With a thriving tech scene, a large number of English speakers, and a time zone close to those in the US, Brazil has become a popular place for US-based companies to hire contractors, particularly for software engineering and other technical roles. Once you've found a contractor you'd like to work with, though, how do you pay them? There are many international payment options for sending payments to Brazil, and choosing one can get a little confusing. We break down some of the most common options for you, with pros and cons for each:
1. Bank transfers using SWIFT 🏦
You can pay your contractors by transferring funds from your company's bank account to your contractor's bank account in Brazil using SWIFT (Society for Worldwide Interbank Financial Telecommunications), a secure network used by financial institutions worldwide.
- Pros: SWIFT is secure and widely used by banks.
- Cons: SWIFT can be costly to both your company and your 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 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.
2. Money transfer companies 💳
Another common option is to use a money transfer company. Husky and Remessa Online are well known in Brazil, as well as Payoneer, PayPal, and Wise (formerly Transferwise).
- Pros: Money transfer companies generally provide much better markups on exchange rates than banks do.
- Cons: In Brazil, some money transfer companies like Wise can only be used for personal transactions and not business transactions. In addition, 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 from 1.8% to even 4%. Another downside is that transfers are often not direct, requiring your contractors to withdraw money from the service (which includes a withdrawal fee) or to use the service’s debit card to access their funds, which means they need to pay transaction fees whenever they use their card.
3. Local exchange brokers 💱
You or your contractor can also find an exchange broker in Brazil to facilitate the exchange.
- Pros: You may be able to find a broker with a good exchange rate.
- Cons: Brokers can still charge exchange fees and large spreads (i.e. the difference between how much they buy a 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 rates.
4. Cryptocurrencies 🤑
You can try to avoid having to work with USD to BRL exchange rates in general and pay your contractors with cryptocurrency.
- Pros: No need to deal with exchange rates and fees, 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 them, too. If the contractor would like the cryptocurrencies to be converted into BRL, you will still need to deal with currency exchange rates and possible fees. You also need to be sure that you’re correctly dealing with cryptocurrency tax compliance regulations, which vary by location.
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, in which your contractors can get paid more ✨.
Pilot is a cloud-based HR platform that manages international payroll, compliance, and benefits for US-based companies. Our platform enables you to pay contractors in BRL currency, using local bank transfers sent to their local bank accounts, and we don't mark up exchange rates. Because these are local TED (Transferência Eletrônica Disponível) transactions, they are typically received twice as fast as other options, in about two business days instead of four.
In addition, because contractors receive the payments in their local Brazilian bank accounts, they do not need to use an e-wallet or debit card--the funds go straight to them. We don't charge companies to send payments, and we don't charge contractors for receiving them--so our clients and contractors love us.
Interested in learning more about Pilot? Request a demo with one of our experts.
⚖️ Legal Disclaimer: The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
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