diff --git a/backend/src/queue/processors/payout.consumer.ts b/backend/src/queue/processors/payout.consumer.ts
new file mode 100644
index 0000000..f0a83d0
--- /dev/null
+++ b/backend/src/queue/processors/payout.consumer.ts
@@ -0,0 +1,92 @@
+import { Processor, WorkerHost, OnWorkerEvent } from '@nestjs/bullmq';
+import { Logger } from '@nestjs/common';
+import { Job } from 'bullmq';
+import { QUEUE_NAMES } from '../queue.constants';
+import { PayoutJobData } from '../queue.interfaces';
+import { PrismaService } from '../../prisma/prisma.service';
+
+@Processor(QUEUE_NAMES.BOUNTY_PAYOUTS, {
+  concurrency: 3,
+})
+export class PayoutConsumer extends WorkerHost {
+  private readonly logger = new Logger(PayoutConsumer.name);
+
+  constructor(private prisma: PrismaService) {
+    super();
+  }
+
+  async process(job: Job<PayoutJobData>): Promise<void> {
+    const { bountyId, approvedAddresses } = job.data;
+
+    this.logger.log(
+      `[PayoutConsumer] Processing payout for bounty ${bountyId} to ${approvedAddresses.length} addresses`,
+    );
+
+    // Simulate processing signatures (2-second sleep as specified)
+    await this.simulateSignatureProcessing(bountyId, approvedAddresses);
+
+    // Update bounty status to COMPLETED after successful payout
+    try {
+      await this.prisma.bounty.update({
+        where: { id: bountyId },
+        data: { status: 'COMPLETED' },
+      });
+      this.logger.log(
+        `[PayoutConsumer] Bounty ${bountyId} status updated to COMPLETED`,
+      );
+    } catch (err: any) {
+      this.logger.warn(
+        `[PayoutConsumer] Could not update bounty ${bountyId} status: ${err.message}`,
+      );
+    }
+
+    this.logger.log(`[PayoutConsumer] Payout job ${job.id} completed`);
+  }
+
+  private async simulateSignatureProcessing(
+    bountyId: string,
+    addresses: string[],
+  ): Promise<void> {
+    // Simulate multi-signature coordination / heavy calculations
+    const processingTime = 2000;
+    this.logger.debug(
+      `[PayoutConsumer] Simulating signature processing for ${bountyId} (${processingTime}ms)`,
+    );
+    await new Promise((resolve) => setTimeout(resolve, processingTime));
+
+    this.logger.debug(
+      `[PayoutConsumer] Signatures processed for bounty ${bountyId}, addresses: ${addresses.join(', ')}`,
+    );
+  }
+
+  @OnWorkerEvent('active')
+  onActive(job: Job<PayoutJobData>) {
+    this.logger.debug(`[PayoutConsumer] Job ${job.id} is now active`);
+  }
+
+  @OnWorkerEvent('completed')
+  onCompleted(job: Job<PayoutJobData>) {
+    this.logger.debug(`[PayoutConsumer] Job ${job.id} has completed`);
+  }
+
+  @OnQueueFailed()
+  onFailed(job: Job<PayoutJobData>, error: Error) {
+    this.logger.error(
+      `[PayoutConsumer] Job ${job.id} failed: ${error.message}`,
+    );
+
+    // Update local Database status back to FAILED on queue failure
+    if (job?.data?.bountyId) {
+      this.prisma.bounty
+        .update({
+          where: { id: job.data.bountyId },
+          data: { status: 'FAILED' },
+        })
+        .catch((err) => {
+          this.logger.error(
+            `[PayoutConsumer] Failed to update bounty status to FAILED: ${err.message}`,
+          );
+        });
+    }
+  }
+}
diff --git a/backend/src/queue/queue.constants.ts b/backend/src/queue/queue.constants.ts
index a3ea54b..942fbc7 100644
--- a/backend/src/queue/queue.constants.ts
+++ b/backend/src/queue/queue.constants.ts
@@ -16,6 +16,11 @@ export const QUEUE_NAMES = {
    * Dummy queue for testing/proof of concept
    */
   DUMMY: 'dummy',
+
+  /**
+   * Queue for bounty payout processing
+   */
+  BOUNTY_PAYOUTS: 'bounty-payouts',
 } as const;
 
 export type QueueName = (typeof QUEUE_NAMES)[keyof typeof QUEUE_NAMES];
diff --git a/backend/src/queue/queue.interfaces.ts b/backend/src/queue/queue.interfaces.ts
index b38bf28..12ef690 100644
--- a/backend/src/queue/queue.interfaces.ts
+++ b/backend/src/queue/queue.interfaces.ts
@@ -72,3 +72,18 @@ export interface OnChainEventJobData {
    */
   blockHeight: number;
 }
+
+/**
+ * Interface for bounty payout job data
+ */
+export interface PayoutJobData {
+  /**
+   * Bounty ID to process payout for
+   */
+  bountyId: string;
+
+  /**
+   * List of approved wallet addresses for payout
+   */
+  approvedAddresses: string[];
+}
diff --git a/backend/src/queue/queue.module.ts b/backend/src/queue/queue.module.ts
index 19788a8..0bff284 100644
--- a/backend/src/queue/queue.module.ts
+++ b/backend/src/queue/queue.module.ts
@@ -3,6 +3,7 @@ import { BullModule } from '@nestjs/bullmq';
 import { ConfigModule, ConfigService } from '@nestjs/config';
 import { QUEUE_NAMES } from './queue.constants';
 import { DummyProcessor } from './processors/dummy.processor';
+import { PayoutConsumer } from './processors/payout.consumer';
 import { QueueService } from './queue.service';
 import { QueueController } from './queue.controller';
 
@@ -46,10 +47,13 @@ import { QueueController } from './queue.controller';
       {
         name: QUEUE_NAMES.ON_CHAIN_EVENTS,
       },
+      {
+        name: QUEUE_NAMES.BOUNTY_PAYOUTS,
+      },
     ),
   ],
   controllers: [QueueController],
-  providers: [QueueService, DummyProcessor],
+  providers: [QueueService, DummyProcessor, PayoutConsumer],
   exports: [QueueService, BullModule],
 })
 export class QueueModule {}
diff --git a/backend/src/queue/queue.service.ts b/backend/src/queue/queue.service.ts
index b02f1f3..69ae07c 100644
--- a/backend/src/queue/queue.service.ts
+++ b/backend/src/queue/queue.service.ts
@@ -2,7 +2,7 @@ import { Injectable, Logger } from '@nestjs/common';
 import { InjectQueue } from '@nestjs/bullmq';
 import { Queue } from 'bullmq';
 import { QUEUE_NAMES } from './queue.constants';
-import { DummyJobData, EmailJobData, OnChainEventJobData } from './queue.interfaces';
+import { DummyJobData, EmailJobData, OnChainEventJobData, PayoutJobData } from './queue.interfaces';
 
 @Injectable()
 export class QueueService {
@@ -13,6 +13,8 @@ export class QueueService {
     @InjectQueue(QUEUE_NAMES.EMAIL) private readonly emailQueue: Queue,
     @InjectQueue(QUEUE_NAMES.ON_CHAIN_EVENTS)
     private readonly onChainEventsQueue: Queue,
+    @InjectQueue(QUEUE_NAMES.BOUNTY_PAYOUTS)
+    private readonly bountyPayoutsQueue: Queue,
   ) {}
 
   /**
@@ -64,6 +66,14 @@ export class QueueService {
     this.logger.log(`Added on-chain event job ${job.id} to queue`);
   }
 
+  /**
+   * Add a bounty payout job to the queue
+   */
+  async addPayoutJob(data: PayoutJobData): Promise<void> {
+    const job = await this.bountyPayoutsQueue.add('process-payout', data);
+    this.logger.log(`Added payout job ${job.id} to bounty-payouts queue`);
+  }
+
   /**
    * Get queue statistics
    */