7 Easy Ways To Pay International Contractors

As businesses grow, they often reach a point where a decision is needed on whether to hire international remote workers. There may be an opportunity to outsource non-core business functions, expand into a new region with professional local expertise, or engage with talented freelancers who work across borders. 

That process was troublesome for a long time, requiring you to navigate various laws, banking systems, and payment processing protocols. 

Today, paying international contractors has been remarkably streamlined thanks to advancements in global payment solutions. 

This article will lay out seven ways how you can pay international contractors easily through online money transfer platforms, financial institutions, or recruitment agencies that specialize in managing remote workforces.

7 Ways To Easily Pay International Contractors

You no longer have to worry about complicated payment systems, international money orders (e.g., Western Union), or high transaction fees on international wire transfers when paying remote foreign workers. The following methods provide easy, efficient solutions for paying your global talent.

This list is in no particular order; they are all great choices, and their strengths and weaknesses depend on your situation. 

1. Near

We will start with ourselves since we love helping US-based businesses tap into the vibrant talent pool that Latin America (LatAm) offers. Near, as a specialized recruiting agency, streamlines the entire process of connecting with and compensating LatAm contractors. 

Here’s how we make things easier for both clients and contractors:

• Tax compliance: We can remove the burden of tax regulations by ensuring that all compliance requirements are met, both in the contractor’s home country and in accordance with US regulations. 
• Salary disbursement: Our seamless payment system facilitates the timely and accurate disbursement of salaries to your international contractors. 
• Benefits administration: Part of fostering a strong working rapport with international talent is providing attractive employment benefits packages. Near helps you administer these benefits, including health insurance, retirement plans, or any other perks you offer as part of your compensation package. 
• Local support: With ‘boots on the ground,’ Near offers extra support to ensure the employment relationship runs smoothly for everyone involved. Our local teams mean contractors can access real-time, culturally knowledgeable assistance. 

By handling the end-to-end process of integrating LatAm professionals into US-based teams, Near not only simplifies global workforce management but also enriches your business with diverse perspectives and skill sets that thrive within a well-supported, cross-cultural work environment.

2. PayPal

PayPal is one of the most widely recognized and utilized platforms for international transactions. Its established presence and user-friendly interface make it a go-to for many businesses looking to pay international contractors. 

Here are some of the features and benefits that PayPal offers:

• Currency conversion: PayPal supports payments in multiple currencies, allowing you to send money to contractors in their local currency, eliminating the need for them to convert funds.
• Invoicing tools: The platform provides invoicing tools that can be useful for both businesses and freelancers to track payments and manage billing.
• Protection for both parties: PayPal’s payment system offers dispute resolution services and payment protection policies, enhancing transaction trust.
• Easy integration: PayPal can easily integrate with many e-commerce systems and accounting software, which simplifies the workflow for businesses.
• Mass payments: For businesses working with multiple freelancers, PayPal offers a mass payment option to send payments to up to 5,000 people simultaneously, saving time and administration efforts.

While PayPal is a convenient option, it’s important to consider the fees it charges for international payments and currency conversion. These can add up, especially for regular or high-volume transactions.

3. Wise

Wise, renowned for its cost-effectiveness and clarity, has become a popular choice for businesses sending payments to international contractors. With its use of real, mid-market exchange rates and low, transparent fees, Wise makes it possible to conduct international transfers without hidden costs. 

Their ‘borderless’ account allows users to hold and manage money in various currencies, simplifying the payment process for both businesses and freelancers.

Notably, Wise transfers are typically faster than traditional bank wires, with funds often arriving within the same day. The platform’s user-friendly interface, both online and via its mobile app, streamlines the setup and initiation of payments. 

For recipients, the advantage is a reduction in typical international receiving fees, ensuring that contractors receive their money directly and cost-effectively.

4. Deel

Deel has carved out a niche as a comprehensive payroll and compliance platform specifically designed for the modern remote workforce. It’s a particularly attractive option for businesses that engage with international contractors regularly because of its focus on compliance and streamlined payment processes.

The platform offers a variety of payment methods, which means contractors can choose how they wish to receive their funds, whether that be through a bank transfer, a payment service like PayPal, or even cryptocurrency. 

For employers, Deel simplifies the payment process by managing invoices and providing one centralized location from which to pay all international contractors.

Apart from facilitating payments, Deel also adds value with features like digital contracts, invoice management, and real-time withdrawal of earnings, which enhance the freedom and convenience of contractors around the globe.

5. Stripe Connect

Stripe Connect is a sophisticated solution for businesses looking to make payments to international contractors and manage complex payment flows. It’s part of the larger Stripe payments infrastructure and offers several key features:

• Global reach: Stripe Connect supports over 135 currencies and payment methods, allowing businesses to send payments to contractors in various countries.
• Customization: The platform provides customizable payment options, giving businesses control over how and when payments are sent.
• Automated compliance: Stripe Connect handles complex tax reporting and compliance requirements, including integrating with local tax systems to streamline the payment process and ensure legal compliance.
• Scalability: Designed to accommodate businesses of all sizes, Stripe Connect can scale from a startup paying a few contractors to an enterprise managing thousands of global payments.
• Security: Stripe is known for its high level of security and robust infrastructure, which is essential when making international payments.

Stripe Connect is ideally suited for tech-savvy businesses looking for a platform that not only offers payment solutions but can also handle the complexities of international payouts with ease, ensuring a smooth process for both senders and recipients.

6. Payoneer

Payoneer facilitates international payments, catering to entrepreneurs, businesses, and freelancers around the globe. Its platform enables businesses to easily send and receive funds across borders and at competitive rates.

With Payoneer, businesses can pay international contractors in their preferred currency. The platform offers a range of withdrawal options, allowing recipients to access their funds through local bank transfers, Payoneer’s debit MasterCard, or by reusing the funds to make their own payments through the Payoneer network.

One of the notable features of Payoneer is the focus on empowering global commerce by simplifying transactions, thus accommodating a diverse clientele ranging from small businesses to large marketplaces. It also provides dedicated support to assist with any payment issues and offers tools that enable contractors to request payments directly.

7. Revolut Business

Revolut Business is a digital banking solution for paying international contractors. It provides a suite of features designed to facilitate global financial transactions.

A key aspect of Revolut Business is its ability to hold, exchange, and transfer currencies at interbank exchange rates, which are typically more favorable. It also offers multi-currency accounts, which can be particularly beneficial when dealing with contractors from different countries. 

The platform also enables instant transfers between Revolut accounts, significantly accelerating the payment process for contractors already using the service.

Corporate cards linked to the business account provide another layer of flexibility, enabling businesses to empower their contractors with dedicated company cards for work-related expenses.

7 Things To Consider When Paying International Contractors

When paying international contractors, several important factors can affect both the efficiency of the transaction and the satisfaction of your contractors. Here are seven things to keep in mind:

Foreign employee classification

It’s critical to correctly classify remote workers as either international employees or independent contractors. Misclassification can lead to significant legal and financial consequences.

Different countries have varying regulations that define the criteria for each classification, which can impact how you manage tax withholding, labor rights, and benefits. 

Ensure that your classification practices comply with local labor laws to avoid penalties and maintain good standing in the countries where your contractors are located. Proper classification also affects contractor expectations regarding work structure, payment, and benefits.

If you want to hire remote employees rather than contractors, you may want to go down the route of using an employer of record (EOR). An EOR makes paying overseas employees and complying with local labor laws simple as they become the legal employer of your offshore workers. 

Currency considerations

When dealing with international payments, currency exchange rates can significantly affect how much money contractors receive.

Check whether contractors prefer to be paid in their local currency or in USD (or another base currency). This choice can have tax implications and impact their income stability due to fluctuating exchange rates.

Understand the costs associated with currency conversion, as these can add up. Look for payment services that offer competitive exchange rates and lower fees. Be mindful of the timing of payments, as exchange rates can vary greatly daily. Consistency in payment dates can help both parties plan for rate fluctuations.

Consider offering a multi-currency account or working with platforms that allow contractors to hold and manage multiple currencies to hedge against currency volatility.

Legal compliance

Adhering to the employment laws in each foreign country where you have a contractor is paramount to avoid fines and legal disputes.

For example, countries like Mexico have stringent laws regulating outsourcing and hiring practices. Mexico’s legal framework requires businesses to adhere to formalized labor and tax laws when engaging with contractors.

Using a comprehensive agency like Near, instead of a mere payment processor, offers significant advantages in navigating these complex legal terrains. Our expertise in local regulations throughout LatAm ensures that your business remains compliant.

Agencies that manage international employment and contractor relations are instrumental in mitigating risks associated with non-compliance. They stay current on legal changes and can guide your hiring practices and payment processes accordingly.

Tax forms and documentation

For contractors outside the US, you will often get them to fill out a W-8 form. The W-8BEN form, in particular, is used by foreign individuals to certify their non-US status and claim any applicable treaty benefits, which can affect withholding tax rates.

Remember that each country has its own tax regulations that might necessitate additional documentation or withholding of taxes. It’s important to know the local tax laws to ensure the proper handling of payroll taxes on your end and the contractor’s.

If you aren’t working with an agency that can help you set up payroll and taxes for remote workers, consult a tax professional to navigate this complex topic. 

Payment schedule and invoicing

Establish and communicate a regular payment schedule, such as on a bi-weekly or monthly basis, so contractors know when to expect their funds. This helps them manage their personal cash flow and reduces uncertainty.

Ensure the invoicing process is straightforward. Contractors should know what details you require—like a breakdown of hours or project milestones—and any other pertinent information necessary for prompt payment.

Consider the time it takes to process payments internationally, as some methods may have longer lead times. Communicating delays or early payment processes around national holidays and other events can help manage expectations.

Timely payments are often a top concern for contractors, so adhering to the agreed-upon schedule is important for their satisfaction and your reputation as a client. Digital platforms can often automate invoicing and payment reminders, which aids in maintaining a reliable payment cycle.

Benefits administration

Although independent contractors typically do not receive the same benefits as full-time employees, offering them can be a powerful incentive for attracting and retaining top global talent.

These could include things like:

• Access to co-working spaces
• Professional development opportunities
• Health insurance
• Performance bonuses

Establish clear policies regarding which employee benefits contractors may be eligible for and the criteria for accessing them. This transparency helps set expectations and avoid misunderstandings.

Managing benefits for international contractors can be complex due to differing regulations and market standards across countries. A streamlined process or agency for benefits administration demonstrates your commitment to their well-being, potentially leading to a more loyal and engaged workforce.

Contract and payment agreements

Drafting clear and comprehensive contracts is essential to outline the terms of the working relationship, payment schedules, and other obligations.

Ensure that contracts include:

• Payment terms: Include details in contracts such as rate, currency, invoicing schedule, and payment method for absolute transparency.
• Conditions for payment: Clearly specify any prerequisites for payment, like project milestones or documentation requirements.
• Handling disputes: Agree on how to manage issues such as late or incorrect payments and outline the process for contract termination.
• Late payment policy: Define the repercussions for late payments, including any interest or fees you might pay.

Regularly review and update your contracts to reflect any changes in the law, business practices, or relationship with the contractor.

Using digital contracts with electronic signatures can streamline the agreement process, and utilizing platforms that store and manage these contracts helps maintain an organized record.

By taking the time to create detailed and transparent contracts and payment agreements, both parties are legally protected, and the likelihood of a smooth working relationship increases.

Final Thoughts

Paying international contractors shouldn’t be a daunting task. With the right knowledge and tools at your disposal, you can make the process smooth, compliant, and beneficial for both sides. 

Whether it’s understanding employee classification, staying on top of legal compliance, or managing payments in multiple currencies, each consideration plays a vital role in building successful international relationships.

To get an even better handle on international hiring and ensure you don’t miss a beat, why not start with a solid foundation? Check out our free independent contractor hiring checklist and begin your journey toward effortless global expansion with confidence.

Frequently Asked Questions

When (or how often) should I pay my international contractor?

You should pay your international contractor based on the agreed-upon schedule in the contract, typically bi-weekly, monthly, or upon the completion of project milestones.

You may or may not be paying your international team on the same schedule; you might have different arrangements for different contractor payments. You might send monthly payments to your digital marketing specialist but sporadic one-off payments to your graphic designer when you have the occasional project.

Depending on their contract terms, some contractors might require upfront payments for some work. 

Do foreign contractors need a US bank account?

No, foreign contractors do not need a US bank account. They can receive payments in their local bank accounts or through international online banking or payment services.

Do I need to pay international contractors in USD?

Not necessarily. International workers can be paid in their local currency or another agreed-upon currency. This should be decided during the contract negotiations and based on what is most practical for both parties and what’s practical within your agreed-upon payment method.