in the future. The payment can be for relatively small amounts spread across a specific timescale, or for far larger amounts such as paying employees. You can usually set up scheduled payments up to a year in advance, though this depends on the bank or financial institution you hold your account with. Scheduled payments are convenient and help prevent individuals from missing the payment of bills, as the payments can be scheduled for before the due date.

ACH stands for Automated Clearing House and is an electronic bank-to-bank network that enables the processing of transactions. The first automated clearing house was established in 1972 and was operated by the Federal Reserve Bank of San Francisco. An ACH payment is a method of electronically moving money between bank accounts across the United States without the need for cash, or debit and credit cards.

One of the biggest appeals of ACH payments is the convenience it provides – the network enables businesses to automate some or all of the payment process, freeing up time and boosting efficiencies. Because ACH bypasses card networks, transferring funds is relatively cheaper and the service is open to anyone with a US bank account.

Unlike other methods, ACH payments are not instant and may take longer than three working days to appear in the account the funds have been sent to. However, they can be scheduled for a date in the future and set up on a regular, ongoing basis.

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication, which was established in 1973 to create common processes and standards for financial transactions. SWIFT is the primary communications network between banks and boasts high levels of security and reliability. The SWIFT network does not transfer funds – it sends payment orders between different bank accounts using SWIFT codes.

SWIFT standardised both IBANs and BIC codes, and the network owns the BIC system. Because of this, it can identify a bank very quickly and send payment information securely. SWIFT makes international payments simple and straightforward, and helps businesses become more efficient.

CHAPS stands for Clearing House Automated Payment System. It is composed of more than 30 direct participants and over 5000 financial institutions, and is ideally suited to those needing to make large real-time gross settlement sterling payments in the UK.

The CHAPS service runs from 6am to 6pm, Monday to Friday – apart from bank or public holidays in England and Wales – and, if payment instructions are received by 2pm on a working day, the CHAPS system guarantees same-day payment and there is no limit to the amount of money that can be sent. It is typically used for making high-value transactions that require same-day guaranteed payment (such as businesses paying suppliers).

For banks, financial institutions and businesses that need to make large, urgent payments, CHAPS presents a perfect solution.

Bacs (or BACS) is an acronym that stands for Bankers’ Automated Clearing System. It is a network of banks and building societies that form part of the Bacs payment services scheme and is a convenient means for businesses to make electronic payments directly from one bank account to another.

Bacs was established in 1968 and has been clearing and settling the secure delivery of electronic payments since then – making it the oldest system of its kind in the UK. In 2018, Bacs became part of Pay.UK – a leading retail payments authority which is also home to Faster Payments. While the scheme is now more than 50 years’ old, it is still the most popular method for sending and receiving business payments in the UK.

One of Bacs’ main services is Bacs Direct Credit which enables businesses of all sizes to make payments directly into a bank account. It is an inexpensive way of making regular payments. Although Bacs Direct Credit is unsuitable for same-day payments, it is worth noting that payments can be cancelled up until midday of day two in the processing cycle.

SEPA stands for Single Euro Payments Area. It was launched by the European banking and payment industry as a means of establishing a set of tools and standards that make cross-border payments in euros as easy as national payments. SEPA is composed of all EU member states, along with the four members of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), and Andorra, Monaco, San Marino, United Kingdom, Vatican City State, Mayotte, Saint-Pierre-et Miquelon, Guernsey, Jersey and Isle of Man.

The SEPA Credit Transfer scheme was established in 2013 and is designed to improve the efficiency of cross-border payments across Europe and is for euro payments only. The advantages of SEPA credit transfers are that payments can be processed and settled the same day, with the maximum execution time set at one working day. In addition, there are no transaction limits.

The Faster Payments Service (FPS) is a UK banking initiative that was launched in 2008. It was established with the aim of reducing payment times between different banks’ customer accounts. The service enables UK sterling payments to be made via mobile, internet, telephone and standing order 24/7. If all parties involved in the transaction are part of FPS, accounts are typically credited within seconds, but it may take longer if one of the accounts is a non-participant of the scheme.

The Faster Payments transaction limit is £1,000,000, although individual banks and financial institutions often set their own limits for personal and corporate customers.

All funds held on your account with Clear Junction Ltd. are safeguarded on your behalf. We do not provide safeguarding services to your customers – this means that in cases where you keep the funds of your customers with Clear Junction, those are safeguarded on your behalf and not on behalf of your customers. In an insolvency scenario, funds would be returned to you, for onward distribution to your customers.

In the event of the insolvency of Clear Junction, safeguard accounts do not form part of the assets of the business. Client funds would therefore be returned from the safeguard accounts to clients by the administrators of the wind down.

In accordance with regulation, designated safeguard funds can be held with either an authorised credit institution, such as a bank, or Invested into secure, liquid assets that have been approved by the FCA and are held via a separate account with an authorised custodian.

Clear Junction operates the ‘segregation method’ for holding client money. Client funds are received to and from designated safeguard accounts, which are separate from Clear Junction’s own business accounts.

As a regulated firm, Clear Junction must ensure that funds of clients are never co-mingled with the company’s own funds – this is known as safeguarding. The rules Clear Junction follows are set out in the Electronic Money Regulations 2011 and the Payment Services Regulations 2017.

Clear Junction Limited is licensed and regulated by the Financial Conduct Authority (FCA registration: 900864) as an Electronic Money Institution (EMI).

API stands for Application Programming Interface. It is essentially a set of functions and interactions between two or more applications. You almost certainly use a range of APIs on a daily basis, even if you are not aware of it. For instance, when you check the weather on your phone, APIs are working behind the scenes to give you the information you need. Clear Junction’s platform is built on a range of APIs to provide effective banking and payments solutions and an exceptional level of service.

Open banking is a term relating to a series of reforms that were introduced to make banking more open. These reforms mean that banks and other financial institutions are obliged to allow open access to their customers’ financial data, such as spending habits and regular payments – provided the customer gives consent.

Open banking is driving innovation within the financial sector as the landscape becomes more competitive and solutions become increasingly tailored to individual requirements. Open banking levels the playing field by forcing larger and more established banks to work with smaller and newer financial institutions to deliver better technology, lower costs and improved service.

Blockchain is a means of recording information digitally that cannot be changed. It is often described as a digital ledger of transactions, where blocks of transactional information are stored in such a way that they can only denote one thing.

As the name suggests, blockchain denotes a chain of these transactional information blocks, where multiple pieces of information are stored beside each other. When you perform a transaction, the information is stored in a block which is given a unique code called a hash. Blockchain had been theorised for years, but it was only realised in a real-world application with the creation of bitcoin in 2009.

Electronic money (e-money) is the electronically stored monetary value which represents a claim against the company that issued the e-money (the e-money issuer or EMI) and can be used to buy goods and services from third-parties, other than the e-money issuer.

E-money is generally used to make and receive payments online but can also be used in the real world. Prepaid cards and debit cards can be attached to an e-money account allowing offline transactions. It is held in e-money accounts and is seen as more secure and convenient than physical cash because it cannot be misplaced.