How does payment for order flow work?
Each time you buy or sell shares of stock, your online brokerage routes your order to a variety of different market centers (market makers, exchanges, ATSs, ECNs). In many cases, the market center generates a tiny profit from each retail (everyday investor) order. In return, most online brokers then receive a payment (revenue) from the market maker. This practice of receiving payments from market centers for routing orders to them is called payment for order flow (PFOF).