Best Ways to Pay Foreign Contractors

Claire Millard
Şeyma Mektepli
Last updated
29 December 2022

There are several reasons why people want to send money overseas. Things like making investments, paying tuition fees, sending money to friends and family, or paying for a relaxing overseas holiday. Businesses are increasingly hiring foreign contractors and using international payments to pay fees and salaries.

If you are using foreign contractors in your business, it is important to select the right payment method. Choosing the right foreign method can save you a lot of money in fees.

Here’s a guide showing 4 of the best ways to make payments to foreign contractors outside of Malaysia

1. Your bank account

2. A multi-currency account

3. PayPal

4. Checks and money orders

Key Points

  • Manage multiple currency payments: A multi-currency account may be a good option if you have a global business or pay contractors in various currencies.

  • Well-known method for paying international contractors: International wire transfers may be a good choice as it is very accessible, but it can be expensive and are often complex.

  • Popular online payment solution: While popular among freelancers around the world, PayPal isn’t always clear about their fees and can end up being costly.

  • A flexible money collection payment option: Checks and money orders may be slightly outdated, but are still preferred by some due to the flexibility and delivery options they offer.

Learn more about Wise

1. Foreign Payments Through Bank Account

International wire transfers have been around for a long time and remain a popular way to send money overseas. It works just like a regular bank transfer, from your account into another person’s account. However, there are a couple of differences.

Instead of ‘regular’ banking networks, banks use the SWIFT (identifies banks) and/or IBAN (identifies individual accounts) international networks to transfer funds overseas . These systems can be slow, since it may involve intermediaries to convert currencies, so it might take a couple of days for the money to reflect in the recipient’s account. What’s more, there are usually extra transactions and steep currency conversion fees involved.

Due to the slow speed and cost of international wire transfers, it may not be the best option.

Advantages of Using a Bank Transfer For International Payments

  • Easy access: Most banks offer international wire transfers so if you already have an account, you don’t need to set up a new one.

  • Send large amounts: Banks usually allow you to send large amounts via wire transfers and are often only limited by the country’s financial regulations.

  • Send almost anywhere: The SWIFT system connects more than 11,000 banks and financial institutions in almost every country in the world.

Disadvantages of Using a Bank Transfer For International Payments

  • The SWIFT system that banks use to do international wire transfers may take longer, and it can take up to 7 business days for foreign contractors to receive their money.

  • High cost: The relatively high transaction fees, high exchange rate markups, and high conversion rates offered by banks, can make wire transfers quite expensive.

  • Contractor might be charged: In some cases, the contractor may be charged a fee for receiving money from overseas. This means that both you and the contractor pay more.

2. Multi-currency account

A multi-currency account allows you to hold different currencies in the same account. You can convert money between currencies in the account and send money to foreign bank accounts. A multi-currency account like the Wise Multi Currency Account lets you pay money directly to contractors’ bank accounts in their local currencies.

Advantages of using a Wise multi-currency account

  • No setup fees or monthly charges: Wise doesn’t charge you to set up the account or a monthly fee to keep it open. It’s completely free.

  • Use a wide range of currencies: Get paid in 10 currencies and hold and convert more than 50 currencies in the same account.

  • You’ll always get the mid-market exchange rate for international transfers and foreign transactions.

Disdvantages of using a Wise multi-currency account

  • Wise does not offer cash deposits or cash pickup services. A contractor has to have a bank account to receive money.

  • Accounts are not interest-bearing: The money that you hold in the multi-currency account does not accrue interest.

  • Wise does not offer regular banking services like overdrafts and loans.

Learn more about Wise

3. PayPal to pay foreign contractors

PayPal is a popular method for paying foreign contractors. You simply pay money from your PayPal account or linked bank card into the foreign contractor’s PayPal account. They can then withdraw the money from their local bank or service provider that offers PayPal services.

Advantages of using PayPal for international payments

  • One of the reasons why PayPal is so popular is because the payment process is so simple. All you need is a PayPal account and the contractor’s PayPal account.

  • PayPal has been around for more than 20 years and is one of the most well-known and trusted online international payment providers.

  • Transfers between PayPal accounts are often instant.

  • PayPal is very widely accepted, which means you can send money to contractors in almost every country.

Disadvantages of using PayPal for international payments

  • PayPal is notorious for charging high fees and often charges both sender and receiver for transfers.

  • Contractors in some countries may need to use regular banks to withdraw money from their PayPal accounts. Banks often charge a fee for this service. They may also charge additional conversion fees if the money is not in the local currency.

  • Both you and the contractor you want to pay to need a PayPal account.

4. Checks and money orders

Checks and money orders are more traditional methods of making international payments. To send money you have to write out a check or get a pre-printed money order and send it to the contractor by mail. While it is still valid, the method is rarely used these days.

Advantages of using checks and money orders

  • Checks and money orders are almost as old as banking itself, and most adults have used them before.

  • To send money overseas, simply write a check and post it overseas. The receiver then takes it to a bank to get their money.

  • Don’t need a bank account: While checks are usually deposited into a bank account, they may often also be exchanged for cash if the receiver doesn’t have a bank account.

Disadvantages of using checks and money orders

  • Outdated payment method: The popularity of checks as a payment method has declined dramatically in recent years. Many businesses no longer accept checks as payment due to the prevalence of check fraud. This may make cashing a check a challenge.

  • Unreliable postal services: Postal services in many countries are not as reliable as they once were and there’s a risk that the check may get lost in the mail.

  • Can be slow: It might take a long time for the contractor to receive their check. Not only that, foreign checks often take up to seven business days to clear.

  • No large amounts: Sending a check via the mail can be risky and thus many banks advise that you not send large amounts via check.

What to consider before paying independent contractors

Before you pay a foreign contractor, there are several things that you should consider:

Reporting Payments & Filing tax forms:

Labor laws in most countries require that you classify contractors properly, report payments correctly, and file the appropriate tax documentation. Classification is important since some contractor roles may be seen as that of an employee and thus taxed differently. Find out how to report payments to foreign contractors, and make sure you check local classifications of independent contractors.

Payment Terms & Conditions:

It is important to set up and agree to payment terms and conditions before hiring an international contractor. These should include the agreed fee, the scope of the work, how the fee will be calculated, as well as when and how the money will be paid out. Check local labor laws to see if there is anything specific that these terms and conditions must include.


One of the things to agree upon before hiring an independent contractor is when they will be paid. A contractor may request to be paid on a certain day. You should consider this date, as well as the time it will take for the foreign payment to arrive. In addition, conditions for missed payment deadlines should also be agreed upon, such as incomplete work, or work quality not as expected.

Benefits of hiring international contractors


The option of hiring international contractors allows you to hire more people for specific projects, whether it’s a once-off job or a long-term contract. What’s more, you can set up the contract the way that you want to, including timelines, deliverables, and the like.

Wider pool of resources:

The ability to hire foreign contractors gives you access to an unprecedented wealth of resources. No matter where you are, you can find exactly who you are looking for anywhere in the world. Job sites like Upwork, Freelancer, and Fiver make it easy to find foreign contractors.

Expand business globally:

When you hire a foreign contractor you also get local expertise. This makes it easier than ever to expand your business internationally by tapping into local knowledge and having people already in the country to which you would like to expand.


Hiring international contractors can also be very cost-efficient. When you hire a foreign contractor you don’t have to worry about auxiliary costs like employee benefits. Many overseas contractors also charge lower rates than local contractors, especially on job sites like Upwork, Freelancer, and Fiver. However, take care when using these sites, because the adage of “you often get what you pay for” often applies.

Conclusion: What is the best way to make payments to international contractors?

Using international contractors can be great for your business in many ways. But while hiring a foreign contractor may be easy, paying them is not always so straightforward.

In this article, we looked at the best ways to make payments to foreign contractors. To help you choose the best way to pay your international contractors, we explored the different payment methods, their pros, and cons, as well as what to consider before paying foreign contractors.

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FAQs on Paying Overseas Contractors

How do I pay someone from another country?

There are various methods to send money abroad, including wire transfers, checks, money orders, or using international payment providers like PayPal and Wise.

Can a Malaysian company pay a foreign contractor?

Yes. Malaysian companies can pay foreign contractors via a variety of methods, including traditional banks, international money transfer providers like Wise, PayPal, and checks and money orders.

Are overseas contractors tax-exempt?

Maybe. It depends on tax laws in their country. It is usually the contractor’s responsibility to comply with local tax laws. Consider getting professional or legal advice to make sure you comply with the relevant laws and regulations.

Can you hire someone from another country to work remotely?

Yes. Hiring contractors to work remotely is very popular. There are many advantages of hiring foreign contractors, like flexibility, cost and more. Keep in mind that if the contractor is located in Malaysia they need to have resident status or a working visa.