International contractor payouts without an EOR

Paying international contractors doesn't require an EOR. You can pay contractors directly in 70+ currencies via Wise, PayPal, or Payoneer, handle FX conversion, track confirmations, and maintain a complete audit trail—all without per-seat fees or per-payout charges.

This guide covers the practical aspects of international contractor payments: currencies and FX, transfer timing, proof and confirmations, tax documentation, and risk mitigation. It's designed for businesses paying contractors in multiple countries.

Why "payroll" doesn't apply to contractors

First, a clarification: contractors aren't on payroll. Payroll is for W-2 employees—people you employ directly, withhold taxes for, and provide benefits to. Contractors are independent businesses you pay for services.

When people say "international contractor payroll," they usually mean "paying international contractors regularly." The process is simpler than payroll: you pay invoices, track payments, and maintain records. No tax withholding, no benefits administration, no employment compliance.

This is why you don't need an EOR to pay contractors. EORs employ people on your behalf (making them W-2 employees). If you're working with true independent contractors, you can pay them directly.

Currencies and FX conversion

When paying international contractors, you'll deal with multiple currencies. Here's how to handle it:

Pay in contractor's local currency: Contractors prefer to receive payment in their local currency (EUR, GBP, INR, etc.) rather than USD. This eliminates FX risk for them and ensures they receive the full agreed amount.

Use Wise for FX conversion: Wise converts at mid-market rates (the real exchange rate you see on Google) with low fees (0.35-1%). This is significantly cheaper than PayPal (3-5% markup on FX) or wire transfers (2-4% markup).

Lock in rates for budgeting: If you're paying contractors monthly, you can use Wise's rate alerts or forward contracts to lock in FX rates. This protects you from currency fluctuations and makes budgeting easier.

Example: You're paying a contractor in Poland €3,000/month. With Wise, you pay ~$3,200 USD (including 0.5% FX fee). With PayPal, you'd pay ~$3,300 USD (including 3% FX markup). That's $100/month or $1,200/year in savings per contractor.

Payment provider comparison

For most international contractors, Wise offers the best combination of low fees, fast transfers, and currency support. PayPal is convenient but more expensive. Payoneer works well for contractors in countries where Wise isn't available.

Transfer timing and communication

International payments take longer than domestic payments. Here's what to expect:

Wise: 1-3 business days for most currencies. Some currencies (like INR, BRL) may take longer due to local banking systems. Wise shows estimated arrival time before you confirm the transfer.

PayPal: Instant to 1 business day if the contractor has a PayPal account. If they need to withdraw to a bank account, add 1-3 business days.

Payoneer: 2-5 business days depending on destination country. Contractors receive funds in their Payoneer account, then can withdraw to their bank.

Wire transfers: 3-7 business days, sometimes longer. Wires go through multiple intermediary banks, each adding 1-2 days.

Always notify contractors when you send payment and provide the expected arrival date. This prevents confusion and reduces "where's my payment?" inquiries.

Proof of payment and confirmations

For international payments, proof of payment is critical. Here's what to collect:

Transaction ID: Every payment provider gives you a unique transaction ID. Save this immediately after sending payment. It's your primary proof that payment was sent.

Payment receipt: Download a PDF receipt from your payment provider showing the transaction details (date, amount, recipient, fees, FX rate). Attach this to the contractor's record.

Contractor confirmation: Ask contractors to confirm receipt once funds arrive. Record the confirmation date and method (email, platform message). This proves the contractor received payment.

Bank statement: Your bank or payment provider statement shows the debit from your account. This is secondary proof that payment was sent.

With these four pieces of documentation, you have a complete audit trail: proof you sent payment, proof the contractor received it, and proof of the amount and date.

Tax documentation for international contractors

International contractors handle their own taxes in their country. Your responsibilities are minimal:

Collect W-8BEN: For U.S. tax purposes, collect a W-8BEN form from each international contractor. This documents their foreign status and exempts them from U.S. tax withholding. Store the form with their contract.

No 1099 required: You don't issue 1099-NEC forms to foreign contractors. 1099s are only for U.S. contractors paid $600+ per year.

No tax withholding: You don't withhold taxes from payments to foreign contractors. They're responsible for paying taxes in their country.

Contractor provides tax receipts: If contractors need documentation for their taxes, they can use your payment receipts and invoices. Some contractors may request a letter confirming total payments for the year—this is optional but helpful.

Always consult a tax advisor for specific situations, especially if you're paying contractors in countries with tax treaties or special requirements.

Risks and mitigations

Risk: Currency fluctuations. Mitigation: Pay in contractor's local currency to eliminate FX risk for them. Use Wise's rate alerts or forward contracts to lock in rates for your budgeting.

Risk: Payment delays. Mitigation: Use Wise for faster transfers (1-3 days vs 3-7 for wires). Notify contractors of expected arrival dates and follow up if payment doesn't arrive on time.

Risk: Incorrect bank details. Mitigation: Verify contractor bank details before the first payment. Send a small test payment ($1-10) to confirm details are correct before sending the full amount.

Risk: Payment disputes. Mitigation: Maintain detailed records of invoices, approved amounts, transaction IDs, and confirmations. If a contractor claims non-payment, you can provide proof with transaction details.

Risk: Misclassification. Mitigation: Ensure contractors are truly independent (they control how work is done, use their own tools, work for multiple clients). Use clear contracts with scopes of work, not employment terms.

Cost comparison: Direct vs EOR

Let's compare the cost of paying international contractors directly vs using an EOR:

Direct payments via Wise cost a fraction of EOR fees. For 10 contractors, you save $5,000-10,000/year by managing payments directly. That's enough to hire another contractor or invest in better tools.

The bottom line

Paying international contractors doesn't require an EOR. You can pay contractors directly in 70+ currencies via Wise, handle FX conversion at low rates, track confirmations, and maintain a complete audit trail—all while saving thousands per year in EOR fees.

The key is using the right tools: Wise for low-cost multi-currency payments, contractor management software for tracking and confirmations, and proper documentation (W-8BEN forms, payment receipts, contractor confirmations).

For businesses paying contractors in multiple countries, direct payments are simpler, cheaper, and give you more control than using an EOR. You maintain direct relationships, use your own payment accounts, and avoid per-seat fees and per-payout charges.