Affiliate payment processing
What is an affiliate program payment processing
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.
How does payment processing for affiliate programs work
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.
Types of affiliate marketing programs
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.
- Pay Per Click (PPC) — the participant places a link to the client’s website and earns commissions every time users click on it.
- Pay Per Lead (PPL) — the marketer earns the commission for each new lead generated. In other words, they receive payment for bringing someone’s contact information to the company managing the program. This type of affiliate program is also often referred to as Pay Per Action.
- Pay Per Acquisition (PPA) — the participant earns commissions on every sale made possible thanks to their effort. Usually, a specific time has to pass from the time of purchase for the affiliate to receive their payout. It is required by the merchant to make sure the customer gets the order without making a return.
How affiliate networks work
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.
What to look for in a payment solution for an affiliate program
- Payout options. The payment service provider you’ll partner with should be able to provide you with a wide selection of payment methods. The range of supported options should include all major card brands, electronic checks, the most popular digital wallets, global payment methods, and some local options for the markets where you operate.
- Technologies. Look for a solution that allows initiating both single and mass payouts through different methods and in various currencies. It should also enable tracking payout statuses and generate automatic reports upon completion.
- Coverage. If you’re an international business, look for a solution that works on as many of your markets as possible. If you’re a local company, it’s better to look for a local payment partner with deep market expertise.
- Security. Ensuring the safety of payment information and customer details is a must, so check if your potential partner takes decent safeguarding measures and complies with regulatory requirements and industry security standards, like PCI DSS. It’s great if the payment provider also offers anti-fraud and chargeback minimisation tools.
- Pricing. Who wants to pay more when you can pay less? Explore offerings on the market, calculate how much each one will cost you and make an informed decision.
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