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This page defines key terms used in Mercoa documentation.

### Automated clearing house (ACH)

A U.S.-based electronic funds transfer system enabling direct deposits and payments between bank accounts.

*Example: ACH transfers are commonly used for payroll deposits and recurring bill payments.*

### Anti-money laundering (AML)

Laws and procedures designed to detect and prevent the use of financial systems for hiding illegally obtained funds.

*Example: Financial platforms implement AML checks as part of their compliance procedures during customer onboarding.*

### Accounts payable (AP)

Money a business owes to suppliers or vendors for goods or services received but not yet paid for.

*Example: Platforms often offer streamlined AP solutions, helping their business customers manage and pay bills efficiently.*

### Approval workflows

A defined process for reviewing and authorizing actions, such as invoice payments, before execution, often involving many users or predefined conditions.

*Example: A platform might configure a multi-step approval workflow requiring manager sign-off for invoices over \$5,000.*

### Accounts receivable (AR)

Money owed to a business by its customers for goods or services delivered but not yet paid for.

*Example: Alongside AP, some platforms provide tools to help businesses with AR functions like invoicing.*

### Arrears

Outstanding payments or debts that are overdue.

*Example: By scheduling payments automatically, businesses can reduce the risk of their vendor payments falling into arrears.*

### Banking-as-a-service (BaaS)

A model where non-bank businesses integrate financial services into their products via APIs provided by licensed banks.

*Example: A BaaS provider might integrate specialized APIs to offer sophisticated AP automation services alongside its core banking products.*

### Bill pay

The process of managing and paying outstanding invoices owed by a business to its vendors, often automated through software platforms.

*Example: Platforms can embed bill pay functionality, allowing their business customers to pay vendors seamlessly.*

### Billing in arrears

A billing practice where customers are charged for goods or services after they have been delivered or consumed.

*Example: Some vendors a business pays might use a billing in arrears model for their services.*

### Buy now, pay later (BNPL)

A financing option allowing purchases with installment payments.

*Example: While distinct from typical B2B invoice payments, BNPL is another common payment innovation in the fintech space.*

### C1

The platform or product team that embeds Mercoa within their product (via embed, React components, or API).

*Example: A vertical SaaS company integrating Mercoa's API to offer bill pay features to its business users.*

### C2

The customer of a C1 platform. An entity (often an SMB) that uses the C1's product and accesses Mercoa's features through that product.

*Example: A construction firm using the C1 SaaS platform to manage its operations and pay supplier invoices.*

### C3

The counterparty of a C2. An entity (typically a vendor or customer of the C2) that sends invoices to, or receives payments from, a C2 via the C1 platform/Mercoa system.

*Example: A lumber supplier invoicing the C2 construction firm and receiving payment through the platform.*

### Check payment

A payment method where a physical check is generated and mailed to the recipient on behalf of the payer.

*Example: Although slower, a business might opt for check payment for a vendor who doesn't accept electronic payments.*

### Counterparty

The other party involved in a financial transaction. In AP, if a business is paying an invoice, the vendor is the counterparty.

*Example: Payment systems securely manage information for both the paying entity and the receiving counterparty (vendor).*

### Embeddable UI components

Pre-built user interface elements (For example: forms, tables, buttons) provided by a service that platforms can integrate into their own application with minimal front-end effort.

*Example: A SaaS platform could use embeddable UI components to add invoice management features.*

### Entity

Within a payment system, a representation of a distinct business (either the platform's end-user or their vendor) that is onboarded and can send or receive payments/invoices.

*Example: Before processing payments, a platform must create an entity for the customer and vendor.*

### Entity user

An individual user associated with a specific business entity within a system, who can perform actions based on assigned roles/permissions.

*Example: An entity user might be created for an accountant, granting them permission to approve invoices.*

### "For Benefit Of" (FBO) account

Bank accounts held by one entity on behalf of others, often used by payment platforms via partner banks to manage funds securely.

*Example: Funds processed via platforms are handled securely using appropriate banking structures, potentially involving FBO principles.*

### Idempotency key

A unique identifier included by a client in API requests to safely retry a request (For example: due to network errors) without performing the same operation many times.

*Example: Include an idempotency key when creating payments to prevent duplicate charges on retry.*

### Invoice

A document issued by a seller (vendor) to a buyer detailing goods/services provided and the amount due.

*Example: Businesses upload vendor invoices into platforms where systems capture data and facilitate payment.*

### Invoice capture

The process of automatically extracting key data (vendor name, invoice number, amount, due date) from uploaded invoice documents, typically using OCR and AI/ML.

*Example: Invoice capture saves time by reading PDF invoices, reducing manual data entry.*

### Invoice consolidation

The practice of combining many invoices. While systems might process individual invoices, platforms can build features for consolidated views or payment runs.

*Example: A platform might allow selecting many approved invoices for a vendor to pay in one batch.*

### Invoice factoring

Selling unpaid invoices at a discount for immediate cash. This financing service is distinct from AP/AR automation.

*Example: Invoice factoring is a different financial service than the AP/AR automation payment platforms typically provide.*

### Invoice status

The current stage of an invoice in a workflow (For example: `DRAFT`, `SUBMITTED`, `APPROVED`, `SCHEDULED`, `PAID`).

*Example: A user checks the invoice status in their dashboard to see it's 'SCHEDULED' for payment next week.*

### Know Your Business (KYB)

A compliance process used to verify the identity and legitimacy of businesses onboarding onto a financial platform.

*Example: Platforms often collect documentation for customers to pass KYB checks before enabling payment processing.*

### Local financial institution (LFI)

A bank, credit union, or other financial institution operating in a specific geographic region.

*Example: Payment systems can send ACH payments to a vendor's account whether it's at a major bank or an LFI.*

### Line item

An individual detailed entry on an invoice (quantity, description, unit price, total). Systems can capture and store this data.

*Example: Capturing line items allows for more granular GL coding and reporting.*

### Lifetime value (LTV)

The total revenue a business expects from a single customer over their entire relationship.

*Example: Embedding essential services like bill pay aims to increase customer LTV.*

### Manual vendor

A vendor whose details (name, address, payment info) are entered directly into a system by the platform or user, not via vendor self-onboarding.

*Example: For a one-off payment, a user might add the recipient as a manual vendor.*

### Merchant category code (MCC)

A code classifying merchants, mainly for card transactions, but useful for vendor categorization.

*Example: Systems may use MCC or similar codes to help categorize vendors during onboarding.*

### Neobanks

Digital-only banks operating without physical branches; potential platform customers for embedded financial services.

*Example: A Neobank might partner with a service provider to add bill payment features to its business accounts.*

### Network vendor

A vendor already part of a specific payment network, potentially simplifying onboarding/payment as details may be pre-verified.

*Example: Paying a network vendor can be faster as their bank details might already be securely stored.*

### Optical character recognition (OCR)

Technology converting images of text into machine-encoded text, used heavily in invoice capture.

*Example: Platforms use OCR to automatically read text from uploaded PDF invoices.*

### Organization ID

A unique identifier for a platform's entire company within a service provider's system, distinct from individual end-user IDs.

*Example: The platform uses its organization ID and API key to authenticate its connection.*

### Payee

The party that receives a payment (typically the Vendor in an AP context).

*Example: Payment systems ensure funds are securely transferred from the Payer to the correct payee.*

### Payment facilitator (PayFac)

A model where a company simplifies payment processing for sub-merchants under its own primary account. Differs from API-driven AP/AR embedding.

*Example: An embedded AP/AR service often differs from a traditional PayFac model.*

### Payer (or payor)

The party responsible for making or sending a payment (typically the business using the platform).

*Example: The payer initiates the bill payment through the platform, which uses a backend service to process it.*

### Payment destination

The specific account -- for example, vendor's bank account -- where funds are credited during a payment.

*Example: The user confirms the vendor's bank account details as the correct payment destination.*

### Payment source

The specific account -- for example, business's bank account -- from which funds are debited during a payment.

*Example: The user selects their primary checking account, linked via the platform, as the payment source.*

### Payment status

The current stage of a payment; for example: `PENDING`, `PROCESSING`, `SENT`, `FAILED`, `CLEARED`, `SCHEDULED`.

*Example: The platform monitors payment status via webhooks to update the user when the payment is 'SENT'.*

### Production environment

The live system processing real financial transactions with actual funds/data, used after testing in sandbox.

*Example: After sandbox testing, the platform deploys its integration to the production environment.*

### Real time payments (RTP)

An electronic payment network allowing near-instantaneous fund transfers between participants.

*Example: For urgent payments, platforms might offer RTP, delivering funds in seconds where available.*

### Reconciliation (payment)

Matching payments to corresponding invoices/bills/accounting entries. Payment systems provide data/tools to help.

*Example: Detailed payment data and unique identifiers (like VANs) simplify reconciliation.*

### Roles and permissions

System settings defining actions a user can perform (view invoices, create payments, approve bills), managed by administrators.

*Example: Roles might allow clerks to upload invoices but only managers to approve large payments.*

### Sandbox environment

A testing environment mirroring production but using test data/simulated connections for safe development/testing.

*Example: Developers use the sandbox extensively to test integration logic before going live.*

### Vendor invite

A process where a business (via a platform) invites a vendor (often by email) to securely enter their own payment details/info, often via a portal.

*Example: Instead of manually requesting bank details, users can utilize the vendor invite feature.*

### Vendor management

Processes for onboarding, storing info, and managing relationships with suppliers. Platforms often provide tools for this.

*Example: Vendor management features might allow securely collecting tax forms and payment preferences.*

### Vendor portal

A secure web interface (often white-labeled) where invited vendors manage profiles, submit invoices (if enabled), and update payment info.

*Example: The vendor used the portal link from the invite email to enter their bank details.*

### Virtual account number (VAN)

Unique bank account numbers created by service providers (via partner banks) for entities/transactions, aiding routing, tracking, reconciliation without exposing real account details.

*Example: Assigning a unique VAN to each payment makes reconciliation easier.*

### Virtual card payment (vCard)

A digitally generated credit card number (often single-use/limited) offered as a secure electronic payment method.

*Example: Platforms may offer vCards as a secure vendor payment option, sometimes earning rewards.*

### Webhook

An automated message from one system to another's endpoint, triggered by events (payment status changes, etc.), enabling real-time sync.

*Example: A platform configures a webhook to get instant notifications for invoices needing approval.*

### White-label

Ability for a platform to customize the appearance (branding) of embedded UI/portals from a third-party service for a seamless user experience.

*Example: White-label options let a neobank make an integrated feature look native.*

### Working capital solution

Financial products/strategies helping businesses manage short-term liquidity. Efficient AP/AR management impacts working capital positively.

*Example: Streamlining payments/receivables improves cash flow, potentially reducing need for external working capital solutions.*