Key takeaways
There are many different payment methods to compensate foreign contractors, and each one has its own pros and cons.
Banks and money transfer apps charge you per transaction, as do recruiting sites, where you can also pay contractors.
Payroll platforms usually charge a monthly per-contractor fee (sometimes in addition to transaction fees), but provide help with onboarding and compliance.
Gusto’s built-in global contractor payment solution lets you pay contractors without a per-contractor fee, and also helps with onboarding and compliance.
The rise of remote work has made it easier than ever to expand your talent search across country lines—but paying international contractors requires a different approach than paying your full-time U.S. employees.
In this guide, we’re sharing eight payment methods you can use to compensate your international contractors, and breaking down the pros and cons of each.
8 ways to pay your international contractors
Not all contractor payment methods are created equal. The route you choose depends on your business’s resources and payroll process, as well as your contractor’s needs and preferences.
Most commonly, it’s a choice from one of these four categories: banks, money transfer apps or digital wallets, payroll platforms, and recruiting platforms.
Banks and money transfer apps typically charge you per transaction, and they don’t usually have a monthly per-contractor fee, which can save you ongoing costs. But the transfer and currency conversion fees can add up, as can the extra admin work. That’s because a money transfer service doesn’t assist with HR tasks like onboarding contractors, gathering tax forms, or automating recurring payments.
Payroll platforms, on the other hand, usually charge a monthly per-contractor fee (although Gusto doesn’t if you’re already using it for your U.S. team). Payroll platforms come with time-saving HR and payroll automations and more compliance peace of mind. Plus, you have all your workforce expenditures and data in one place, so you can easily track labor costs and make more informed decisions about your business.
Recruiting sites are convenient because they let you pay contractors from the same platform where you found and hired them. The downside is that recruiting sites don’t offer any compliance or tax support for your business—and the hefty transfer and conversion fees can eat into your contractor budget.
Side note: For more information on hiring international contractors, including tips on avoiding misclassification, complying with labor laws, and navigating tax reporting, check out this blog post.
Banks | Money transfer apps | Payroll platforms | Freelancer recruiting platforms | |
Examples | Wells Fargo, Chase, Bank of America | PayPal | Gusto | Upwork |
Pros | It’s convenient to use the bank you already do business with, and there’s no monthly per-contractor fee. | There’s no per contractor per month fee, and some apps are cheaper than banks. | You can pay all your US employees and global contractors from one platform, plus automate recurring payments and get tax compliance help. | You can recruit, hire, collaborate with, and pay your contractor in the same place. |
Cons | The fees and exchange rates can be high. | The various fees can add up, and you don’t get any HR or compliance support. | Some platforms charge an extra per contractor per month fee (but Gusto doesn’t). | The transaction fees can be costly, and there are no HR automations or compliance support. |
For more information on working with contractors—and structuring your payments—check out our guide to contractor compliance and taxes. If you’re not sure whether to hire a global contractor or a full-time employee for your business needs, review our helpful cost comparisons.
Here are eight common contractor payment options to consider, broken down by category:
Banks
International bank transfer
International wire transfers are a popular way to pay people in other countries. As the payer, you’ll usually pay a transfer fee—which can range from $15 to $30 USD, depending on the amount you send over—plus a bank fee for currency conversion. The transfer can take several business days to complete, especially if you use an intermediary bank.
Your overseas contractors may also get charged an incoming wire transfer fee, depending on the bank they use. If that’s the case, you’ll need to let your contractors know in advance and either offer to cover the fee or negotiate who will cover it.
To find out whether or not an international bank transfer is your best option, start by asking the bank you do business with what their transfer timeline and fees look like. Then make sure your international contractor is able to receive transfers at their personal bank. You’ll need to gather the following information from your international contractor to make a transfer:
Contractor’s name
Contractor’s country
Account type
Account number
Bank name
Bank address
Bank’s SWIFT code
Pros
It’s convenient to use your own bank.
The money goes straight into your contractor’s bank account.
There’s no per-contractor per-month fee.
Cons
The fees and exchange rate tend to be high.
The money can take longer than other payment methods to arrive.
You can’t automate recurring payments.
Banks don’t help collect tax forms, like Form W-8 BEN.
Money transfer apps
PayPal
One of the most popular payment tools is PayPal. With PayPal, you set up an account, link it to your bank or credit card, then send payments to people who also have a PayPal account.
Sending online payments with PayPal can incur substantial fees. For example, a transaction fee of 3.49% of the amount you send, plus an additional 1.50% for international commercial transactions, and a currency conversion fee that varies depending on the type or currency your contractor receives.
Pros
It’s commonly used and free to set up an account.
You don’t need bank details from your contractor, just their name and PayPal email.
There’s no per-contractor per-month fee.
Cons
The international fees can add up—for both you and your contractor.
The money doesn’t go straight to your contractor’s bank account; they have to accept the money into their PayPal account first and then transfer it – potentially adding delays.
The recipient must have a PayPal account; otherwise, you’re redirected to Xoom, a company affiliated with PayPal that requires you to fill out more information to send your money.
You can’t automate recurring payments or use PayPal to gather and store your international contractor tax forms.
Wise
Wise is a digital payment platform that simplifies international payments. If you work with a handful of contractors in different countries, you can sign up for a multi-currency business account that lets you store money in 50 different currencies. Notably, Wise is available in fewer countries than other apps.
It’s free to create a business account with Wise, but sending money starts at 0.33% of the total transaction and depends on the country you’re sending money to. Unlike PayPal, your international contractors don’t need a Wise account to get paid. The money goes straight into their bank accounts, and they won’t have to pay any fees to receive it. To facilitate this process, you need your contractor’s domestic bank details.
Pros
There’s no per-contractor per-month fee.
Fees are generally lower than PayPal and international bank transfers.
You can handle multiple international contractor payments in the same place.
You can pay contractors in U.S. dollars or the local currency.
Your recipient doesn’t need a Wise account.
Cons
You have to set up and use a new system, rather than managing all your payroll in one place.
You have to collect more of your recipient’s banking information.
Wise only works in 70 countries.
Wise doesn’t help you with contractor compliance or automate recurring payments.
Revolut
Revolut is a global financial app that lets you pay international contractors using SWIFT bank transfers, account-to-account transfers, and virtual cards, as well as offering other banking and investment services.
There are a few different plans you can choose from, with complex details buried in the fine print. The Basic plan, which is free, lets you pay international contractors up to $1,000 a month at the transfer rate banks use—but only if contractors also have a Revolut business account. To open a Revolut business account, your contractor has to be a registered business entity in one of the following eligible countries: the U.S., the United Kingdom, Ireland, France, Germany, Belgium, or Australia. Otherwise, it’s $5 per transaction, plus a 0.6% fee for any amount you send over $1,000.
If your contractor doesn’t have a Revolut business account and you want to send more than $1,000 at low rates, you’ll need to buy a monthly Revolut plan to pay them. Starting at $30 a month, it gives you five no-fee international transfers per month and up to $10,000 you can transfer at low rates. After five transfers, each transaction comes with a $5 fee—and anything over $10,000 comes with a 0.6% transfer fee.
Pros
Making payments is low-cost if your contractor is based in one of seven eligible countries.
Cons
You have to create a business account to make payments—and so does your contractor if you want no fees.
Contractors in most countries won’t be eligible to create a business account, so you’d have to pay a $5 transaction fee for every payment.
The fee structure is complex and potentially confusing.
You can’t use Revolut to set up recurring payments or handle contractor compliance details, like collecting tax forms.
Payoneer
Payoneer is a global business payments platform that essentially functions as a business bank account. With Payoneer, you can set up a multi-currency business account, then withdraw funds from your account to send money to international contractors’ Payoneer accounts. If you go this route, your payment fee is 1% of the transaction amount plus a minimum fee of $4 USD.
If your contractor doesn’t have a Payoneer account, you have to pay them via a local bank transfer, which comes with a fee of up to 3% of the transaction amount—for both you and your contractor.
Pros
Payoneer works in over 190 countries with 70 different currencies.
If you have an account, you can monitor your international contractor payments there.
There’s no per-contractor per-month fee.
Cons
The transaction fees can add up, especially if your contractor doesn’t also have a Payoneer account.
You can’t streamline other tasks with Payoneer, like setting up recurring payments or collecting contractor tax forms.
Payroll platforms
Gusto
If you’re already using Gusto to pay your U.S. team, it’s cheap and easy to use it for paying global contractors, too. While other payroll tools charge a monthly per-contractor fee, Gusto only charges a small fee on the transaction amount.
With Gusto, you can handle your business’s entire payroll (U.S. and global, contractor and full-time employee) all in one place, and keep the payment schedule you’re accustomed to. This cuts down on software costs, gives you a more complete picture of your labor costs and operations, and minimizes time-consuming admin work.
Pros
Pay contractors in 120 different countries.
There’s no additional per-contractor per-month fee for customers already using Gusto.
You can automate your payments, so contractors never miss a check.
Your contractors can go online to access their payments and pay stubs.
Gusto helps collect contractor tax forms, like Form W-8 BEN.
Using one platform for all of your payroll means you don’t have to troubleshoot multiple software platforms, and you can see all your payroll/labor costs in one place.
Cons
If you’re not already using Gusto, you might have to transfer your payroll services over.
Deel
Deel is a platform for international payroll that helps hire and pay global contractors. Like Gusto, Deel helps you onboard new contractors, set them up with recurring payments, and collect tax forms all in one place.
However, Deel’s international contractor plan—which starts at $49 per contractor per month—is separate from their U.S. payroll plan. That means that if you already have a payroll platform for your domestic employees, you’ll have to pay extra for a separate tool for your international contractors—and manage your workers in two different places.
Pros
It serves over 200 countries
Deel helps you onboard contractors, collect tax forms, and automate recurring payments.
Cons
The contractor plan costs an extra $49 per contractor per month, which can add up if you manage many international contractors.
Unless you switch over your entire workforce to Deel’s platform, you’ll be managing international contractors on a different platform from your domestic team, which can make it tricky to get a complete picture of your payroll expenses.
Freelancer recruiting platforms
Upwork and Fiverr
Another option for paying international contractors is to use a freelancer recruiting platform like Upwork or Fiverr. These tools help you find, vet, and hire contractors around the world.
Most freelancing platforms also allow you to pay contractors using a variety of different methods, including direct bank account withdrawals and third-party payment vendors like PayPal and Payoneer (more on them above). However, the payment methods available depend on the recruiting platform and the country.
On most platforms, your contractor chooses how they want to be paid—whether through a third-party vendor or a direct bank account transfer—and might have to pay extra fees depending on the method. Upwork, for example, charges contractors outside the US $0.99 USD per local bank transfer.
Pros
You use the same platform to find and pay your international contractors.
You’ll likely have several different payment methods to choose from.
Cons
The transaction fees can be expensive.
You can’t use freelancer recruiting platforms to gather tax forms or automate regular payments.
Pay international contractors seamlessly with Gusto
Gusto’s built-in international contractor payments solution gives you tax, compliance, and onboarding help, without the per-contractor monthly fee many competitors charge.
Like money transfer apps you might be used to, Gusto pays your contractors in their home currency with the click of a button. The best part: there’s no need to manage multiple payment tools, so you can work on the same platform for your global team that you already use for your U.S. team.
FAQs
Do I need to withhold taxes when paying international contractors?
No, you don’t need to withhold taxes from payments for your international contractors. Your contractors are responsible for adhering to their own country’s local tax laws and tax withholding rules. You do, however, need to have your international contractor fill out Form W-8 BEN (or Form W-8 BEN-E) to keep for your records (no need to file it with the IRS).
How much does it cost to pay international contractors (fees, exchange rates)?
International exchange rates and transfer fees vary widely depending on the payment method you use. Banks and money transfer apps tend to have the highest currency exchange rates and fees, while payroll platforms tend to have lower associated costs. The payment method you opt for largely depends on your existing business payroll structure and your contractor’s needs. If you’re hiring an international contractor for a one-off project, you might be willing to pay a high bank transfer fee. However, if you have an ongoing working relationship with a handful of international contractors, it might make more financial sense to use a payroll platform so the fees are somewhat built in and you have more support.
How do currency fluctuations affect payments to international contractors?
Country-specific currency fluctuations can change a contractor’s payment significantly. If the contractor’s local currency gets stronger against the US dollar, you may end up paying slightly more as the employer. If your contractor’s local currency weakens, you’ll end up paying slightly less. It’s a good idea to specify upfront with your contractor in the contractor agreement whether the amount they charge is in US dollars or their local currency.
How do time zones and local banking hours affect international contractor payments?
The payment processing time for international payments is typically longer. Payments to a foreign country often take a few more days to go through than payments to US-based contractors because of time zone differences and different local banking hours. That’s not necessarily a bad thing, though—it just means you have to factor in a longer payment timeline when discussing payment terms with your contractor.
Can businesses pay international contractors in their local currency or only in USD?
It depends on which payment method you use. Certain payment platforms and money transfer apps let you choose whether to pay international contractors in their local currency or in USD. With Gusto, you can pay contractors easily in their home currency.
