How to Send Payments to Contractors in the Philippines

Common payment methods for companies hiring independent contractors in the Philippines

1. SWIFT bank transfers 🏛

Pros: SWIFT is secure and widely used by banks.
Cons: SWIFT can be expensive for both your company and your contractors. SWIFT payments are typically routed through multiple banks before they reach the contractor’s bank account, and each bank can deduct a fee from the funds being transferred, reducing the total amount transferred by as much as $20 to $40 USD per payment. The deductions are often random and arbitrary; the same payment can go through the same banks, yet be charged different fee amounts each time, so that it’s difficult for employers to plan ahead for them. If the contractor is receiving the payment at their local bank, then the bank may charge an additional markup of 3% to 6% for the conversion from USD to the Philippine Peso (PHP). Overall, $20 to even $50 in fees and markups could be deducted from a $400 USD payment, resulting in a lower paycheck amount for your team member.

2. Online money transfer companies 💻

Pros: Money transfer companies generally provide much better markups on exchange rates than banks do.
Cons: Though their markups are better than those of banks, money transfer companies typically do still charge percent-based fees or add markup fees for currency exchange, ranging for the Philippines from 1% to 3% or even more, making the exchange rates less than optimal. In addition, some transfers may require your contractors to withdraw money from the service (which includes a withdrawal fee) or to use the service’s debit card in order to access the funds, which again charges transaction fees.

3. Traditional money transfer companies 🏦

Pros: In addition to online services, these companies have physical locations in the US and agent locations in the Philippines, where your independent contractor has the option to pick up the payment in person. Traditional money transfer companies can also provide better markups on exchange rates than banks do.
Cons: Similar to online money transfer companies, traditional ones typically do still charge percent-based fees or add markup fees for currency exchange, so the exchange rates could still be better.

4. Cryptocurrencies 🤑

Pros: No need to deal with the exchange rate and exchange fees, at least in terms of transactions that use only fiat money.
Cons: You need to be set up for sending cryptocurrencies and work with a contractor who is set up to receive them, too. If they would like the cryptocurrency to be converted into PHP, you will still need to deal with exchange rates and possible fees. In addition, local tax laws related to cryptocurrencies vary by location, so while the same tax rules sometimes may not apply for cryptocurrencies as for fiat money, you’ll need to be sure you’re following the regulations correctly to ensure compliance with all laws.

There are many options for paying independent contractors in the Philippines, and unfortunately, they can involve hefty fees and markups. The good news is that Pilot offers an alternative solution for US companies hiring foreign independent contractors, in which your international contractors can get paid more ✨.