Split Funding is a feature in payment processing that allows a single payment to be divided among multiple parties. This is commonly used in business models like marketplaces or platforms, where a portion of a payment may need to go to:
- a vendor
- the platform
- a delivery service
- an other third party
This feature is essential for business models that involve multiple stakeholders in a single transaction. For example, in a ride-sharing service, the payment made by the passenger may need to be split between the driver, the platform, and any other service providers like toll or parking charges.
The payment processor will automatically divide the payment as per the predetermined agreements and transfer the funds to each party’s account. This not only simplifies the accounting and funds transfer process but also ensures that all parties receive their share promptly and transparently.
Split funding helps in streamlining the financial operations of platforms and marketplaces, reducing the need for manual intervention and minimizing errors.