Best Ways of Paying International Contractors

Paying international contractors can be a tricky part of hiring abroad. But it doesn’t have to be.

With the right approach—and the right hiring partner—you can avoid delays, high fees, and compliance risks. 

Are you working with freelancers in Latin America? Or maybe scaling a remote team across borders? In any case, understanding your options is crucial. 

In this guide, we’ll walk you through the 10 most efficient payment options for international contractors. We’ll cover what to consider before making a choice and best practices to make the process smoother and more secure.

What Is an International Contractor?

An international contractor is someone who works for a company based in a different country.

Typically, they work independently on a freelance or project basis. Simply put, they set their own schedules and handle taxes themselves. 

So, why hire international contractors? The main benefits include: 

• It provides access to global talent. 
• It's cost-effective and easier to scale. All in all, it saves on overhead costs, benefits, and salaries. This comes in handy for small businesses.
• It’s more flexible and efficient. No long-term commitments or onboarding processes.

Still, it comes with legal, financial, and operational considerations. 

Therefore, understanding how international contracting works and how to handle payments correctly is key to navigating it.

10 Payment Methods to Use With International Contractors

Finding a simple, straightforward way to pay international contractors is key. It helps avoid unnecessary fees, stay compliant, and simplify the process for everyone involved.

Let's explore some effective payment services to consider:

1. Lupa

At Lupa, we specialize in helping businesses hire and manage remote talent across Latin America. 

With strong regional expertise, we offer end-to-end hiring solutions. In other words, we don’t just handle payments. We take care of the entire hiring process, following local regulations and handling payments. 

This is how we can help your business:

• All-in-one hiring solutions: This includes staffing, recruitment, onboarding, and international payroll services, reducing the recruiting process to less than 21 days.
• Seamless compliance:  We handle contracts, taxes, and labor laws—offering seamless, transparent hiring tailored to your needs.
• Specialists in LatAm: We provide deep connections in the region, delivering high-quality candidates at competitive rates for more than 300 global businesses. 
• Strong tech recruiting experience: We have proven success in scaling tech teams across the region—saving up to 70% on hiring expenses.
• Remote-first approach: Proven ability to hire and retain top technical talent in fully remote and hybrid environments—97% of placements are still with our clients after 1 year!
• Part-time and full-time solutions: We provide flexible staffing options to match your business needs.

2. Ontop

Ontop offers solutions for managing international contractors. Their platform handles contract management, invoicing, and cross-border payments. 

All in all, it helps companies pay contractors with ease and adhere to local regulations.

3. Deel

Deel provides global payroll and compliance solutions. It assists companies in paying foreign workers worldwide. 

The platform automates payments, ensures tax compliance, and provides localized contract templates to help businesses meet legal requirements.

4. Stripe Connect

Stripe Connect is a payment platform designed for businesses. It is especially useful for those who run marketplaces or platforms and need to pay third parties.

That said, it's also useful for companies paying international contractors. It handles currency exchange, legal requirements, and sending money straight to your contractors' bank accounts.

5. Payoneer

Payoneer offers cross-border payment solutions. It supports multiple currencies, tax form management, and mass payouts. This allows businesses to send funds to contractors in over 200 countries. 

Contractors, on the other hand, receive payments through local bank transfers, debit or credit cards, or their Payoneer accounts. 

6. Revolut Business

Revolut Business provides multi-currency business accounts. Overall, this allows businesses to hold, exchange, and transfer funds in different currencies. 

It offers features like batch payments and expense management. This way, it simplifies the process of paying international contractors. 

7. Wise

Wise offers international money transfers with transparent fees and real exchange rates. Businesses can send payments to foreign contractors in various countries, often receiving funds within a short time frame.

Its main strength is its multi-currency accounts feature. This allows businesses to manage funds in local currencies, simplifying the payment process.

8. PayPal

PayPal is one of the most popular international payment platforms. It offers features like invoicing, mass payouts, and support for multiple currencies.

PayPal also owns Xoom. This service enables international money transfers with cash pickup or direct deposit options. This is useful in places without digital banking. 

That said, there are a few things to watch out for.

First, transaction fees and currency conversion rates can be higher. And second, PayPal isn’t available in every country—so it’s worth checking before you commit.

9. Western Union

Western Union is one of the oldest and most popular financial institutions for sending money abroad. Why? Simple—it's wide accessibility.

With a presence in over 200 countries, contractors can often receive funds in cash at local agent locations. This is especially useful in areas with no access to banking services. 

That said, watch out for high transfer fees and exchange rates. It’s also less convenient for recurring payments or large transactions. In short, it is a good option for occasional transfers.

It’s also worth noting that Western Union isn’t specifically designed to pay contractors. This is why it lacks features for hiring managers.

10. International Bank Transfer

The old traditional international wire transfer is still a viable choice. 

However, this method comes with higher bank fees and longer processing times compared to digital payment platforms or wallets.

Accuracy is also critical when using this method. A small error in account details, SWIFT codes, or beneficiary information can result in payment delays or failed transfers altogether. 

For these reasons, international bank transfers may not be the best option nowadays. 

Still, they can be useful in certain cases. For example, for large, one-time payments or when working with contractors who don’t use digital platforms.

Key Factors to Consider When Paying International Contractors

Hiring international contractors is more than just choosing the right payment platform. It also involves other aspects. For example, staying compliant, building trust, and setting clear expectations from day one. 

Here are some best practices to make hiring abroad more effective:

Avoid Worker Misclassification

A major risk when hiring internationally is misclassifying contractors as employees. They are not the same thing. 

Contractors work independently and handle their own taxes, such as social security contributions. Employees, on the other hand, are entitled to benefits and legal protection. 

Mixing them up can lead to legal and financial consequences for your business. Avoid this by following local employment laws in your contractor’s foreign country.

Be Aware of Common Tax Penalties

Each country has its own tax laws. Failing to comply can result in fines or penalties. 

Yes—contractors are self-employed and, therefore, responsible for reporting their own income taxes. That said, your business may still need to submit certain forms or reports. 

It’s always smart to check local requirements or talk to an expert. Moreover, you can partner with a recruiting firm to do this for you. 

Complete the Proper Paperwork

Documentation matters. Having the right paperwork in place can protect both you and your contractors. 

This includes tax forms, identification documents, and signed contracts. Many payment and hiring platforms can help you stay organized with this step.

The good news? Many global payment and hiring platforms can make this process easier by providing templates, automated reminders, and secure storage. Moreover, they can do this whole process for you.

Staying organized and on top of your paperwork not only keeps you legally protected—it also builds trust and shows your contractors that you take the working relationship seriously.

Check Currency Exchange Rates

When it comes to international payments, exchange rates are crucial. For instance, if you're paying contractors in USD, conversion rates can impact how much they actually receive. Over time, even small differences can add up.

Some platforms offer real exchange rates, while others include hidden fees or markups. This could mean your contractor receives significantly less than expected.

To avoid misunderstandings, be upfront about how payments are processed and what fees might apply. When possible, use platforms with fair exchange rates and minimal conversion costs. 

This ensures your contractors are paid fairly. But mostly, it also shows that you respect and value their work—no matter where they’re located.

Establish a Payment Schedule

Set a clear and consistent payment schedule. This can be weekly, biweekly, or monthly. 

Establishing this upfront helps build trust, ensures your contractor knows when to expect payments, and avoids confusion. It also shows professionalism and reliability on your part. 

Just as important, make sure the schedule aligns with local norms in the contractor’s country. Payment frequency can change by region or industry. 

Taking these extra steps can go a long way in fostering a lasting working relationship.

Offer Some Benefits

Contractors aren’t full-time employees. Still, offering thoughtful perks can go a long way. Overall, it builds loyalty and strengthens your working relationship. 

Think about it—these professionals are often juggling multiple clients. Showing that you value their work can help you stand out as a preferred partner. 

Small gestures can make a big difference. For example: 

• Performance-based bonuses.
• Paid time off during major holidays.
• Access to professional development resources—like online courses or training programs.

This encourages long-term collaboration, increasing contractor retention.

Discuss a Contract

Signed contracts—or contractor agreements— are crucial for setting the foundation of a professional and transparent working relationship. They help establish clear expectations on both sides and prevent confusion. 

Make sure to outline key details, such as:

• The scope of responsibilities.
• Rates and potential increase.
• Payment terms.
• Timelines.
• Specific deliverables and deadlines.

All in all, a contract doesn’t just offer legal protection. It also works as a reference. Ensuring everyone is on the same page reduces the risk of misunderstandings. 

Taking the time to get the contract right shows respect for the contractor's work and adds structure and clarity to your collaboration.

Avoid Traditional Payment Methods

Paper checks and international money orders were once standard for cross-border payments. 

However, in 2025 they’re largely outdated—especially when working with international contractors.

These traditional methods are slower, harder to track, and more prone to delays or errors. Not only that, but physical mail can get lost or held up in customs or post offices. Cashing a foreign check, on the other hand, can be a burden for the contractor. 

All in all, they often lack the transparency, security, and convenience that digital platforms provide. To make things easier, it’s best to stick with modern payment solutions designed for remote work and global teams.

Comply With U.S. Taxes

In addition to following the contractor’s local laws, U.S.-based companies must also follow specific IRS (Internal Revenue Service) regulations to meet their federal tax obligations.

To do this, businesses should collect the appropriate tax forms from foreign contractors. This verifies that they are not U.S. citizens, as well as the nature of their work.​ 

There are two main forms: 

• IRS Form W-8BEN: Used for foreign individuals. This form states their non-U.S. status and lets them claim any tax benefits they qualify for under a treaty.
• IRS Form W-8BEN-E: Used for foreign businesses or entities. It also verifies their foreign status and helps them claim applicable tax treaty benefits.

With these forms, U.S. businesses can confirm that the contractors are non-U.S. persons providing services outside the United States. As a result, the company is generally exempt from certain tax withholding and tax reporting obligations.

Hiring Foreign Independent Contractors for U.S. Companies

Hiring international contractors can be a smart move for U.S. companies. It opens the door to global talent, offers greater flexibility, and helps keep costs under control. But along with the benefits come important responsibilities. 

Working with contractors in Canada, Latin America, or elsewhere? In any case, it’s important to understand the local labor laws and tax implications in each country.

And not only that—hiring abroad also means navigating an entirely different job market, including:

• Understanding cultural expectations.
• Knowing standard compensation rates to set fair and competitive pricing when negotiating with contractors.
• Adapting to local business practices.

In some cases, working with an Employer of Record (EOR) can be the safest way to ensure compliance. An EOR is a business or staffing agency that acts as the legal employer. Therefore, it handles contracts, payroll, and local tax obligations on your behalf.

That’s where Lupa comes in. We manage everything from hiring, and onboarding to payments and tax documentation—ensuring compliance with U.S. and local regulations.

Hire Talent Abroad and Manage International Payments With Lupa!

Lupa is your best ally when it comes to making payments to international contractors.

We manage the full spectrum of financial operations, encompassing payments, taxes, and compliance, while also ensuring adherence to human resources regulations in each country where our remote team operates. Contact us today to get started.