What's the Best Way to Pay Contractors?

When businesses grow, the logistics of paying a global team often become a bottleneck. While finding world-class talent is easier than ever, the administrative burden of cross-border finance remains high. For many companies, the friction isn't just a finance problem, it is a retention risk.

Managing a global workforce means navigating a maze of tax laws, currency fluctuations, and varying local banking standards. When payments are delayed or eroded by hidden fees, even the most dedicated talent can lose motivation. Research shows that 71% of subcontractors reported delayed payments in late 2023, and by 2024, nearly 88% of contractors had rejected projects specifically over concerns about payment reliability. 

The stakes are clear: if you want to keep the best talent, you need to know the best way to pay contractors.

The Hidden Cost of Payment Friction

For many startups and enterprises, "global payouts" still mean a manual process of collecting bank details and sending individual wire transfers. However, these legacy methods are riddled with regulatory potholes that make international payments slower and more expensive.

Beyond the administrative time spent, the financial impact on the recipient is significant. Traditional remittance fees averaged roughly 6.35% in early 2024, far above the global target of 3%, according to Fortune Business Insights, 2025. When a contractor in Europe or Asia receives 6% less than they invoiced due to intermediary bank fees and currency markups, it creates a sense of payment uncertainty that can demotivate your most vital contributors.

Traditional Payment Methods vs. Payout APIs

When deciding the best way to pay contractors, businesses usually weigh three main categories: conventional bank transfers, large aggregator platforms, and modern Payout APIs.

1. Conventional Transfers (Wire, SWIFT, ACH)

These are the old guard of finance. While reliable for large, one-off sums, they are often ill-suited for a high-volume contractor base.

• Wire/SWIFT: Highly secure but expensive, with fees often reaching $35–$50 per international transaction (Ramp, 2025).
• ACH: Cost-effective for domestic (U.S.) payments, usually under $1.50, but generally unavailable for direct international payouts (Stax, 2025).

2. Large Aggregator Platforms

Many companies turn to established names like PayPal or Stripe. While these offer more convenience than a bank branch, they often come with high walled garden fees and complex fee structures for currency conversion that can surprise the recipient.

3. Payout APIs

This is the modern standard for scaling businesses. A Payout API allows a company to integrate payment functionality directly into their own dashboard or software. Instead of manual data entry, the system triggers payments automatically based on milestones or approved invoices. This method bypasses the slow correspondent banking network by utilizing local payment rails,  ensuring funds arrive in the contractor's local currency almost instantly.

What is the Safest Way to Pay a contractor?

Security and compliance are the twin pillars of global operations. Virtually  every business owner that works with contractors abroad has asked the question, “what is the safest way to pay a contractor?”

The answer lies in using traceable, documented methods that provide a clear "paper trail" for both the IRS and the contractor’s local tax authorities .

The safest systems do more than just move money; they handle:

• Identity Verification (KYC): Ensuring the person you are paying is who they say they are.
• Tax Compliance: Automated collection of W-9 and W-8BEN forms to ensure you aren't liable for unpaid taxes during an audit.
• Fraud Prevention: API-led systems can validate bank details before a transfer is sent, preventing errors that lead to lost funds in traditional wire transfers.

How Do I Protect Myself When Paying a Contractor?

Risk management doesn't end with the transfer itself, and they are often concerned about misclassification and legal exposure.

To protect your business, you should:

1. Tie Payments to Milestones: Never pay 100% upfront. Use a system that triggers payments only after work is verified.
2. Use a Unified System: Managing contractors across five different apps leads to data silos and accounting errors. Centralizing payouts through a single API ensures that every dollar is accounted for in real-time.
3. Automate Reporting: According to statistics, manual reporting is prone to error. High-trust companies use automation to handle their 1099 filings, which can save them significant administrative costs and legal headaches.

Why Businesses are Switching to Dots

A lot of businesses are moving away from the rigid structures of legacy providers and the high fees of large aggregators. While brands like Stripe or PayPal are excellent for taking payments, they can be cumbersome for a specialized global payout strategy.

Dots offers a distinct advantage by serving as a unified layer for global payouts. Unlike traditional wire transfers that get stuck in the SWIFT network for days, or competitors that force your contractors to sign up for specific wallets, Dots allows you to send money to over 190 countries using the recipient's preferred method, whether that’s a local bank transfer, Venmo, or a digital wallet.

By choosing Dots, you gain a partner that prioritizes the contractor experience. Our platform automates the entire lifecycle, from onboarding and tax form collection, to risk management and instant payouts. This ensures your business remains compliant with global regulations while your contractors receive the full value of their work without hidden deductions.

Ready to automate your global payouts and improve your talent retention? Book a demo with Dots today.