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UniPayGateway

February 18, 2015
Written by
James Davis
Written by James Davis
Senior Technical Writer at United Thinkers

Author of the Paylosophy blog, a veteran writer, and a stock analyst with extensive knowledge and experience in the financial services industry that allows me to cover the latest payment industry news, developments, and insights.

My works have been cited across media and payment blogs. I do my best to help businesses make the most efficient financial decisions that can positively and significantly improve their business growth.

Whether you are a seasoned investor or just starting out in the world of payments, my writing is designed to be accessible to everyone and help people navigate the complex world of payments. So if you want to stay up-to-date on the latest trends and insights in the payment industry, be sure to check out Paylosophy and my published works.

Reviewed by
Kathrine Pensatori
Product Specialist at United Thinkers

Product specialist with more than 10 years of experience in the Payment Processing Industry. I help payment facilitators and PSPs solve their various payment processing issues. On a regular basis, I work with a team of knowledgeable technical people in the space, and I am passionate about finding creative solutions to the challenges presented by the Payments Industry.

I would be happy to help with any questions you might have regarding credit card payment processing, merchant services, EMV certifications, the various ways of becoming a payment facilitator or a payment platform, as well as any other Payment Industry related issues you might be struggling with. Feel free to follow me on Quora, and don’t hesitate to send me links to the specific Quora questions you would like me to answer.

Adaptive Payments Model

The simple residual revenue sharing mechanism envisioned a simple splitting of a merchant fee charged for transaction processing, among several parties involved in the process. These parties included the association (Visa, MasterCard), transaction processors, and, possibly, merchant services providers.

Recent developments, witnessed in the merchant services industry, call for introduction of new, more advanced remittance models. These models should allow to automatically split various fees, commissions, and surcharges between a relatively large number of parties, according to some pre-defined rules, embedded in the remittance logic.

Adaptive Payments Model

One of the first companies, which tried to meet the new requirements to remittance mechanisms was PayPal with its adaptive payments model. The model provides an opportunity to share the transaction amount among two or more PayPal customers, according to some pre-defined rules. PayPal adaptive payments mechanism is particularly convenient for online retailers, selling goods or services produced by several vendors (while a separate contract is signed with every vendor).

Beside multi-vendor case, there are two other use cases (scenarios), which call for implementation of advanced remittance logic. In the first case a convenience fee, charged on top of a transaction amount, has to be automatically shared between two or more parties. In the second case, beside a convenience fee, some percentage of the transaction amount is charged as tax, while another share is retained as a merchant services reserve. Both taxes and reserves have to be remitted to special targeted accounts.

Read more about modern split funding mechanisms in the respective article at Paylosophy.com.

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