When your business hires workers overseas, you’ll need to pay them on time. However, finding the best way to pay them can be a daunting task. You’ll have to evaluate several payment methods to find the most suitable option. Doing all those is not a simple task.
The differences in financial regulations and currencies between countries make it even more challenging to pay employees abroad. You have to adhere to all the payroll and tax laws in a foreign country. So, what’s the best way to pay international workers?
You can find the best money transfer deals through a comparison of of the best providers worldwide. But in this guide, we’ll look at the various payment methods to pay international employees. Keep reading to learn all the fundamentals of making international payments.
Best Ways to Pay International Employees
Whether you’re hiring top talent in another country or expanding your business globally, these are some of the best methods to pay your workers in foreign countries.
- Reputable Currency Exchange Provider
Since currencies vary from country to country, exchange rates can fluctuate at any time. That could influence the amount of money you send to a foreign country. How do you make sure that the changing exchange rates don’t affect your employees’ salaries?
You might have to fix the foreign workers’ salaries in their home currency, never to change the amount of money they receive. But since there are several currency exchange options, select a reputable currency exchange with the lowest rates.
An excellent example of a company that offers the best currency exchange in Laval and the rest of Canada is Knightsbridge FX. It also offers free international money transfers, making it easier to pay employees overseas. There are also other options to consider.
- International Money Orders
Another best way to pay employees abroad is through international money orders. You can get the money orders in several places, including post offices. You’ll pay the money you want to transfer along with a fee, then send the order to your employees via post.
The primary advantage of using international money orders is that your workers living abroad don’t need a bank account to receive the payments. The recipient must also show their ID to prove identity. That reduces the chances of losing the money.
However, you will have to pay for the fees involved in sending the international money order. Another downside is that this payment method doesn’t guarantee fair exchange rates. Your workers may also pay substantial fees when depositing the money order.
- International Wire Transfers
An international wire transfer is one of the popular methods of transferring money from one country to another. With this payment method, you’ll send money from your bank account directly to the employees’ bank accounts through the SWIFT Network.
The good news is, many banks in the world provide international wire transfers. Sending the money through banks also guarantees the security of funds. You’ll also enjoy transferring large sums of money due to the banks’ high transfer limits.
The main drawback of using international wire transfers is the higher exchange rates set by banks. They tend to inflate their exchange prices to earn more profits. Again, you will pay the recipient and intermediary bank fees, making the method more costly.
- Payoneer for Independent Contractors
If you’ve hired independent contractors in another country, you can send the payments through Payoneer. With this international money transfer service, you can send money to over 200 countries in more than 150 currencies. It’s licensed to send funds globally.
Payoneer offers several payout solutions for quick transfer of funds. It supports global bank transfers and prepaid Mastercard cards. It also provides Mastercard debit cards to allow employees and contractors to withdraw money through ATMs in their countries.
However, Payoneer’s withdrawal fees are relatively higher than other online payment methods like PayPal. Another controversy is that it’s the recipient who pays for transfer fees and not the sender. So, you have to consider that when paying your employees.
- PayPal for International Workers and Contractors
If you plan to pay your international workers through an online payment platform, you can consider using PayPal. It’s the most popular payment method for businesses hiring talents globally. PayPal has more than 325 million active accounts worldwide.
One good thing about PayPal is that it offers flexible payment solutions. You can link a bank account or credit card to a PayPal account. You don’t need your workers’ bank accounts to send payments – only their email addresses used for PayPal.
The main drawback of using PayPal is that you’ll be paying unclear fees. Also, not every country has withdrawal options to the local bank accounts. Employees in such places may get stuck with their PayPal balances and only use the money for online purchases.
Factors to Consider When Choosing an International Payment Method
When paying overseas workers using any method, there are several things you have to consider, such as currency exchange rates, tax obligations, and foreign regulations.
- Currency Exchange: An employee living and working in the US will want to get paid in US Dollars, while the one in the EU will want to get paid in euro. So, you need to figure out the amount of money you’ll spend on currency exchange.
- Tax Obligations: Various countries have different tax laws. In some cases, you may have to pay taxes in two countries when hiring a foreign employee. Check if there are tax treaties between your government and the foreign employees’.
- Foreign Regulations: Ensure that you understand the regulatory environment of your employee’s country. That will help you comply with the country’s legislation. For instance, workers in Argentina get paid in 13 instalments yearly and not 12.
Final Words
While there are many other payment methods for international employees, you need to select an option that’s convenient and affordable. Considering factors such as currency exchange rates and foreign tax obligations will help you make informed decisions.