Affiliate payment processing is the fuel that drives affiliate marketing. Without the ability to make payments to affiliates, merchants won’t be able to benefit from this powerful business growth channel because nobody would be interested in facilitating sales for a company that doesn’t pay out.
To make the concept clearer, let’s find out more about its components.
An affiliate program is an agreement between the merchant and its partners, or affiliates, according to which the latter ones get paid for increasing traffic to the merchant’s website, generating them leads (contact details of people who can potentially become customers) or facilitating sales.
Payment processing is the way a transaction goes from inception to finalisation. The term is also commonly used to describe the process of handling payments by a business.
Most frequently, companies initiate payouts to their counterparties once a month.
If the number of program participants is not high, businesses can easily calculate the commission and make payouts to each affiliate manually. For example, they can make payouts on their PayPal accounts, credit cards, or bank accounts.
But if a company has hundreds of affiliates, handling all the payouts gets complicated. This challenge is common for top paying affiliate programs. Luckily, the market offers a lot of solutions for payouts automation. For instance, Corefy allows making payouts to an unlimited number of recipients simultaneously, even with different amounts and through various payout methods.
The commission rates and the way payout is calculated and made depends largely on the type of affiliate marketing program.
We can categorise all affiliate marketing programs into three groups by looking at businesses’ targets. In other words, on what leads to paying the commission.
Sometimes this term is used to describe the circle of partners who promote merchant’s products. Still, we’re interested in a different use case, where an affiliate network is a platform gathering the highest paying affiliate programs.
Merchants come to such platforms to promote their products or services by connecting with interested affiliates, while marketers, influencers, publishers, writers or other affiliates come there to connect with brands and start earning commissions.
In its turn, the affiliate network receives a certain percentage of the commissions earned by its network and some money for its referrals.
The major downturn of such business is that acquirers mostly open them high-risk merchant accounts. That’s because they’re sort of a middleman between merchant and processor. They also can’t directly affect the quality of the services provided to the end consumers, which makes them prone to high chargeback rates. Moreover, fraud is quite widespread in this business.
However, the demand drives the supply, so there are many decent payment processing solutions tailored to the unique needs of the industry.