A paymaster is someone appointed by a group of buyers, sellers, investors or lenders to receive, hold, and dispense funds, commissions, fees, salaries (remuneration) or other trade, loan, or sales proceeds within the

private sector The private sector is the part of the economy, sometimes referred to as the citizen sector, which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The ...

public sector The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, inf ...

. Specific titles within the British government are

Paymaster of the Forces The Paymaster of the Forces was a position in the British government. The office was established in 1661, one year after the Restoration of the Monarchy to King Charles II, and was responsible for part of the financing of the British Army, in ...

Paymaster-General His Majesty's Paymaster General or HM Paymaster General is a ministerial position in the Cabinet Office of the United Kingdom. The incumbent Paymaster General is Jeremy Quin MP. History The post was created in 1836 by the merger of the posit ...

and

Paymaster of Pensions In 18th century Britain, the Paymaster of Pensions was the official in charge of payments of Crown pensions and bounties. The first paymaster was Edward Nicholas in 1703, and the post was abolished in 1782 by the Civil List and Secret Service Money ...

Purpose

The primary purpose of a paymaster is to receive fees in

escrow An escrow is a contractual arrangement in which a third party (the stakeholder or escrow agent) receives and disburses money or property for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacti ...

by buyers in a large transaction, and disburse to the sellers and brokers on the transaction. A paymaster is usually, but not required to be, a lawyer (also known as a 'lawyer paymaster'). When dealing with commission payments on

contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tr ...

s dealing with large amounts of money (such as Oil, Gas, Steel, Iron, Gold, MTN's, VG's, T-Strips, and other instruments), most banks in the United States are very wary of handling such large amounts of money. In addition, most buyers and sellers of such transactions want to place the money with a neutral third party for disbursement. In most cases, the buyer and the seller involved in the transaction require a paymaster be named to handle all incoming and outgoing funds. A paymaster is a neutral third party and has no knowledge of any particulars of the transaction. They handle the incoming commissions, and then disburses the funds accordingly. In return for their services the paymaster charges a small fee, which is paid directly to them out of the commission proceeds prior to disbursement.

Requirements for position

In US, there is no licensing requirement to be a paymaster. However, a paymaster often is a licensed lawyer, due to the security and safety issue that lawyers in the U.S. are required to hold any funds that do not belong directly to them in an "Attorney's Trust Account" (also known as an IOLTA account), which is monitored by the

state bar A state bar association is a bar association that represents or seeks to represent the attorneys practicing law in a particular U.S. state. Their functions differ from state to state, but often include administration of the state bar examination fo ...

, in the state in which the lawyer practices.

United States Military

In the

American Civil War The American Civil War (April 12, 1861 – May 26, 1865; also known by other names) was a civil war in the United States. It was fought between the Union ("the North") and the Confederacy ("the South"), the latter formed by states ...

era, a paymaster was generally a commissioned person in the army who held the relative rank of captain or major, depending on cumulative time in service of the person and the period in which they served (the regulations changed over time)."Pay Department" from the ''History of the War Department of the United States''
Broderick, Justin T

''uniform-reference.net website''. Retrieved November 19, 2021. The navy was similar, with the equivalent rank as lieutenant, lieutenant commander or commander.

References

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