The 5 Best Ways to Pay International Contractors and Employees Abroad

11 minute read

Nothing’s more important to your staff and contractors than getting paid on time.

And just because someone’s based in a different country doesn’t mean they can afford to wait for their paycheck any longer than an employee who lives down the street from you.

If you’re looking for the best way to pay your international employees, you’ve come to the right place.

There are a few tried and true ways to send money abroad you may have already considered.

But there are also other options that may work even better for your needs — probably exactly what you’re looking for.

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Read on to find out 5 of the best ways to pay your international contractors and employees.


1. Wise for international contractors

Founded in 2011, Wise is on a mission to make it easier and cheaper to move money around the world. Along the way, Wise has attracted big name investors like Sir Richard Branson and Peter Thiel.

In addition to offering international payments at the real exchange rate like you find on Google, Wise offers a multi-currency account that lets you store money in more than 50 currencies.

Also, you can get your own virtual account details for receiving local transfers in the US, the EU, the UK, Australia and more. You can sign up for free, and there’s no monthly fee to worry about.

If you need to make mass payouts to employees all over the world, make batch payments with Wise - with just a single file upload.

Take a look at how a spend management platform called Accrualify integrated Wise global payouts to see just how easy it is.

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The pros of paying via Wise

  • High limits. Depending on which state you’re located in and where you’re sending money to, you could send as much as $1,000,000 in a single transaction with Wise. If you’re sending money in batches, you can send a lot more in total.

  • Low cost. Research has shown businesses can save up to 8x by sending international transfers through Wise rather than PayPal. And, depending where you bank, you may find similar savings over a regular international wire.

  • Convenience. Once you open your multi-currency account you can hold your balance inside Wise and pay out to other countries whenever you want.

  • Online. Everything can be done online — no need to visit a branch or call anyone up.

  • Your recipient gets notified. If you enter your contractor’s email, they will get an email once you’ve paid them, which is good for their peace of mind as well as yours.

  • Your recipient doesn’t need a Wise account. When you use a solution like PayPal, your recipient will need to sign up to get hold of their money. Not so with Wise — it goes straight into their bank account.

  • Bulk payment options. If you have many contractors or employees to pay overseas, just like companies such as Hotjar, you can make mass payroll payouts with Wise.

  • Great exchange rates. You’ll get the mid-market rate like you see on Google, which should save you and your employees a lot of money. You aren’t likely to get that from a bank.

  • End payments in US dollars or local currency. You can pay your employees abroad in most countries in either the local currency or in US dollars.

  • Secure. Wise is regulated by the financial ruling bodies in each country it operates. Which means you can expect bank-level security.

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The cons of paying via Wise

  • One-time verification process. To get your account set up, your business will need to go through a one-time verification process. It could take several business days to start.

  • Local bank details. You’ll likely need your recipient’s domestic bank details rather than their account number and international SWIFT code. That may mean having to contact them one extra time. While it’s a bit inconvenient upfront, it will cut down on international charges on their end — they won’t be charged for receiving an international payment.

  • No cash pickups. Wise sends money from bank account to bank account, so cash deliveries aren’t available.

  • No recipient mediation. Wise doesn’t get involved in disputes between sender and recipient. So if you want your money back from your beneficiary, Wise won’t take sides.


2. International wire transfer for overseas employees

There’s something to be said for sticking with what you know. An international wire transfer is probably the best-known method of getting money out of the country.

Most often, a wire transfer goes from your bank account to the recipients, generally via the SWIFT networka complex and sometimes costly system that links together international banks.

Despite its name, SWIFT transfers aren’t always particularly fast.

Depending on the route the money has to take, numerous intermediary banks might also have to get involved with your transfer — and each of them deduct a fee for their trouble.

Though wire transfers are a popular way of sending money, it doesn't mean that you'll always get the fairest prices.

The pros of paying via international wire

  • You can use your bank. A lot of American banks do offer international wires, even if it’s not their speciality. So the likelihood is that you can probably make a wire transfer with your existing bank. That’s great if you like the simplicity of using a company you already know, rather than signing up for something else. It’s one less password to remember, anyway.
  • Security. Banks always have to have tight security, so there’s relatively little chance of any disasters happening during an international wire transfer.
  • High limits (possibly). The maximum amount you can wire varies from provider to provider. Some specialist transfer providers have relatively low upper limits, but your bank might not — banks are used to handling large sums, after all. But you’ll need to check what your bank’s limit is. Often times there are lower daily limits which may make moving money out of your account a bit difficult.
  • It goes straight into your recipient’s bank account. Your payee won’t have to sign up for any sort of new account if you wire them their money. The money will go straight to their bank.
  • Fixed upfront fees. If you’re sending a large amount, most banks charged a fixed, upfront fee for an international wire transfer that’s the same no matter how much you’re sending. Which means if you’re sending a lot, then you may be in luck in this department. However, if there’s a currency exchange involved, that’s likely where most of your cost will come from — and that won’t be spelled out upfront.

The cons of paying via international wire

  • Fixed upfront fees. You read that right. This can be both a pro and a con. If you’re not sending much money, those upfront fixed fees banks charge will sting if you look at it percentage-wise.
  • Intermediary and recipient bank fees. Add on fees deducted by up to 3 intermediary bank — oh, and the recipient bank — and it may make jumping the hurdles to sending a few hundred dollars abroad nearly impossible.
  • Exchange rate. A bad exchange rate can cost you far more than upfront fees. When the banks convert your money, they can choose the exchange rate themselves. That means they generally choose a rate that benefits them rather than you. At an average mark-up of 4-6%, that adds up. They pocket the difference and you’re left none the wiser. Check what exchange rate your bank offers and compare it to the rate you find on Google. You might be unpleasantly surprised.
  • Speed. SWIFT transfers aren’t renowned for their speed. You might find it hard to get a definite answer from your bank about exactly when the money will arrive, although it’s generally accepted that, at worst, your money should arrive in 5 business days or less.
  • Inconvenience. This one depends on your bank. But there are still banks out there that don’t let customers wire money internationally via online banking — in which case, you might have to go into a branch every single time you want to do this. On the other hand, some banks have it sorted with fancy websites or even apps.
  • When something goes wrong, it can go really wrong. Sometimes things go wrong. The SWIFT code is incorrect. One of the correspondent bank account numbers was off. A reference didn’t get passed on that was necessary. Because SWIFT transfers often have to use intermediary banks to make the transaction, mistakes can cascade and, in worst case scenarios, one error can lead to the money getting lost or stuck somewhere for months on end. So always make sure you triple check your recipient bank information before committing.


3. International money order for foreign independent contractors abroad

Another established international payment solution is an international money order. You can purchase one at a range of locations, including post offices, by paying the amount you want to send along with a fee. You’ll then need to send the order to the recipient via post — yes, real, old-fashioned snail mail — and then your employee or contractor will need to work out how to deposit the money once it arrives.

The pros of paying via international money order

  • No need for a bank account. Your recipient doesn’t need a bank account. If they want, they can simply get cash from the money order. You don’t actually need to use your bank account, either, if you have another way of paying upfront.
  • A guaranteed source of funds. Comparing with checks, the money order has one big point in its favor as far as recipients are concerned. The sender pays for it upfront, so there’s zero chance of it bouncing.
  • It’s a common method in some countries. If you’re sending to a Latin American country, you might find that an international money order is what your clients or employees expect.
  • The recipient will need to prove their identity. True, using the postal service isn’t necessarily the most secure option, because there’s always a chance things get lost in the mail — or stolen, in some countries. But the recipient will often need to show ID when they cash their money order, so the chances of the wrong person getting hold of the money are lower.

The cons of paying via international money order

  • Fees for you. There will probably be a fee for you to get hold of the international money order and send it out.
  • Exchange rates cost even more. Then there’s the issue of the exchange rate. An international money order doesn’t guarantee a fair exchange rate. In fact, many currency exchange sellers routinely add up to a 10% spread to the exchange rate and pocket the difference. Keep this in mind when figuring out how much to pay.
  • Fees for your recipient. Your client might well face substantial fees as well when they deposit the money order. Some agencies take a pretty high percentage for the privilege of cashing it. Not always the best way to make friends with your international suppliers.
  • Might be hard to cash. While money orders are popular in some places, they’re not popular everywhere. In fact, your recipients might even have trouble cashing them at all. You should definitely check with them first.
  • Inflexibility. Particularly because they are reliant on the postal system, it’s difficult to cancel an international money order and get a replacement sent. If any changes are needed, it could add months to the payment schedule.
  • Scams are common. Money orders are less regulated than bank transfers. That means fraud is more rampant. So it’s wise to be in close contact with your recipient to make sure everything’s above board.
  • Speed. Money orders are reliant on the international postal service, so they might take a while to reach their destination. Then, the recipient has to make time to cash it — it doesn’t go straight to their account.
  • You can’t send very much. This method is generally for low amounts — in fact, the cap is often around $1,000. Which could well be low enough to rule this option out for regular salary payments or substantial contracts.


4. PayPal for international employees

You’ve almost certainly heard of PayPal, one of the most popular of all online payment solutions. But you might not know so much about its business offerings.

That said, it’s worth keeping a close eye on the cost if you want to use PayPal for international transfers. Because of many of the costs involved that aren’t so clear upfront, independent research has shown that business payments could be up to 8x cheaper with Wise over PayPal.

The pros of paying via PayPal

  • Convenience. PayPal isn’t hard to use, and you may well have a PayPal account anyway that you’ve used for online shopping. Your recipient might, too.
  • You don’t need the recipient’s bank details. Sending money via PayPal is very simple, wherever in the world you send it. And, because the money goes into the recipient’s PayPal account rather than a bank account, you don’t need their bank details — just the email address they use for PayPal.
  • Speed. The money often gets sent to the recipient pretty fast, so if you’re in a rush and don’t care about cost, it’s an option worth considering.
  • Special business offerings. PayPal offers a range of services to businesses, which theoretically make it easier for you to manage international payments and so on. But you should always check how much you’re actually paying.

The cons of paying via PayPal

  • Unclear fees. Anyone who’s spent time on the PayPal fees page probably knows the pain of trying to understand what you’re being charged. And, somehow, at the end it often seems as if the PayPal international transaction cost even more than you expected.
  • Exchange rates. PayPal’s exchange rates are generally not great. If they’re converting your money, you might face a substantial mark-up. In fact, they explicitly states you will.
  • Business account fees. If you need a PayPal business account, you might be tempted by PayPal’s offering, especially as there’s no fee to set one up. But that doesn’t mean there’s no fee at all. You’ll face PayPal fees — either percentage fees or fixed fees, or both — when you sell things with PayPal business, make any international payments, and sometimes even when you withdraw or move money.
  • Recipient fees. The fees don’t stop with you, either. There can be hefty fees for the recipient once the transfer arrives. Here’s one case study on paying an invoice to prove the point. Coupled with the exchange rate, your employee’s pocketbook could really end up feeling the sting of all of those charges.
  • Recipient account needed. If you’re sending by PayPal, your recipient will need a PayPal account themselves. If your contractor isn’t tech-savvy or lives in a country that PayPal isn’t used in, this could make things a bit difficult.


5. Xoom for overseas contractors

Xoom is owned by PayPal, but offers its own services to individuals and businesses exclusively looking to send money out of the US.

The pros of paying via Xoom

  • Speed. Xoom is known for being quite fast at getting your money from A to B. So it could be a good option if you’re in a rush.
  • Ease of use. It’s also easy to use online and could save you a lot of hassle — especially if the alternative is using your bank.
  • Several delivery options. Xoom’s delivery options vary from country to country, but in addition to offering transfers straight into the recipient’s bank account, in some places, it offers cash pick-up or even delivery.
  • Send up to $10,000 a time. Its maximum sending limit for a single transaction is $10,000, which could well be enough for most of the transfers you need to make.

The cons of paying via Xoom

  • Fees. Xoom fees may be clearly displayed on their website, but that doesn’t mean they’re necessarily a good value. They often charge a fixed fee and can charge substantially more for credit or debit card payments.
  • Exchange rate. Then, of course, there’s that exchange rate. Xoom admits on its website, “In addition to the transaction fee, Xoom also makes money when it changes your U.S. dollars into a different currency.”¹ Which means those rates you find on Google won’t quite match Xoom. Rather, just like a bank, they effectively take a cut when they convert your funds.
  • Limits. If you’re trying to send a bit more than $10,000, then Xoom’s limits may be a bit, well, limiting.

Of course, there are many more than 5 options available. But these are some of the most common. Whichever method you choose, make sure that you’re happy with your chosen option. And that you’re getting a deal on your transfer that you — and your employees — deserve.


1. (July 24, 2018)

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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