The short answer
Split funding (also called "split settlement" or "partner payouts") is when a processor deposits a single card transaction's proceeds into two or more bank accounts according to rules set by the platform. Stripe Connect, Adyen MarketPay, Braintree Marketplace, and PayPal Commerce all offer it.
In plain English
A customer pays $100 on your platform. The platform keeps a 10% commission; the sub-merchant gets $90. Without split funding, money hits one account and you wire out later (slow, AR heavy). With split funding, the processor itself deposits $10 to the platform and $90 directly to the sub-merchant's bank — no intermediate money movement.
What operators need to know
- Sub-merchants need their own underwriting — KYC, KYB, ownership info, bank account. You don't get to skip it.
- Liability model matters — in a payfac model, the platform owns chargeback and compliance liability. In a "referred" or "facilitator" model, the sub-merchant does. Read the contract.
- 1099-K goes to the funded party — whoever receives the money files the 1099-K, not the platform.
- Refund flows need design — refunding $100 means pulling $90 back from the sub-merchant AND $10 from the platform. Negative balances happen.
- Fee assessment — who eats interchange? Usually assessed on the gross and deducted before split, but some processors split fees proportionally instead.
- Instant vs standard split — instant splits payout to sub-merchants same-day (with a fee); standard follows T+2.
Numbers to know
Platform fees on split funding range from 0.25% (Stripe Connect Standard) to 0.90% + per-merchant monthly (Connect Express with Express Dashboard). MarketPlace platforms clearing >$50M/yr typically negotiate to 0.10% or flat per-transaction.
Why multi-brand operators care
If your brands share ownership but need separate bank accounts, 1099-Ks, or entity-level accounting, split funding lets one payment processor serve all of them while funds land correctly. It's the single cleanest way to run multi-brand e-commerce without commingled funds or ACH reconciliation headaches.