Outsourcing work to remote workers has many benefits – you canhire top talent, you aren’t committed to expanding your permanent staff, andthere’s no need to locate space for yet another workstation – but it leaves youwondering how to pay freelancers.With the many freelance payment options out there, you want to find the onethat is easy and convenient for you and your payees. Consider the followingnine options:
Checks have been the answer to the question of “How to pay freelancers” more or less since freelancing began. Checks are secure and easy to trace, and eChecks make it a lot faster to complete checks and preserve a record of payment. For freelancers, it’s free to receive and cash a check, but it can be expensive for you – each check costs the business, on average, between $6 and $9. Writing checks is also time-consuming, and it can take a long time for the check to be received and cashed when being sent in the mail.
2. Bank transfer
Bank transfers clear faster than checks, usually between one to two business days, although a transfer could take up to a week. However, bank transfers are among the most expensive freelance payment methods. Fees average between $15 and $25 per wire transfer. It’s very impractical if you have a high volume of payments and if the value of each payment is low.
Bank transfers are not a good idea if you’re paying freelancers overseas. You’ll be charged extra for international payments, have to pay a fee for foreign currency conversion, and usually lose money on the exchange rate as well. If the transfer goes straight to your payee’s bank account, it’s pretty easy at the other end, but many freelancers will have to pay a fee to receive your international bank transfer too.
3. Credit cards
As long as your contractor can accept credit cards, this can be a straightforward solution for you. Credit card payments are secure, and you can usually cancel the payment if you need to. However, most freelancers who accept credit card payments do it through an app like Skrill or PayPal, which means they have to pay processing fees as well. Credit card companies usually charge high fees for international payments, and like with bank transfers, you’ll often also be charged a foreign currency conversion fee with an unfavorable exchange rate.
EFT stands for Electronic Funds Transfer. If you already use EFT for your payroll obligations, it’s usually easy to add your remote workers to the process as well. EFT payments cost between $0.25 and $3 per payment, but it can take time to order the transaction. This added time makes EFT payment less appropriate for high volume, low-value freelancer payments. EFT payments also take between two and four business days for the funds to clear.
5. Google Pay
You might Google “How to pay freelancers” but did you expect that Google itself would be the answer? Google Pay is a digital wallet that links to your debit or credit card or your bank account. You can make free transfers to and from your debit card or bank account, but there’s a fee of 2.9% for credit card transactions.
You’d need a Gmail account to use it, and you’d have to be willing to connect to your business bank account to avoid paying fees. It also only supports international transfers between the US and the UK, so it’s probably not relevant for most overseas freelancer payments.
PayPal is the groundbreaker when it comes to digital payments. You can trust in its security measures, and it makes it easy to process freelance payments in almost any foreign currency. The trouble with PayPal for freelance payment methods is that you’ll have to pay fees – usually between 2.9% and 3.9%, plus a fixed fee, but that will depend on where your payee lives. If you make many freelancer payments to multiple recipients each month, all those fees might add up.
Your freelancers might ask you to pay through Escrow. You’d pay the agreed amount to Escrow in advance, and the platform holds the money until the work is complete. It’s a good freelance payment option because it protects you from paying for in case the work isn’t delivered, and also protects the freelancer by ensuring that they’ll get paid. Escrow charges quite high fees – as much as 6% of the balance plus up to $20, depending on your payment method. It also means that you’d need to send the total cost of the project before any work begins.
8. Accounting software
If you use accounting software like QuickBooks or Due to manage your payments and accounts, it can also be your solution to the question of how to pay freelancers. QuickBooks allows you to pay through direct debit or credit card, or to print checks for free through the QuickBooks system. Due supports credit cards and ACH payments. These are some of the most straightforward options for small businesses since you can calculate taxes and keep a record of payments without having to copy over the information. However, if you have to pay overseas freelancers, you might find the payment options limited and expensive.
Payoneer’s international payments solution is highly secure, handles both domestic and international freelancer payments with ease. When you make in-network payments, there are no charges at all, and the funds will clear within two hours. International Payoneer payments offer a competitive interest rate that undercuts bank rates, and there are no high currency exchange fees to pay. Payoneer supports most major currencies and operates in 200 countries worldwide.
Learn more about how Payoneer can make it easier to pay freelancers worldwide.