A third-party payment is funded or received by a person or organization other than the named customer, buyer, seller or contractual counterparty. It can be legitimate but often requires additional verification.
Which situations create third-party payments?
- Parent or subsidiary pays an invoice
- Director or employee funds a business transaction
- Payment agent or marketplace collects funds
- Financier pays a supplier
- Customer requests payment to another beneficiary
Why do providers review them?
The difference between the contractual party and payment party can create fraud, money-laundering, refund, tax and reconciliation risk. Some accounts prohibit third-party funding entirely.
What should be verified?
Confirm identity, relationship, authority, payment purpose, source of funds and permitted account use. The supporting contract and invoice should explain the role.
Third-party payment vs. same-name funding
Same-name funding requires the source account name to match the verified customer. A third-party payment comes from or goes to another party and may require an approved exception.
How should it be recorded?
Preserve the contractual party, actual payer, source account, beneficiary, approval and allocation. Refunds should follow the authorized route rather than an unverified request.
