How to Write Referral Program Terms and Conditions

This article is general guidance, not legal advice. For anything with significant financial or regulatory impact, have a qualified professional review your terms.

Why Terms Matter

Most referral disagreements are not about dishonesty. They are about assumptions. The referrer thought a reward would be paid when the person enquired; the business thought it would be paid after the first purchase. Written terms replace assumptions with something both sides can point to.

Good terms are also short. If a referrer cannot read them in a couple of minutes, they will not read them at all.

The Sections to Include

1. Who Can Participate

State who can join as a referrer and any exclusions: for example, that employees of the business or their immediate family are not eligible, or that referrers must be at least 18. If the program is limited to certain cities or customer types, say so.

2. What Counts as a Valid Referral

This is the most important section. Define the referral by the action that has to happen. For example:

• A new customer who has not purchased from the business before.
• A person who enquired through the referrer's unique link or QR code.
• A person who completes the qualifying action, such as a first purchase, booking or signed contract.

Also list what does not count: existing customers, self-referrals, duplicate submissions and leads that cannot be contacted.

3. The Reward

Say exactly what the reward is: a flat amount, a percentage of the sale, a service credit or a discount. PayRef programs use a flat or percentage reward set when the program is created. If the reward is something else, such as a free service, describe it and state how it will be delivered. Avoid vague wording like "a good reward" or "attractive commission".

4. When the Reward Is Earned and Paid

Separate these two events:

• Earned: when the referral meets the definition, for example when the lead is marked as converted.
• Paid: how long after that you pay, and how. For example, "within 15 days of the sale being confirmed, to the bank or UPI details in the referrer's profile".

On PayRef, a commission record is created when a lead is marked converted, and its status moves from pending to paid when you pay it. Your terms should explain how that maps to your own payment timing.

5. Validity and Time Limits

State how long a referral stays valid after the click or submission. PayRef programs have a validity period set at creation. If your sales cycle is long, such as weddings or B2B contracts, choose a longer period and say so.

6. Returns, Cancellations and Refunds

Decide in advance what happens if a sale is cancelled or refunded. Common options are that the reward is not paid, is reversed, or is paid only after the refund window closes. This single clause prevents many disputes.

7. Conduct Rules for Referrers

Referrers represent your business to people they know. Require them to:

• Describe your products or services accurately.
• Avoid promising guaranteed results, prices or timelines on your behalf.
• Avoid spam, misleading ads or unsolicited bulk messages.
• Respect the privacy of the people they refer.

8. Fraud and Misuse

Say that fake, duplicate or self-referred submissions may be rejected and that repeated misuse can lead to removal from the program. See how to prevent fake referrals for the checks behind this clause.

9. Changes and Ending the Program

Reserve the right to change or end the program with notice, and say what happens to referrals already in progress. A fair approach is to honour qualifying referrals made before the change.

10. Disputes

Explain how a referrer can raise a concern: who to contact, and how long you will take to respond. PayRef includes a dispute feature for commission and lead issues, which gives both sides a documented place to resolve them.

11. Taxes and Compliance

Rewards may have tax consequences for the recipient and may bring reporting duties for the business. State that referrers are responsible for their own taxes, and check with an accountant about your obligations. Some professions also restrict referral fees; check the rules that apply to you.

Plain-Language Example

Here is the style to aim for (adapt it, do not copy it blindly):

Who can refer: Anyone aged 18 or over, except our staff and their families. What counts: A new customer who enquires through your link and completes a first paid booking. Reward: A flat reward as shown on the program page, confirmed after the booking is completed and paid within 15 days. Not eligible: Existing customers, self-referrals, duplicate or fake enquiries. Cancellations: No reward if the booking is cancelled or refunded. Conduct: Describe our service honestly; do not make guarantees on our behalf. Disputes: Raise any concern through the PayRef dispute feature and we will respond within seven days.

Where to Put the Terms

Put a short summary on the program description so referrers see it before joining, and link or attach the full terms. Keep one version, and tell referrers when it changes.

Checklist Before Launch

• Valid referral defined by a specific action.
• Reward amount and type stated clearly.
• Earned and paid timing separated.
• Cancellation and refund rule included.
• Conduct rules and fraud clause included.
• Dispute process explained.
• Reviewed by a professional if the stakes are high.

Next Steps

With your terms ready, list your business free on PayRef and create your first program. For a broader walk-through, read how to create a referral program for your business, or learn how referral tracking keeps the record that your terms refer to.