Table of Contents
Hiring international contractors can help you grow your business, reduce costs, and access specialized skills, but navigating how to pay contractors across borders can be tricky. From compliance to currency conversion, choosing the right payment method is crucial for efficiency and trust.
What are independent contractors?
Independent contractors are self-employed professionals or businesses that provide services under a contract. Unlike full-time employees, they are not on your payroll and should be responsible for their own taxes, benefits, and equipment.
They typically work on a project or freelance basis, and your company doesn’t usually manage how they do their work, just the outcome. Independent contractors can bring in specific expertise and, many times, help your in-house team meet tight deadlines
This flexibility is what makes hiring contractors so appealing for global businesses. On the other hand, contractors may charge a premium fee for their service in exchange for its availability and fast delivery.
What are the different types of contractors?
Contractors can fall into various categories, depending on the nature and structure of their work:
- Freelancers: These are individuals offering services like writing, graphic design, or programming, usually working with multiple clients.
- Consultants: Experts who provide strategic advice or specialized services in areas like IT, HR, or finance.
- Agencies or Firms: Small companies or teams contracted for specific projects or functions.
- Gig Workers: Short-term or task-based workers, often hired through platforms like Upwork or Fiverr.
Each type may require different payment and contract structures, so it’s important to understand their legal characteristics before hiring. Misclassifying a collaborator as a contractor when they work under an employee type of role can result in fines and legal penalties.
How to pay contractors internationally
Paying international contractors involves more than just transferring funds—it’s about finding secure, affordable, and compliant methods that work for both parties. Here are the most common ways to choosing how to pay contractors globally:
1) Bank transfers
Direct bank transfers (also known as SWIFT transfers) are a traditional and secure way to send money internationally. While reliable, they can be slow and come with high fees and poor exchange rates.
| Pros: | Cons: |
| Widely accepted | Expensive fees |
| Secure and traceable | Longer processing times |
2) International money orders
International money orders and wire transfers are another option for paying overseas contractors, especially if they don’t have access to modern banking systems.
| Pros: | Cons: |
| Accessible in areas with limited banking infrastructure | Slower and less efficient |
| Can be tracked | Not ideal for recurring payments |
3) Online platforms
Digital payment platforms like PayPal, Wise, Payoneer, and Revolut make it easy to send money internationally. These services offer lower fees, faster transfers, and better currency conversion rates than traditional banks.
| Pros: | Cons: |
| Quick and cost-effective | Some platforms charge recipients high withdrawal fees |
| Easy for both parties to use | Not all countries are supported |
4. Employers of record (EOR)
If you’re hiring contractors at scale and want to avoid compliance risks, using an Employer of Record (EOR) can be a smart move. An EOR is a third-party organization that legally hires and pays international workers on your behalf.
| Pros: | Cons: |
| Handles legal compliance and tax obligations | May cost more than DIY solutions |
| Reduces your HR and payroll burden | Less flexibility for one-off contracts |
How to choose the best alternative
With so many ways to pay international contractors, how do you choose the right one for your business? It depends on a few key factors: the number of contractors you’re working with, how often you need to pay them, your budget, and your compliance needs.
Here’s a quick summary to help you decide:
| Method | Best For |
| Bank Transfers | Established businesses with long-term contractors |
| International money orders | Contractors in regions with limited banking access |
| Online platforms | Freelancers or small teams needing fast payments |
| Employers of record (EOR) | Companies hiring multiple contractors or working in regulated markets |
Additionally, there are key questions to ask before choosing how to pay contractors across borders:
- How many contractors are you paying, and how frequently?
- For one-off or occasional payments, platforms like PayPal or Wise might be ideal.
- For ongoing work with larger teams, consider an EOR for streamlined compliance and payroll.
- Where are your contractors based?
- If they’re in countries with limited digital payment access, bank transfers or money orders may be necessary.
- Do you need help managing compliance and local labor laws?
- An Employer of Record can remove the legal burden, especially in countries with strict labor regulations.
No alternative cancels the other, and they may even work well together for different projects within the same company, in different times. With these key questions in mind, along with the comparison tables, you can make an informed decision on the best option for your business.
