21 Essential Fintech Concepts Every Product Manager Must Know

Navdeep Yadav
20 min readMar 8, 2024


As a fintech product manager, I spent years mastering the fundamentals of fintech. I’ve distilled all of my knowledge into a single, comprehensive article.

This detailed article covers more than 30 Fintech concepts and is possibly the most thorough resource on fintech you can find online and requires approximately 30 minutes to read.

For a deeper dive, I recommend taking the course.

Fintech Product Management: Become a Fintech PM.

Fintech Product Management: Become a Fintech PM.

P.S. It costs less than a burger and offers incredible value if you’re aiming to break into fintech!

Topic 1. Payment Systems and Infrastructure

If you are new to this domain understanding the Payment system and infrastructure is the backbone of the Fintech ecosystem. This would help you build a strong fintech foundation if you are new to this domain. I have divided this into 3 main parts.

a) Overview of Payment Systems: We will explore the fundamental concepts that underpin payment systems, including the transfer of funds, processing, and settlement.

b) Payment Instruments: Examining various payment instruments such as cash, checks, and electronic forms, and their role in the financial ecosystem.

c) Participants in Payment Systems: Understanding the key entities involved in payment processes, including payers, payees, banks, and intermediaries.

a) Understanding the Basics of Payment Systems

How banking infrastructure works

Banks profit from the interest rate difference between deposits and loans. They create money by lending out a portion of the deposits they receive.

How Bank makes money

Banks generate income through interest on loans and service fees. Customers can minimize fees by using online services and maintaining good financial practices.

How Banks Profit:

1. Interest on Loans:

  • Banks profit from interest on loans such as credit cards, personal loans, and mortgages, with rates varying by loan type.
  • Example: A $5,000 loan at 9.65% interest over two years yields $566 for the bank.

2. Bank Fees:

  • Banks charge various fees for services and transactions, including NSF, overdraft, ATM, late payment, minimum balance, withdrawal, and wire transfer fees.
  • Customers can avoid fees via online services, account monitoring, direct deposits, and responsible spending.

The reserve requirement set by the Central Bank affects how much banks can lend. So trust in banks is crucial; we rely on them to safeguard our money. Banks lend out more money than they have but maintain customer trust.

b) Payment Instruments

Money instruments

Money instruments are financial tools that enable transactions and the exchange of value, including cash, checks, electronic transfers, cards, and money orders, facilitating everyday financial activities.

  • Demand Drafts: Prepaid instruments issued by banks, ensuring payment to recipients.
  • Cashier’s Checks: Bank-issued checks, secured by the bank’s funds.
  • Money Orders: Prepaid instruments for secure transactions.
  • Electronic Funds Transfer (EFT): Digital money transfer methods, including wire transfers and direct deposits.
  • Banker’s Acceptance: Short-term debt instruments guaranteed by banks, often used in international trade.
  • Promissory Notes: Written promises for loan repayments.
  • Traveler’s Checks: Safe travel money with replacement options.
  • Bearer Bonds: Unregistered bonds redeemable by whoever holds them.
  • Bank Guarantees: Assurance by a bank to pay if contract terms aren’t met.
  • Electronic Checks (e-Checks): Digital versions of paper checks for online payments.

c) Participants in Payment Systems

  • Payers and Payees: These are the individuals or businesses initiating (payer) and receiving (payee) payments.
  • Banks: Central to the payment ecosystem, banks facilitate fund transfers, issue payment instruments, and manage accounts.
  • Payment Processors and Gateways: Intermediaries handling transaction authorization and routing, ensuring successful completions.
  • Card Networks: Companies مانند Visa and Mastercard that connect banks and merchants, providing infrastructure and rules for card-based transactions.
  • Regulatory Bodies: Central banks and other financial authorities establish guidelines to ensure safe, reliable, and efficient payment systems.

Topic 2. Payment Gateways

Payment infrastructure is the backbone of financial transactions globally, comprising systems and networks that facilitate secure and efficient money transfers.

Understanding the Role of Payment Gateways

  • The Bridge Between Merchants and the Financial World: Payment gateways act as secure interfaces, connecting online businesses to the complex web of banks, card networks, and payment processors that handle financial transactions.
  • Encryption and Authorization: These gateways safeguard sensitive payment information through encryption and transmit it to the relevant financial institutions for authorization and processing.
  • Seamless Integration: Payment gateways can be integrated into websites and e-commerce platforms, allowing customers to conveniently and securely pay for goods and services online.

The payments industry is experiencing significant changes, with a shift from cash to cashless payments, driven by customer demand for fast and secure transactions. Regulatory initiatives like PSD II aim to promote innovation. New technologies, such as open banking, are reducing costs and increasing efficiency

Payment Gateway Stack

The Payment Gateway Stack

Understanding the key players involved in the payment gateway process is essential:

  • Issuing Bank: The financial institution that provides credit or debit cards to consumers. They hold customer funds and approve or decline transactions based on available balances or credit.
  • Issuer Processor: Partnering with issuing banks, these companies manage card authorization, settlement of funds, and other backend processes.
  • Card Networks (Visa, Mastercard, etc.): These networks serve as the backbone, connecting banks and merchants, setting rules, and facilitating communication between financial institutions during transactions.
  • Payment Gateway: The technology platform that encrypts and transmits card data to the acquiring bank’s processor and communicates results to the merchant.
  • Acquiring Bank: The merchant’s bank, is responsible for processing the payment and depositing the funds into the merchant’s account.
  • User-Facing App: The front-end interface where users interact with the merchant’s online store, initiate the transaction, and enter their payment information.

Payment System Architecture: Considerations and Types

  • Security: A robust payment architecture prioritizes data encryption, multi-factor authentication, and fraud detection mechanisms to safeguard sensitive information and transactions.
  • Scalability: The architecture needs to handle growing transaction volumes without performance bottlenecks to support business growth efficiently.
  • Integration: Seamless integration with various e-commerce platforms, accounting systems, and additional services is essential.
  • Flexible Payment Options: The architecture should support diverse payment methods like credit/debit cards, digital wallets, and potentially alternative payment options.
  • Payout Time: Consider the time it takes for processed payments to reach the merchant’s account.
  • Multi-Currency Support: For international businesses, support for a multitude of currencies and streamlined foreign exchange handling is crucial.

Topic 3 Embedded Finance

Understanding the Concept

  • Seamless Integration: Embedded finance involves the seamless incorporation of financial services, such as payments, lending, or insurance, directly into the digital experiences of non-financial companies and platforms.
  • Frictionless User Experience: The goal is to provide customers with convenient access to financial products and services within the context of their everyday interactions, removing unnecessary steps and making financial tasks more intuitive.
  • Enabled by Technology: Embedded finance is made possible by modern APIs (Application Programming Interfaces) and fintech infrastructure that allow for seamless connections between diverse platforms.
Payment Gateways and Embedded Finance

The Role of Payment Gateways in Embedded Finance

  • The Foundation of Embedded Payments: Payment gateways form a crucial part of the embedded finance landscape, particularly in scenarios involving embedded payments. They facilitate the secure and efficient processing of card-based and other digital transactions within non-financial environments.
  • Behind the Scenes: While users experience a seamless payment flow within their favorite app or platform, behind the scenes, payment gateways handle the complexities of authorization, encryption, and communication with financial institutions.

Popular Types of Embedded Finance

Embedded Payments:

  • Facilitating payments directly within e-commerce platforms, ride-hailing apps, or even social media experiences.
  • Offering flexibility with diverse payment methods (cards, digital wallets, bank transfers, etc.).

Embedded Insurance:

  • Integrating tailored insurance products into relevant customer journeys. For example, offering travel insurance when booking a trip, or device protection when purchasing electronics.

Embedded Financing (Also known as Embedded Lending):

  • Providing point-of-sale financing options (installment plans, “Buy Now, Pay Later”), credit cards, or other forms of lending directly within online shopping experiences.
Embedded Finance

Benefits of Embedded Finance

  • Improved Customer Experience: Frictionless access to financial services enhances overall user experience.
  • New Revenue Streams: Non-financial firms can unlock additional revenue by offering financial products.
  • Increased Customer Engagement: Embedded finance solutions can drive customer loyalty and brand affinity.
  • Innovation and Competition: Embedded finance fosters a more dynamic and competitive financial services landscape.

Topic 4 Fintech Worldwide landscape (UPI, Open Banking, and Card Rails)

a) Everything about Open Banking

Open banking API facilitates data-sharing from large banks to startups for streamlined app development through secure Application Programming Interfaces (APIs).

Example: Similar to Uber using Google Maps API for location data.

Open banking connects banks (ASPSPs) with third-party providers (TPPs) like AISPs and PISPs, transforming digital finance and consumer banking access.

TPPs (Third-Party Providers): Authorized entities providing financial services using open banking APIs.

AISP (Account Information Service Provider): Accesses and aggregates a customer’s financial data for insights and financial management.

PISP (Payment Initiation Service Provider): Initiates payments directly from a customer’s bank account, facilitating online transactions.

ASPSP (Account Servicing Payment Service Provider): Banks or institutions holding customer accounts, allowing TPPs access under open banking rules.

b) Everything about UPI (Unified Payments Interface)

UPI is a real-time payment system in India that facilitates instant fund transfers between bank accounts through mobile devices.

UPI (Unified Payments Interface)

Why It’s Used: Provides a simple, interoperable, and secure payment infrastructure, reducing the reliance on cash transactions.

Example: Apps like PhonePe and Google Pay use UPI to enable users to make peer-to-peer payments, pay bills, and shop online seamlessly.

How does UPI Works

How does the UPI works

Step 1 Registration

Bob login into payments and provided his phone number +91 123456s78 and verified using OTP and set up VPA (Virtual Payment Address) bob@paytm

Step 2 Link bank account

Bob wants to link his SBI bank account, and The request is forwarded to NPCI. It acts as a switch between acquiring banks and issuing banks.

Step 3 — Transfer money

He will enter the UPI ID(VPA) or Scan the QR code to transfer money directly to Alice’s account.

Use cases of UPI

Paytm — A UPI App
  • Peer-to-Peer (P2P) Transfers: Transfer money to a friend or family member by entering their UPI ID or scanning their QR code.
  • Merchant Payments: Pay for groceries at a local store through by scanning the merchant’s QR code or entering their UPI ID.
  • Bill Payments: Settle utility bills (electricity, water, gas) by selecting the biller and entering the required details.
  • Online Shopping: Make purchases on e-commerce platforms and pay with UPI during checkout.
  • Mobile Recharge and DTH Payments: Recharge your mobile phone or pay for DTH services by entering the mobile number or customer ID.
  • UPI for Investments: Invest in mutual funds through Apps and use UPI for seamless transactions.

Topic 5 Card Networks

The payments industry is experiencing significant changes, with a shift from cash to cashless payments, driven by customer demand for fast and secure transactions. Here are all the parties involved when a card payment happens at your nearby grocery store.

Issuers, Acquirers, and Credit Card Networks

  • Issuers provide credit or debit cards to customers, Acquirers enable merchants to accept these cards, and Credit Card Networks facilitate transactions between them. They facilitate the smooth flow of funds between customers, merchants, and financial institutions during card transactions.
  • For example, A customer (cardholder) uses a Visa (Credit Card Network) issued by Bank X (Issuer) to make a purchase. The merchant’s Acquirer ensures the payment is processed, and funds are transferred to the merchant.
  • Acquirer Bank: Facilitates electronic payments for merchants and earns fees for their services.
  • Issuer Bank: Provides credit or debit cards to consumers, approves or declines transactions, and generates revenue through interest and fees from cardholders.
Card Network

Here is how a card payment at a nearby grocery store looks like

Step 1: Consumer initiates purchase by swiping card at POS or entering details online.

Step 2: Encrypted card details are sent to a payment processor.

Step 3: The payment processor directs details to the relevant credit card network (Visa, Mastercard, etc.)

Step 4: The credit card network verifies funds and authenticates the transaction with the issuing bank.

Step 5: Issuing bank approves or declines the transaction, and the response is relayed back to the merchant through the network.

Step 6: If approved, the acquiring bank processes the payment batch, crediting the merchant and debiting the cardholder’s account.

Step 7: Issuing bank bills the cardholder, and the acquiring bank pays the merchant after deducting fees, such as interchange fees.

Everything About Debit and Credit Cards

You can use a debit or credit card to Withdraw cash (use debit to avoid fees), Make online purchases (credit cards offer more protection), Send money to others and Pay bills.

A Credit card
  • Debit Cards: You can Electronic transfer from linked accounts. Doubles as an ATM card. No borrowing; uses funds deposited.
  • Credit Cards: Allows borrowing from the bank and has a Revolving account with a credit limit. This also has Minimum repayment and interest on delays.
  • Forex Cards: Holds foreign currency for international travel. Single or multi-currency variants.
  • Prepaid Cards: Load money in advance, not linked to a bank account. A common example: is prepaid gift cards.
various ways a card can be used
  • Swipe (Magnetic-Stripe): The traditional method uses the card’s magnetic stripe. Data is read by swiping through the PoS terminal. Phasing out due to security concerns.
  • Dip (Chip-based): Utilizes EMV chip technology. More secure and generates unique codes for each transaction. Inserted into the terminal for processing.
  • Tap (Contactless NFC): The latest method employing Near Field Communication, the Cardholder taps the card near the terminal, Enhancing speed and convenience, and gaining popularity.

Topic 6 Direct Debit Payments

A payment method where customers authorize businesses to pull funds from their bank accounts, mostly for recurring payments. Handled by Bacs (Bankers’ Automated Clearing Services) in the UK.

Direct Debit Payments

Steps to Set Up Direct Debit:

  • Step 1 Prepare Mandate: Gather customer details including account number and sort code.
  • Step 2 Get Signed Mandate: Obtain customer approval by having them sign the mandate.
  • Step 3 Submit Mandate: Send the signed mandate to the bank; activation takes 4–6 days.
  • Step 4 Send Payment Notice: Notify the customer 10 days prior about the payment amount and date.
  • Step 5 Initiate Payment: On the due date, the business requests payment via the Bacs network.
  • Step 6 Settlement: Funds take 3–5 working days to settle into the business’s account after the payment date.

Topic 7 Merchant Services Provider

Merchant services are solutions that enable businesses to accept and process electronic payments.

Merchant Services Provider

Key merchant services include:

  • Merchant Accounts: Temporary fund-holding bank accounts.
  • Payment Gateways: Software linking websites to payment processors.
  • Checkout Pages: Optimized for increased conversion rates.
  • Analytics: Tools for data collection informing business decisions.
  • Mobile Payments: Services like Apple Pay and Google Pay.
  • Virtual Terminals: Allows card-not-present transactions via phone, email, etc.
  • POS Systems: Hardware and software for in-store transactions.
  • Credit Card Terminals: Devices for accepting card payments in physical stores.

Topic 8 Fraud, Disputes, and Chargebacks

A chargeback is a reversal by a credit cardholder due to unauthorized transactions, misrepresentation, or fraud. The credit card issuer investigates and refunds money to the cardholder, charging it back to the merchant.

Disputes and Chargebacks

If a merchant receives a chargeback dispute, they should:

  • Review the reason for the dispute
  • Gather evidence like receipts and proof of delivery
  • Submit evidence and explain why the reversal is invalid
  • Consider mediation if the evidence is strong
  • Resubmit the charge if the dispute continues

The credit card issuer or acquiring bank decides chargeback disputes based on evidence and card network rules.

Chargebacks can be costly for merchants through fees and processing costs. If a merchant wins a dispute, the chargeback is cancelled but they may still need to take steps to get paid by the customer.

Topic 9 Payment Service Providers (PSP) and Account Information Service Providers (AISP)

AISP (Account Information Service Provider) aggregates consumer banking data for financial management, while PISP (Payment Initiation Service Provider) initiates direct online bank-to-merchant payments, simplifying transactions.

Data Brought By API

  • Banks have accumulated data about user transactions and expenses, which can be valuable for startups.
  • API-sharing allows startups to use this data safely to create new products with user consent.
  • Using this data companies can see the Location of banking branches, Details of certain banking products, Transaction data, Mortgage payments, Electricity bills, and Travel expenses and build better financial products.

AISP (Account Information Service Provider)

An AISP is an entity authorized under open banking regulations, such as PSD2 in Europe, to access a customer’s financial data from banks and financial institutions, with the customer’s consent.

Use in Insurance:

  • Risk Assessment: Enhances underwriting by analyzing clients’ financial data.
  • Customization: Offers personalized insurance products based on spending habits.
  • Efficiency: Streamlines claims processing and fraud detection using real-time data.
  • Personal Finance: Apps offer consolidated financial views and budgeting advice.
  • Credit Scoring: Lenders assess creditworthiness for personalized loan offers.
  • Wealth Management: Investment platforms provide tailored advice using financial data.
  • E-commerce: Platforms personalize shopping experiences based on purchase history.
  • Bill Management: Apps track and manage subscriptions and recurring payments.
  • Debt Management: Services offer consolidation plans using account information.

PISP (Payment Initiation Service Provider)

Payment Service Providers (PSPs) are financial institutions that facilitate money transactions between merchants and customers, acting as intermediaries in the payment process.

PSPs integrate various payment methods (like credit/debit cards, e-wallets, direct bank transfers) and handle technical and regulatory aspects of payment processing, including security and anti-money laundering measures.

  • Facilitate direct online payments from bank accounts.
  • Benefits: Streamlined transactions, and lower costs.
  • Examples: PayPal, Stripe.

Topic 10 Neobanks

Neobanks are digital-only banks without physical branches, offering online account services, virtual cards, instant payments, and budgeting tools.

Digital Banking Solutions

Types and Benefits: Online Account Opening, Virtual Cards: Convenience and accessibility for users.

Real World Example: Chime

Use Case: Redefining traditional banking by offering mobile-based banking services, including no-fee checking accounts, early direct deposit, and budgeting tools.

How Do Neobanks Make Money?

  • Interchange-led Model (e.g., Chime): Revenue from interchange fees when customers use Neobank’s card.
  • Credit-led Model (e.g., Nubank): Focus on credit services, starting with credit cards and expanding to banking accounts.
  • Ecosystem-led Model (e.g., Monzo): Checking accounts may not be the primary profit driver but enable various monetization strategies, including subscriptions.
  • Asset-led Model (e.g., Aspiration): Emphasis on saving accounts, attracting deposits with competitive rates. Some prioritize ethical or moral spending management.
  • Product Extensions Model (e.g., Robinhood): Successful credit-led models extending into diverse product offerings. Often involves partnerships with prominent tech companies and traditional banks.

Topic 11 Know Your Customer (KYC)/ Know Your Business (KYB)

KYC is the Verification process to identify and verify the identity of individual customers while KYB is tailored for business entities.


Why we need KYB:

Why we need KYB
  • To reduce the risk of doing business with entities involved in financial crimes
  • To avoid penalties and reputation damage from non-compliance databases

What KYB offers:

What KYB offers
  • AML Screening — Global screening 1000+ watchlists, Politically Exposed Persons (PEPs), sanctions lists, etc.
  • Sanctions Screening — Global sanctions by various regulatory bodies.
  • Adverse Media Checks — Monitoring for negative news and red flags.
  • UBO KYC — Detailed KYC verification of Ultimate Beneficial Owners.
  • Document Verification — OCR of official documents like GST, certificates, and licenses.
  • Central Database Checks — Validation against government databases like MCA, and CERSAI.

How to perform KYB?

Topic 12 Anti-Money Laundering (AML)

Money Laundering is the process of hiding the origins of money obtained illegally (drug trade, human trafficking, etc) by transferring it to make it appear legitimate.

How Money Laundering Works

AML is a way to screen customers against watchlists and monitor transactions to detect money laundering activities.

Why is AML Compliance Important?

  • Prevents fraud and financial crimes
  • Avoids heavy non-compliance fines
  • Maintains reputation and customer trust
Risk Based Approach

Key Aspects of an AML Compliance Program:

The Pillars of an AML
  • Policies for customer screening
  • Dedicated compliance team and AML officer
  • Employee AML training
  • Customer background checks and transaction monitoring

Benefits of Robust AML Compliance:

  • Reduces business risk exposure
  • Increases efficiency via automation
  • Enhances customer onboarding experience
  • Ensures regulatory obligations are met

Topic 13 Fraud Prevention and Detection

Fraud detection involves identifying illegal activities like identity theft, phishing scams, or unauthorized transactions.

Fraud Detection

How Fraudsters Operate:

  • Fraudsters, often organized groups, employ various tactics like identity theft, phishing, and financial scams.
  • The rise of phishing, credit card fraud, identity theft, and money laundering requires advanced detection methods.

Banking and Fintech Use Cases:

  • Credit Card Fraud Detection: AI analyzes transactions for anomalies like sudden increases or atypical expenses.
  • Identity Theft Detection: AI prevents identity theft by spotting suspicious transactions or behaviors.
  • Loan and Mortgage Fraud Detection: AI evaluates applications using NLP to identify potential fraud patterns.
  • Money Laundering Activity Detection: Deep learning models uncover hidden correlations in account activity.

Topic 14 PSD2 (Payment Services Directive 2)

EU legislation updating payment services for the digital age. Introduced to enhance consumer protection, promote innovation, and improve security in digital payments.

  • Consumer Protection: Enhances security and privacy in payment services.
  • Faster Payments: Streamlines processes for quicker transactions.
  • Market Competition: Boosts competition among payment providers.
  • Open Banking Support: Enables innovative financial services through secure data access.
  • Fraud Prevention: Strengthens authentication to reduce fraud risks.

Impact on Open Banking: Enabled third-party access to bank data (with customer consent), fostering competition and innovation in financial services.

Topic 15 Strong Customer Authentication(SCA)

Strong Customer Authentication (SCA) is a European requirement enhancing payment security by necessitating two-factor authentication; it affects online and in-store transactions in the EEA.

  1. Payment Initiation:

The process starts with the customer initiating a payment, either online or in person.

2. Authentication and Authorization:

The customer’s identity is verified using two-factor authentication, fulfilling the SCA requirements.

3. Payment Execution:

Upon successful authentication, the payment is processed and completed through the payment service provider.

Topic 16 Advanced Payment Technologies

In this part, we will understand NFC, Defi, and some other advanced payment technologies that will reshape the future of Fintech.

a) Near Field Communication (NFC) is a wireless technology that enables communication between electronic devices when they are nearby, typically within 4 cm or less.

Initiation: Devices with NFC (e.g., smartphones, payment terminals) connect when close.

  • Modes:
  • Peer-to-peer: Active NFC devices exchange information.
  • Reader/writer: Active devices read/write from/to passive devices (e.g., smart cards).
  • Card emulation: NFC acts as a contactless card for digital payments.

Transaction: A payer’s device (smartphone or smartwatch) communicates with a payment terminal via NFC. Encrypted data exchange completes transactions swiftly.


b)Mobile Wallets: Apple Pay, Google Pay, Samsung Pay, etc., allow users to make NFC payments using their smartphones.

E-money and E-wallet

E-wallet transactions have seen significant growth. Understanding how e-wallet payment processing works for both P2P and P2M transactions is crucial.

  • P2P: Direct transaction between users with the e-wallet acting as the intermediary. Instant settlement with no redirection.
  • P2M: Involves an intermediary (payment processor) between customer and merchant.

c)Contactless Cards: Debit or credit cards with a contactless symbol enable tap-and-go payments.

d)Wearable Devices: Smartwatches and other wearables equipped with NFC technology can be used for payments.

Topic 17 Blockchain and Distributed Ledger Technology

Topic 18 Decentralized Finance (DeFi)

DeFi is a monetary system built on public blockchains, utilizing protocols, digital assets, dApps, and smart contracts. It aims to provide an alternative to traditional financial systems, emphasizing global accessibility, safe transactions, and lower costs.

Traditional Finance vs. DeFi:

Traditional Finance vs. DeFi:

  • Operational Structure: Traditional Finance is managed by institutions, whereas DeFi operations are handled by algorithms and smart contracts.
  • Transparency: Traditional Finance relies on intermediaries for transparency, while DeFi offers code transparency and pseudonymous transactions to enhance trust.
  • Global Accessibility: Traditional Finance is limited to localities, in contrast, DeFi provides global access to networks and services.

Topic 19 SWIFT

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a messaging network used by banks and financial institutions globally to securely communicate and facilitate cross-border transactions.

How does Swift work

How SWIFT Works:

  • Step 1 Each member bank gets a unique 8-digit SWIFT code identifying it
  • Step 2 To send money abroad, sending bank initiates a SWIFT message to the receiving bank
  • Step 3 Message contains key transaction details — beneficiary account, amount, etc.
  • Step 4 The receiving bank approves the message once the details are verified
  • Step 5 Funds can then be credited to the required account SWIFT itself does not hold any funds, only facilitates communication

Topic 20 Automated Clearing House (ACH) Transactions

ACH stands for Automated Clearing House — a network that facilitates electronic transfer of money. It allows businesses to surely transfer larger payments at a lower cost directly from bank accounts.

Automated Clearing House (ACH)
  • Step 1 Setup — The business gets authorization from the customer to pull money from their bank account.
  • Step 2 Initiation — The business sends transaction details like account numbers, amount, etc. to its bank (Originating Depository Financial Institution — ODFI).
  • Step 3 Batching — ODFI groups transactions and sends them to the ACH operator.
  • Step 4 Distribution — The ACH operator routes transactions to the customer’s bank (Receiving Depository Financial Institution — RDFI).
  • Step 5 Completion — RDFI pulls money from the customer’s account and completes the transfer.

Topic 21 Peer-to-Peer (P2P) Lending

Lending and Borrowing Platforms are digital ecosystems that connect individuals or businesses in need of funds with potential lenders. These platforms eliminate traditional intermediaries, facilitating direct transactions between borrowers and lenders.

How P2P Lending works

1. Peer-to-peer (P2P) Lending: Individuals lend money directly to others, bypassing banks.

2. Institutional Lending: Businesses or individuals access loans from institutional or alternative lenders.


  • Streamlined Processes: Quick approval and disbursement via automation.
  • Competitive Rates: Cost-effective loan options compared to traditional banking.

Topic 21 Insurance Technology (Insurtech)

InsurTech, a fusion of insurance and technology, encompasses innovative technologies transforming the insurance sector.

Insurance Technology (Insurtech)

Most people who pay for the insurance don’t suffer a loss. Therefore the money these people will pay covers the losses of the people who suffer a loss. Anything left over is profit from the insurance company.

Microinsurance offered by a Cab Hailing Provider
  • P2P Insurance: Friendsurance, Lemonade, and InsPeer leverage communities to pool premiums.
  • On-Demand Insurance: Activated during asset use, meeting real-time consumer needs.
  • Microinsurance: Swift underwriting for smaller risks, e.g., travel or event coverage.
  • Gig Economy Insurance: Tailored coverage for freelance opportunities like Uber and Airbnb.
  • Comparison Portals: Check24 and PolicyGenius enable product comparisons across various companies.
  • Digital Insurers: Sherpa and similar companies handle end-to-end insurance processes.
  • Open Insurance: Lemonade’s API fosters collaboration, creating a connected data ecosystem.

For a deeper dive, I recommend taking the course.

Fintech Product Management: Become a Fintech PM.

Fintech Product Management: Become a Fintech PM.

P.S. It costs less than a burger and offers incredible value if you’re aiming to break into fintech!