how it works

Most 1099-contractor payment platforms sit between your business bank account and your contractors’ accounts—essentially acting as a “middleman” for every transaction and they earn money each time you fund your payouts - typically the three-day float period. 

Here’s how the typical flow works and how they earn money from the three-day float:

1. Client Funding
   You initiate a payment (via ACH debit, credit card, or bank transfer) to the platform. Those funds land in the platform’s operating account—often a pooled account at a partner bank.
    
2. Hold Period (Float)
   Due to ACH and bank settlement rules (NACHA), incoming funds take 1–3 business days to clear. The platform doesn’t immediately push those dollars out to your contractors; instead, they stay in the platform’s account during that window.
    
3. Contractor Payout
   Once the funds clear, the platform issues an ACH credit to each contractor—another 1–3 business days for the money to appear in their bank accounts. That’s why most contractors wait up to three days or more for payment.
    
4. How Platforms Profit
    
   • Float Interest: While your money sits in the platform’s pooled account, the platform earns interest or invests it in short-term instruments. Even a fraction of a percent on large balances can translate to significant revenue.
      
   • Interchange & Processing Fees: If you fund via credit card, the platform pockets (or shares) a portion of the interchange fees charged by Visa/Mastercard.
      
   • Markup on Instant Payouts: Many platforms offer “instant” payouts for an extra fee (e.g., 1–2% of the payout amount), which they pocket.
      
   • Subscription or Per-Transaction Fees: Beyond the float, they charge you monthly fees or per-transaction fees that may be higher than pure bank costs.

• Cash-Flow Impact: Holding your funds for several days creates a working-capital drag on your business.
   
• Hidden Revenue: Instead of transparent, real-time settlement, you’re effectively lending money to the platform at their short-term interest rate—often without your knowledge.

ezPayments removes these intermediary steps and provides:

• A simple platform that lets you manage and control contractor payouts on your terms
   
• No need to pre-fund a separate account—payouts occur directly from your business bank account
   
• Instant or ACH settlements, with true next-day or same-day options (sometimes for a small, disclosed fee)
   
• Zero float interest charged—no one profits from holding your funds, and
   
• Lower transaction costs by moving volume directly through your own bank, not multiple intermediaries
   

By cutting out the unnecessary layers, you regain control of your cash, reduce hidden float costs, and get your contractors paid faster.