Glossary
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 master 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.