A payee is a party within an exchange of goods or even services that can receive payment.
What Is a Payee?
A payee is a party within an exchange of goods or even services that can receive payment. The payee is paid by cash, check or another form of transfer medium by a payer.
The payer receives the goods or services in return for making the payment.
Keep in mind that payees can be more than just one party in a transaction, and at times, they are the same party.
To truly get a grasp of this, in any type of transaction, there will always be a party that involves the goods or services, and the party that receives the goods or services. To receive goods or services, a buyer has to provide value, or in other words, an exchange of value, that is often money to the payee. This can also be a cryptocurrency.
Now, in a banking situation, the payee must have an active account that is in good standing, through which the funds can be transmitted by the payer themselves. This is if the transaction is not done in cash, however.
Then you have the promissory note, where one party promises to pay another party a predetermined sum, where the party which receives the payment is known as the payee. The party which makes the payment is known to the buyers as-well.
Keep in mind that payees can also be more than one party, and this typically happens in electronic transfers when a person withdrawals money from a payer’s account and ends up splitting it into a variety of different payee allocations.