Business International business

Paying Independent Contractors in Mexico

Wise

25.03.20 (updated more than 1 year ago)

Read time 3 minutes

Payments to Mexico can be quite expensive due to the fees associated with currency conversion from dollars to Mexican Pesos. On average, you lose 3 - 7% of the transfer value on fees using traditional banks. The overall cost includes, Swift fee, exchange rate mark-up and receiving fee on the recipient side. This means that transferring $2000 to Mexican Pesos can cost around $40 - $70.

Let’s see how you could reduce these fees.

1. Money Transfer Services

The good news is that there are Money transfer Services that could save you over 40% on international transfer fees. Here are some of them.

Wise Business

Wise supports transfers to 45+ currencies including Mexican pesos. You can take advantage of the real exchange rate without any mark-up.

With Wise Business you also can set Auto Conversions. Choose your currencies, the amount to convert, and your desired exchange rate. Wise will then automatically exchange the amount when your desired rate is available. This is a great, easy, and safe way to save money if you need to pay employees or suppliers in Mexico and abroad.

Cost	$13.66 (0.68%) conversion fee
Speed	0 - 2 working days
Convenience	If you’re paying multiple contractors, you can use a dedicated tool for running payroll - Wise Batch Payment. Instead of making several payments separately, you can send multiple payments in one go. You can make business payments via the app. Can be integrated to accounting software called Xero to help ease tax reconciliation.

Pros:

Real 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
Bank-level security.

Cons:

Business and personal accounts need to get verified first
No Cash Pick-ups
Recipient cannot track the status of the transfers

OFX

OFX doesn’t charge transfer fees 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	$8 - $50 (0.4 - 2.5% exchange rate mark-up)³
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 transfer limit
Operates 24 hours a day, 7 days a week

Cons:

Exchange rate mark-up
Doesn’t offer same-day delivery
Minimum transfer is $2,000

TorFx

Just like OFX, TorFX doesn’t charge transfer fees but makes money from exchange rate mark-ups.

Cost	$10 - $ 40 (0.5%-2%)⁶
Speed	1 - 2 working days
Convenience	You can make payments on the app. Recurring payments at a competitive rate

Pros:

No transfer fees
Can make transfers both online and over phone
Operates 24 hours a day, 7 days a week
Can be cheaper for large transfers (above $10,000)

Cons:

Exchange rate mark-up
Can be slow at times
Expensive for smaller amounts (below $10,000)

The fees shown above are the estimated cost of a $2000 transfer to MXN. Fees may vary according to the provider's exchange rate set for you.

2. Payroll services

Bigger companies often employ payroll software for larger volumes but this usually comes with monthly subscriptions and cost per employee. But this reduces errors and eases tax reconciliation. However, not that many support global payroll. But here's one good example.

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 or $15.99 monthly 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
Less expensive for employers

Cons:

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

3. Banks

Stanford Federal Credit Union

They’re one of the banks that offers real-exchange rates. They partnered with Wise to execute international payments and the fees are relatively the same. However, there’s a maintaining balance depending on the type of account you have and an opening deposit of $100.

Cost	$13.67
Speed	0 - 2 working day
Convenience	Transactions can be tracked on the app. Recurring payments Mass Payment

Pros:

Real Exchange rate
Low transfer cost
Instant transfer for some currencies

Cons:

Requires maintaining balance and opening deposit
No Cash Pick-ups
Recipient cannot track the status of the transfers

Sources:

Payoneerabout - fees
Payoneerblog post
OFX FAQ
Bitwage price page
CrozDesk
TorFx FAQ

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.