Creators who actively collaborate with you on Shopify Collabs, may earn affiliate commission for promoting and selling your products. Affiliate commissions may be earned by a creator through affiliate links or discount codes that are created and tracked through Shopify Collabs. When a creator’s audience makes a purchase using an affiliate link or code, the creator earns an affiliate commission. You need to pay that commission to the creator.
The way you're paying commission to creators depends on when you've installed Shopify Collabs:
- If you joined Shopify Collabs on April 27, 2023 or later, then commissions are processed through automatic payments.
- If you joined before April 27, 2023, commissions may be processed through manual payments, but you can switch to automatic payments at any time from the Payments page in Shopify Collabs app.
After automatic payments has been activated, all affiliate commissions from future orders will first go into a 30-day holding period. During this period, the commission of canceled and fully refunded orders will be automatically canceled. Also, during this period you can open a payment dispute.
After the 30-day holding period is over, the commission will be automatically added to your upcoming Shopify bill (or sooner if you've reached your billing threshold). After you pay your Shopify bill, the commission is paid out to your Collabs creators if they have activated automatic payouts on their side.
There is a 2.9% processing fee applied to every automatic commission payment, you’ll see it reflected in your Shopify bill. For example, if your affiliate product sale total is $100 and commission earned by the creator is 10%, then the 2.9% processing fee will be 29 cents.
Moreover, automatic payments are handled in USD and charged to you in the currency of your Shopify bill. If your Shopify bill is in a currency other than USD, then local currency conversion fees may apply. Likewise, if a creator chooses to cash out in a currency other than USD, a payout currency conversion fee is paid by the creator.
Using manual payments, you pay your outstanding affiliate commission manually either through Collabs integration with PayPal or outside of Collabs and mark the payment as paid in Collabs.
You can view outstanding and historical manual payments from the Payments page in Shopify Collabs app.
To activate manual payments through PayPal, you must have a PayPal Business Account, and you must have PayPal Payouts enabled. To help you get started, you can set up PayPal Payouts using the steps below:
Step 1: Visit the PayPal Developer website and log into the dashboard
- To log into the dashboard, press Log in to Dashboard.
- Use your PayPal account email address and password.
Step 2: Enable Payouts
- After logging in, press your profile name in the top right corner.
- Press My Account in the dropdown menu.
- Then scroll down to find Payouts where you can press Enable… to enable PayPal Payouts.
Step 3: If a message appears to contact PayPal, contact PayPal to proceed
- You may get a message that says “To process your request we need more information about you and your account. Contact Us”
- If you receive this, follow the instructions that PayPal gives you to enable Payouts.
If you're paying affiliate commission through automatic payments and find commission in the holding period suspicious, you can open a dispute with the creator.
To dispute a payment, open creator details from the Holding period tab at the Payments page in Collabs app and press Open a dispute. Then, you need to provide dispute reason, details and the date from which all existing and future orders in the holding period would be disputed. Opening a dispute will trigger sending an email to the creator.
After you've discussed the dispute with the creator, you can go back to the creator details at the Payments page in Collabs app and resolve the dispute. When resolving the dispute, you can select either all or some of the disputed commission to be paid out to the creator.
A creator's services may be subject to sales or use tax. The responsibility to determine if taxes are payable are on the merchant and creator. If you have enabled our automated payments feature, aggregate commissions earned by creators will appear on your standard monthly invoice, and in such cases, Shopify will collect and file taxes related to the sale of creator's services in certain jurisdictions in accordance with applicable law. Please refer to the Collabs Terms of Service. If you’re a merchant who makes payments to creators during the year, you may be required to issue them a Form 1099. This tax form is used to report the income earned by freelancers or independent contractors and is necessary for tax purposes. Merchants and creators in all cases have the responsibility to comply with their respective tax obligations, including reporting and remitting any applicable taxes and tax forms.