{"id":9354,"date":"2023-12-20T07:53:07","date_gmt":"2023-12-20T12:53:07","guid":{"rendered":"https:\/\/faisalkhan.com\/?page_id=9354"},"modified":"2023-12-20T07:53:09","modified_gmt":"2023-12-20T12:53:09","slug":"3rd-party-payments","status":"publish","type":"page","link":"https:\/\/faisalkhan.com\/learn\/payments-wiki\/3rd-party-payments\/","title":{"rendered":"3rd Party Payments"},"content":{"rendered":"\n<p>Certainly! Third-party payments in the banking and finance sector involve transactions where a separate entity, other than the two main parties (payer and payee), facilitates or processes the payment. Here&#8217;s an expanded explanation with examples:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Definition and Mechanism<\/strong>:<\/h3>\n\n\n\n<ul>\n<li><strong>Official Definition<\/strong>: A third-party payment is a transaction made by an entity on behalf of another. It involves a third party, separate from the buyer and seller, that processes the payment.<\/li>\n\n\n\n<li><strong>How They Work<\/strong>: In these transactions, when you purchase something and use a payment service, this service is the third party. They collect money from the buyer (payer) and transfer it to the seller (payee).<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Issuance and Processing<\/strong>:<\/h3>\n\n\n\n<ul>\n<li><strong>Who Issues These<\/strong>: Financial institutions or payment processing companies, like banks, credit card companies, and online payment platforms (e.g., PayPal, Stripe) typically issue these payments.<\/li>\n\n\n\n<li><strong>Who Processes Them<\/strong>: The third-party service provider handles transaction details, security, and fund transfers.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Benefits<\/strong>:<\/h3>\n\n\n\n<ul>\n<li><strong>Who Benefits<\/strong>: Both payer and payee benefit from the convenience and efficiency provided by third-party payments, facilitating secure and quick payment options, especially in e-commerce.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Risks and High-Risk Considerations:<\/h3>\n\n\n\n<ul>\n<li><strong>Why Considered High Risk<\/strong>: They are deemed high risk due to potential fraud, money laundering, and the difficulty in tracking money flow and validating transaction legitimacy.<\/li>\n\n\n\n<li><strong>Risk Factors<\/strong>: These include fraud, chargebacks, money laundering, and potential misuse for illicit activities.<\/li>\n\n\n\n<li><strong>Comparison with First-Party Payments<\/strong>: First-party payments, being direct transactions between payer and payee, often have lower fraud risks due to greater control and transparency.<\/li>\n<\/ul>\n\n\n\n<p><strong>Examples of Third-Party Payments Processed by Banks<\/strong>:<\/p>\n\n\n\n<ol>\n<li><strong>Credit Card Payments<\/strong>: When a customer uses a credit card issued by a bank to make a purchase, the bank acts as the third party. It pays the merchant and later collects the amount from the cardholder.<\/li>\n\n\n\n<li><strong>Online Banking Payments for E-commerce<\/strong>: When a customer purchases goods online and opts to pay through their online banking portal, the bank processes the payment on behalf of the customer, transferring funds to the merchant&#8217;s bank.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Certainly! Third-party payments in the banking and finance sector involve transactions where a separate entity, other than the two main parties (payer and payee), facilitates or processes the payment. Here&#8217;s an expanded explanation with examples: Definition and Mechanism: Issuance and Processing: Benefits: Risks and High-Risk Considerations: Examples of Third-Party Payments Processed by Banks:<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":3611,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_uag_custom_page_level_css":"","_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"blocksy_meta":[],"featured_image_urls":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","gb-block-post-grid-landscape":"","gb-block-post-grid-square":"","yarpp-thumbnail":""},"post_excerpt_stackable":"<p>Certainly! Third-party payments in the banking and finance sector involve transactions where a separate entity, other than the two main parties (payer and payee), facilitates or processes the payment. Here&#8217;s an expanded explanation with examples: Definition and Mechanism: Official Definition: A third-party payment is a transaction made by an entity on behalf of another. It involves a third party, separate from the buyer and seller, that processes the payment. How They Work: In these transactions, when you purchase something and use a payment service, this service is the third party. They collect money from the buyer (payer) and transfer it&hellip;<\/p>\n","category_list":"","author_info":{"name":"Faisal Khan","url":"https:\/\/faisalkhan.com\/author\/nomismad\/"},"comments_num":"0 comments","featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","gb-block-post-grid-landscape":"","gb-block-post-grid-square":"","yarpp-thumbnail":""},"post_excerpt_stackable_v2":"<p>Certainly! Third-party payments in the banking and finance sector involve transactions where a separate entity, other than the two main parties (payer and payee), facilitates or processes the payment. Here&#8217;s an expanded explanation with examples: Definition and Mechanism: Official Definition: A third-party payment is a transaction made by an entity on behalf of another. It involves a third party, separate from the buyer and seller, that processes the payment. How They Work: In these transactions, when you purchase something and use a payment service, this service is the third party. They collect money from the buyer (payer) and transfer it&hellip;<\/p>\n","category_list_v2":"","author_info_v2":{"name":"Faisal Khan","url":"https:\/\/faisalkhan.com\/author\/nomismad\/"},"comments_num_v2":"0 comments","yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.6 (Yoast SEO v22.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>3rd Party Payments - Faisal Khan<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/faisalkhan.com\/learn\/payments-wiki\/3rd-party-payments\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"3rd Party Payments\" \/>\n<meta property=\"og:description\" content=\"Certainly! Third-party payments in the banking and finance sector involve transactions where a separate entity, other than the two main parties (payer and payee), facilitates or processes the payment. 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Third-party payments in the banking and finance sector involve transactions where a separate entity, other than the two main parties (payer and payee), facilitates or processes the payment. 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