Transaction processing in the online marketplace has become more complicated, and the demand for split funding capabilities have increased, but payment service providers (PSP) have been slow to offer this along with existing merchant services. PSPs tend to see split funding platforms as riddled with challenges.
The biggest of these challenges becomes apparent with chargebacks and refunds. In the traditional split funding mechanism, the primary merchant may be left short on funds and unable to pay their portion, leaving the burden on the PSP, with the merchant’s debt recorded as a future payable. This is known as a PSP-centric split funding model
The other type of split payments system is merchant-centric. With this model, outstanding debts are returned to the PSP as soon as payments come in. Chargebacks and refunds are covered by the merchant, while affiliate shares are listed as future payables. This split payment model is less intimidating to payment service providers.
Learn more about split funding models and the challenges of each at Paylosophy.
Also check out a brief summary at #UniPayGateway website.