Split Shipment Transaction How Does It Work

Split-shipment means cardholders will get items from more than one location and have more than one entry in their bill for a single purchase. At the same time, merchants provide a single-bill (authorization amount) to the acquirer to get funding. You can find all these details in a well-explained example.

Credit Cards: How does Split shipment Work

1. What is split-in authorized amount?

For instance, you buy two T-shirts from a retail merchant. One delivered to you from Texas, and the other one is from Atlanta.

Then, the end customer (you) will be charged the total purchased amount in splits in his bill. The below example explains you.

1 T-Shirt cost is $20
2 T-shirt cost is $30
Total cost is $50

The end customer can see in his bill as two amounts. One is $20, and the other one is $30.

In your bill you can see two transactions. $20 and $30.

In credit card transactions, when you do an on-line (e-commerce) transaction, and the e-commerce platform can submit a single authorized slip to the issuer (Banks) to get money.

2. Credit cards basic terminology.

  • Card holder – who is having card in hand
  • Acquirer-Credit card transaction processor-on behalf of merchants
  • Issuer-Card issuer as in our case is Banks
  • Network team-Visa or Master card etc.,

3. What is Split Shipment?

Your total purchased order will deliver from two different places shipment you can call split shipment.

Split Shipment Best Example.

Shipment

Details of Split Shipment.

A Visa card holder, ordered two sweaters online from a retail merchant. One of the sweaters costs $60.00 plus a $6.00 shipping fee and is available at a distribution center located in Texas. The other sweater costs $30.00 plus a $3.00 shipping fee and is available at a store located in California. For both sweaters the merchant submits a single authorization for $99.00.

When the first sweater ships from the Texas distribution center, two days after the authorization was approved, a transaction is posted to the customer’s account for $66.00.

When the second sweater ships from the California store four days after the authorization was approved, a second, and final, transaction is posted. In this case, because of where the sweater was being shipped from (California), there is an additional sales tax of $2.40. The amount of the second transaction posted to the customer’s account will be for $35.40 which is within the 15% tolerance threshold so no additional authorization is required.

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Author: Srini

Experienced software developer. Skills in Development, Coding, Testing and Debugging. Good Data analytic skills (Data Warehousing and BI). Also skills in Mainframe.