Split Funding Models

Important Split Funding

As online marketplaces have grown, split funding mechanisms have become ever more important. Under the conventional model, a processor withheld a predetermined percentage of each transaction as a payment processing fee. As online marketplaces became more complex, transactions had to be split among more entities. The conventional model could not accommodate split payment functionality.

As new transaction entities were created, new functionality had to be incorporated into split funding platforms so that each party received the appropriate share of each transaction.

There are two basic split funding models, depending on uniqueness of transaction details. Under the first model transaction details, such as number of entities, change with each transaction. With this model, transaction splits are defined individually by the submitter’s system. Under the second model, transaction details are much the same from one transaction to the next, and the rules for the split are defined by the payment gateway.

To learn more about split funding and how split payment scenarios can be implemented in the merchant services industry, feel free to contact us.