The split funding concept

Split funding concept becomes relevant, when transaction amount has to be distributed among three or more entities. Beside the merchant and the processor (who traditionally charges transaction processing fees), these entities may include online marketplace owner, affiliates of various kinds, and others.

Depending on split funding requirements of your company, you might need to implement some split payment scenario. Basically, splitting rules can be defined either on per-transaction basis or in advance. Besides, these rules can vary across transactions.

If you have to split a transaction into several sub-transactions, you must consider several important issues. Particularly, you should define void and refund mechanisms for such cases.

If in your business model splitting rules should vary from transaction to transaction, customized splitting may be more suitable for your company. If you are constantly dealing with a limited number of typical transaction (and respective splitting rules), then pre-defined distribution mechanism might be a better option.

Read more about split funding in the respective article on Paylosophy.