Affiliate Payout

Why

When

How

1. Choose a payout method: PayPal (international, instant, 2% fee) or ACH (US, 1-3 days, free) — offer both and let the affiliate choose
2. Set a $50 minimum payout — commissions below $50 accumulate until they reach the threshold; this avoids processing $5 payments and reduces your payment fees
3. Set a fixed payout schedule: the 1st of the month for the previous month's commissions — affiliates plan around this, and consistency builds trust
4. Collect tax forms before the first payout: W-9 for US affiliates (requires SSN or EIN), W-8BEN for international (requires foreign tax ID) — use the platform's built-in collection
5. Generate 1099-NEC at year-end for US affiliates paid > $600 — the platform does this automatically; do not pay anyone without a W-9 on file
6. Handle refunds and chargebacks: claw back the commission from the affiliate's next payout if their referred customer refunds within 30 days
7. Use the platform's payout automation: Rewardful and Partnerstack integrate with PayPal and ACH, and handle W-9 collection, 1099 generation, and payouts in one flow
8. Send a payout confirmation email with the amount, the period, and a link to the affiliate dashboard — this closes the loop and gives the affiliate a record

Example

# Payout schedule (monthly, 1st of month)
# November commissions → paid December 1
# December commissions → paid January 1

# Payout flow (using Rewardful)
// 1. Affiliate earns $87 in November commissions
// 2. On December 1, Rewardful auto-pays:
//    - Checks W-9 on file (required before payout)
//    - Pays $87 via PayPal (affiliate's chosen method)
//    - Sends confirmation email: "You were paid $87 for November commissions"
// 3. At year-end, Rewardful generates 1099-NEC for affiliates paid > $600

# Minimum payout logic
function processPayout(affiliate: Affiliate) {
  const pending = affiliate.pendingCommissions;
  if (pending < 50) {
    return { status: "accumulating", message: "Below $50 minimum, will roll over" };
  }
  if (!affiliate.w9OnFile) {
    return { status: "on_hold", message: "W-9 required before payout" };
  }
  return { status: "paying", amount: pending, method: affiliate.payoutMethod };
}

Common Problems

• ⚠Paying manually via PayPal — this takes 4 hours/month for 50 affiliates and inevitably leads to errors (wrong amount, missed affiliate). Use the platform's payout automation.
• ⚠Not collecting W-9 before the first payout — you cannot legally pay a US affiliate without a W-9 on file, and you need it to generate the 1099-NEC at year-end. Use the platform's built-in collection.
• ⚠Paying every commission regardless of size — processing a $5 PayPal payment costs $0.50 in fees and 10 minutes of work. Set a $50 minimum and let small commissions accumulate.

Best Practices

• ✓Use the affiliate platform's payout automation — it handles W-9 collection, 1099 generation, and PayPal/ACH payouts in one flow, and pays on time every month without manual work.
• ✓Set a $50 minimum payout and a fixed monthly schedule — this reduces your payment-processing cost and gives affiliates a predictable payout date they can plan around.
• ✓Send a payout confirmation email with the amount and period — this closes the loop, gives the affiliate a record for their taxes, and reinforces that the program pays reliably.