Best Ways to Pay Independent Contractors

Making payments to independent contractors can often be easier compared to paying regular employees as you don’t withhold tax for them or need to figure out benefits.

Contractors usually have their preferred methods for receiving their wages. Services like BatchTransfer and Payoneer are some of the most popular ones as they're easy and cost-effective.

But are these services also a good choice for employers? Let’s find out!

Money Transfer Services

You may be considering using a bank to pay your independent contractors overseas, as it's the most traditional service out there. But here's a quick heads up on the fees and how money transfer services can save you a few bucks.

The average cost to send funds overseas using traditional banks range from 3 - 4% of the amount being transferred. This is due to the SWIFT fees that cost $20 - $50 per transfer and an exchange rate mark-up of 2 - 4%. This means that transfering a $1000 to EUR can costs around $40 - $70 plus a receiving fee charged by the recipient's bank.

The good news is that there are money transfer services that could save you money on international transfer fees. Let's have a look at some of the best ones in the market.

Pay Employees With BatchTransfer

BatchTransfer has an easy-to-use instant payments system that allows you to make multiple payments, for both domestic and international, in one go. Small businesses and enterprises can get access to BatchTransfer with no additional cost after getting a Wise Business account.

BatchTransfer’s core strengths for payroll:

What sets BatchTransfer apart is its commitment to providing the mid-market rate for currency conversions. This means that businesses get a fair and transparent deal when making international payments.

Another perk of using BatchTransfer for international payroll is its extensive coverage of over countries and currencies! With features like automatic payment scheduling and API integration, small businesses can streamline their payroll process, freeing up valuable time and resources for other important tasks.

• How can businesses use BatchTransfer for payroll?: Businesses can send up to 1000 payments with a single click with BatchTransfer. US-based business can access BatchTransfer at no extra charge.

• Connect to your accounting software: You can easily manage and reconcile your mass payments through accounting software integrations such as QuickBooks or Xero.

Start making payments
with BatchTransfer >>

Wise Features	Price
Mid-market exchange rate for currency conversions Payments to countries in currencies Delivery estimator, real-time tracking, pay-to-email & more	Free to sign up for US business accounts, no monthly fees, no minimum balance requirements. Transparent and competitive rates Free access to API, BatchTransfer, and integrations features. You can also get major currency account details for a one-off fee to receive overseas payments.

Pros:

• Mid-market exchange rate
• High Transfer limit - up to $1,000,000
• Low transfer cost
• Recipients don’t need a Wise account to receive payments
• Instant transfer for some currencies
• Accepts Payments through debit and credit card, ACH direct debit and Wire transfer
• Safe and secure account.

Considerations:

• No Cash Pick-ups
• Recipient cannot track the status of the transfers

Payoneer

Payoneer’s services are quite similar to Wise. They provide local account details in different currencies where contractors can receive payments for free. Employers can make international payments to overseas contractors.

Cost	1% local bank transfer fee¹ + currency conversion
Speed	1 - 2 working days
Convenience	You can make payments on the app. Can be integrated to accounting software Recurring payments for eligible accounts

Pros:

• Free payments between Payoneer accounts if in the same currency
• Provides a MasterCard that can be used on a large number of platforms
• A lot of contractors are already using the service to receive payments which means that it may be easier to send funds to them

Cons:

• Fees to use the MasterCard can be quite costly (up to 3.5% for cross-currency transactions)¹
• Recipient's account details need to get approved first which can take 1 - 2 working days
• Currency conversion charge can be higher compared to other services

🔍 Read the full Payoneer review

OFX

OFX doesn’t charge a transfer fee however, they make money by adding a mark-up on their exchange rate which can vary according to the transfer amount and your transaction history with them. It’s usually higher for smaller amounts and vice versa.

Cost	Transfers under $10,000 - flat fee of $15³
Speed	0 - 1 working day
Convenience	You can make payments on the app. Can be integrated to accounting software Can set up recurring payments Batch payments tool

Pros:

• No transfer fees
• No maximum transfer limit
• Operates 24 hours a day, 7 days a week

Cons:

• Flat fee can be high for small amounts
• Doesn’t offer same-day delivery
• Minimum transfer is $2,000

2. Payroll Software

Bigger companies often employ payroll software for larger payout volume but it's usually more expensive due to monthly subscriptions and cost per employee. But this reduces errors and eases tax reconciliation. There are a few services that are tailored to small and medium enterprises. Here are some of them:

BitWage

In order to run Payroll using BitWage, the employees need to be invited to set up a receiving account so even though the service is cost effective for companies, the challenge comes from convincing employees to use BitWage to receive their wages. Unfortunately, as it can be quite expensive for them due to 1% charge per deposit, or $15.99 per month for the Premium Invoicing service, they tend to use other services that charge no fee for receiving payments

Cost	1% fee on local currency wage distribution (for standard subscription). $7.99/employee/month subscription charge for premium account.⁴
Speed	0 - 1 working day
Convenience	Transactions can be tracked on the app. Payments in 3 distribution types including digital currencies. Provides receiving accounts to contractors

Pros:

• Helps manage employee salary and sends necessary form to fill out

Cons:

• Best suited for workers who prefer to be paid in Bitcurrency
• Employees need to use the service too in order to receive payments

Paylocity

Paylocity (see Paylocity Alternatives) offers payroll services, HR, talent management, attendance, and benefits administration functions and supports mobile apps to conduct workforce management on the go.

Cost	Priced per employee per month (PEPM) depending on the features you select for your plan⁵
Speed	0 - 1 working day
Convenience	Accessible via the app. paycheck calculator payroll templates employee paychecks verification check-creating option.

Pros:

• Offers a number of resources that help streamline payroll processes
• Saves you time on admin work
• Easier tax reconciliation

Cons:

• Can be expensive for companies who run payroll in small volume

Paychex

Paychex offers a compact package of human resources management solutions that integrates HR administration, retirement, ATS, HRIS, and employee benefits.

Cost	Pricing on request⁶
Speed	0 - 1 working day
Convenience	Accessible via the app. Integrates with several accounting software

Pros:

• User friendly and fast
• Saves you time on admin work
• Offers a few other resources that help with HR processes

Cons:

• Can be expensive for companies who run payroll in small volume
• It can take a while to familiarize

It's important to keep in mind that the cost shown above is not final. For most services, you’d have to integrate a bank or financial tools to execute the payment. Also, keep in mind the minimum head count per payroll. Most companies have 20 employees minimum volume.

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Sources:

1. Payoneer about - fees
2. Payoneer blog post
3. OFX FAQ
4. Bitwage price page
5. Paylocity
6. Paychex