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Ultimate Guide to Paying International Contractors Today

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6 Best Ways to Pay International Contractors

Need to pay international contractors? Paying foreign freelancers and independent contractors is simple and cost effective when you follow best practices for payouts and use the right global payment software tools. The gig economy is expanding rapidly for independent contractors or freelancers and businesses working on fixed or hourly projects or with an upfront monthly retainer. This means it’s more likely that your company will need to find effective ways to pay these non-employees on time with different payment options.

This how-to guide provides the best methods and resources to make overseas payments to international contractors quickly, safely and securely. Read the guide to help you decide how to pay international contractors in your business. The IRS has 1099 rules for reporting contractor payments, whether they’re U.S. persons or foreign. 


Businesses pay freelancers and international independent contractors using PayPal Business. 

How to Use PayPal as a Payment Method

The business paying for services and the payee both need a PayPal Business account. The freelancer (independent contractor) initiates the payment transaction through a “Create an invoice” link in the PayPal Business app. The business pays the invoice through PayPal Business when they Send money using a PayPal account or payment card. The contractor may be charged transaction fees and FX fees as a percentage. 

The business client will review the contractor’s digital invoice to “Send money” by the due date using a PayPal Business link. In 2019, a PayPal user data analysis showed that 76% of all invoices are paid within one day of receiving the invoice. 

PayPal also lets freelancers and other contractors set up a PayMe button on their website to let their clients book and pay for services. 

If freelancers and independent contractors submit invoices outside the PayPal platform, it’s possible that they will be charged a fixed-rate, lower per-transaction fee instead. 

Pros & Cons

Using PayPal to pay your foreign-based contractors has its pros and cons.  


  • Online invoices received from independent contractor or freelancer or use a PayPal checkout payment button on the contractor’s website
  • Ability to pay with PayPal Business account or payment card
  • Security of using PayPal 
  • PayPal purchase and seller protection with claim filing
  • Available in more than 50 countries and 130 currencies


  • Higher transaction fees and foreign exchange fees

Best Time to Use PayPal

The best time to use PayPal directly is when you need a simple method to pay for invoiced freelancer and independent contractor services in one of the countries and currencies that PayPal offers but you don’t have an automated mass payments solution. Compare the fees to other payment methods besides PayPal. Before paying, check to see if the contractor payee will be paying the PayPal transaction and FX fees by receiving a lower net payment amount.

Wise (formerly Transferwise)

Wise is a cost-effective payment method for paying international invoices from independent contractors. 

How to Use Wise as a Payment Method

Wise lets businesses send money to pay their international contractors in 170 countries and 50 currencies. Your business can use its digital wallet, no-fee Wise international prepaid debit card (with digital card capabilities) tied to your Wise account, or go through the SWIFT system to pay US dollar invoices to international contractors. Contractors may submit invoices for payment through the Wise platform. 

Pros & Cons 

Wise has several pros, including low cost, and some cons. 


Pros of using Wise (formerly Transferwise) to pay international contractors include:

  • Choose from 170 countries and 50 currencies to pay contractors in their local currency where available
  • Wise transaction fees for money transfers and foreign exchange fees are (up to 9 times) lower than its competitors
  • Wise communicates the expected money arrival date to senders and payees
  • Wise uses live FX rates and may guarantee the exchange rate for up to 8 hours
  • Recipients with a bank account don’t need to have a Wise account
  • Wise gives you the choice (for a higher fee) to send U.S. dollar payments for USD invoices via SWIFT network to bank accounts outside the U.S. denominated in USD


Cons of using Wise (formerly Transferwise) to pay international contractors include:

  • Wise doesn’t offer many different types of payment methods
  • Wise doesn’t automatically record payments in your ERP or accounting software

Best Time to Use Wise

The best time to use Wise is when you need to pay international independent contractors at a low-cost in countries and currencies where Wise is available. 

How should your company pay its international contractors?

Download our Contractor Payments eBook to explore the best international contractor payment methods to consider for your business. 

Use AP automation and mass payments software with self-service independent contractor, supplier onboarding with IRS W-8 (or W-9) tax forms collection, payments tracking, and verification processes to ensure global regulatory and 1099 and 1042-S tax compliance, while reducing fraud risks.


Tipalti provides automated mass payments and AP automation software. This Tipalti finance automation software works exceptionally well for cost-effectively making domestic and international contractor payouts. You can also use Tipalti software to pay other types of supplier invoices and partner payments for publishers, influencers and referral fees to eCommerce marketplaces, and royalties, both domestically and internationally. 

How to Use Tipalti as a Payment Method

To make international contractor and freelancer payments, your business will have a choice of available global payment methods in the recipient’s country that Tipalti offers. You’ll pay the contractor in accordance with the independent contractor agreement, including agreed payment terms, and let the contractor select their preferred cost-effective payment method for their home country.

With Tipalti, your company will gain optional access to advanced FX (foreign currency exchange and foreign currency conversion) features. You can make large batch payments to overseas contractors with scheduled payment dates for online payment efficiency. 

Tipalti Payment Methods

Tipalti offers the following international and cross-border payment methods for paying independent contractors and freelancers:

  • Global ACH 
  • Wire transfer
  • Prepaid credit cards
  • Virtual Tipalti Card for payments
  • Paper checks

Global ACH (international ACH transfer) is a payment method in foreign countries such as the 35 European SEPA member countries that’s similar to ACH. U.S.-limited ACH is for U.S. companies making domestic payments. Both global ACH and international wire transfers are considered international EFTs that are international bank transfers. But international wire transfers have much higher bank fees, including sending, receiving, and intermediary bank fees.

The virtual Tipalti Card provides spend control by each of your employees using the virtual payment card and rewards on business purchases. 

With Tipalti mass payments and AP automation software, your business will also be able to use low-cost U.S.-only ACH, a bank-account to bank-account EFT for paying domestic contractors and suppliers within the United States. 

Although paper checks are an option, mailing paper checks through the post office isn’t a recommended choice for making international contractor payments. 

Tipalti Self-Service Supplier Portal

An advantage of Tipalti AP automation and global payments software is that businesses have a white-branded and self-service supplier portal that shifts workload from the accounts payable department staff to your suppliers, including independent contractors and freelancers. 

Tipalti Global Regulatory Compliance and Tax Compliance

Tipalti automation software uses thousands of automated rules and screenings for global regulatory compliance and adheres to local laws and international tax laws, including any required VAT tax with invoice payments to help you meet your payment and tax obligations. 

When using independent contractors, your company needs to comply with labor laws and employment laws, plus rules for contractor payments. Independent contractors aren’t full-time employees on your global payroll. Therefore, they need to be paid differently and your company should avoid misclassification.

Independent contractors and other required foreign suppliers submit their W-8 information (like Form W-8 BEN or Form W-8BEN-E) and preferred payment method through the supplier portal. Tipalti will help you gain tax compliance with supplier payments tracking for IRS Form 1099 or Form 1042-S tax reporting and tax withholding.

Third-party Tax1099 software is integrated with Tipalti AP automation and global payments software, letting you import twelve months of Tipalti-tracked supplier (including contractor) payments data through Tax1099 software. If your business chooses the option to buy a SaaS subscription for Tax1099 software, the company can use partnered Tax1099 software to automatically eFile 1099-NEC (or 1099-MISC) information returns in tax season. 

Tipalti Customer Case Study

Art of Problem Solving is an education company, with online courses and multiple physical locations for classes. A case study from Art of Problem Solving, a Tipalti customer since 2020, demonstrates the value of using the Tipalti AP automation add-on app and mass payments software, integrated with their ERP system/accounting software, for making global contractor payouts. 

Art of Problem Solving used Tipalti automation software to:

  • Save five days by switching from manual to automated contractor payment processes
  • Speed their monthly close by 20 days
  • Gain tax compliance through self-service onboarding of contractors and partners (and Tipalti 1099 payment tracking and 1099 reporting)

“Our monthly close was slow because we couldn’t record contractor expenses until we could figure out the payments. That was a 20-day process. At the same time, if we wanted to offboard a contractor, there wasn’t a good way to ensure they didn’t submit and get paid. Now, with Tipalti, payments flow smoothly. It took four to five business days for one person to take care of all the contractor payments. And now it takes me an hour.”

  • Jessica Hardy, Art of Problem Solving, VP of Finance

Pros & Cons 

Tipalti financial automation software has many pros and few cons because it helps your business gain efficiency and save money. It works for both domestic and foreign payments for contractors, partners, and suppliers performing work both internationally and in their local labor markets. You and your staff can switch to more valuable work. The business will reduce the need for additional account payables staff headcount. 

Tipalti offers optional advanced Multi-FX functionality for managing foreign exchange. Tipalti automation software works for multiple subsidiaries or business entities and provides consolidated views of accounts payable when used with most ERP systems. 


  • Use Tipalti to efficiently prepare information returns for income tax compliance, including IRS Form 1099 and 1042-S, and achieve global regulatory compliance and supplier/ contractor verification to reduce fraud risk
  • Pay independent contractors, freelancers, and suppliers efficiently in large batches, with real-time reconciliation and provide automated payment status notifications
  • Use a choice of available payment methods in the recipient’s country, choosing from 196 countries and 120 currencies (including local currency)
  • Integrated Tipalti integrates AP and payments data with your ERP or accounting software to record transactions in real time
  • Tipalti offers significant efficiency and cost savings benefits for domestic and foreign supplier payment uses beyond paying international contractor services 


  • Tipalti software requires businesses paying international contractors to have an ERP system or accounting software that it integrates with 
  • With Tipalti, you need to plan ahead for implementation before making your first international contractor payment. 

Best Time to Use Tipalti

For a growing business in most industries, the best time to use Tipalti AP and mass payments automation software to pay independent contractors, freelancers, partners, and other suppliers is as soon as you implement it. The implementation timeline can be within weeks, especially if you purchase and optionally use Tipalti Implementation Services.  

If your company is an online marketplace for hiring contractors, your business can use Tipalti to pay foreign independent contractors and freelancers in the contractor’s country (for hundreds of countries and currencies). It’s a no-hassle solution. 

An opportune time to implement Tipalti is when your business is ready to gain significant benefits, including time and cost savings, from digital transformation with its AP automation and global payments software. Tipalti scales for rapid business growth. It gives your business a competitive advantage and cash flow savings from hiring less staff to handle payables and payments. 


Payoneer offers a global payments platform for cross-border payments to international contractors and other types of payees. 

Payoneer partners with established freelancer platforms, including Upwork, Fiverr, and CrossOver. Your business make freelancer payments through these Payoneer-powered platforms or directly to your independent contractor if a freelancer platform isn’t involved. 

Payoneer charges international contractors a 1% fee when paid by U.S. businesses. But Payoneer is free to independent contractors and freelancers when paid by clients in other countries besides the U.S. 

How to Use Payoneer as a Payment Method

Businesses can pay their independent contractors, freelancers, or other partners by using a Payoneer prepaid debit card, credit card, bank transfer, local bank transfer, or (free) from their Payoneer balance. International contractors don’t need to have a bank account. Instead, they can get paid in their Payoneer receiving account when details are furnished to the payer by invoice or email. 

If you pay an international contractor with the Payoneer prepaid debit card, they can withdraw the funds to their local international bank account in a choice of over 150 currencies or (for a fee) withdraw money from their ATM. Contractors can also pay their expenses with the Payoneer prepaid debit card. 

Pros & Cons 

Payoneer has pros and cons for paying international contractors. 


  • Payoneer understands the freelancer market, as evidenced by its freelancer platform partnerships
  • Payoneer cross-border payments to independent contractors originated outside the U.S. are free when made by money transfer from a Payoneer sending account to a Payoneer receiving account
  • Payoneer doesn’t require the payee recipient to have a bank account
  • The Payoneer prepaid debit card balance can be used by the recipient in multiple ways
  • Payoneer lets contractors issue invoices (or emails) to be paid 
  • Payoneer offers many local currency options


  • Payoneer may not be available in a recipient’s country
  • You may not be able to use your credit card for paying recipients in some countries

Best Time to Use Payoneer

The best time to use Payoneer is to make international or cross-border freelancer or independent contractor payments if you’re willing to use the Payoneer sending account to receiving account or Payoneer prepaid debit card, which are lower-cost options. You may also want to use Payoneer if your contractors are using a Payoneer-partnered freelancer platform.  

Western Union 

Western Union, known for its international money orders and money transfers, is one method for paying international independent contractors. Next, we describe methods for businesses to pay foreign independent contractors.  

How to Use Western Union as a Payment Method

Western Union Business Solutions for Business Payments uses their online WU® Edge platform to let businesses make international and cross-border payments. 

Pros & Cons 


  • Widespread availability in 200 countries and 130+ currencies
    • Instantaneous payments with no fee in 54 currencies through the WU® EDGE Network Payment Services
  • Mass payments capability with up to 10 thousand payments in multiple currencies, ability to import invoices to WU payment platform, and payments reconciliation
  • Global compliance for increased safety
  • Near real-time exchange rate quotes
  • Reduced intermediary fees if SWIFT payments are used for making international wire transfers


  • Western Union may mark up its foreign exchange (FX) rates
  • Near real-time payments are not available in all currencies or recipient countries
  • You may incur wire transfer fees if the SWIFT network is used for a WU  payment
  • To use WU® EDGE Network payments, both parties need to be approved and registered as part of the network, residing in only certain countries

Best Time to Use Western Union

Consider using Western Union for payments to international contractors if they have availability in the payee’s currency and country, if foreign exchange rates and any non-WU® EDGE Network payments from Western Union are comparable to other payment companies. Think about whether an international wire transfer payment method is cost-effective if that’s the WU payment method.


MoneyGram provides a few types of payment services for businesses to pay their independent contractors. 

How to Use MoneyGram as a Payment Method

For businesses paying their independent contractors (through one of its MoneyGram Biller Solutions), MoneyGram offers the following payment methods:

  • Cash payout services to vendors (including independent contractors)
  • Prepaid debit cards
  • Money orders
  • Money transfers

Pros & Cons 

Using MoneyGram to make business payments to international contractors in foreign countries has pros and cons. 


  • Prepaid debit cards can be from multiple providers
  • MoneyGram Plus Rewards program offers discounts on money transfers


  • MoneyGram’s expedited same day, next day, or 2 and 3-day payments through its high-tech service is limited to only 13,000 billers (larger companies than independent contractors)
  • A money order takes some time to clear before the recipient can use the funds
  • Only use money orders if both the sender and receiver are known and trusted, to avoid scams
  • Canceling a money order may be expensive

Best Time to Use MoneyGram

The best time to use MoneyGram for making independent contractor payments is when you can make payments to the recipient’s country in a safe and documented manner at a reasonable cost.

Which International Payment Method Fits Your Business Needs? 

6 best ways to pay international contractors are:

  1. Tipalti
  2. Payoneer
  3. Wise (formerly Transferwise)
  4. PayPal
  5. Western Union
  6. MoneyGram

Your company needs to do research to decide which foreign payment method best fits your specific business needs for paying contractors and freelancers. 

When you compare your business options for paying foreign contractors and freelancers in different countries, Tipalti mass payments software (and AP automation software) provides attractive benefits beyond the other choices we’ve described in this guide. Tipalti is integrated with most ERP systems or accounting software. Download our eBooks, “Top Strategies for Online Marketplaces” and “Contractor Payments.”

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