What’s a third-party transaction?

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A third-party transaction is a type of commercial transaction in which the transactions between the buyer and the seller are handled through an intermediary or a third party. This third party may be involved in working out the details of the deal, or serve as a means of receiving a payment from a buyer and forwarding that payment to the seller. The use of a third party transaction is common in a number of businesses, including mortgage financing and even remittance payment for services rendered through some type of online payment portal.

One of the most common examples of a third-party transaction involves mortgage brokerage. In this scenario, the broker will try to match the needs of a potential homebuyer with the loan programs offered by a lender. The idea is to create a connection between the buyer and the seller that works to the benefit of all stakeholders. In the best of circumstances, the buyer can work through the broker to obtain a mortgage with acceptable rates and terms, while the seller works through the broker to obtain a new customer. The broker benefits from the successful execution of the deal by receiving some type of compensation, usually in the form of a commission.

Using an online payment portal is also an example of a third-party transaction that has become increasingly common since the advent of the Internet. With this type of activity, a buyer can send a payment for some type of good or service that is provided. That payment is received by the third-party provider that operates the payment gateway, the proceeds are verified and deducted from the buyer’s account, and then sent to the seller’s account. From there, the seller can withdraw the payment amount by transferring it to a bank account using a debit card provided by the payment gateway to withdraw the funds with the help of an ATM.

As long as there is some sort of intermediary involved in a transaction between a buyer and a seller, that activity can properly be referred to as a third party transaction. This includes situations where intermediaries work to secure services or goods for a buyer, advocate for the products offered by a seller, or simply function as the conduit for a payment from a buyer to a seller to be processed. In almost all cases, the third party involved in the transaction will receive some type of compensation, either in the form of a flat fee or fee or a percentage of the total value of the transaction.

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