How to Send International Payments to Contractors in Brazil

Common payment methods for US companies hiring contractors in Brazil

1. Bank transfers using SWIFT 🏦

Pros: SWIFT transfers are a secure way to send money and are widely used by banks.
Cons: SWIFT can be costly to both your company and your overseas contractors. SWIFT payments are typically routed through multiple banks before they reach their final destination, and each bank can make a fee deduction from the funds being transferred, reducing the total amount transferred by as much as $20 to $40 USD per payment. Those deductions are often random and arbitrary; the same payment can go through the same banks, yet be charged different transfer fee amounts each time, making it difficult for employers to plan ahead for them. For contractors who have bank accounts in Brazilian Real (BRL), their bank will likely add a conversion markup of between 3% to 6% of the transfer amount, in addition to charging an extra fee for receiving a SWIFT payment. This results in further reducing the funds that your contractor receives. In total, a contractor can easily pay up to $300 USD or more in fees for a $4,000 USD payment. If you're looking for a payment method that has low fees for both you and your contractors, there are better options to consider.

2. Money transfer companies 💳

Pros: Money transfer services generally provide much better markups on exchange rates than banks do. Many of them also enable you to transfer money online, for ease of use.
Cons: In Brazil, some money transfer companies like Wise can only be used for personal transactions and not for sending money for business transactions. In addition, though a money transfer service may have better markups than those of banks, they typically do still charge additional fees to transfer money internationally, such as percent-based fees or markup fees for currency exchange, ranging from 1.8% to even 4%. Another downside to money transfer services is that these international money transfers are often not direct, requiring your contractors to withdraw money from the money transfer provider (which includes a withdrawal fee) or to use the provider’s debit card to access their funds, which means they need to pay transaction fees whenever they use their card. Even if you use the best money transfer services with good markups, your contractors can, understandably, not be fans of having to pay withdrawal or transaction fees to receive money.

3. Local exchange brokers 💱

Pros: You may be able to find a broker with competitive exchange rates and transparent fees.
Cons: Brokers can still charge exchange fees and large spreads (i.e. the difference between how much they buy a foreign currency for and how much they’ll sell it for). Also, you or your contractor will need to put in the time to research local brokers and their foreign exchange rate.

4. Cryptocurrencies 🤑

Pros: No need to deal with foreign exchange rates and fees to send money, at least as they relate to transactions that use only fiat money.
Cons: You need to be set up for paying in cryptocurrencies and work with a contractor who is set up to receive funds in cryptocurrency, too. If the contractor would like the cryptocurrencies to be converted into BRL, you will still need to deal with an exchange rate and possible fees in order to transfer funds. You also need to be sure that you’re correctly dealing with cryptocurrency tax compliance regulations, which vary by location, so talking to an experienced tax professional will be extra important.

As you can see, there are many options for paying contractors in Brazil, with varying pros and cons. The good news is that Pilot offers an alternative solution, with highly competitive currency exchange rates, so that your contractors can get paid more ✨.