What Is a Split Payment?
A split payment involves using multiple payment sources to settle the whole cost of a single transaction. A person using two different credit cards to pay for an item or a table of restaurant guests splitting the bill three ways are both common examples of split payments.
Key Takeaways
- A split payment involves using multiple payment sources to settle the whole cost of a single transaction.
- Split payments allow individuals to use multiple payment methods to complete an order, or enable several individuals to jointly contribute part of the order total.
- Financial technology services and apps have helped make split payments easier and less cumbersome than they were in the past.
Understanding Split Payments
Technologically advanced products are rapidly shifting the commercial landscape from a physical one to a digital engagement sphere. In the financial industry, traditional services and products that could only be obtained in a physical location and by conversing with a human financial professional can now be acquired online, thereby foregoing costs of transportation and minimizing valuable time expended meeting with a human.
Fintech, financial technology, has disrupted the norm of storing and transferring value, making paying for services and goods possible for everyone in real-time and at a minimal cost. Innovative mechanisms, such as digital split payments, are being implemented for consumers that have a need to split payments across multiple forms.
Split Payments in Use
Split payments are already used in traditional brick-and-mortar facilities. A consumer can go to a store and purchase groceries worth $100, paying with either cash, credit cards, debit cards, or a mixture of all three to conclude the transaction.
With a digital transaction, the payment technique is a little bit trickier. Although e-commerce platforms accept a growing array of payment forms, including gift cards and closed-loop reward cards, very few accept split payments involving multiple credit or debit cards.
One of the few is Crate and Barrel’s online retail site, which specializes in furniture and home accessories. The online site’s checkout page includes three ways the customer can pay for a basket of goods: a gift card, redeem rewards, or a credit/debit card. The latter option also has an optional feature to pay with two credit cards.
Most online retailers don’t have the option to pay for an order with multiple cards but are finding new ways to split payments. For example, to make a split payment on an order of $100 from Amazon, a customer with a $60 spending limit on a credit card can purchase a $40 Amazon Gift Card using a debit card. At checkout, the customercan then proceed to use both their credit card and gift card for the purchase amount of $60 and $40, respectively, to finalize the transaction.
Split Payment Users and Tools
Another use of split payments is to split a payment across multiple cards owned by different parties. This feature can normally be seen in a restaurant setting or a ride-share service program.
For example, split payment apps enable a group of people dining at a restaurant to receive one bill through the app. Each member of the group can then pay their portion of the bill with their individual credit cards using the app installed on their mobile devices.
Another company that implements split payment is the ride-sharing company, Lyft. Two Lyft users on the same ride can split the bill using the Lyft app on their mobile devices, as long as the ride is still active and they haven’t been dropped off at their final destination.
Popular financial and payments app Venmo also allows individuals to easily calculate and split bills for restaurants or other shared purchases.
Benefits of a Split Payment
Split payment is a convenient mechanism to share costs and for customers that don’t want to go above their credit card limit, or who have a daily spending limit on their debit cards.
If one order has a dollar amount that is greater than each of the imposed limits on both cards, the ability to split the payments would mean that the customer can acquire the goods without going over the limits.
FAQs
A split payment involves using multiple payment sources to settle the whole cost of a single transaction. A person using two different credit cards to pay for an item or a table of restaurant guests splitting the bill three ways are both common examples of split payments.
What is an example of a split transaction? ›
In the following example, a $10.00 Transfer is split so: The primary merchant receives $6.00 (before subtracting processing fees) The second merchant receives $3.00 (before subtracting processing fees) The third merchant receives $1.00 (before subtracting processing fees)
What does split up payment mean? ›
Split payment meaning: what is a split payment? When a customer uses more than one payment method to settle a single transaction, this is called a split payment. For example, a customer might put the total cost of their transaction on two different credit cards. Split payments aren't always used by single customers.
What are the benefits of split payments? ›
Benefits of a Split Payment
Split payments allow you to divide the total purchase cost among multiple payment sources or methods, making it easier to handle bills in group settings. They are convenient when dining out with friends, buying group gifts, or sharing expenses with roommates.
How does split it payments work? ›
Splitit guarantees your purchase, by placing a hold on your credit card. This is not a payment, it's just a pre-authorization that allows you to pay off your balance over time, before accruing any interest. In most cases the hold is only temporarily held on your card and the duration is dependent on your issuing bank.
What are split payments called? ›
Many banks and financial institutions offer such functionality by allowing their customers to request payments from people they split a bill with (known as sub-payees). There's also another type of split payment (sometimes called deferred or partial payment) that has become quite popular in recent years.
What is splitting and an example? ›
Some examples of splitting include: telling one's romantic partner to leave, then begging them not to leave when they actually do. attributing another person's behavior to their fundamental goodness or badness instead of seeing them as a complex person with good, bad, and in-between attributes.
What is an example of a split purchase? ›
Examples of split purchases include, but are not limited to, the following: 1) A single CH making multiple purchases from the same merchant on the same day, the total of which exceeds the single purchase limit, and the total requirement was known at the time of the first purchase.
How to do split payment? ›
If an online store allows split payments, shoppers might see a split payment option during checkout. They would then enter in the required information for each payment method, such as cardholder name, card number, CVV, and other relevant details.
What is the word for splitting payments? ›
give-and-take. go Dutch. go fifty-fifty. go halves.
Speak up. Ask the server for separate checks right when you place your order. It's not only easier for you, but the server as well.
What is an example of a part payment? ›
a payment that is less than the whole amount owed: part payment for sth The company received 500,000 shares as part payment for the sale of its transport division. We are unable to repay the debt, but have offered to make a partial payment.
When would you use split transactions? ›
Use cases for split payments
For example, a customer could pay for a large purchase by putting a specified amount on their debit card and the remainder on a credit card.
What are the features of split payment? ›
Split payments involve using different payment sources to contribute to the total amount. These sources can include credit cards, debit cards, mobile wallets, bank transfers, or other forms of electronic payment methods. The flexibility of split payments allows each person to utilise their preferred payment option.
Is it better to split payments or pay in full? ›
Carrying a balance does not help your credit score, so it's always best to pay your balance in full each month.
What is an example of a multiple payment? ›
Multiple Payment Options: An Example
For in-store purchases, the boutique accepts cash, credit and debit cards, and mobile payments like Apple Pay and Google Wallet. This flexibility ensures customers can choose the most convenient method for them.
