FYI, the term exists to solve the following language problem when discussing percentages:
Alice: I got a loan at 5% APR. But if I ever miss a payment the rate goes up 2%.
Bob: That's it? 5.1% doesn't seem all that bad.
Alice: No, it goes up to 7%.
Bob: Oh, you mean it goes up 40%.
percent can be a unit just like
orange, a term is needed to distinguish when you're talking about the unit called
percent vs. the mathematical operation called percent, especially when you need to use them in the same sentence. So
basis point means 1/100 of the unit called
percent (the same way
centimeter means 1/100 of the unit called
meter). Alice and Bob can then avoid confusion by using only one meaning of the word "percent" at a time:
Alice: I got a loan at 5% APR. But if I ever miss a payment the rate goes up by 200 basis points.
Bob: Yikes, to 7%!
Alice: I got a loan at 500 basis points APR. But if I ever miss a payment the rate goes up by 40%.
Bob: Yikes, to 700 basis points!