Pip Rebate

A pip rebate is an Introducing Broker (IB) or affiliate commission structure that pays a fixed number of pips from the spread or commission on every trade a referred client executes, instead of a flat dollar amount per lot. A "pip" is the smallest standard price increment in a currency pair, and its cash value depends on the instrument and the trade size.

Because the payout is denominated in pips rather than dollars, the IB's earnings scale with the pip value of whatever the client trades. On EUR/USD a standard lot (100,000 units) is worth roughly $10 per pip, so a 1-pip rebate returns about $10 per standard-lot round turn. On a pair where the pip value differs, or on a mini lot, that same 1-pip rebate returns a different dollar figure.

Most brokers express the offer as a share of the total spread. If a broker charges a 1.6-pip spread on EUR/USD and grants the IB a 0.8-pip rebate, the IB captures half the spread revenue on each round-turn trade while the broker keeps the rest. The rebate can be retained by the IB as commission or passed to the trader as cashback.

Pip rebates are common on Market-Maker and STP accounts where the broker earns from the spread, whereas raw-spread ECN accounts more often pay a per-lot dollar commission because the spread itself is near zero.

When a referred client opens and closes a trade, the broker's platform records the volume and the instrument, converts the agreed rebate from pips into the account's deposit currency, and credits the IB's partner wallet. Settlement is usually per closed trade and aggregated for daily or weekly payout.

The pip-to-cash conversion is the crux. Pip value equals the pip size multiplied by the trade's contract size, then converted into the deposit currency. A 1-pip rebate is therefore worth more on a standard lot than a mini lot, and more on an instrument with a large pip value than a small one. Robust IB portals show the converted dollar figure alongside the pip figure so partners are not surprised.