Glossary
Circular transactions
Also called: round-tripping, circular flows
One-sentence definition
Circular transactions are flows where money moves out from the merchant and back through one or more counterparties within a short window, inflating apparent revenue without generating any real economic activity.
Key takeaways
- The simplest form of revenue inflation.
- Visible as debit-credit pairs of similar amount with the same counterparty.
- A multi-hop variant cycles through 3+ counterparties before returning.
- Industries with naturally bidirectional flows (real estate, manufacturing) need industry tuning to avoid false flags.
Why it matters for MCA underwriting
The merchant sends $25,000 to Entity X on Monday and receives $24,800 back on Wednesday. The $24,800 looks like revenue on the statement, but it is recycled money. Aggregated across many such pairs, this can inflate the revenue figure by meaningful percentages.
How Vyaso detects circular transactions
Vyaso's symmetry layer catches direct pairs. Its graph-cycle layer catches multi-hop variants. Both are tuned by industry to allow legitimate bidirectional flows in segments where they are normal.