What is a third party transaction? (with photo)

Many mortgage contracts are brokered through third-party transactions.

A third party transaction is a type of business transaction in which the negotiations between the buyer and seller are handled through an intermediary or third party. This third party may be involved in working out the details of the deal or serve as a means of receiving payment from a buyer and forwarding it to the seller. Using a third-party transaction is common in a number of businesses, including mortgage financing and even remittance of payment for services provided through some sort of online payment gateway.

One of the most common examples of a third-party transaction has to do with mortgage brokerage. In this scenario, the broker will attempt to match the needs of a potential home buyer with the loan programs offered by a lender. The idea is to create a connection between the buyer and seller that benefits all stakeholders. At best, the buyer can work through the broker to secure a mortgage at rates and terms that are acceptable, while the seller works through the broker to win a new customer. The broker benefits from the successful execution of the trade by receiving some sort of compensation, usually in the form of a commission.

Using an online payment gateway 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 kind of good or service that is provided. This payment is received by the third-party provider that operates the payment gateway, the product is verified and deducted from the buyer’s account, and then forwarded to the seller’s account. From there, the seller is free to withdraw the payment amount via transfer to a bank account using a debit card provided by the payment gateway to withdraw the funds with the aid of an ATM.

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Whenever there is some kind of intermediary involved in a transaction between a buyer and a seller, this activity can correctly be called a third-party transaction. This includes situations where intermediaries work to secure services or goods for a buyer, defend products offered by a seller, or merely function as a means of processing a payment from a buyer to a seller. In almost all cases, the third party involved in the transaction will receive some form of compensation, either in the form of a flat fee or fee or a percentage of the total transaction amount.

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