How to Pay International Contractors [My Best Options]

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Ewen founded Venture 4th Media, a remote boutique media company in 2014, before remote work was cool. He launched peo.guide to help other entrepreneurs navigate the evolving work of PEO and Remote HR solutions and strategies.

1. Wise: Best Overall for International Payment Options

In a nutshell: Wise is a virtual Swiss army knife for handling payments, with some of the deepest and most custom solutions for both sending money and denominating in various currencies. It does require some “work” initially to set up, but ensures you can pay almost any foreign contractor in a handful of different ways.

Wise Advantages

Supports 50+ different currencies and 80+ countries for both send and receiving
Can specify what currency to send (e.g. if contractors want to be paid in USD)
Ability to use ACH or wire transfers as needed
Saves information for “frequent recipients” for easy repeat transfers
Lower transfer fees compared to PayPal (no markup above market rates)
Offers a debit card service and some lite banking features
Generally saves fees on both sides of the transaction (contractors tend to prefer it)

Wise Drawbacks

Payments are still multi step. You can save profiles and payment routes for quicker payments, but you do have to pay attention
Wise is not a tax issuing authority, so you’ll need to still collectible relevant legal documentation on your own
No credit payment solutions
Fees can vary unexpectedly by destination based on market conditions
Most payments do required 1-2 business days to clear

2. Oyster HR: Best for Local Legal Compliance

In a nutshell: Oyster HR is a good solution when you’ve grown your international footprint and have a concentration of contractors in certain foreign locales with evolving local legal compliance enforcement. The more contractors you have in a particular country, the bigger the target for local labor enforcement agencies.

Oyster HR Advantages

Streamlined hiring and onboarding process for international contractors
Full outsourced compliance with local labor laws and regulations
Currently offers 120+ different currencies to offer payment in for contractors (they add a few every Quarter)
I personally love the easy to use dashboard interface (HR tools are typically clunky IME)
Centralized platform for managing international payroll and benefits
Access to a wide network of talent across the globe without having to consider local compliance issues
Assistance with visas and work permits when needed
Custom pricing available for larger teams as you scale (lowering your per contractor costs)
Can scale up to support international employees as well, if you need it
Less expensive that peers like Deel ($29/contractor per month vs $49)

Oyster HR Drawbacks

Oyster HR is a robust service and charges for it, starting at $29/month per contractor (custom pricing available)
Support times can vary, especially as they’ve grown quickly (I’m told they are resolving these wait times)
Fewer reporting and analytics solutions compared to Deel and Remote.com

3. PayPal: Best for Hard to Reach Countries

In a nutshell: PayPal is the most well-known and widespread of the payment options for international talent. I still use it everyday in our company! Everyone hates the fees, but it’s hard to beat the convenience factor and vast international reach.

PayPal Advantages

PayPal has support for the most countries as a payment transfer system, making it a good option for harder to reach locations
Easy to use mobile app
Widely accepted and recognized by everyone as a legit payment mechanism
Integrates with almost every major third party financial reporting and analytics software
Payments generally transfer instantly
Offers almost every mainstream transfer option including wire transfer, ACH, credit, debit

PayPal Drawbacks

PayPal “fraud control” can be quite arbitrary and bureaucratic. I’ve personally had accounts frozen for days or weeks due to tripping the fraud filter (one time because a writer wrote an article on the best Cuban coffee and it assumed we were smuggling coffee!)
Fees can be high, specifically for some foreign countries
PayPal acts as a tax issuing authority (1099-K forms for US contractors), easing some of the tax compliance burden (a trade off for the higher fees)

4. Deel

In a nutshell: Deel is a platform very similar to Oyster for true outsource payments AND compliance with local foreign markets. It’s geared slightly more towards larger enterprises (although still accessible for all) and also scales well if (or when) you decide to hire true employees in your company (in foreign countries).

Deel Advantages

Slightly more expensive for contractors compared to Oyster, but less expensive as you scale above 20+ contractors and/or add international employees
Deel integrates with a wide array of third-party tools like and platforms like Dropbox, Airtable, Notion, Netsuite, Quickbooks, Xero, Greenhouse, Intercom, Shopify, Mercury, and others… (this makes it easy to create payment and HR automations and synchronizations across your workforce)
Deel acts as a native payroll provider, meaning that you don’t have to integrate with a third-party and can go directly do their support for any issues
Deel operates as an EOR (employer of record) in 90+ different countries, among the best EOR solutions I’ve tested
Ability to offer team members stock options

Deel Drawbacks

Each additional contractor adds incremental expense in the way of service fees
Not cost effective if you just have a handful of international contractors

5. Payoneer: Best Low Fee Payments Option

In a nutshell: Payoneer (like PayPal) is a well known option and favorite of contractors for it’s very low (or no) fees. A simple way to send money quickly, often easier to get approved than PayPal.

Payoneer Advantages

Great for quickly sending money to anyone who has a valid Payoneer account
Often easier for some foreign contractors to get approved to Payoneer as compared to other payment networks
Generally slightly more cost effective for everyone compared to PayPal with respect to fees
Payoneer typically has a better exchange rate conversion compared to others like PayPal
Customer services is actually quite good compared to PayPal and Wise

Payoneer Drawbacks

There’s often variable fees for the sender (1-3%)
Doesn’t cover any of the tax or legal compliance requirements
Generally a flat fee of $1.50 to withdraw payments (recipient) regardless of amount
Supports 200+ countries, but only 7 currencies (as of this writing)

6. Remote.com

In a nutshell: Remote.com is another EOR solution, similar to Deel and Oyster. Where Remote.com stands out is with it’s HCM tools like time tracking, workflow analysis, and even recruiting.

Remote.com Advantages

Includes built-in recruiting functions for screening and sourcing international contractors
The most robust HR platform for remote companies, many of which have international footprints
Offers time off and vacation tracking, built-in
Offers different tiers, one lite tier JUST for contractor management (if you don’t need the true EOR features with permanent employees)

Remote.com Drawbacks

Might be more features than most companies need (just to pay international contractors)
THE most expensive option on this list (starts at $349/month per contractor)

Payment methods for international contractors

Once you’ve determined the appropriate currency, the next step is to choose the right payment method. There are several options available, each with its own set of benefits and drawbacks. The most popular methods for paying international contractors include wire transfers, online payment platforms, and cryptocurrency.

Wire transfers

Wire transfers are a traditional and widely-used method to pay international contractors. They are known for their reliability and security. However, they can be slow and come with high transaction fees, making them less suitable for smaller payments or frequent transactions.

Online payment platforms

Online payment platforms, such as PayPal, TransferWise, and Payoneer, have become increasingly popular for international transactions.

These platforms offer relatively low fees, fast transactions, and additional features like invoicing and payment tracking. However, make sure to review their terms and conditions, as some platforms may not support certain currencies or countries.

Of these options (and as referenced in my overall list above), my favorites in order of preference is:

Wise: Best Overall for International Payments
PayPal: Best for Underbanked Countries
Payoneer: Best for Lower Transaction Fees

Cryptocurrency

Cryptocurrency is a newer option for paying international contractors. It offers low transaction fees, fast processing times, and increased privacy.

However, cryptocurrency is subject to price volatility and may not be an ideal choice for everyone. Ensure that both you and your contractor are comfortable with using cryptocurrency before selecting this payment method.

I personally haven’t shifted our payment operations to crypto yet, mainly because of the volatility. But here are a few companies I’m watching closely in this area:

I’m also watching how PayPal, Wise, and others integrate cryptocurrency natively into their apps.

Determining what currency to pay contractors

When paying international contractors, it’s crucial to determine the most suitable currency for both parties. To make an informed decision, consider factors such as exchange rates, transaction fees, and the contractor’s preferred currency.

Exchange rates and transaction fees

Exchange rates play a significant role in international payments. Keep an eye on fluctuating rates to ensure that your contractor receives the correct amount. Additionally, be aware of transaction fees, which can vary depending on the payment method and the currencies involved. These fees may impact the overall cost of your project.

Contractor’s preferred currency

It’s essential to discuss currency preferences with your contractor before finalizing the payment terms. Some contractors may prefer to be paid in their local currency, while others might opt for a more globally accepted currency like the US Dollar or Euro. By considering their preference, you can help establish a smooth and efficient payment process.

MY TAKE: My general take is to either pay EVERYONE in US currency to keep accounting straightforward and to save on transaction fees (on the business end).

Otherwise, certain local exchange rates might shift rapidly, cause specific localized issues, and/or lead to increased transaction fees for your business

Managing Tax Obligations When Paying International Contractors

As a business owner, managing tax obligations when paying international contractors can be a daunting task. However, it’s essential to stay compliant with both your local and foreign tax regulations. In this section, we’ll explore some of the key aspects of tax management that you should consider when working with international contractors.

Understanding Tax Residency and Withholding Taxes

First and foremost, it’s crucial to determine the tax residency of your international contractors. This information is necessary for understanding whether you need to withhold taxes from their payments or not. In some cases, tax treaties between your country and the contractor’s country may influence the withholding tax rates. Make sure to consult an expert in international tax law to ensure you’re complying with the necessary regulations.

Collecting Required Tax Documentation

Collecting the right documentation from your international contractors is key to managing tax obligations. This may include tax identification numbers, certificates of tax residency, or completed W-8 forms (for US-based businesses). Having the proper paperwork in place will help you avoid potential penalties or tax withholding errors.

Reporting Payments and Taxes to Tax Authorities

Lastly, businesses must report their payments to international contractors and any taxes withheld to the appropriate tax authorities. This might involve filing specific forms or submitting electronic reports. Keeping accurate records of all payments made and taxes withheld will make reporting easier and reduce the risk of non-compliance.

How Your Payment Platform Affects Tax Compliance Responsibility

There’s a trade off to using a platform like PayPal or Upwork and putting up with the fees. In exchange, they both become the de facto tax issuing authority, meaning you typically don’t need to submit separate tax documentation.

If using Wise or Payoneer (for example), you will need to collect tax forms and submit these to the various government entities, including any US based contractors. They are not intermediary tax form issuing platforms.

If you use Wise or Payoneer, or use ACH or Wire transfers directly from your bank, be prepared to get familiar with local laws OR higher an accounting firm or professional with this knowledge.

Then, if you use a solution like Oyster, Deel, or Remote.com, you pay a higher service fee, BUT they take care of all of the compliance collection, issuance, and correspondences for you.

The Future of Payment Methods for International Contractors

In my opinion, cryptocurrency may actually help solve many of the friction points of international payments. BUT, the technology is still not there yet, and it’s not immediately clear what legal status or separate compliance crypto might have in many different countries (some are friendlier than others).

While I see a blockchain assist here, I think it’s more likely to integrated with an existing payment platform like PayPal gradually than a new disrupter taking market share.

Finally, EOR companies like Oyster HR and Deel will fill an important regulatory compliance gap as governments around the world catch up to the modern payment reality. While most countries do not have the ability to do much internationally tax enforcement, I expect this to change over time and with it, the need for outsourced platform solutions like EORs and PEOs.