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I'm thinking about how to handle a payment system which is similar to AdSense or some other advertising network. Advertisers pay some relatively large chunk of cash for each advert, a percentage of the money from multiple adverts is then paid out to multiple publishers. Some publishers could be earning very small amounts monthly, others could be earning more.

Is this kind of thing easy to setup? Are there any legal issues with payments to publishers in the above? Would PayPal or others be concerned about money laundering via such a system?

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No, this kind of thing is not easy to setup. Processing payments is notoriously complicated.

PayPal's Mass Pay API may be helpful as a starting point for you. Assuming the economics of your business allows you to use a service like PayPal, you should look into its competitors as well.

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