Split funding mechanisms have become increasingly important as online marketplaces have become more complicated. Under the traditional payment processing model, payment processors took a defined percentage of each transaction as a payment processing fee.
As transactions became more complicated, with more entities participating in a transaction, it became apparent that the traditional model was no longer adequate to accommodate these more complex transactions. New split funding platforms were needed to accommodate split payments so that each party could receive its share of the transaction.
Split payments can be managed in one of two ways. In the first, the details each transaction is unique, and splits are defined by the submitter for each individual transaction. Under the second model, transaction details, such as number of transaction participants, are the same for every transaction. In this scenario, splits are determined by the payment gateway.
Check out the Paylosophy articles on split funding and how merchant services can implement split payment scenarios.
Also visit #UniPayGateway website to read a brief summary.