Split funding concept describes payments, which have to be shared among at least to recipients (usually, a merchant and an affiliate). A traditional (or PSP-centric) split payment mechanism involves serious challenges, which have to be faced by the payment service provider. These challenges are associated with chargebacks and refunds of split payments. In a traditional split funding system the PSP often has to face unreasonable risks and assume financial liability before the client. The merchant-centric split funding model allows the PSP to shift much of the responsibility to the merchant. In a merchant-centric model one of the merchant’s top priorities is to cover all its outstanding debts to the PSP (even before paying the affiliates). And if a chargeback is issued, the whole amount should be covered by the merchant. Afterwards the merchant should charge the affiliates’ shares from the respective affiliates.
More information on risks, associated with split funding models, can be found in the article on the subject, published on Paylosophy.