Payee

In finance, the term payee denotes a person or entity which is entitled to receive a payment from a third party as per the conditions laid out in a bill of exchange. A payee has a legal right to receive payment from a drawee on behalf of a drawer.

The term is most widely used in relation to banking. When you use a debit card to instruct your bank to transfer money to a merchant’s account, the merchant to which the bank makes the payment is the payee. In this case, you are the drawer and the bank is the drawee.

It is possible for the drawer and the payee to be the same person or entity. For example, if you write out a check to yourself or order your bank to transfer money to another account held by you, you are both the drawer and the payee.

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