Whether you are new to influencer marketing or have been building an influencer marketing program for your brand for a while, you will quickly find that there isn’t exactly a “standard” processor payment platform designed for paying influencers at scale.

With so many creators today monetizing on all types of content across different channels and platforms, it’s no wonder there’s not a “standard” way to pay them. Before diving into why your agency or brand should reconsider using PayPal, let’s cover the basics.

What is a content creator?

A content creator is any individual who makes and publishes digital media for other people to consume. Content creators make short videos, long videos, or podcasts and publish photos or blogs across different social media platforms like Instagram, TikTok, YouTube Shorts, Patreon, Spotify, and more.

While technically, anyone on the internet can be considered a content creator, creators and influencers who publish content, build an audience, and are looking to monetize their personal brand are considered content creators in the broader world of the creator economy.

Creators and influencers getting paid for their content creation are also self-employed and thus considered independent contractors, freelancers, or 1099 employees.

How are content creators paid?

With more creators stepping onto the scene, there are many avenues and opportunities for monetization. To allure young people back to their platforms, tech companies have invested more money and resources into building monetization tools for creators.

In 2021, TikTok’s creator fund rolled out, which is not a grant or ad revenue sharing program but instead awards creators funds who have garnered at least 100K authentic video views.

Similarly, YouTube recently rolled out YouTube Shorts, a short-form video competitor to social media giant TikTok, and announced that it would be revenue sharing with Shorts video creators in 2023.

Other companies like Snapchat and TikTok have similar partner programs to keep their existing young users engaged on the platforms (although eligibility varies). But regardless of these monetization creator tools each company boasts, creators have found success in monetizing through brand partnerships and creating sponsored posts for brands — which oftentimes can be more promising for creators looking to do this full-time.

What is the best way to earn money on social media as a creator or influencer?

Today, brands will pay a lot of money for influencer marketing which allows you to reach a new target audience. Ecommerce brands like Gymshark have seen a lot of success with influencer marketing after their products went viral with TikTok creators.

For creators, a brand partnership typically consists of a contractual agreement where a brand offers payment or a commission of affiliate sales to the creator in exchange for content.

What is the most common payment method for creators on social media?

With millions of creators around the globe, you would think there would be a “standard” payment method for brands and creators, but to tell you the truth, there isn’t.

Below we will highlight the differences between paying a creator via PayPal and Lumanu that may make you reconsider your current process if you are a brand or agency using PayPal to pay influencers for their work.

PayPal

If a brand has chosen to pay creators via PayPal, it is most likely for the following reasons:

• Paypal is widely known

• Paypal works for paying international creators with global bank accounts

• PayPal can make it easier for marketing teams to dispense funds without having to go through tedious funding or approval processes with their AP team.

• PayPal is an easier alternative than forcing individual creators to endure internal vendor onboarding processes that your company may require that oftentimes cause a lot of confusion and friction.

• Payment methods include credit card, ACH, and payments from the PayPal wallet making it a flexible choice for paying creators if you are a smaller brand.

However, Paypal was not built for paying influencers and is just a workaround for the above.  In fact, many of the brands who are using PayPal to pay influencers today are most likely using it outside of PayPal’s terms of service in an attempt to avoid merchant fees. Those who use PayPal also need to make sure to use the correct type of sub-platform for businesses, not the individual/personal app, or else there may be payments held for an audit for use.

This is commonly known as paying “the friends and family method” which essentially means that a good or service is not being exchanged.  In the case of working with a creator or influencer, the content or post they are providing for your brand is considered to be the “good / service” exchanged and the creator is seen as a “seller” or “merchant” in the eyes of Paypal’s terms of service.  This would mean they would be subject to pay an uncapped 2.9% fee to accept payment from you.  

There is no fee to accept cash via the friends and family method, however, it is against PayPal’s terms of service and may result in complications and investigations that could freeze the payment or return it back to your account.  To be safe, never send an influencer payment via the friends and family method on Paypal. It’s not worth the risk, bad for building relationships, and it is not fair of you as a brand to put an individual’s livelihood at risk just to avoid the fees.  

The same concern also applies to the less popular but still sometimes used personal apps like Venmo or cash app.

Additionally, PayPal is not invested in helping creators and offers little support or troubleshooting assistance which may cause the creators to turn to your team for help.  

Why Lumanu is the best for brands and agencies to payout influencers and creators at scale

Lumanu is the only startup in the creator economy that was built to payout influencers at scale. It’s the only solution that solves the most common challenges faced by brands that pay creators, such as high transaction fees, vendor onboarding processes, tax paperwork, funding approval processes, creator confusion, and overall friction during the process of getting a creator paid for their work.  

In addition to tackling and solving the common challenges brands face, Lumanu is also invested in helping creators get paid instantaneously, giving them access to working capital and cash flow to avoid late payments.

Working with and paying creators at scale has never been easier with Lumanu's payouts solution that seamlessly ties into your existing accounts payable process and is specifically built for paying influencers at scale and strengthening relationships.

With Lumanu you can:

• Spare yourself the hassle of handholding each individual creator through any required vendor onboarding processes. Simply send the creator an onboarding link and we handle the rest!

• Skip the hassle of collecting tax paperwork and storing personal banking information. Lumanu takes care of all tax documentation and reports on your behalf.

• Save time with the ability to pay multiple creators at once with just a few clicks. Pay creators via bulk push payments from an imported spreadsheet or select and pay multiple creator invoices in seconds from your Lumanu dashboard.

• Improve your internal processes by speeding up funding approvals and exporting easy transaction records for your accounting team.  Easily fund your account via credit card, ACH, or wire transfer and get access to funds the same day.

• Strengthen your relationships with creators by giving them access to Lumau EarlyPay. Creators can get paid early for approved work without disrupting your workflow or timelines.  

• Save time handholding with creators.  Lumanu’s dedicated creator success team is available to assist with onboarding and troubleshooting.

By using Lumanu, brands and influencers can have a truly collaborative relationship. Spare yourself the hassle of vendor onboarding, tax paperwork collection, dealing with 1099s, and tedious single-payment restrictions. If you're still not convinced, learn more about how Lumanu stacks up against other payment methods like Bill.com.

456 Growth Agency: a case study on how this digital agency scaled its transactions by 67%:

A great example of how an agency was able to scale its payments to creators is 456 Growth Agency. Prior to using Lumanu, 456 Growth relied on paper checks as their preferred payment method to creators until the checks would either come up missing or get lost in the mail.

Now, they use Lumanu to pay creators, talent agencies, and talent managers across their businesses, allowing them to grow their talent roster and deepen their relationships with existing creators.

If you’re interested in learning about the best solution for your brand or agency, schedule a demo with us!