Paying overseas contractors from Australia. What you need to know

As technology helps to make our world more connected, a greater number of Australian businesses are choosing to engage overseas contractors to fulfil their business needs.

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Who’s an overseas contractor?

An overseas contractor is someone living outside Australia that’s hired by an Australian business to complete contract work. They are usually not considered Australian residents for tax purposes and don’t hold an ABN.⁶

Here’re some options for paying overseas contractors from Australia

If you’re hiring your contractors directly rather than going through a job site like UpWork you’ll need to find a safe, secure and affordable way to pay them. There are many different options out there so to help out we’re going to take a look at a few of the methods available to Australian businesses.

Wise Business

What is Wise business

Wise is a secure international money specialist that offers money transfers, a multi-currency account and cards for business and private users. With a Wise Business account you gain local account details in 10 world currencies to receive payments like a local.

You’re also able to send money to 80 countries, making it simpler to make international business payments to your overseas contractors.

How to send payments with Wise

• Login or sign up for an account
• Choose the amount you want to send
• Add the recipients bank or Wise account details
• Select if you want to use your Wise balance, bank transfer, PayID, POLi, or a debit or credit card to pay for the transfer
• Review and confirm the payment

What are the benefits

• Recipient doesn’t need a Wise account to receive payment
• Mid market exchange rate with no markups or hidden fees
• Batch payments available

What are the cons

• Not possible to pay cash in or out
• Same day transfer isn’t available for all payments

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Payoneer

What is Payoneer

An international digital commerce partner, Payoneer offers a range of solutions to Australian businesses who are looking to make overseas payments.⁹ This includes multiple currency accounts that come with local account details.

How to send payments with Payoneer¹⁰

• Register or login to your Payoneer account
• Go to Pay>Make a Payment
• Choose if you are sending funds to a Payoneer account or bank account
• Follow the prompts to complete the transfer

What are the benefits⁹

• Send payments to 190+ countries
• Contractor doesn’t require a Payoneer account
• Batch payments are possible

What are the cons⁹

• Cash pay ins or outs aren’t possible
• Bank transfers can take a few business days to process

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PayPal Australia

What is PayPal

PayPal is a commerce platform that Australian businesses can use to make and accept payments. There are a range of business tools on offer and the potential to gain funding through the PayPal Working Capital business loan.¹

How to send payments with PayPal²

• Signup or login to your PayPal Business account
• Go to Send payments
• Enter the contractors email address or phone number and the amount
• Choose your payment method
• Send the funds

What are the benefits³

• Pay businesses in 96 countries
• 24 currencies available
• Can setup payouts to multiple people at the same time

What are the cons³

• Can only send funds to another PayPal account
• Cash pay ins or outs aren’t possible

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Airwallex

What is Airwallex

An ecommerce partner, Airwallex offers Australian customers an online business account with a range of features including global accounts, multi currency payment cards and payment links.⁴

They also have a platform option which offers a variety of APIs to help you manage your business.

How to send payments with Airwallex⁵

• Signup or login to your Airwallex account and go to Transfers
• Select an existing contact or add someone new
• Choose the funding source
• Input the transfer amount
• Select the transfer method
• Add additional details about the transaction
• Review then confirm the payment

What are the benefits⁴

• Send payment to 150+ countries in 40+ currencies
• International batch payments available

What are the cons⁴

• Foreign currency exchange rates have a set margin of 0.5% or 1% above the interbank exchange rate
• $10 fee when sending non-local currencies (e.g. AUD to China)

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Western Union

What is Western union

Western Union are a money transfer company that allow you to send and receive funds internationally.⁷ Using their system you can send contractors money online, through the app or at a Western Union agent.

How to send payments with Western Union

What you need to do to send a payment varies slightly depending on whether you’re doing it online, through the app or at a Western Union agent. Let’s look at an online transfer.⁸

• Signup or login to your account or create and verify a profile
• Input the destination and amount
• Add the contractor's name, address, bank name, account number and bank city.
• Choose a payment method
• Approve and send the transfer
• You could also walk into a Western Union kiosk or agent to get your transfer done

What are the benefits⁷

• Cash pay in and out possible
• My WU Rewards program enables you to earn rewards points on each transfer
• Send funds to over 200 countries and territories

What are the cons⁷

• Exchange rates, fees and taxes can vary by brand, channel and location
• No additional business features

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International money transfer with your bank

What is an international bank transfer

In the process of starting and running your business you likely have already opened a business bank account with an Australian bank such as Westpac, NAB or ANZ. If you have then you may be able to use that account to pay your overseas contractors by transferring funds from your bank to theirs.

How to send payments with your bank

The process and requirements can vary between banks but here’s what you’ll generally be required to do.

• Log into your online account and go to the transfer section
• Add the details of the payee such as their full name, address, bank name, SWIFT code and account number
• Input the transfer amount
• Confirm and send the payment

What are the benefits

• May have access to branch assistance
• Potential to have cash pay in
• Bigger amount of supported countries and currencies

What are the cons

• Foreign exchange rates may not be transparent or favourable
• Fees for international transfers can be expensive

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What else to keep in mind

When paying an overseas contractor here’s a few things to keep in mind.

• Given the contractor is overseas it’s likely your transfer will involve a foreign currency exchange. It’s a good idea to find out how the payment provider determines their exchange rate and if there’s a profit margin or additional fees for exchanging currency.
• Double check that any fees don’t prevent the full amount you owe being sent to the contractor to avoid the risk of underpaying them.
• There may be tax implications to employing overseas contractors. If you’re not sure if there’s anything you need to keep in mind then it’s a good idea to speak to a qualified expert.

Wise Business

While deciding which international payment partner to choose, why not give Wise a try.

The Wise Business account is tailor-made for international businesses. Send money to over 70 countries, at the mid-market rate plus a small upfront fee.

Alternatively, use the Wise Debit card to pay for international online purchases, wherever Mastercard is accepted.

Hold and convert money in over 50 currencies, and provide your debtors with one of 10 local account details, including (AUD, USD, and EUR).

To learn more about what Wise can do, take a look at what they offer for yourself. It can all be done conveniently online or via the Wise App.

Register your Wise business
account in minutes 🚀

Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up-to-date pricing and fee information.

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Sources used:

1. PayPal - Business
2. PayPal - Send Money Online
3. PayPal - Make Payments
4. Airwallex - Business Account Transfers
5. Airwallex - Creating a transfer
6. ATO Community - Payment of an overseas contractor without ABN in Australia
7. Western Union - Home
8. Western Union - How to send money from Australia
9. Payoneer - Payments Australia
10. Payoneer - Make a Payment

Sources last checked on date: 27 March 2023