Payment processing for affiliate programs: What your options are and how to get started

If you’re thinking about starting (or maybe revamping) your affiliate program, how you pay your affiliates will be a major consideration. There are different compensation structures, payout schedules, and reward systems that each influencer you partner with may be more accustomed to. Here’s what you need to know to get started and keep your affiliates happy.

What are affiliate payments? 

An affiliate payment refers to the compensation a brand provides an influencer (an affiliate, once they’ve signed the agreement), who partners with them as part of their affiliate program. The affiliate is compensated for promoting the brand’s products or services to their digital audience as outlined in the agreement terms. Put simply, it’s paying affiliates for their promotional efforts that generate leads, traffic, or revenue. 

Affiliate payments aren’t just a quick transaction. They’re an essential part of running an effective affiliate campaign. When affiliate payments are made promptly and accurately, affiliates are motivated and brand partnerships are strengthened. 

The four main affiliate payment methods explained

There are many ways brands could choose to pay an affiliate. It could be with discounts, gift cards, or free product. But for the sake of this article, we’re going to explain how to pay your affiliates with regular money. That’s the typical route affiliate marketers take, and that’s what affiliates always appreciate most. Here’s how affiliates typically get paid based on performance data. 

The 4 main ways affiliate marketers pay their affiliates

Pay-Per-Click (PPC): An affiliate is paid based on how many people from their audience click on their affiliate link. The clicks don’t necessarily have to convert, but the affiliate is rewarded based on the traffic they’re bringing in.

Pay-Per-Action (PPA): This is the most common form of affiliate payment, where affiliates are paid based on completing a pre-determined action. For example, they could be paid for every form filled out or for every sale completed through their affiliate link. 

Pay-Per-Impression (PPI): The brand pays the affiliate for every click their audience generates on their website ads. Similar to PPC, PPI is about ad impressions specifically, and not web traffic. 

Two-Tier Affiliate Programs (TTAP): In this type of program, an affiliate marketer refers other affiliates and is compensated for their referrals in addition to sales from their direct audience. 

How can you ensure your affiliates are paid on time? 

Compensating your affiliates accurately and on time will make them feel valued and more motivated to sell harder for your brand. But before you get to the payment process, you need to complete a few steps. 

• Set up your affiliate software program: Choose a comprehensive affiliate marketing program with a clear dashboard, KPI tracking, and all the management features you’d need to get up and running. 
• Get your affiliate agreement signed: Before onboarding the affiliate into the system, make sure the affiliate agreement is signed. You need to align with the affiliate and your company’s finance policies by clearly defining the commission structure. You should also determine payment thresholds, cadence, and any potential deductions.
• Set your affiliate to either automatic or manual payout: Based on your agreement, set your affiliate payment schedule to either manual or automatic payments, whether bi-weekly, monthly, or another agreed-upon cadence.  

When should you change your payment terms?

With affiliate marketing, consistency is key. Affiliates take comfort in knowing when and how they will be paid. That being said, there might be a few reasons you’d change your affiliate’s regularly scheduled affiliate payment: 

• Rewards for top performers: Some affiliate marketers give bonuses to their highest-performing affiliates, incentivizing them to advertise for you more. It’s a win-win.
• Special monthly deals: Maybe you increase the affiliate commission by a small percentage for a certain period of time, like a deal, so they feel motivated once again to sell more. 
• Affiliate agreement renewals: Of course, if you extend the affiliate partnership, you’ll want to renegotiate your payment terms when the affiliate contract is up.

Get started with affiliate marketing software that scales

If you’re ready to get started with an affiliate marketing software that makes payments simple, try Simple Affiliate. We offer manual payments, automated payments, and even automated tax forms for your affiliates. 
On top of that, we have over 100 5-star Shopify reviews, top-notch customer service, and an easy-to-use platform that’s suited for businesses at any size. Book a demo today.