Managing a remote team may seem overwhelming and complicated at first, especially with logistics like payments to think about. And the truth is, companies can waste a ton of money by not using the best services available to pay independent contractors and remote employees online.

The reason why choosing a payment service provider is challenging is because the services themselves make it very difficult to figure out exactly what you are being charged.

In this post, we will discuss how to pay independent contractors and other remote team members, as well as the top contractor payroll methods that you can use.

The Cheatsheet (TL;DR)

For US teams with employees in the US, Mexico, or Brazil:
Bitwage offers the lowest rates, is able to pull the money out of your account or credit card, and integrates with Hubstaff for automatic payments.

For US teams with employees in the EU, the Philippines, Mexico, Brazil, or India:
Bitwage
often has competitive rates but they aren’t reliably better than PayPal Payouts, so compare their rates to those on XE to see which is the best option.

For teams with employees in Pakistan or Bangladesh (or other non-PayPal countries):
Xoom
or TransferWise. Xoom only accepts US customers, but they are also the only option for these countries that accepts credit card payments (although you may be charged a cash advance fee). TransferWise is almost always going to be the cheapest option.

For teams with employees outside of those countries sending <$20,000 a month in payroll:
PayPal Payouts
 is recommended, especially if your team is in the US (as fees are capped at $1). Payouts mass pay requires you to keep a cash balance in your PayPal account to fund the transfers but has low fees, competitive conversion rates, and integrates with Hubstaff for automatic payments.

For companies sending >$20,000 a month in payroll:
At this size, the conversion rate fees are going to really start adding up so it can be worth it to investigate using an enterprise-grade solution like Transpay or Payoneer. Both options give discounts for large senders and integrate with Hubstaff to allow for automatic payments. They also will give you an account manager you can call if there are any issues, while PayPal can make it almost impossible to get somebody on the phone who can help.

For the absolute lowest cost solution:
If you have spare time but no spare money, then you can likely save 1-2% by using Xoom or TransferWise. Both of these services are built for individual payments, while the others mentioned were built for batch payments, so for these you need to pay each contractor individually, and because there is no Hubstaff integration, you will also need to do this manually. Every dollar counts, and if you can spare a few hours a week, these are the cheapest options you will find.

For paying with a credit card:
Bitwage
for US based teams paying employees in the US, Mexico, or Brazil.
Xoom for other countries if your credit card doesn’t charge you a cash advance fee.
Paypal Web Payments for all other countries.

For streamlining payroll, time, and project management:
Instead of manually monitoring your contractors’ work progress, you can use Hubstaff to automate the entire process, including payroll. Hubstaff will track your remote team’s progress, let you set budgets, and automatically send payments based on the total hours your team has worked.

Jump to read about individual types of international contractor payroll:

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Why it’s hard to compare different payroll services

Comparing the costs of different payroll services is difficult because it is hard to figure out what you’re actually paying for. Most advertise low upfront fees, which are usually a flat fee or a percentage, or a combination of the two, but there are still other factors involved.

If your remote employee is being paid in a different currency, then you need to know what the exchange rate is. Many consumers are not aware of what rate they are paying. Most of those who actually are assume it is the “real” rate (also referred to as the mid-market rate).

The trouble is, nearly every service out there builds in an additional fee on top of their exchange rate. There’s no way for you to know about it unless you intentionally went looking for this information. Some companies charge a set percentage above the “mid-market rate,” while others charge a seemingly random fee. There are even companies that don’t publish their exchange rates upfront.

Finally, it’s difficult to compare payment services side-by-side because many companies offer multiple ways to pay, which can all impact fees and convenience. For example, paying by credit card using PayPal adds a processing fee, but paying from a bank account or PayPal balance doesn’t. We’ll get into this in the following sections.

Here’s how we’ll compare payment options.

The Research

The fees are obviously important, but there are other pieces of information needed to make informed recommendations for the best options for paying your 1099 contractors.

Here are the 6 factors we’ll consider for each option:

Global acceptance:
Where can this service be used and what currencies are supported?

Transfer fees:
What does it cost just to send and receive money using the service?

Conversion fees:
These fees are often built into the exchange rate offered by the services, so they aren’t as easy to find as other fees. Many consumers are unaware that they are being charged anything here.

Ease of use for the sender:
While one service may be cheaper, an extra percent or two could be a fair trade if it requires less of your time to use it. This section aims to uncover if the service requires the sender to maintain a balance to cover payments (instead of pulling the money from a bank account or credit card only when it is needed), whether or not credit cards are accepted, whether mass payments or ongoing payments can be made, and whether or not it can be automated by integrating with Hubstaff.

Ease of use for receiver:
There are two factors for how easy a service is to use for a receiver: whether or not they need to create an account to receive their payments, and whether or not the payments go directly to them (via bank, cash pickup, or an e-wallet account).

Who this is best for:
Finally, we will compare services to see which business situations make the most sense for each one.

How do you pay independent contractors?

Independent contractors or international employees can provide you services that are of the same quality — sometimes even higher — as local full-time employees. What makes them the better option of the two is that you only have to pay for the hours they have worked, or the projects they have completed.

Of course, you need to have a payment method you can safely rely on since your contractors will naturally be expecting compensation. Some of them have their own preferred payment methods. Others work on a freelancer platform and let it handle everything for them.

Let’s take a look at top contractor payroll solutions.

1.Automated contractor payroll with Hubstaff

Hubstaff

Hubstaff is a time tracking and automated payroll software that addresses the main challenge with the methods mentioned above: ensuring that you get value for your money. Hubstaff tracks every hour worked by your freelancers so you know exactly how much you will pay.

It also offers a payment solution that can be maintained right from within your account by integrating with payment platforms like PayPal and Payoneer.

Of course, you can always use Hubstaff’s service to pay an independent contractor, a remote employee, or a freelancer. Hubstaff offers a payment solution that can be maintained right from within your account by integrating with PayPal.

The advantage is that Hubstaff addresses the main challenge with all of the methods mentioned above: an easy way of ensuring that you get value for money. Hubstaff tracks the time that your remote employees are working and maintains a record of which time logs you’ve paid and which ones you haven’t.

It simplifies remote time tracking and adds an extra layer of insight and reporting. Payments can be sent out automatically or manually. All your freelancers have to do is download the desktop app and begin tracking time so the service knows how much to pay them.

Hubstaff will automatically calculate payroll based on their hourly rate and the time they have logged. You can also use Hubstaff’s reporting feature to view how many total hours they have worked over a specific date range, and pay them accordingly after the whole project has been completed.

As easier way to pay contractors and remote teams

Completely free for 14 days

Bonus: A solution for managing your independent contractors

With a distributed team or outside contractors working on your projects, it’s very important to get everyone on the same page by using the right online project management tool. Hubstaff Tasks is one such tool, providing teams with Agile features and automated kanban boards. With Hubstaff Tasks, you can create detailed tasks, organize them into columns, add an assignee, followers, and collaborate by adding comments or files.

Tasks can also be organized into weekly sprints. Each task can go into the backlog, current sprint or the future sprint. This ensures projects stay on track, and as a project owner, you can easily see what your team is working on this week. This project management tool also has an automated daily standup, making it easy for team members to update what was worked on yesterday, the planned work for the coming day and any roadblocks that might come up.

2.PayPal

PayPal

When it comes to paying contractors online, there is no bigger name than PayPal. PayPal is the largest online payments processor in the world with over 157 active digital accounts in 203 countries.

At a glance:

  • A large number of people and businesses pay contractors and remote employees with PayPal. This means that if you want to outsource, there is a solid chance that your contractor already has a PayPal account.
  • PayPal offers flexible payment options. You can link your credit card or bank account to your PayPal account so that you are never short of cash.
  • You have easy access to PayPal funds via a web application and mobile application.
  • If PayPal ever becomes insolvent, you lose any PayPal balances. This is because it isn’t a bank. PayPal balances are not FDIC-insured. The FDIC pass-through insurance they offer only protects transfers to your bank but offers no protection against PayPal insolvency.
  • PayPal isn’t an option for everyone around the world. Even though most people around the world can receive a payment via PayPal, not all countries have withdrawal options to local bank accounts. Hence, you may end up paying your international employees overseas only for them to get stuck with PayPal balances which they can only utilize for online purchases.

Global acceptance:

  • Available in 202 Countries (full list)
  • 25 currencies supported:
    • USD, AUD, BRL, CAD, CHF, CZK, DKK, EUR, GBP, HKD, HUF, ILS, JPY, MXN, MYR, NOK, NZD, PHP, PLN, RUB, SEK, SGD, THB, TRY, and TWD

Transfer fees:

  • Senders pay 2.9% + $0.30 per transaction funded by credit card
  • Senders pay nothing for transactions funded by bank account
  • Receivers pay 2.9% + $0.30 for any transaction
  • Source: PayPal

Conversion fees:

  • An undisclosed fee is built into their conversion rate (in practice this is often 3-3.5% higher than the true mid-market rate), in addition to any other fees for sending or receiving. You’ll have to calculate the fee in your PayPal account, according to this support article.

Ease of use for sender:

  • Does it require keeping a balance to cover payments?
    • No
  • Can you pay via credit card?
    • Yes
  • Can it be automated with Hubstaff?

Ease for receiver:

  • Does it go straight to their bank account?
    • No, goes to their PayPal account and takes 2-3 days to go from there to their bank account
  • Do they need to create an account?
    • Yes

Who is this best for?

PayPal Web Payments is best for businesses that want to use a credit card to pay their team. If you are in the US, Bitwage may be cheaper if you are paying teams in the EU, India, Philippines, Mexico, or Brazil. Their exchange rates vary so you should check before sending.

3.PayPal Payouts Mass Pay

Global acceptance:

  • PayPal Payouts (their mass pay option) supports 24 currencies and 156+ markets around the world.

Transfer fees:

  • To make domestic payments through the website, PayPal Payouts charges 2% per payment, capped at $1 USD per payment.
  • For payouts made through API, the fee is $0.25 USD per U.S. transaction.
  • You can also check out all fees for international payments.
  • The recipient pays nothing.

Conversion fees:

  • There’s a 2.5% charge for currency conversion (in practice this is often 3-3.5% higher than the true mid-market rate).
  • Plus, a 1.5% international transaction fee to receive payments from another country.

Ease of use for sender:

  • Does it require keeping a balance to cover payments?
    • Yes, although you can set your account to be automatically funded to a certain amount if you have the PayPal debit card.
  • Can you pay via credit card?
    • No
  • Can it be automated with Hubstaff?

Ease for receiver:

  • Does it go straight to their bank account?
    • No, goes to their PayPal account and takes 2-3 days to get from their to their bank account.
  • Do they need to setup an account?
    • Yes

Who is this best for?

At Hubstaff, we use PayPal Payouts mass pay to automate payroll for our team. Paying within the US is very cheap, and the costs of paying contractors overseas are reasonable. This is recommended it for companies that are sending $20,000 or less a month, and are able to pre-fund their account without impacting cashflow.

As with Paypal’s Web Payments, Bitwage may be cheaper if you are paying teams in the EU, India, Philippines, Mexico, or Brazil, but their exchange rates vary so you should check before sending.

This service is relatively cheap, but there are a few things to know:

  • You need a business account in order to be approved for Payouts.
  • PayPal may refuse to approve you, often without giving a reason, or providing their criteria for approving accounts.
  • PayPal may place a temporary hold on a transfer in the receiver’s account if they suspect the transaction wasn’t authorized.

Just like with any PayPal service — when it works — it’s great because it’s easy and relatively cheap. But when it doesn’t work, it can be difficult to get a resolution. This is why companies sending over $20,000 a month may be better suited to use a service like Payoneer or Transpay, so that you have an account manager you can call if anything goes wrong.

4.Payoneer

Payoneer

Payoneer is a global payments, payouts processor and money transfer service. If you can get into a relationship with them, it is a good alternative to paying independent contractors worldwide.

At a glance:

  • They have a wide global reach. You can send payments to more than 200 countries, in over 150 currencies.
  • Payoneer offers multiple payout solutions including prepaid Mastercard cards and global bank transfers
  • The company is a regulated entity in the US and EU, and is licensed to remit funds globally.
  • They issue workers with a Mastercard debit card which allows contractors and employees to withdraw money from an ATM machine in their country.
  • You can manage your account using a mobile app that’s available for Android and iOS.
  • Your contractor can withdraw the funds via the debit card provided with the account. Withdrawals can also be made to a bank account or web money account.
  • You cannot use Payoneer’s service unless you have a large number of workers.
  • The withdrawal fees are relatively high when compared with a service like PayPal. While PayPal charges an average of 3%, Payoneer charges between $2-$4 to load a prepaid debit card. The outsourced contractor is also charged $3.15 to withdraw and up to another 3.5% for currency conversion.

Global acceptance:

Transfer fees:

  • Receivers pay $1.50 transfer fee to a bank account in the same currency
  • Sender pays nothing

Conversion fees:

  • Exchange fees are up to 2% above mid-market rate, depending on the volume of your account; the more money you send through Payoneer, the lower the exchange fees will be.

Ease for sender:

  • Does it require keeping a balance to cover payments?
    • Yes, but for US companies who are funding $10-15k at a time, Payoneer can debit their bank account instead of having them initiate the transfer.
  • Can you pay via credit card?
    • No
  • Can it be automated with Hubstaff?
    • Yes

Ease for receiver:

  • Does it go straight to their bank account?
    • It can go directly to their bank or the receiver’s Payoneer account, depending on their preference
  • Do they need to setup an account?
    • Yes. Accounts are manually approved, and sometimes additional documentation is required.

Who is this best for?

Anybody paying their team more than $20,000/month should consider Payoneer. You can speak directly with the teams at Payoneer and Transpay to see which one is a better fit for your business.

 

5.Skrill

pay independent contractors with Skrill

Skrill, formerly known as MoneyBookers, is a UK-based money transfer platform. They were named the Best Electronic Payment Solutions in Europe by the International Finance Magazine Financial Awards 2014.

At a glance:

  • The service is popular with contractors in Eastern Europe, Asia and Africa due to the localized withdrawal options that they offer. For example, they have a service that allows outsourced workers in East Africa and some Asian countries to withdraw funds to mobile wallets.
  • Skrill is also relatively cheap to use compared to a service like PayPal. Sending money costs 1.45% but the total fee is capped at a maximum of €10. But, as with all services, there is a currency conversion fee of 3.99% on top of wholesale exchange rate.
  • The main disadvantage with Skrill is that it doesn’t have a large enough uptake. In particular, the service isn’t popular in North America. Thus, it isn’t a viable option to pay contractors in this region.
  • You also have to login or make a transaction every 12 months, otherwise a $3 service fee will be deducted from you account.
  • As with PayPal, there is no protection afforded in the event of the company becoming insolvent.

Global acceptance:

  • Used in nearly 200 countries for 40 currencies (although when it comes to sending money internationally, it seems you can only send to up to 37 countries).

Transfer fees:

  • To send a payment, there’s a 1.45% fee (minimum of .50 USD). Receiving money is always free.
  • Uploading funds from your bank is free; using Visa or Mastercard has a 2.90% fee; ACH payments have a 6.00% fee.
  • To withdraw funds, there’s a flat $5.50 USD fee.

Conversion fees:

  • Skrill adds 3.99% to wholesale exchange rates, which is a bit higher than the average.

Ease for sender:

  • Does it require keeping a balance to cover payments?
    • You’ll need to set up a Skrill account to send payments but you can link your bank account directly.
  • Can you pay via credit card?
    • Yes
  • Can it be automated with Hubstaff
    • No

Ease for receiver:

  • Does it go straight to their bank account?
    • Yes
  • Do they need to create an account?
    • No, money can be sent to a mobile wallet or bank account. You just need an email address.

Who is this best for?

You can send one-time or ongoing monthly payments, but if you’re looking for a more streamlined way to pay multiple remote workers with differing amounts each month, Skrill might not be right for you. That said, Skrill is freelancer- and recipient-friendly and offers convenient wallet features.

6.Bitwage

Bitwage

Bitwage is a growing payment service that added 18 additional currency options in 2017. It’s built for remote workers and development teams, so its features are a great fit if your business falls in that category.

Because their rates are dependent on the method of payment, country, and currency, it’s best to explore your specific situation us7ing their rate calculator. In some cases, Bitwage comes in below the mid-market rate, and other times it can be well above.

At a glance:

  • They support nearly every country with a “virtual savings account” through Uphold where users can then get their money via bank transfer (For the US and Europe) or ATM card (for other countries).
  • All international users also have the option of receiving a debit card provided by Xapo.

Global acceptance

  • Supports over 25 currencies.
  • Local bank-to-bank transfers for countries in the EU, Philippines, Mexico, Brazil, India, US (and soon Indonesia).

Transfer fees

  • 0.50% + .50 USD per payroll charged to employer to fund via ACH debit.
  • Free to fund via ACH credit or bank wire (but your bank may charge a fee).
  • 3.50% + .30 USD per payroll charged to employer to fund via Credit Card.

Conversion fees

  • Bitwage charges 1% above the market rate they are able to get, but the rate they are able to get varies based on the liquidity for that market.

Ease for sender

  • Does it require keeping a balance to cover payments?
    • No, but it costs 0.5% to have them pull the funds from your bank account.
  • Can you pay via credit card?
    • Yes, but accounts start with a $500/month limit (this can be raised over time).
  • Can it be automated with Hubstaff?

Ease for receiver

  • Does it go straight to their bank account?
    • Yes
  • Do they need to create an account?
    • Yes

Who is this best for?

Bitwage aims to offer an easy to use service at an affordable price by only charging a 1% premium on the rates they get for currency conversions, however those rates vary significantly. Typically for MXN and BRL conversions, they are able to get very close to the mid-market rate, making them a great option for those countries.

Because the rates can vary so much by country, check their exchange rates for your situation to see if it is competitive with PayPal’s 2.5% (which in reality can be 3-3.5% or higher).

7.Transpay

Transpay

Unlike some of the other payment services, Transpay is focused on business transactions with international teams or customers. Their features and payment options are tailored toward offering a cost-effective, scalable solution for businesses.

At a glance:

  • Local bank transfers can be complete in a few hours; cash transfers can happen right away.
  • Extended reach thanks to availability in many countries.
  • Hard to decipher fees until you know the amount, time and method of payment.

Global acceptance:

  • Very good coverage – 90% in-market coverage in over 120 countries and 60 currencies. Source: Transpay

Transfer fees:

  • The fees vary based on the country and volume, and in some cases they require a minimum monthly fee/maintenance fee.

Conversion fees:

  • The exchange rate is quoted at the time the transaction is placed and varies by country.

Ease for sender:

  • Does it require keeping a balance to cover payments?
    • Yes, and accounts can be funded in USD, CAD, GBP, or EUR
  • Can you pay via credit card?
    • No
  • Can it be automated with Hubstaff?
    • No

Ease for receiver:

  • Does it go straight to their bank account?
    • Yes, they can also receive a cash payout in many countries
  • Do they need to create an account?
    • No

Who is this best for?

Transpay is similar to Payoneer except they don’t require an account for the receiver. As mentioned above with Payoneer, it’s recommended to talk to sales reps at both companies to determine which makes the most sense as each will have different fees based on the countries you are sending to.

8.Xoom

Xoom

Xoom’s greatest strength is speed. The total time differs depending on where you’re sending money and the amount, but sending money to a bank account in India from the U.S. can be done in as little as four hours. For some banks and amounts, Xoom offers instant deposits.

As part of PayPal, Xoom covers the international part of payment services. Currently, U.S. to U.S. payments must be made in PayPal. You can choose to login with your Xoom or PayPal account.

Global acceptance:

Transfer fees:

  • Fees vary by payment amount, method, currency and receiving option, but generally: $4.99 for transfers up to $1,000, paid for by the sender
  • Free for transfers over $1,000

Conversion fees:

  • Varies by country, but approximately 1-1.5% above mid-market

Ease for sender:

  • Does it require keeping a balance to cover payments?
    • No
  • Can you pay via credit card?
    • Yes, but many credit cards process Xoom transfers as a cash advance which has additional fees that are often quite large
  • Can it be automated with Hubstaff?
    • No

Ease for receiver:

  • Does it go straight to their bank account?
    • Yes, they can also receive a cash payout
  • Do they need to create an account?
    • No

Who is this best for?

Xoom is a good option for anybody paying a team that resides in countries not supported by PayPal, and is sending less than $20,000 a month in payments. If you want to use your bank account, TransferWise is most likely going to be the cheaper option.

It is also the easiest option if your remote workers want to receive a cash payout instead of a payment directly to their bank account.

9.TransferWise

TransferWise

TransferWise leads with a pretty compelling offer: the fairest exchange rate. Unlike other payment services, TransferWise doesn’t add a premium to the wholesale (mid-market) exchange rate. That means you end up paying only what you have to for currency conversion.

At a glance:

  • You only pay the mid-market exchange rate, which is the lowest available.
  • Upfront estimate of fees and rates helps you feel confident before you send money.
  • With only 60 countries available, TransferWise’s reach is more limited than others.

Global acceptance:

  • Currencies for funding the transfer: AUD, AED, ARS, BDT, BGN, BRL, CAD, CHF, CLP, CNY, COP, CZK, DKK, EGP, EUR, GBP, GEL, GHS, HKD, HRK, HUF, IDR, ILS, INR, JPY, KES, KRW, LKR, MAD, MXN, MYR, NGN, NOK, NPR, NZD, PEN, PHP, PKR, PLN, RON, RUB, SEK, SGD, THB, TRY, UAH, USD, VND
  • Currencies that transfers can be received in:  AUD, BGN, BRL, CAD, CHF, CZK, DKK, EUR, GBP, HKD, HRK, HUF, JPY, NOK, NZD, PLN, RON, SEK, SGD, TRY, USD
  • Source: Transferwise

Transfer fees:

  • Different for each country, but the rates for from GBP have been reduced to 0.35% + £0.80
  • Some countries have additional discounts for larger volumes
  • You can read their documentation for the complete fee structure

Conversion fees:

  • There are no additional conversion fees

Ease for sender:

  • Does it require keeping a balance to cover payments?
    • No
  • Can you pay via credit card?
    • No
  • Can it be automated with Hubstaff?

Ease for receiver:

  • Does it go straight to their bank account?
    • Yes
  • Do they need to create an account?
    • No

Who is this best for?

If you are sending less than $20,000 monthly, TransferWise is the best way to pay contractors that reside in countries not supported by PayPal, like Pakistan or Bangladesh. For countries where PayPal’s Payouts mass pay is an option, TransferWise will always be cheaper for the receiver, and if you are sending more than $150 it will be cheaper for you as well.

The downside is that these payments cannot be automated. If you are handling a large team, it might be better to go with a service that can because it will save you a lot of hours every week. If you are smaller or are willing to trade a few hours of work for some savings, then TransferWise can make sense.

10.Wire transfer, Western Union, and other money transfer services

Western Union

Wire transfer has been around for at least half a century, and is the oldest among all the money transfer methods. Money transfer services like Western Union and others are fairly recent.

At a glance:

  • The main advantage is that they are uncomplicated and pretty much everyone understands them. In fact, they are the safest option for sending payments to foreign contractors because anyone from any part of the world can receive a Western Union payment or wire transfer.
  • They are a great option to pay independent contractors in countries where services like PayPal don’t offer a local withdrawal option.
  • Wire transfers take time and are not cost efficient for small amounts.
  • Sending an international wire transfer takes a minimum of three days for the money to hit the employees account. In most cases, it takes about a week. This is disadvantageous given that prompt payments tend to motivate workers.
  • They are time consuming. Making a payment via wire transfer or Western Union — even if you are using a web application — isn’t automated, and can take longer to complete.

Global acceptance:

  • Used in over 200 countries and 130 currencies, with over 500,000 agent locations

Transfer fees:

  • Sending money from bank account to bank account has a $.99 USD fee
    • For cash pickup, add a fee up to 10%; to use a debit or credit card, add a 2-8% fee depending on the amount

Conversion fees:

  • Western Union has a helpful tool for finding out exactly how much your transaction fees will be, but expect a higher conversion fee overall, up to 6%

Ease for sender:

  • You can send money online, stop into a Western Union location or send by phone. In that way, Western Union has plenty of options. Just know that the method you use to send money may influence your fees (the more convenient, the higher the fees).
  • Does it require keeping a balance to cover payments?
    • No
  • Can you pay via credit card?
    • Yes
  • Can it be automated with Hubstaff?
    • No

Ease for receiver:

  • Much like sending money, you have options when it comes to how you want to receive the money. It can be sent straight to a bank account, to one of the 500,000 agent locations around the world, or via mobile app.
  • Does it go straight to their bank account?
    • Yes
  • Do they need to create an account?
    • No

Who is this best for?

Western Union is a good option when being able to withdraw money locally is important. It’s not the fastest process, especially international wire transfers, but it can be convenient for both sender and recipient.

Pay only for time worked

Easy, accurate payments with Hubstaff

11.Escrow via freelance websites

Freelance websites are one of the easiest ways to find contractors.. The most popular are Upwork, Freelancer and PeoplePerHour. Because payments are handled by the same platform where you manage your remote workers, it is one of the most convenient contractor payroll solutions.

Freelancer platforms offer payment methods where they take care of the money transfers from your account to your freelancer’s. For some, if you don’t have enough funds in their internal systems, they charge your account or credit/debit card along with their fee. Once the funds are transferred, your remote employees are free to use their hard-earned money.

At a glance:

  • The biggest advantage of freelance websites is the escrow feature. Escrow protects both the employer and employee. Once funds are paid into escrow, the employer has peace of mind that the employee will only access funds once they have completed the job in accordance with the job description and agreement.
  • Freelance websites have a number of withdrawal options, making payments very convenient. For example, a site like Upwork allows contractors to withdraw funds using PayPal, bank transfers, checks, Skrill and Payoneer.
  • While using these platforms to pay your international contractors gives you peace of mind due to the escrow service, it also takes away an element of control from you. You aren’t entirely in charge of the hiring process. If, for example, there is a dispute, the freelance site’s dispute resolution panel can rule against you and release the funds to the worker.
  • As with PayPal, any funds held by a freelance site are not protected in the event of insolvency. Rather than place too much money in escrow, it’s recommended to break up the project into smaller chunks and fund the milestones one at a time to reduce the insolvency risk.
  • If you are paying by the hour, it is difficult to ascertain if the worker actually worked for the number of hours billed.

Global acceptance:

  • Payment through Upwork, for example, is available in 188 countries

Transfer fees:

  • Upwork charges a 3.00% processing fee per payment

Conversion fees:

Ease of use for sender:

  • Does it require keeping a balance to cover payments?
    • No, you can pay with Mastercard, Visa, American Express, Discover, or PayPal
  • Can you pay via credit card?
    • Yes

Ease for receiver:

  • Does it go straight to their bank account?
    • Yes
  • Do they need to setup an account?
    • Yes
  • One thing to know about Upwork is that they have significant fees for people who get paid through the platform. Make sure your team is aware before setting up payment.

Who is this best for?

Platforms like Upwork are best for recipients and clients that have ongoing projects. The fees Upwork charges freelancers go down to 5% once they’ve billed $10,000. Up until that point, freelancers take a significant cut just to get paid through the platform.

For businesses, paying through Upwork can be easy enough, especially because of the multiple payment methods it supports.

Which payment method is best suited for you?

When making a decision on how to pay remote contractors, you shouldn’t base your decision on which platform is the cheapest. Make sure that you select the one that’s the most convenient for your business, and supports all the countries in which your contractors are based.

Were you able to determine which of the payment methods mentioned above is best for your business? Are there any payment platforms that you use that are worth mentioning? Let us know in the comments below.

Read our other articles on money transfers:

This post was originally published in December 2014. It has been updated in April 2019 for accuracy, and to include more relevant payment systems.