How to Pay Your Remote Employees: The Most Popular Payment Services Compared

How to Pay Remote Employees: The Most Popular Payment Services Compared

I love working for a remote company. It lets me work when and how I want from wherever I want, and I don’t need to fight traffic and waste hours a day commuting to a soulless cubicle.

As part of my job as Marketing Director at Hubstaff, I’ve talked with hundreds of our customers to better understand their businesses and I haven’t heard a single one say they regret going remote. That being said, remote work isn’t without its challenges. Whether it is finding talented employees, managing a team across multiple time zones, or staying productive, remote work brings up a set of new problems that need to be overcome.

Recently I sent out an email to a handful of our customers asking them how they handle payroll.

This is how the responses broke down:How to Pay Remote Employees: The Most Popular Payment Services Compared

  • PayPal: 33%
  • Bank Transfer: 22%
  • Traditional Payroll Service: 15%
  • Multiple Services: 15%
  • Payoneer: 4%
  • Other: 6%

I was surprised by 2 things:

  1. How many companies needed to use multiple services to pay their global team
  2. How frustrating a process this was (I got more than a few rants about this)

This lead me to diving in and spending a few weeks researching the options out there so I could get a better grip on what the market looks like and also try to determine the best options for different scenarios.

Early on, one thing became clear: Companies are wasting a ton of money by not using the cheapest services to pay their team (we estimate we save over $32,400 a year by not using Upwork to pay our team and that was even before Upwork upped their pricing), primarily because the services make it very difficult to figure out exactly what you are being charged.

Why it’s hard to compare different services

The cost of different payroll services is hard to compare, because it is hard to figure out exactly what each service is actually charging you. Most advertise low upfront fees which are usually a flat fee ($4.99 for anything under $1000 at Xoom, for example) or a percentage (like 2% for PayPal Mass Pay) or a combination of the two (like 2.9% + $0.30 for PayPal), but that isn’t the whole story.

If your team is being paid in a different currency, then you need to know what the exchange rate is. Many consumers are unaware of what rate they are paying, and of those who are aware, most assume it is the “real” rate (also referred to as the mid-market rate).

The trouble is, nearly every service out there builds an additional fee into their exchange rate which you wouldn’t know about unless you went looking for it. Some companies charge a set percentage above the “mid-market rate” while others charge a seemingly random fee, and others still don’t publish their exchange rates upfront.

My job is to figure out all of the fees these services are charging so that your company makes an informed decision about what services to use to pay your global team.

So let’s get into it…

How to handle payroll in a remote team - we compare 7 popular payment providers Click To Tweet

The Research

The fees are obviously important, but there is other information I needed to collect so I could make informed recommendations about what the best options are.

I came up with 6 areas I needed to learn about with my research:

Global acceptance:

Where can this be used and what currencies are supported?

Transfer fees:

What does it cost 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 and many consumers are unaware they are being charged anything here.

Ease of use for sender:

While one service may be cheaper, if it requires more of your time to use it, then an extra percent or two could be a fair trade. I want to see if it 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, 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 or cash pickup) or are sent to an e-wallet account.

Who this is best for:

Based on that data and a comparison with the other services reviewed, I make a suggestion for the situations I think it makes sense for businesses to use a certain service

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 Mass Pay, 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:

I recommend PayPal Mass Pay, especially if your team is in the US (as fees are capped at $1). 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.

PayPal

PayPal | How to Pay Remote Employees: The Most Popular Payment Services Compared

Global Acceptance

  • Available in 203 Countries (full list)
  • 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

Conversion fees

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?
    • No

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, but their exchange rates vary so you should check before sending. I have found Mexico and Brazil to consistently be cheaper on Bitwage than any other service, while the other countries are usually less competitive.

PayPal Mass Pay

Global acceptance

  • On their website they say “Send multiple payments in more than 100 currencies to recipients in 203 countries and markets worldwide” but in the API documentation they only list 25. When I called support they simply referred me to the API documentation.
  • I am assuming that the same countries and currencies supported by the traditional PayPal service are also supported by Mass Pay, but it has been difficult to get a straight answer from anybody despite multiple calls and escalations to supervisors (the poor support is another downside to all of PayPal’s products)

Transfer fees

  • Sender pays 2% capped at $1 (for the US) or 2% capped at $20 (for all other countries)
  • Recipient pays nothing

Conversion fees

  • A 2.5% fee is built into their conversion rate (in practice this is often 3-3.5% higher than the true mid-market rate)

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
    • Yes

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 the time of writing this article, we use Mass Pay to pay our team. Paying within the US is very cheap, and international payments are reasonable. I recommend Mass Pay for companies sending less than $20,000 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, especially for the sender because of the cap on fees, but there are a few things to know:

  • You need a merchant account in order to be approved for Mass Pay
  • Sometimes PayPal won’t approve you for Mass Pay and they often won’t give you a reason, or provide the criteria they use to approve accounts
  • We have had payments to our team members in India and Eastern Europe inexplicably fail. We have been able to resolve this quickly with PayPal’s support, but we have not been able to get more information about why this happens
  • We also recently had Paypal place a temporary hold on the transfer in the receiver’s account because they suspected the transaction wasn’t authorized. This was after using Mass Pay to make similar sized payments to the same people every other week for over a year.

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’s difficult to get a resolution. This is why I recommend companies sending over $20,000 a month to simply use a service like Payoneer or Transpay so that you have an account manager you can call if anything goes wrong.

Bitwage

Bitwage | How to Pay Remote Employees: The Most Popular Payment Services Compared

Global Acceptance

  • Local bank-to-bank transfers for countries in the EU, Philippines, Mexico, Brazil, India, US (and soon Indonesia)
  • 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). For more information, check out Uphold’s FAQ.
  • All international users also have the option of receiving a debit card provided by Xapo

Transfer fees

  • 0.5% to fund via ACH debit
  • Free to fund via ACH credit or bank wire (but your bank may charge a fee)
  • 3.5% 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

Country specific fees

  • Xapo debit card fees
  • Mexico fees via partnership with Volabit
  • USD to USD transfers incur a 1% fee, paid by the receiver
  • Brazil has an additional 1.89% fee, paid by the receiver
  • The Philippines has a fee of between 0 and 200 PHP for payouts less than 200,000 PHP to bank accounts, paid by the receiver
    • Cash pickup, cash cards, Gcash,credit card and bill payments are also available with separate fees

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?
    • Yes
  • The sender’s account must be in USD (they are expanding to the EU in the near future)

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. To check what their rates are (inclusive of their 1% fee), navigate here and click Historical Tickers.

Typically I have noticed that 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. However, some of the other markets, especially India, seem to consistently have worse rates.

I recommend Bitwage for companies paying their employees in USD, MXN, or BRL. For the EU, Philippines, and India, I would recommend following their exchange rates to see if it is competitive with PayPal’s 2.5% (which in reality can be 3-3.5% or higher).

Update: In the past few weeks, these exchange rates have become much more competitive, so it is worthwhile to keep an eye on them.

Payoneer

 

Payoneer | How to Pay Remote Employees: The Most Popular Payment Services Compared

Global acceptance

Transfer fees

  • Receivers pay $3 fixed transfer fee
  • Sender pays nothing

Conversion fees

  • Exchange fees are between 1% to 2% 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 >$20,000/month should consider Payoneer. I would recommend speaking with the teams at Payoneer and Transpay to see which is a better fit for your business.

Transpay

Transpay | How to Pay Remote Employees: The Most Popular Payment Services Compared

Global Acceptance

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?
    • Yes

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 I said with Payoneer, I would recommend talking 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

Xoom

Xoom | How to Pay Remote Employees: The Most Popular Payment Services Compared

Global Acceptance

Transfer fees

  • $4.99 for transfers up to $1k, paid for by the sender
  • Free for transfers over $1k

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, like Pakistan or Bangladesh, and is sending less than $20,000 a month in payments, and wants to use a credit card or debit card. 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 team members want to receive a cash payout instead of a payment directly to their bank account.

Two things to emphasize about Xoom:

  1. They only accept US credit cards or bank accounts
  2. If your credit card issuer processes Xoom payments as a cash advance, then the savings on the conversion rate will be negated by the fees your credit card charges you

TransferWise

TransferWise | How to Pay Remote Employees: The Most Popular Payment Services Compared

Global Acceptance

  • Currencies for funding the transfer: EUR, GBP, USD, AUD, BGN, BRL, CAD, CHF, CZK, DKK, HUF, JPY, NOK, NZD, PLN, RON, SEK
  • Currencies that transfers can be received in: AED, AUD, BDT, BGN, BRL, CAD, CHF, CNY, COP, CZK, DKK, EUR, GBP, GEL, HKD, HUF, IDR, INR, KRW, LKR, MAD, MXN, MYR, NOK, NZD, PHP, PKR, PLN, RON, RUB, SEK, SGD, THB, TRY, UAH, ZAR
  • Source: https://transferwise.com

Transfer fees

  • Different for each country, but typically starts around $3 for transfers up to $300, then 1% for anything about that and 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?
    • No

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?

TransferWise is the best option for anybody paying a team that resides in countries not supported by PayPal, like Pakistan or Bangladesh, and is sending less than $20,000 a month in payments, that is able to pay via bank account. For countries where PayPal’s 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, so for a large team, it probably makes sense to go with a service that can because it will save you 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.

It doesn’t have to be so hard (or expensive) anymore

Handling payroll for a team across the globe has always been a pain, especially when all of the various services make it difficult to compare what you are getting. Hopefully this article helped simplify the options to save you time and money so you can get back to the important things like running your business.

If you want even more time to run (and grow) your business, then check out how Hubstaff can help you automate your payroll and save you hours a week.

  • Ana

    This is a great article. Eastern European freelancers have been struggling with getting paid abroad (and some still do) due to the obstacles you are mentioning. In addition to this I would add this blog post as well https://jobrack.eu/blog/3-easy-ways-pay-eastern-european-employees/ because it helped a lot of them clear their doubts about what can/cannot be done.

    Thanks for this article – very well written – it will help a lot of employers pay their remote workers easily.

  • Andy, very well researched article. Excellent comparison. There is a moot point that is often missed (and I know it was not the intention/focus of your article), but there are literally 100s of various payment methods out there. Some famous (like the ones you have mentioned), some not to much. Some are just down right poisonous and you’d avoid like the plague. There isn’t a well known, trusted (neutral?) ranking system for these payment system.

    In addition to this, there is a HUGE vacuum when it comes to routing payments ‘amongst’ these various payment solutions. You cannot route a payment from PayPal to Transferwise, or from Xoom to TransPay or Payoneer, this just doesn’t exist. We need a ‘financial routing’ mechanism where aggregators can provide such a service to ensure more interoperability of payment networks.

  • Thank you Andy for the effort of researching about these payment services and sharing what you’ve found out.

    I have staff in the Philippines and calculating the payment service charges is not that complicated. However, banks there have holding days (I don’t know the exact term) and additional transfer fee which varies depending on the payment service.

    So aside from the service charges, remote managers should also consider the bank charges if they are paying staff in the Philippines.