Ask what it costs to pay a contractor abroad and you’ll get a percentage. Ask what it actually costs and you have to add two things the percentage leaves out: the exchange-rate margin, and your own time.
The exchange-rate margin is the quiet one. A service can advertise a “free” or “1%” transfer and still take 2–3% by giving you a worse exchange rate than the real, mid-market one. The contractor receives fewer of their own-currency units; you never see a line item for it. The only way to compare honestly is to look at the amount that lands in the contractor’s account against the mid-market rate — not the sticker fee.
The second cost is administrative. A raw payment rail moves money cheaply and hands you back the invoicing, the tax forms, the onboarding and the record-keeping. For one payment, that’s fine. For a roster, those hours are real money, and a flat-fee platform that folds the paperwork in can be cheaper all-in even at a higher headline percentage.
So “cheapest” isn’t a single answer — it’s a function of your volume and how much work you want to keep. A raw rail wins for the occasional large transfer where you already hold the contract. A flat-percentage platform wins for a small or spiky roster where the paperwork would otherwise eat your week. Per-seat software wins only once a roster is large and paid every single month.
The mistake worth avoiding is optimising the wrong number: chasing a lower fee while ignoring the FX spread and the admin, or — worse — optimising cost at all before you’ve settled whether the person is genuinely a contractor. The cheapest payment to a misclassified employee is the most expensive one you’ll ever make.