In case of Split Shipment, card holder (end customer) will be charged to his or her bill with more than one time and merchant or acquirer can submit single authorization bill to issuer.
What is split in authorize amount
An example is if you buy 2 T-shirts from a retail merchant. One T-shirt is delivered to you from Texas and the other T-Shirt delivered from Atlanta.
So, end customer (you) will be charged in split of total purchased amount. Let me explain the below example.
1 T-Shirt cost is $20 2 T-shirt cost is $30 Total cost is $50
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 2 transactions. $20 and $30
In credit cards transactions, when you do a transaction for example on-line (e-commerce) and the e-commerce platform can submit a single authorized slip to issuer (Banks) to get money.
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.,
- Now, your total purchased order delivered from two different places, so the shipment is called split shipment
Example flow chart for 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.