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Third-party processor TPP
Also called TPP, payment processor, third party payment processor.
A company that handles payment transactions on behalf of others — either card acceptance and settlement for a merchant, or ACH origination for a funder debiting merchant accounts.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Two distinct uses run through this market. On the merchant side, the processor authorises card transactions, settles batches and deposits net proceeds to the merchant's bank. That relationship is what split funding depends on: a funder can only take a share of card receipts if the processor cooperates in withholding it.
On the funder side, a third-party processor originates the ACH debits. Most funders do not have direct access to the ACH network and use an intermediary with a sponsoring bank. This is why the company name appearing on a merchant's bank statement next to a daily debit is frequently not the funder's name, and why merchants trying to identify who is debiting them sometimes cannot.
Processors sit under network rules and bank oversight, and a merchant's own processing relationship is a distinct contract with its own reserve, chargeback and termination terms.
Where this one catches people
Attempting to stop a daily debit by telling the processor to stop, or by blocking a specific originator name at the bank, achieves less than merchants expect and costs more. Funders re-present debits and can originate under a different descriptor through a different processor. Meanwhile, in essentially every one of these agreements, blocking or revoking the ACH authorisation is itself an event of default that accelerates the balance.
Where you will meet this term
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Third-party processor — common questions
What does third-party processor mean?
A company that handles payment transactions on behalf of others — either card acceptance and settlement for a merchant, or ACH origination for a funder debiting merchant accounts.
Where does third-party processor catch people out?
Attempting to stop a daily debit by telling the processor to stop, or by blocking a specific originator name at the bank, achieves less than merchants expect and costs more. Funders re-present debits and can originate under a different descriptor through a different processor. Meanwhile, in essentially every one of these agreements, blocking or revoking the ACH authorisation is itself an event of default that accelerates the balance.
Is third-party processor the same as an interest rate?
Third-party processor is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does third-party processor apply to?
Merchant Cash Advance, Working Capital, Credit Card Processing.
Is there a worked example of third-party processor?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside third-party processor?
ACH debit, Chargeback, Default, NSF fee, Split funding.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.