How to Pay Contractors Online in 2026: ACH, Cards, and Tools

Choosing the right payment method

For US-based contractors, ACH bank transfer is the default: free, reliable, and creates a clear payment record in your accounting software. Most bill payment platforms (Melio, BILL, QuickBooks Bill Pay) support ACH to any US bank account. The contractor provides routing and account number once; you pay on invoice without re-entering details.

Credit card payment via Melio is worth considering if you want to extend your payment float — pay the invoice with your card on statement due date while the contractor receives ACH within 2 days. The 2.9% Melio fee is the cost; compare it to your card's rewards rate and the value of 30–45 extra days of float.

For international contractors, options include: PayPal or Wise (fast but no accounting sync), BILL international wire transfers ($14.99/transfer), or Tipalti for companies paying 20+ international contractors who need automated tax form collection.

1099 tracking: the compliance step most businesses miss

If you pay a US-based contractor $600 or more in a calendar year, you must file a 1099-NEC with the IRS and send a copy to the contractor by January 31. Penalties for missing or incorrect 1099s range from $50 to $290 per form.

The cleanest approach: collect a signed W-9 from every contractor before making the first payment. Store it on file. At year-end, any contractor who received $600+ gets a 1099. Most accounting software (QuickBooks, Xero) and AP tools (BILL, Tipalti) generate 1099s automatically from payment records — but only if the vendor record is tagged as a 1099-eligible contractor from the start.

BILL handles 1099 generation for domestic contractors natively. Tipalti handles both 1099-NEC (domestic) and 1042-S (foreign contractor withholding) automatically. Melio does not generate 1099s — handle these in your accounting software or with a tax service.

Best tools by contractor payment volume

Under 10 contractors/month: Melio (free) is usually sufficient. Pay by ACH or credit card, sync to QuickBooks, handle 1099s in QuickBooks at year-end. No monthly subscription needed.

10–100 contractors/month: BILL adds approval workflow layer that matters at this volume — useful when payments exceed $1,000 and a second set of eyes is needed. BILL also handles domestic 1099 generation. At $45–55/user/month, the subscription is justified once payment volume or average invoice size warrants the control. See our BILL review for setup details.

100+ contractors or any international contractors: Tipalti's vendor self-onboarding portal eliminates manual work of collecting banking details from large contractor rosters. Automated W-9/W-8 collection and 1099/1042-S generation is a meaningful time-saver at this volume. See our Tipalti review.

International contractor payments: the practical options

Wise (formerly TransferWise): Best for occasional international payments where speed matters more than accounting integration. Transfers are typically cheaper than bank wires and arrive within 1–2 business days. Downside: no direct QuickBooks or Xero sync — record payments manually.

BILL international payments: $14.99 per wire transfer, 130+ currencies, QuickBooks and Xero sync. Good for companies making 5–20 international contractor payments per month without needing automated tax compliance.

Tipalti: Purpose-built for companies paying 20+ international contractors regularly. Handles W-8 collection, OFAC screening, local payment rails, and 1042-S generation. The $449+/month cost is justified when compliance automation replaces meaningful staff time.

PayPal: Convenient for contractors who prefer it but creates accounting headaches — fees are non-transparent, reconciliation is manual, no direct accounting sync. Use as a last resort.