What is a Payee?

The term 'payee' refers to an individual or entity that will receive a payment. It can also be referred to as the beneficiary in situations that pertain to a benefactor.

How Does a Payee Work?

There are a number of examples of payees. A payee is the person to whom a check, promissory note, draft or bill is written out. A payee may also be the one who holds the coupons of a bond.

An example of a payee in a check is one whose name appears in the caption 'Pay to the Order of' on most checks.

Why Does a Payee Matter?

The payee is the one with legal rights to a payment. It is therefore essential to decipher who the individual or entity is that is to receive payment in any financial transaction. In any contract of a financial transaction where it is unclear who the payee and payer are, the contract may be invalid or there may be provisions within the law about how to determine rights in such situations.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.