What is a Payment Threshold?

Affiliate Program
Getty Images / Tara Moore

Marketing is a multi-layered tool for communicating information about goods and services on a large scale, and new technology has brought marketing to the digital world via affiliate advertising programs. Such programs facilitate the placement of ads on platforms that wish to sell a part of their web presence in exchange for a new revenue stream. These platforms are usually websites that have no way of earning income from the website's content.

By allowing ads to be shown alongside their content, these sites are able to draw value from something that might otherwise only drain their resources.

Most affiliate marketing programs tend to pay out once the affiliate has reached a certain level of income. Others pay out at preset intervals, regardless of the amount earned during the period. These payment thresholds are usually fairly low, and they represent the minimum commission that must be earned before payment can feasibly be transferred to the affiliate. Those who use a scheduled payment approach may not have a minimum earnings level associated with their timed payouts, but some may. The purpose of these thresholds is to prevent the affiliate program from being forced to manage extraneous transactions while paying their affiliates.

Payment thresholds are easily identifiable if you are applying to be an affiliate advertiser. Most often, the terms are presented clearly during the sign-up process, specifically, the portion that concerns payment.

For instance, the application might state that the payment threshold for your account is $10. That means that you will not be able to receive a payout until you have earned at least $10 worth of revenue. However, that might not mean that you automatically receive a payout once you go above $10. It is common practice for affiliate programs to give a payout request option to its affiliates, meaning you could bank as much revenue with them as you like before asking for a bulk payout.



Timed payout intervals operate a bit differently, but the underlying principle is the same. The idea is to limit the transactions the advertiser must make to pay its affiliates by forming a schedule that performs automatic payments at preset intervals, most commonly every two or four weeks, so affiliate advertising programs can accurately calculate how many transactions they need to make. Some take it a step further and combine the two systems to limit their transactions even more. Under such a system, you might automatically receive a payout every two or four weeks, but only if you've earned the minimum revenue during that period.

If you're considering applying to be an advertiser through an affiliate program, be sure that the payment threshold they use is low. Programs with high thresholds might want to use your money to earn interest for themselves, so they create an arbitrarily high payment threshold, allowing them to control the money paid to them by their clients for longer periods of time before they are forced to pass it along to the affiliate. Such platforms could be considered scams.