Online affiliates, multiple suppliers and convenience fees are among the reasons that split funding models for payment transactions are necessary. In the past, payment processors usually just deducted their processing fee and put the remaining funds into a single merchant account. Now, merchants often need funds divided among several accounts, and split funding makes that possible.
Split payments can be handled in one of two ways, and companies must put a split funding mechanism in place that handles their present and future needs.
Customized Split Funding Based On The Submitter
With customized split funding, the submitter specifies how the funds are divided. With each transaction, fund distribution rules are followed that specify which merchants or recipients get the money. This method of handling split payments works best when the context of the transaction determines the split. When multiple affiliates are involved or the split is determined by the number of items purchases, customized split funding is perfect.
For example, if a customer buys an item from an online marketplace that uses affiliates to drive traffic, the right choice of split payment platforms can divide the incoming funds between the site and the affiliate that deserves a percentage of the sale.
Pre-Defined Distribution Based On The Gateway
A more complex method of handling a split payment at the gateway level involves pre-defined distribution. In these cases, the split payments rules are set up in advance at the gateway. Consider online rent payment software as an example. When rent is paid, a convenience fee is charged by the gateway that goes to the processor, not the landlord.
Another case where pre-defined distribution works well is a store with multiple suppliers. When the split funding mechanism detects the sale of a t-shirt, for example, the funds go to the t-shirt supplier – minus the markup that goes to the store. When a hoodie is sold instead, the funds go to a different supplier, and the rules indicate that the seller keeps perhaps a different percentage. Each transaction that comes into the gateway follows the same rules.
Other Considerations About Split Funding Models
When dealing with split funding, it's important to consider which party pays the transaction fees. In most cases, one of the parties pays the entire fee, but it's important to choose a split funding platform that can handle any need you might have in the future as well.
Split payments also complicate voided and refunded transactions. In most cases, a voided or fully refunded transaction means no one gets their funds, but it could be necessary to refund only part of a transaction. For example, a convenience fee could be refunded for customer satisfaction purposes.
Not all split funding platforms are the same, and not all can handle the specific needs your business may have now and in the future. At PayVisors, we recommend the UniPay gateway from United Thinkers, a robust and feature-rich payment gateway that handle split payments and many other payment situations with ease.
We're a business consulting company that helps businesses get the services they need for success. When you choose the UniPay payment gateway, you're choosing the payment processing software we recommend to companies with complex payment needs. Why not contact us now to learn more about how your split funding models can be implemented using the UniPay gateway?