Pay International Contractors: Options and Costs

What are your options for paying foreign contractors?

If you're sending funds to a contractor overseas, you have a few possible channels: use your bank for an international transfer, choose a specialist payment service, or send money through a payment platform the contractor already works with.

These methods aren't always alike. Costs, speed, and what your contractor must provide (like a payslip, identification, or business registration) can vary a lot between them. When contractors receive funds into a local bank account and in their own currency, fewer middlemen are involved, so there may be fewer deductions from the final amount.

Ask your contractor upfront how they can accept payments. Some only use a local bank, while others may want funds into a digital wallet. By making this clear before that first invoice arrives, you avoid failed or delayed payments later on.

Which currency should you pay a contractor in?

You're able to pay in the contractor's currency, your own, or sometimes a third one entirely. Paying in their currency means your provider handles the conversion, so the receiver gets a known sum. If you pay using your home currency, it’s often up to the contractor’s bank (or their provider) to convert the funds, which could result in an unpredictable rate.

Be specific in all paperwork: always write the intended currency and amount in every contract or invoice. This direct approach stops future confusion or disputes if exchange rates change things. For a setup that lets you hold and pay in multiple currencies from one place, you might like our guide to multi-currency business accounts.

Pay in the contractor’s currency if the agreed amount is set that way from the start.
Only pay in your own currency when this is detailed in the contract.
Look at the total amount received, including costs hidden in exchange rates, before settling on how you’ll pay.

Who pays the transfer fees, and which records should you keep?

Transfer fees could show up in a few places: your provider might add charges, banks in the middle may deduct something extra, and the contractor’s own bank can also take a cut. Clarify in writing whether your contractor will get the full contract price or whether they’ll cover costs along the way. If you're making multiple international payments together, our bulk international payments guide goes into those extra checks on costs and necessary approvals.

Your records matter. Save copies of the contract, invoice, transfer confirmation, and keep a note of any exchange rate used. Tax rules on paying contractors (including if you must withhold any tax at source) can change from country to country. Always get advice from your local tax office or a certified professional before you pay abroad.

Frequently asked questions

Is it cheaper to pay a contractor by bank transfer or by a platform?

There’s no single answer. The cost varies with the currencies and amounts involved. Bank transfers can mean fixed fees plus possible deductions by other banks in the chain. Specialist services usually show a clear fee, but the exchange rate may include their margin. Always look at the total amount that actually ends up in your contractor's account, not just the listed fee.

Do I have to withhold tax when paying a foreign contractor?

You might not have to, but sometimes you do. Withholding rules depend on both countries, the kind of work and the contractor's tax registration. As these requirements change between jurisdictions, check with your tax authority or a professional adviser before making the first payment.