What is a 'Split Payment'

A split payment is a means by which payment for a single order of goods or services is made using more than one payment methods. Split payment is a multi-payment method that either involves multiple payment cards owned by the user alone, or multiple payment cards of different parties involved in the transaction.

Breaking Down 'Split Payment'

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 gotten online thereby foregoing costs of transportation and minimizing valuable time expended meeting with a human. Fintech, technology in finance, aims to disrupt the norm of doing things by making services and goods accessible to everyone at minimal costs. Innovative payment mechanisms like digital split payments are being implemented for consumers that have a need to split payments across multiple payment 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. S/he has the option to use either cash, credit card, debit card, or a mixture of all three to pay for the groceries. S/he can split her payment by debiting $60 to her credit card and $40 to her debit card. S/he can also choose to use a mix of all three payment methods to conclude the pending transaction.

With a digital transaction however, 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, only 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 his basket of goods: Pay with Gift Card, Redeem Rewards, or Pay with Credit/Debit Card. The latter option also has an optional feature to pay with two credit cards. While this is a convenient way of shopping, most online retailers don’t have the option to pay for an order with multiple cards but are finding new ways to split payments on platforms that don’t have the feature. For example, to make a split payment on an order of $100 from Amazon, a customer with only a $60 spending limit on his credit card can purchase a $40 Amazon Gift Card using his debit card. At checkout, they can 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 for splitting 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, the Split app enables 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.

Split payment is a convenient mechanism for customers that don’t want to go above their credit card limit or customers that have a daily spending limit on their debit cards. Either way, 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 his limits.

  1. Cash Card

    A cash card is any electronic payment card that stores cash for ...
  2. Stock Split

    A stock split is a corporate action in which a company divides ...
  3. Split Adjusted

    Split adjusted refers to the changes in a stock's data following ...
  4. Charge Card

    A charge card is a type of electronic payment card that charges ...
  5. Universal Default

    Universal default allows a credit card company to raise a card’s ...
  6. Returned Payment Fee

    A returned payment fee is a charge a credit card company may ...
Related Articles
  1. Personal Finance

    Credit, Debit and Charge: Sizing Up the Cards in Your Wallet

    Not all plastic is equal! Learn the difference among the three kinds, and how each can affect your finances.
  2. Personal Finance

    Debit Cards: Why They're Not As Safe As You Think

    Ditching your credit card can be a smart move, but debit isn't yet an equal alternative.
  3. Investing

    Berkshire's Stock Splits: Good Buy Or Goodbye?

    Warren Buffett's Berkshire Hathaway recently split its stock. Is this a sign to buy?
  4. Personal Finance

    8 Ways to Avoid Getting Burned by Prepaid Debit Cards

    These cards have many differences from traditional debit and credit cards that can cost you money if you don’t know what to watch out for.
  5. Personal Finance

    10 Reasons To Use Your Credit Card

    There's a surprising credit card strategy you should employ as a consumer ... use your card for everything (or almost).
  6. Personal Finance

    Purchases You Should Always Make With A Credit Card

    Credit cards aren't always bad possessions to have. There are certain perks associated with using credit cards as we make routine or irregular purchases.
  7. Personal Finance

    How to Find the Right Prepaid Debit Card

    Prepaid debit cards have become very popular. Here are some tips for choosing the right one for your needs.
  1. Debit card versus credit card

    Can't figure out which card to use when making a purchase decision? Here is everything you need to know about the differences ... Read Answer >>
  2. Does a stock split lead to the gapping up/down of the stock?

    If a company splits its stock, there will be no gapping of the stock due to the split itself. A stock split does not materially ... Read Answer >>
  3. How is the minimum payment on a credit card calculated?

    Even when minimum payments are low, consumers should still aim to pay off credit card balances every month. Read Answer >>
  4. Does a stock split make a better investment?

    Learn why a stock split doesn't make a difference to an investor's equity and the main reason why companies choose to split ... Read Answer >>
Trading Center