How to choose the right payment method for a job

Many businesses still rely on a single payroll approach to pay employees, contractors, and gig workers alike. That simplicity often breaks down once you add cross-border hiring, variable pay cycles, or workers without reliable access to traditional banking. The result can be delayed payments, higher support costs, and frustrated teams asking the same question: where is my money?

Common types of payment methods for payroll

Local bank transfers

Local bank transfers remain the backbone of payroll in many markets. Examples include ACH in the United States, SEPA Credit Transfer in Europe, and Faster Payments in the UK.

Best for:

• Routine payroll and scheduled employee payments
• Contractor payouts where next-day or same-day settlement is acceptable
• Employers focused on predictable costs and strong audit trails

Trade-offs:

• Payments are not always instant and cut-off times vary by scheme and bank
• Coverage differs by country and does not always extend easily across borders
• Failed payments can take time to identify and resolve

Local bank transfers are often seen as the default payment method, but default does not always mean best, particularly for time-sensitive or high-churn workforces.

Instant account-to-account rails

Instant payment rails are expanding rapidly, with examples including RTP and FedNow in the United States and SEPA in parts of Europe.

Best for:

• Gig workers and freelancers who expect fast access to earnings
• Urgent contractor payments tied to milestones or service delivery
• Use cases where payment speed supports loyalty and retention

Trade-offs:

• Availability depends on bank participation and regional scheme coverage
• Transaction limits may apply
• Not all recipients can receive instant payments yet

Speed is essential. Research shows that 62% of freelancers would switch clients for real-time payments, highlighting how payment timing can influence who chooses to work with you.

Card-based payouts

Card-based payouts include prepaid cards, payroll cards, and virtual cards issued to workers.

Best for:

• Workers without easy access to bank accounts
• Short-term or gig work where rapid onboarding matters
• Regions where card usage is widespread and familiar

Trade-offs:

• Fees can be higher than bank transfers
• Card eligibility and coverage vary by country
• Dispute and chargeback concepts may confuse recipients if not explained clearly

For employers paying a workforce that is partially unbanked or underbanked, card-based options can fill important gaps. More than 40% of gig workers fall into this category, increasing the need for alternatives to direct deposit.

Digital wallets

Digital wallets play a central role in many markets, particularly across Asia-Pacific, Latin America, and parts of Africa.

Best for:

• Regions with strong wallet adoption and daily wallet usage
• Workers who already manage spending, savings, and transfers inside wallet apps
• High-volume payouts where familiarity reduces support requests

Trade-offs:

• Cash-out fees and limits may apply
• Onboarding and identity checks differ by provider and country
• Wallet balances may not suit long-term savings or tax planning

Asia-Pacific is the fastest-growing region for gig work, with more than 63 million gig workers recorded in 2024. In urban India, over 80% of gig workers are paid through digital wallets, reflecting how local habits shape the best payment method.

International wire transfers

International wires, often sent via SWIFT, are one of the oldest cross-border payment methods.

Best for:

• High-value B2B payments
• Specific corridors where local rails are unavailable
• One-off transfers rather than recurring payroll

Trade-offs:

• Limited transparency on intermediary and lifting fees
• Slower settlement times
• Manual processes and heavier operational overhead

While wires still have a role, they are rarely the first choice for paying a distributed workforce at scale.

Cheques and cash pickup

Cheques and cash pickup remain in use in certain regions and edge cases.

Best for:

• Areas with limited digital payment access
• Transitional situations during workforce onboarding

Trade-offs:

• Slow settlement and poor tracking
• Higher fraud risk and administrative burden
• Limited scalability

For most businesses, these methods signal constraints in local infrastructure rather than a long-term payroll strategy.

Matching payment type with worker profile

Employees

Employees are typically paid through structured payroll cycles and are subject to local labour and tax regulations.

Typical characteristics:

• Fixed or predictable pay schedules
• Statutory deductions and benefits
• Country-specific reporting requirements

Non-negotiables:

• A compliant payroll process
• Clear audit trails and payslips
• Secure onboarding and data handling

Local bank transfers and direct deposit remain the most common way to pay employees, supported by payroll systems that handle tax withholding and reporting.

Contractors and freelancers

Contractors and freelancers often work across borders and are paid against invoices or milestones.

Characteristics:

• Variable payment amounts and timing
• Higher likelihood of cross-border payments
• Greater sensitivity to payment delays

Non-negotiables:

• Correct worker classification
• Accurate tax documentation, which varies by jurisdiction
• Clean reconciliation to invoices or purchase orders

Offering faster payment options can be a differentiator. When contractors know they will be paid quickly and predictably, disputes and churn tend to fall.

Gig workers

Gig workers are often paid frequently and in smaller amounts, with expectations shaped by consumer-grade payment experiences.

Characteristics:

• Daily or weekly payouts
• High volume and low ticket sizes
• Sensitivity to failed or delayed payments

Non-negotiables:

• Speed options, including instant payouts where possible
• Clear payout status visibility
• Scalable identity checks where required

With a large share of gig workers lacking full access to traditional banking, employers need payment methods that meet workers where they are, not where systems expect them to be.

Marketplace sellers and affiliates

Marketplaces and platforms often manage payouts to thousands of sellers or partners.

Characteristics:

• Multi-currency payouts
• Settlement timing rules and reserves
• Exposure to refunds and disputes

Non-negotiables:

• Mass payout capabilities
• Support for rolling holds or delayed settlement
• Strong reporting and reconciliation

Here, the payment method is closely tied to platform trust and long-term participation.

Factors to consider when choosing a payroll method

Timing requirements

Start by defining how fast payments need to arrive. Same-day, next-day, and instant payments all serve different purposes.

Be precise about what instant means. Availability depends on the recipient’s bank, wallet, or card and on local payment scheme participation.

Geography and currency needs

Domestic payroll is rarely the full picture for growing businesses.

Consider:

• Whether you need to pay in local currency
• How foreign exchange is handled and disclosed
• Whether recipients receive converted funds or local balances

Transparency is important, particularly for workers comparing net pay across clients.

Cost model

Costs extend beyond headline transaction fees.

Look at:

• Per-payment charges for different methods
• FX spreads and conversion costs
• Intermediary fees on international wires
• Failed payment handling and support effort

A cheaper payment method on paper can become expensive once operational work is included.

Recipient experience

Recipient experience is often underestimated.

Key questions include:

• Does the worker have access to a bank account, card, or wallet?
• Which payment types are familiar in their market?
• How easy is it for them to track and access funds?

Poor experience quickly turns into support tickets and strained relationships.

Controls and compliance

Employers remain responsible for meeting regulatory obligations.

This includes:

• KYC and KYB checks where applicable
• Sanctions screening and payment purpose codes
• Record retention and reporting

Payment methods should support these requirements without creating unnecessary friction.

Security and fraud protection

Different payment types carry different risk profiles.

Paper-based methods tend to increase exposure and reduce traceability. Digital payments offer stronger records and monitoring, which supports audits and investigations when issues arise.

Conclusion

The right payment method for the job is rarely a single choice applied across your entire workforce. Employees, contractors, gig workers, and marketplace partners each bring different expectations and constraints.

By understanding payment types, worker profiles, and regional realities, you can choose the best payment method for each situation. That choice shapes more than cash flow. It influences trust, loyalty, and how your business is experienced by the people who keep it running.