Last editedMar 20233 min read
Between payment apps, electronic transfers, and BNPL services, customers have more options than ever at checkout. Some prefer to break down the total bill into a variety of different methods, or split payments. So, what is split payment and how does this type of payment method work? Here’s a closer look at your options.
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. A group might ask to split the bill for a product or service they purchased together, like a meal at a restaurant or a shared utility bill. Businesses can use split payments as well by asking to split the cost of vendor invoices across more than one payment method.
Although they’re sometimes used interchangeably, split payments are different to deferred payments. Deferred payments also split the total cost into several smaller portions, but these are spread out into installments and paid off over time. Buy Now Pay Later services like Klarna are an example of this type of deferred split payment.
What are the main uses of split payments?
With the rise in peer-to-peer payment apps like Venmo and Zelle, it’s perhaps no surprise that many American consumers are choosing to split the bill with friends. According to a Forbes study, nearly half, or 47%, of U.S. adults using these apps split payments with friends and family to pay for meals out, groceries, and other expenditures.
In addition to splitting the bill at a restaurant with friends, individual consumers use split payments in brick-and-mortar retail locations. For example, they might go to purchase groceries and split payment into a combination of cash and credit cards. Some ecommerce stores are following suit by offering a choice of different payment methods at checkout. For online shoppers, this most frequently includes the option to split payment between a gift card or voucher and a credit or debit card.
What are common split payment methods?
Here’s a breakdown of the various split payment methods you can offer at checkout:
Credit or debit cards
Store reward cards
This is in addition to the peer-to-peer payment apps mentioned above which facilitate digital split payments. Some company-specific apps enable split payments, including Uber and Lyft. These allow users on the same ride to split the bill automatically with more than one payment method during an active ride.
What are the benefits of providing split payment options?
If you’re a small business owner, why should you consider offering split payments to your customers? There are plenty of benefits. It’s generally always a good idea to provide your customers with the widest possible range of payment methods. Catering to customer preferences at checkout helps push through sales that might otherwise be abandoned. It also caters to customers who have a strict spending limit on their debit or credit cards, enabling them to make larger purchases.
Offering split payments:
Reduces shopping cart abandonment
Offers a better customer experience
Increases conversion rates
Improves customer loyalty and satisfaction
How to split payment during a transaction
If you’re thinking of offering split payments, there are a few factors to take into consideration. The first step is to choose a payment gateway that enables split payment methods. This should include a blend of digital wallets, bank transfers, vouchers, reward cards, and card networks. If your current payment provider only accepts card payments, you’ll need to branch out into multiple providers to cater to a wider range of options.
Another factor to consider is card verification and security. When your customer uses more than one card at the same time, both will need to be verified with the issuer. Look for a provider that can handle multi-card verification at speed.
GoCardless works side-by-side with major payment gateways to offer a wider selection of payment methods. We make it easy for customers to set up ACH payments taken directly from their bank accounts, ideal for one-off, subscription and recurring payments. Businesses can increase conversion rates with a fully customizable checkout flow embedded directly into their website. These can be localized for over 30 countries, enabling a smoother payment flow from across the globe.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.