Starting An Affiliate Network: How To Pay Affiliates?

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How to pay your affiliates – does it matter? Who should adjust, you – the business/network owner or your affiliates? Let’s explore this most crucial aspect of the affiliate business – the payouts. We’ll learn why it’s important and discuss the different payout methods available.

Why are payment methods so important? 

According to a survey:

  • Over 40% of the affiliates stopped working with the affiliate network because of a payment problem.
  • 65% of the affiliates left a network because of repeated payment issues.

In other words, if withdrawing earnings becomes a problem, most affiliates will just turn around and leave.

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Starting an affiliate network – don’t miss the entire full guide:

Part 1: Where to Find Affiliates?
Part 2: Where to Find Good Offers
Part 3: Affiliate Network Technical Basics
Part 4: How To Pay Affiliates?
Part 5: Where to Promote Your Affiliate Marketing Program?
Part 6: Where to Get Quality Traffic?
Part 7: Performance Marketing Software – What You Need To Know
Part 8: Why you need a White Label Affiliate Marketing Software

Generally speaking, affiliate marketing is a profitable way to earn passive income from your business. If you’re already interested in affiliate marketing, you realize that there’s a lot of money out there for those who work successfully in this area.

Related: Top 100 Profitable Affiliate Marketing Niches for 2021

But one thing that not many people are addressing is how affiliate marketers really get paid. This looming issue can leave potential affiliates unwilling to join the program or even consider affiliate marketing at all.

In this article, we’ll reveal how affiliate partners (or publishers) get paid so that you can better understand the diverse payment choices that affiliates have available to them.

But, before we get into payment methods, let’s break down the affiliate commission structures.

Types of Commission Structure

Advertisers, ad networks, retailers, or agencies are paying publishers (affiliates) to run advertisements or embed affiliate links in their content. The cut for certain publishers (bloggers, advertisers, industry content creators) depends on the commission structure:

  • Revenue Sharing Model: The publisher earns a portion of the revenue generated from sales on the publisher’s web.
  • Cost Per Action (CPA): The publisher is paid after the visitor has completed a particular action. For example: purchase a product through the affiliate links.
  • Pay-per-click (PPC) or Cost-per-click (CPC): The payment is depending on the number of clicks from the publisher’s website to the merchant’s website.
  • Pay-per-acquisition (PPA): payment rate based on a particular action, such as when a new visitor signs up for a newsletter or purchases via an affiliate connection.
  • Cost-per-lead (CPL): Publishers receive payment for contact information from an interested prospect. The merchant or his sales team will then be able to reach out to the prospect.
  • Pay-per-impression (PPI): payment depending on the number of times the visitor of the website has viewed the ad.

Now that we understand “what” affiliates are getting paid for, let’s look at the various types of affiliate programs out there.

Different Types of Affiliate Programs

  • Classic Affiliate Program – This is the typical program most people think about when they consider affiliate marketing. In this kind of program, the affiliate will be provided with a unique referral link, and the affiliate receives a commission every time the transaction is made through that link.
  • Lead Generation – Some affiliate programs will also pay publishers for getting leads to their companies (CLP we discussed above). This means that every time anyone fills out a contact form, asks for a quote, or reaches out to a company in any way, the publisher gets a commission.
  • Multi-level Marketing Affiliate Program (MLM) – In these types of programs, publishers (or affiliates) can get an affiliate link as they would in the conventional affiliate program. However, they will also be rewarded for hiring other affiliates. So, if anyone from the affiliate makes a profit, the affiliate often makes a commission on that sale. Read about the difference between Affiliate Marketing and MLM.
  • Tiered Affiliate Program – In these types of programs, affiliate commissions are structured so that affiliates earn commissions on their conversions and conversions of webmasters they refer to the program. This is yet another form of MLM marketing, yet differently formulated.
  • Affiliate Network – Companies like ShareASale, C.J. or Awin are affiliate platforms where publishers can select from a wide range of programs rather than being restricted to only one affiliate program at a time.

How Often Do Affiliate Marketers Get Paid?

Depending on the affiliate marketing program, structure, and network, payouts are rolled out differently, and there is no “general rule” when it comes to payments.

Most affiliate programs pay their affiliates once a month, but some also pay only when the affiliate’s net earnings exceed a certain level. The most common affiliate payouts are:

  • Once a month, on the 1st date of the month.
  • Net 15 – when the affiliate is eligible for withdrawing his earnings at the end of the month, he will receive his payout on the 15th of the next month. 
  • Threshold method – when the affiliate is required to reach a certain number of commissions (or earn a certain sum) to be eligible for a payout. Some companies set a low threshold of about $20; others set it to $100 or even $500. Remember that a high threshold may discourage affiliates from even getting started with your affiliate program or network.

Streamlined dynamic payment processes

As far as it is concerned, the conventional method of paying accounts – issuing paper checks, printing tax forms, and other manual activities – cannot be kept up with the multi-functional workflow of affiliate marketing software

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Leveraging technology features such as automation and data authentication can allow the company to streamline the complicated process of issuing payments to a growing affiliate program.

Here’s another factor to bear in mind: Affiliate marketing software, such as Scaleo, allows managers to monitor the success of various affiliate marketing campaigns; however, monitoring ad performance on a network that is independent of the mass payment provider produces a cumbersome workflow. 

That’s why you need a global integration framework. You can greatly reduce the workload of payment processes by tracking profit and issuing payments on a single platform.

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Looking for an affiliate marketing software to manage all your campaigns, affiliates, and payments in one place? Check out Scaleo – 14 days free trial – no credit card required.

Forms of Affiliate Marketing Payment

Now that we have discussed all the background that is surrounding affiliate payments, let’s move on to the different payment methods available. Affiliate marketers may be paid out in many ways. Here are a few of the most popular ones.

Monetary Payouts

The most common and successful way to pay affiliates is through a monetary commission, although some networks do offer credits, cashbacks, and other forms of barter/trade deals. The monetary commission is when the publisher earns revenue from the affiliate program, and the company he is affiliated with pays him real money.

Credit Payouts

Some affiliate programs also allow affiliates to use their affiliate earnings as credit for that online company’s goods or services. For example, if the publisher has an account at a WordPress themes e-shop, their affiliate earnings can be used as credits for purchasing themes in that e-shop. This form of payment is favorable to some affiliates because it helps to save money on subscriptions or payments of their business expenses.

Discounts Payouts

Some affiliate programs provide incentives to affiliates who make enough referrals in every given month. This form of payment is popular with retail and health-related affiliate programs. After a certain number of sales and conversions, publishers’ discounts may increase, giving them more purchasing power over the products they love from the companies they trust.

Choices for affiliate payments

If you’re running a very small or super-sized affiliate program, there are a lot of means you can use to pay for your affiliates. If we are talking about monetary payouts, you can use a few payment gateways to process payments.

Not every payment method is available in every country, and the fees may vary dramatically, so it’s all about finding the perfect compromise between your and your affiliate’s convenience.

PayPal 

PayPal is one of the most popular online payment systems that has been around since 1998. The best thing about PayPal is that it does not allow affiliate programs access to their publisher’s banking information; all of the publisher’s commissions go to their PayPal account, from which they can transfer the funds to their local bank account. The other wonderful thing about PayPal is that it is perfect for foreign customers.

PayPal is essentially an e-wallet that enables you to collect payments and pass money between individuals and businesses in seconds. 

You can also make any kind of online transaction and withdraw cash. It also offers excellent features, such as:

  • PayPal.Me, a peer-to-peer program for requesting payment;
  • PayPal Credit, an online service for crediting PayPal users (so far only in the U.S.).

Overall, PayPal is a reliable, fast, flexible, and super-safe payment system available on most affiliate networks and ad networks. The downside could be the high fees. Generally 2.9% from the amount + $0.3 fixed fee per transaction. For example, if you send $10 via PayPal, the recipient will only receive $9.41, and that’s 5.90% going to fees, effectively.

Stripe

Stripe is another great affiliate payment gateway. It operates in the same way as PayPal – publishers need to provide their Stripe email address to the affiliate program and do not need to disclose their bank information. Stripe also provides third-party integration software to help make the process of handling and paying affiliates simpler and more automated.

Stripe charges the same rates as PayPal – 2.9% + $0.30.

Stripe also provides free access to their API, where developers can use it to create a custom checkout directly on your affiliate network’s website.

It’s worth noting that Stripe cannot accept PayPal payments.

Payza

Payza was set up in 2008 and currently has more than 9 million users and operates in 195 countries with 21 different currencies.

Any of PayPal’s “embargoed” countries are open for Payza, and it has completely embraced Paypal’s business model. It offers both a secure portal for companies and a user-friendly, super affordable individual service.

The best thing about Payza is that it is trying to keep its platform flexible, which is good, particularly for affiliate marketers, when it comes to accepting payments. Many options when it comes to withdrawing their affiliate earnings – bank wire, bank transfer, Payza prepaid card, or check (U.S. members only).

Another key feature about Payza is that it enables Bitcoin to be transferred; the fee for BTC is only 1.2% while receiving funds fee is the same as Stripe and Paypal – 2.90% + $0.30.

Skrill

Skrill, formerly known as Moneybookers, is another payment processor used often by affiliate programs, especially those many with foreign affiliates. 

The good thing about Skrill is that affiliate payouts can also automatically convert the currency, so no matter where the affiliate is located in the world, they can get solid payouts without any issues.

Skrill is also used often in the online gaming industry and focuses on keeping users satisfied with low fees. You can also use your Skrill wallet to shop online (instead of using your credit card). 

Skrill is available in about 190 countries and supports 40 currencies. You can use Skill in case you see that other e-wallets are not available for you. For other integrated methods (BitCoin, Neteller, etc.), Skrill will charge you a percentage of your transaction. 

Skrill is free to join and has free maintenance for as long as you use it every 12 months. Otherwise, you will be paying a monthly fee of $2.

WebMoney

WebMoney is one of the most common payment channels in Eastern Europe and the countries which were a part of the former Soviet Union.

If you want to use your funds to purchase traffic, web hosting, or a domain in that area, WebMoney is the perfect choice for you.

This payment system currently operates in 91 countries with local currencies for national transactions or in USD or EUR for global/international payments.

WebMoney Transfer also offers online banking services, P2P payment, internet-based trading sites, merchant services, and online billing systems.

One of the main benefits of using WebMoney is that it has low fees. The fee for a P2P transaction – charged by the sender – is 0.8% of the amount sent, with a limit of $50 per transaction.

If you run an affiliate network and have many affiliates in Eastern Europe, consider offering this option to enable those who cannot use PayPal to still be able to withdraw funds easily.

Wire Transfers

Wire transfers, i.e., bank transfers, are the most common payment method in the world. It is primarily popular with large affiliate networks or websites, where commissions are huge, and processing it through an e-wallet such as PayPal will not “pay out.”

The downside is that payments are not swift, and fees are higher (no consistent charge) than other payment methods on the market. W

A wire transfer can cost $100 per withdrawal, but, as I already mentioned, it’s primarily used by big affiliate companies for paying top affiliates.

Simple math: if you withdraw $10000 from your affiliate network to your PayPal account, and the transaction is international (outside the U.S.), you’ll pay a 4.4%+$0.3 fee. That’s $440 in fees, compared to “only” $100 wire transfer fee.

Of course, all banks have their own rules. Not all banks are eligible for foreign transactions (for example, the EU/USA cannot receive transfers from Cuba, Iran, or North Korea), and some charge crazy currency conversion fees.

Neteller

Neteller is one of the most common e-wallets available in over 190 countries and 22 currencies across various businesses and industries. It is commonly seen in affiliate programs, especially in the gambling industry.

Receiving money to your account is free, but if you want to transfer money to a peer, it will cost you 1.9% of the transaction (maximum $20 per transaction).

If you want to pay your affiliates, you can use different methods to send money to Neteller, such as credit cards, debit cards, bank transfers, a Paysafe Card, etc.

Bitcoin

Of course, we can’t ignore one of the fastest-growing payment methods: bitcoins.

This isn’t just the name of the payment system. In fact, it is a new form of online digital currency (or often called – cryptocurrency) created back in 2009.

This payment method has some unique features that the aforementioned systems cannot really compete with. All transactions are made without intervention from any middlemen or even banks that could pray on transaction fees.

It does not require any authentication and leaves the transactions discrete (no real name of a Bitcoin wallet owner).

Global transactions are simple and inexpensive, as Bitcoins are not linked to any particular country and do not rely on any government regulation. Many online companies, affiliates, and sellers choose to use Bitcoins because of their zero payments on/off credit cards.

Cryptocurrency isn’t a mainstream method for withdrawing funds since the commissions you earn are generally calculated in any of the popular currencies and not in bitcoins. However, there are certain affiliate networks where commissions are offered in cryptocurrency in the first place.

Venmo

Venmo is a payment service currently operated by PayPal. The affiliates can be charged through transfer using this service. However, the only downside to this method’s use is that all parties must be located in the United States. 

So, this is not suitable for businesses with international affiliate programs and will only be good for US-based programs, where only US-based affiliates are accepted on board.

Conclusion

In this article, we went over all the popular methods that are used today for paying affiliates. Naturally, we cannot mention them all, as there are hundreds of them. 

Each has its own advantages and disadvantages. Although some have been specifically developed for affiliate marketing purposes (such as ePayments or Paxum), some provide a wider variety of services (PayPal, Webmoney, Skrill), and some would be able to deliver the lowest fees (Payza, FirstChoice Pay).

The more payment choices you offer on the affiliate network, the more confident your affiliates will feel because they know they can quickly/safely withdraw their earnings. 

Hopefully, the above knowledge has helped you understand how affiliate marketing and affiliate commissions operate and what methods you can use to run affiliate payouts.

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Elizabeth Sramek
Elizabeth is a Senior Content Manager at Scaleo. Currently enjoying the life in Prague and sharing professional affiliate marketing tips. She's been in the online marketing business since 2006 and gladly shares all her insights and ideas on this blog.
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