On this page
🔗 How Referral and Affiliate Links Work
~5 min read • Last updated:
These days, it’s common to see special links promising bonuses, cashback, or rewards if you sign up through them. Maybe you’ve even shared some yourself. But how exactly do referral and affiliate programs work — and are they really worth using?
Let’s walk through what they are, how they work, and how to use them wisely — whether you're sharing the links or using them.
Why Companies Offer Referral & Affiliate Rewards #
Rather than spending all their money on ads, many companies prefer to grow through word-of-mouth. It's simple: if a user loves a product or service, they’re likely to talk about it. Referral and affiliate systems take that natural behavior and reward it.
Instead of paying advertisers, companies give a small bonus or commission to users who help bring in new customers. It’s their way of rewarding your contribution — and it’s only paid when results happen.
What Happens When You Click a Referral or Affiliate Link? #
When you click one of these links, you’re usually redirected to the company’s website — just like a normal link. But behind the scenes, a small code is tracking where you came from. This could be done using a URL parameter, a cookie, a tracking pixel, device/browser fingerprinting, or server-to-server tracking.
If you complete a certain action — like signing up, making a purchase, or depositing money — the system recognizes who sent you. Then the person who shared the link can receive their reward.
What’s a Referral Program? #
Referral programs are usually designed for everyday users — not marketers or influencers. They're based on the idea of inviting a friend or contact to use a service you already like.
If you’ve ever seen a “Give €10, Get €10” message, that’s a referral program.
For example, if you refer someone to Binance or Kraken, you may both receive bonuses when they start trading. In the world of gaming, it’s common to unlock in‑game rewards by inviting friends to play. These programs often reward both sides — the one who sends the link and the one who signs up.
And What About Affiliate Links? #
Affiliate links are similar in how they’re tracked, but they’re more commonly used in content, websites, and social media. Here, the person sharing the link often doesn’t know the buyer personally.
Think of an article recommending the “Top 5 headphones in 2025” — with links to Amazon. If you buy one of those headphones, the writer earns a small commission. Booking.com and many other platforms work the same way.
In affiliate programs, the reward usually goes to the person who shares the link — not to the buyer — but sometimes both sides benefit.
Referral vs Affiliate at a Glance #
| Aspect | Referral | Affiliate |
|---|---|---|
| Relationship | Usually friend-to-friend | Audience/reader to merchant |
| Who gets rewarded | Referrer and often the referred user | Mostly the affiliate (sometimes both) |
| Typical action | Signup, first purchase, deposit | Purchase or qualified lead |
| Tracking | Code/cookie per user | Link parameters, cookies, pixels |
What You Can Gain as a Referred User #
When you sign up through a referral link, you’re not just doing someone else a favor — you often get a reward too.
That might be a welcome bonus, a discount, free crypto, or early access to a product. In most cases, it doesn’t cost you anything extra. But you may need to complete a certain action for the reward to apply — like registering, making a purchase, or verifying your account.
What the Referrer Gets in Return #
If you're the one sharing the link, your reward depends on what your invitees do.
Sometimes you'll earn a fixed bonus per referral. Other times, you'll receive a percentage of what they spend — once or even over time. On some platforms, you can unlock higher reward levels as you refer more people.
The key is that you only earn when someone completes the required steps — not just by clicking the link.
What to Watch Out For #
Not all referral or affiliate links are safe. Some websites try to appear legitimate while hiding unclear or unfair conditions.
Be cautious of:
- Unrealistic promises: Huge rewards for no effort
- Pyramid schemes: Suspicious multi-level systems where you need to recruit other recruiters
- Pressure to refer: Platforms that pressure you to refer others before trying the service yourself
- Hidden fees: Programs asking for signup or activation fees
- Opaque conditions: Very long validation delays or hard-to-find terms
- Unrealistic thresholds: Very high minimum payout ($500+) that's difficult to reach
How to verify legitimacy:
- Read the program's terms and conditions
- Check reviews on independent third-party sites
- Test the service first before recommending it
- Search for the company on forums or social media
- Use trusted comparison sites
Legal Aspects and Transparency
If you're sharing affiliate links, you must:
- Disclose your links: Clearly mention that they are affiliate links
- Use proper disclaimers: #ad, #sponsored, “affiliate link”, “I earn a commission”
- Be transparent: Honestly explain what you earn
- Declare taxes: Affiliate income is taxable in most countries
- Follow platform rules: Each social network has its own advertising guidelines
Best practices:
- Only recommend services you actually use
- Be honest about both advantages AND disadvantages
- Put your legal disclaimers prominently, not in hidden small text