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.