# 1st Party & 3rd Party Payments

**Differences between 1st Party & 3rd Party Payments.**

The fundamental difference between payment types comes down to the legal identity of the sender and the receiver.

* If they are the exact same entity, it's a 1st party payment. 
* If they are different entities or individuals, it's a 3rd party payment.

💡 **Important -** 3rd party payments can only be processed via Virtual Accounts.

* 1st Party Payments can be processed to/from Align Payments Ltd
* 3rd Party Payments can only be processed to/from a customer's Virtual Account. You cannot process 3rd party transactions directly without creating a Virtual Account.

**Quick overview**

| **Feature**               | **1st Party Payments**                                           | **3rd Party Payments**                                               |
| ------------------------- | ---------------------------------------------------------------- | -------------------------------------------------------------------- |
| Entities Involved         | One (Sender and Receiver are the same)                           | Two or more (Sender and Receiver are different)                      |
| Primary Purpose           | Treasury management, account funding, liquidity, balancing books | B2B payments, payroll, purchasing, customer refunds, paying invoices |
| Virtual Account Required  | No                                                               | Yes                                                                  |
| Name of Sender / Receiver | Align Payments Ltd                                               | Your Customer's Name                                                 |

#### 1st Party Payments

A 1st party payment (often called a "me-to-me" transfer) occurs when a business or individual moves money between different financial accounts that they own. The funds never leave the legal control of the entity.

* Expanded Example: Acme Inc. sends a payment from its primary stablecoin wallet to to its Acme Inc. Bank of America payroll account.
* Common Use Cases:
  * Treasury management and moving money between your own accounts.
  * Funding a specialized account (like a payroll or tax account) before a disbursement.
  * Moving money across borders between international subsidiaries of the exact same company.

**3rd Party Payments**

A 3rd party payment occurs when funds are transferred from one legal entity to an entirely different one. This is the standard definition of a commercial transaction or a payout.

* Completed Example: Acme Inc. sends a payment to Beta Corp to settle an invoice for software services, or Acme Inc. sends a direct deposit to Jane Doe, an employee.
* Common Use Cases:
  * Accounts Payable: Paying vendors, suppliers, or contractors.
  * Payroll: Disbursing salaries to employees.
  * Customer Transactions: Issuing a refund to a customer or receiving a payment from a buyer.