What Are Affiliate Payments?

To understand affiliate payments, you first need to understand what affiliate programs are, and what they do.

Affiliate programs are third party programs that allow you to recruit, manage, and pay freelance sales representatives online.  A merchant creates a product (or lists an existing one) on an affiliate site, or on their own site, and allows marketers, known as affiliates, to promote their product or service. Each affiliate receives a unique link, and any sales made through their link (usually tracked with sophisticated tracking cookies) earns them a commission on the sale.

There are three main types of affiliate programs – pay per lead, pay per sale, and pay per click, but each of these types of programs will require the merchant to make affiliate payments.

Various methods are used to make affiliate payments.  Some programs use check payments, usually on a monthly basis, while others use PayPal payments, and then there are those that offer co-branded prepaid debit cards. Wire transfers and international ACH payments are also used by some programs to manage affiliate payments.  Often, these payments are managed by a third party affiliate network system, like Commission Junction or Offervault, which makes it possible for the merchant to make a single payment, which is then distributed by the third party to the affiliates themselves, but whoever manages the accounts and the payments due, affiliate payments still have to be made.

Another factor in affiliate payments is whether your affiliates will be paid monthly, or instantly.  In the case of check payments, international ACH payments, and wire transfers, it is often cheaper, and easier, for merchants to manage affiliate payments on a monthly basis.  Payments through PayPal and prepaid debit cards can often be made instantly, which is often more attractive to the affiliates themselves, as they do not have to log into their profile to track their sales throughout the month.

There are several factors involved in choosing and implementing affiliate payment methods, both on the part of the merchant, and the affiliate themselves.

 One is certainly the frequency with which payments are made, and while the affiliate may prefer instant payments, the merchant may find that making affiliate payments on a monthly basis is more convenient.  Being able to make mass payments, without having to do individual transactions to make every payment due to a substantial affiliate network is another big factor for affiliate program merchants.

Then there is the cost of making payments.  Whereas check payments may be more convenient, for instance, the cost to send checks by mail is higher than using automated electronic payment methods.

Then there is the issue of tracking. Affiliates will want to know what they are earning, and what they can expect in affiliate payments at the end of the month, and the pay cycle. 

Affiliate payments are very important, both to affiliate marketers, and to the merchant that owns the product or service they are promoting. Choosing the right type of affiliate payment, in terms of cost, reliability and security, is often a big factor in the success and popularity of a program, and its well worth considering your options very carefully.