They pay very slowly, but they pay. I think it's once a quarter, but only after they get paid, and maybe only after a bit of a delay beyond that. The upside of this policy is that there are never any returns!
Smashwords can be awfully slow making payment. For example for books you sell this month via Smashwords, they have to wait to get payment from the seller (for example Kobo, Diesel, or Barnes & Noble). This can take up to three months! Then, Smashwords only pay quarterly, which could mean up to another three months.
So for that book you sold today, you might not actually get paid for it until August. Obviously, that's an extreme case, but it is possible.
The benefit is that they format your book in a number of different formats and distribute it to a wide variety of sellers.
The traditional major publishers pay royalties every six months, and for new authors, a lot of that is written off by returns. And that six months doesn't start until several months after a book is published, so you could wait over a year for a first royalty payment.
Book stores have up to 90 days to return books they've ordered, so that's one reason they have the royalty system they do.
I appreciate the Amazon Kindle payment system best, but Smashwords is still better than traditional publishers. And, since they are managing payments from several sources (as others have noted), they have to create a system that works with that model.
Authors can also use the PayPal Buy It Now feature on their websites to sell books directly, but that means a trip to the post office.
Like others, I find Smashwords slow... but honest. They also make an effort to add up and transfer what you're owed from other sites just before payday. And you can click on your dashboard to see what's owed and accruing to you anytime. They have a pretty good system where you can see which of your books are selling at which sites.
They ask for your paypal email or your mailing address on your account page.
It's up to you to select how to receive payments and fill the information out. Mark constantly reminds people to check that their payment info is up-to-date at the end of each quarter on the Site updates page.
They pay 30-40 days after the end of each quarter.