Efficient ways to pay international contractors

Making sure you can seamlessly pay international contractors is an essential part of growing your business because it allows you to source some of the best talent for a given job regardless of that specialist’s location. 

To help you get started, review the table below to consider your main options for paying international contractors and what kind of business is best suited to each one.

Some of the best ways to pay international contractors

Method	Pros	Cons	Best For
Payment Platforms	Competitive Fees, Multi-currency support, Contractor management tools	Monthly subscription costs	Business owners who make frequent international payments
Freelancer Platforms	Easy to use, Integrated project management tools, Built-in escrow for security	High platform fees require contractors to have an account	Contractors already working within the platform’s ecosystem
EOR/AOR Services	Compliance, Typically includes tax & payroll support	Platform limitations	Long-term contractors in need of recurring payments and ongoing tax/compliance needs
Digital Wallets	Easy to use/setup, Faster payments	Multiple fees, Not universally accepted	Businesses with rare cross-border payments
Bank Transfers	Stand alone, Easy to use	High cross-border fees, Rarely provides multi-currency support	Contractors with compatible banking systems
Wire Transfers	Tight security, Large payment amounts	Higher fees, Slow speed, Not built for recurring payments	Large one-time payments

What to look for when paying international contractors

Although the table above details the major categories by which business owners pay international contractors, the nuances of each one will vary depending on the individual provider. 

The sections below detail the most important features of paying international contractors, as well as how business owners can evaluate prospective providers when making their decision.

1. Multi-Currency Support 

A robust multi-currency account allows business owners to pay international contractors quickly and easily across different currencies without having to manage multiple bank accounts. 

In addition, they can avoid expensive exchange fees because they can pay contractors in the desired currency from their account (assuming they have available funds). 

The more currencies a platform offers, the greater its global reach. 

The table below describes the qualities at different levels of multi-currency support in greater detail.

Poor	Fair	Good	Better	Best
No multi-currency support	Limited (1-3) currencies supported	5-10 common currencies, but no regional options	30+ common currencies	50+ currencies

Payoneer Workforce Management, for instance, supports contractor payments in 70 currencies.

2. International Invoicing Options

International contractors often prefer to use invoicing due to the compliance and tax measures it provides. 

In addition, it can often help streamline the payment process. 

For business owners, it’s a great way to pay international contractors while also giving them the peace of mind that comes with a written agreement for their labor. 

The exact solutions available to business owners vary depending on what kind of platform they work with. When evaluating the invoicing options available to you, consider the following scale:

Poor	Fair	Good	Better	Best
No invoicing available	Provides templates for invoicing, but no automation	Basic invoicing with limited customization and tracking	Works in tandem with multi-currency support and tax calculations	Automated invoicing for recurring payments with customization options

Similar to multi-currency options, invoicing is a valuable enough service that providers typically have a page dedicated to its description. 

3. Global Reach

Business owners who want to source the best talent require a solution that can manage global transactions and has a customer support team that works directly with contractors in the appropriate language. 

Access to this level of support allows business owners to truly collaborate with international contractors while also ensuring a positive working relationship.

Poor	Fair	Good	Better	Best
Limited (USD and EUR) to no support for global contractors	Available in 5-50 countries with limited currency/ language support	50+ countries 10+ languages	100+ countries 15+ languages	150+ countries 20+ languages

4. Faster Payment Times

Paying international contractors efficiently requires promptness. This not only ensures a regular payment cadence but also enables businesses to handle adjustments quickly in the event of overlooked or non-recurring payments. 

On average, the experience of paying international contractors typically falls somewhere on the scale below.

Poor	Fair	Good	Better	Best
5+ business days	3-5 business days	2-3 business days	Same-day payments	Near real-time payments

Payment speed is often buried in the FAQs of many international payment providers due to the difficulty in providing an answer to the question.

The reality of international payments is that, unless you have a direct payment portal, the actual speed will vary depending on the international clearinghouse, as well as the international and local banks. 

Unless they provide this portal themselves, providers can typically only provide you with an average based on how long their existing payments take. For the best results, seek out options that provide a dedicated portal.

5. Low Fees

Paying international contractors typically incurs a great number of fees: 

• Payment Processing
• Currency Conversion 
• Bank Transfer
• Withdrawal
• Cross-Border/International
• Compliance 
• Intermediary Banks

In addition to all of those above, many services now employ a subscription model to generate revenue. That’s why finding an international payment provider that provides transparency into their fee structure is critical. 

The details will vary by individual provider, but the scale below breaks down some of the most common fees.

Poor	Fair	Good	Better	Best
High rates, Hidden charges, Multiple fees per payment	Moderate rates, Limited transparency, Additional multi-currency or international fees	Moderate rates, Provides fee information, but materials do not target average readers, Competitive multi-currency rates	Minimal rates, Transparent pricing information is provided, Low currency conversion	Negligible fees, including invoice payments, Real-time currency conversions at mid-market rates, No hidden charges

Because the question of fees is so common, we highly recommend avoiding payment solutions that do not have a dedicated page explaining their fees. 

Furthermore, the page should clearly explain where these fees apply in the transaction process, as some platforms include fees at multiple stages of the transaction, adding up to more than is initially advertised.

The best solution to pay international contractors easily and quickly? 

Finding an all-in-one solution for international payments allows you to customize your service to your needs and grow your business as needed. Most often, this means working with a global contractor management platform like Payoneer Workforce Management. 

Our solutions are customizable and provide users with a better degree of integration options for business owners and freelancers who want a platform that offers payments as a comprehensive solution. 

Contact us for more information.

FAQs

1. How do I pay an international contractor?

You can pay an international contractor using methods like wire transfers, payment platforms, or contractor management systems such as Payoneer Workforce Management. It’s important to choose a secure, cost-effective option that also offers support for compliance with local laws.

2. Do I need to issue a 1099 to a foreign contractor?

No, you usually do not need to issue a 1099 to a foreign contractor. However, you should collect a completed Form W-8BEN from the contractor to document their foreign status for IRS records.

3. Can a US company hire an international contractor?

Yes, a US company can hire international contractors. You don’t need to set up a local entity, but you must follow local labor laws, manage taxes correctly, and use proper contracts to avoid misclassification.