TaxBandits Knowledge Base

What is a Payment Settlement Entity with respect to Form 1099-K?

A payment settlement entity in Form 1099-K refers to an entity that makes payment in settlement of a payment card transaction (credit card, debit card, or other payment cards) or third-party network transaction. 

Two types of PSE

1. Merchant Acquiring Entity: An organization that has a contractual obligation to make payment to participating payees in the settlement of payment card transactions.
2. Third-Party Settlement Organisation: An organization that has the contractual obligation to make payment to participating payees of third-party network transactions.