Receiving international payments as a freelancer
How to avoid being stung by charges in a global Britain
For many freelancers, remote working has been a way of life long before coronavirus shook things up. No longer tied to a daily commute, the world is your oyster.
From San Francisco to Auckland, the wider English-speaking world offers an enormous potential pool of clients (even if you might have to misspell colour occasionally). Even our former friends in the EU need freelancers who can work comfortably in English as the de facto lingua franca.
A big challenge with this international career is payments. Receiving payments in foreign currencies into your bank account can be a costly nightmare.
In Europe at least, the banking system is somewhat harmonised. The Single Euro Payments Area made cross-border payments easier, although being outside the Euro means that UK banks can take a slice during the currency conversion.
The US system, however, struggles to cope with the concept of the world outside. If you don’t have a US bank account, then you may be stuck with an old-fashioned wire transfer with old-fashioned fees.
Cut out the banks
The long-standing alternative to bank transfers is PayPal – the cyber-payment juggernaut that made Elon Musk wealthy enough to call whoever he likes a paedophile.
PayPal makes good use of its market dominance to charge whatever fees it likes, albeit less than you would pay to a bank. The charges for converting currencies are usually hidden within the exchange rate, which makes it difficult to understand how much you are paying.
The other problem is needing to convince your client to use PayPal, which may not be possible. In my experience, clients are very keen to make sure that they aren’t responsible for the payment fees, while also being inflexible on payment methods.
The alternative
TransferWise* is the new kid on the block. It has heavily advertised its low fees for currency exchanges for many years. However, it also now offers a multi-currency account, where you can get proper bank account numbers for the US, Australia, Europe and New Zealand.
This means you can give a local account number to your client for payment, and then convert and transfer the money through TransferWise to your UK account at a much lower (and more transparent) cost.
Setting up a multi-currency account isn’t as straightforward as you’d hope, uploading multiple photos, including a selfie while holding your ID like you’re a hostage sending proof-of-life with a ransom demand.
To set up a US account, you’ll need to transfer in $20, which rather defeats the point of TransferWise to force you to use a bank transfer or credit card payment, potentially resulting in charges from your bank.
However, once it’s up and running, the multi-currency account works very well and is easy enough to use.
I set up a TransferWise account after making the mistake of being stung for a wire transfer charge on a job that was already pretty poorly paid. Avoiding these fees is not only like giving yourself a pay rise, but also opening up a much wider market for your talents. Who could resist?
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