Learn Spanish (Latin America): El documento estipula un pago mensual, o sea, pagas cada mes. - The document stipulates a monthly payment, in other words, you pay every month.

Yes, they are interchangeable here. o sea and es decir are used to clarify or rephrase the previous statement to mean "in other words" or "that is to say". o sea is very common in everyday spoken Spanish, while es decir is slightly more formal, and esto es is the most formal, usually found in writing.

Since sea is a subjunctive verb, does it force the next verb into the subjunctive too?

No. While o sea originally comes from the subjunctive of ser (meaning "or it may be"), it functions today as a fixed connector. It doesn't govern the verbs that follow it. Because you are stating a fact about the payment, the following verb stays in the indicative mood (pagas).

Are the commas around o sea mandatory?

Yes. When using explicative connectors like o sea, es decir, or esto es in the middle of a written sentence, you must place commas immediately before and after them to separate the clarification from the main clause.

I've seen people online write this as a single word (osea). Is that a valid alternative?