Split payments is a feature of a payment gateway that divides one customer payment between several sellers. It is also called payment splitting or marketplace payments.
Here is why it is needed. On an online marketplace, one order can include products from different sellers. Say you buy a book from one seller and headphones from another seller, in one checkout. You pay once: ₹1,000 in total. But that ₹1,000 does not belong to one person. Part of it belongs to the first seller, part of it belongs to the second seller, and part of it is the marketplace's commission.
Split payments solves this. It is a part of the payment gateway. The gateway collects your ₹1,000 and keeps it safely for some time. It also records how much each party should get. For example, the first seller should get ₹600 for the book. The second seller should get ₹300 for the headphones. The marketplace keeps the remaining ₹100 as its commission.
The sellers are not paid immediately. Each seller is paid later, through payouts, usually after the return period is over. This way, if you return the headphones, your refund can be paid from the money the gateway is still holding. Keeping money safely with a third party until a deal is complete is called escrow.
In India, there is also an RBI rule to follow. Under the RBI's rules for payment aggregators, customers' money must be kept in a separate escrow account until it is paid out. So split payments is not only about calculating the amounts. It is also about following the rules for holding other people's money.
The same idea is used outside shopping. Consider an oil well. It can have hundreds of owners. Every month, each owner must be paid a part of the money earned from the well. Oil companies use revenue distribution software to calculate and pay these amounts. It is a different industry, but the questions are the same: who paid, who should receive money, how much, and when.