How to Pay a Mexican Subcontractor: The Real-World Guide for US Contractors

If you run a construction business in Texas, Arizona, California, or Florida, you are probably paying Mexican subcontractors. Most are doing it wrong — burning $80-120 per payment in bank wire fees and exchange rate losses. This guide gives you the practical workflow that actually works.

The paperwork you need first

• •W-8BEN form: a one-page IRS form that your Mexican sub signs certifying they are a foreign person. Get this before the first payment. It protects you if the IRS ever questions whether you withheld correctly.
• •Your subcontractor agreement: should specify the scope of work, payment amount in USD, payment schedule, and that the relationship is contractor (not employee)
• •Their banking information for Wise transfers: bank name, CLABE number (18 digits), and full account holder name
• •You do not need to withhold US taxes from Mexican sub payments. You do not need to file a 1099 for foreign persons paid abroad.

Payment method comparison for construction subs

• •Bank wire: $25-45 fee + 2-3% exchange rate margin. Total cost on $5,000 payment: $125-190 above the transfer amount. Standard in the industry but expensive.
• •Wise Business: 0.4-0.9% fee, mid-market exchange rate. Total cost on $5,000 payment: $20-45. Arrives in 1-2 business days to any Mexican bank via CLABE.
• •Cash across the border: common in construction, creates tax documentation problems. Avoid for amounts over $1,000.
• •Western Union / MoneyGram: high fees and exchange rate margins. Only use for small urgent amounts when no bank account is available.
• •Zelle: only works between US bank accounts. Cannot be used for cross-border payments.

How to send via Wise Business step by step

• •1. Ask your sub for their CLABE number — this is their 18-digit Mexican interbank routing number, different from their account number
• •2. In Wise Business, go to Send Money and select MXN as the destination currency
• •3. Enter the CLABE and the account holder name exactly as it appears on the bank account
• •4. Enter the USD amount you want to send — Wise shows exactly how many pesos your sub receives
• •5. Confirm the transfer — funds arrive in 1-2 business days
• •6. Save the sub as a recipient for future payments — same CLABE every time

What if your sub does not have a Mexican bank account?

• •Wise also supports cash pickup in Mexico at OXXO stores and other locations
• •Remitly has an extensive cash pickup network if speed is the priority
• •Opening a Mexican bank account is straightforward for Mexican citizens — Banamex, BBVA, and Banorte all have easy account opening processes
• •For subs who move between the US and Mexico: Wise personal account is also an option if they have a US address