Ben Todd | Jun 3, 2017 | 2
Best And Cheapest Ways to Pay Freelancers Online
Since I am giving you the best and cheapest ways to pay freelancers online, I have rated each method out of ten according both to how costly the method is and how suitable the method is. I also offer you my thoughts on the good, the bad and the ugly with regards to each method.
The numeric ratings are just my opinion. The good, the bad and the ugly sections give details that indicate why I chose the scores that I did. Nevertheless, the numeric scores are just my opinion, so try to hold back your troll rage for something worth complaining about, such as how Facebook offers fifty genders to choose from in a way that turns the idea of gender into a joke.
Bank – Money Company – Credit Union
I use the word “Bank” quite a bit in this article, yet there are money types of companies that offer banking services. Whenever you see the word “Bank,” I also mean credit unions, building societies, and money companies that offer banking services.
Bank Transfer Into A Business Account – 9/10
Most banks will allow you to transfer from one bank to another bank. Some banks offer this service for free, and some will charge you. Some banks will send your transfer overnight by ACH and others will offer a direct wire transfer.
If you are transferring to a business account, then it looks good for both you and the freelancer. Tax paying freelancers usually have a business bank account to separate their personal income and their work income. Paying into a business account makes it harder for the authorities to claim that you were trying to pay people what is known as “Cash in Hand” where people hide their income from the tax inspectors.
Transferring to a business account also offers protection too. For example, it gives you a clear and easily verifiable way of proving that you paid your freelancer. The freelancer may also be pleased because he or she doesn’t have to withdraw the money to his or her bank account because it is already there.
It depends on your choice of bank, but some are going to charge you. Some banks will allow you to send money for free, some will charge, and some will give you the choice of a free and a paid transfer.
Besides the possibility of a charge, there is also the time it takes to arrive. Some banks will allow you to transfer instantly, others will make you wait one working day, and some may even take a few days.
If you are paying international freelancers, then that recipient may require a multi-currency account in order to receive your money, which may not please the freelancer because banks often demand maintenance charges for multi-currency accounts. Your freelancer may only accept payments in his or her own currency, which means you have to suffer the cost of converting your money.
You do have some protection if you transfer money to another person’s account, but unless you can prove fraud, then you may not be able to get your money back. For example, if you pay a person in advance, and that person disappears, you may have to sue that person in small claims court, and finding the freelancer’s real address may cost more than the money you are suing for.
PayPal – 7/10
If you and your recipient have a PayPal account, then you may quickly and easily send money via PayPal using only the recipient’s email address. The email address that your recipient logs into his or her PayPal account with is the one you need to send your payment to. In addition, you may pay with your PayPal balance, or you may have the money taken directly from your bank account and sent via PayPal to your recipient.
There are plenty of good things about PayPal when sending and receiving money, and in my opinion, it is probably one of the best ways to to pay freelancers online…but it only gets 7/10 because it is not the cheapest. I wrestled with the scoring decision like a banker wrestling her way out of a lawsuit, but this article is titled “The best and cheapest ways to pay freelancers online,” and despite the fact that PayPal is cheap…it isn’t the cheapest.
PayPal is very popular, which means your freelancer probably already has a PayPal account, which is going to save you a lot of hassle. Plus, PayPal is very secure to the point where most forms of fraud happen as a direct result of the user being silly with his or her password, or because the user was personally scammed rather than it being a system issue. PayPal also has some of the best buyer, seller, receiver and sender protection of all the online wallets on the Internet.
You may send money from your PayPal balance, and you may send it in a wide range of currencies. If you do not have a PayPal balance, then loading money into your account is very easy and very quick. Plus, if you do not have a PayPal balance, you may ask your freelancer for an invoice and pay that way. The great thing about PayPal invoices and money requests is that you may pay it and have the money taken straight out of your linked bank account rather than having to upload it directly into your PayPal account.
Transfers are usually instant, and you do not have to pay fees as a sender. Your recipient is the one that has to pay the fees for receiving money. If you are living in the USA, then your freelancer will have to pay a 2.9% fee and a $0.30 flat charge. It is not a massive amount as far as fees go. If you are living in another country, then your fees will differ. Your freelancer may charge you for the receiving fees, but if you are paying a high enough price for your freelancers services, then your freelancer should be willing to suck up the fees. Just make sure you are paying your freelancers enough money. If you pay peanuts, you will only attract monkeys.
Seller, buyer, sender and receiver protection can be manipulated by people who I like to call scummy scab buckets. PayPal are pretty on the ball when it comes to scams and people trying to get something for nothing, but they have slipped up in the past and some people have managed to get away with fraudulent behavior.
For example, these days, it is very difficult to find a bitcoin exchange that accepts payment from PayPal because of charge backs. Scabby hunch-backed troglodytes will go ahead and buy bitcoin from an exchange with PayPal and then contact PayPal saying that they didn’t receive their bitcoin. In many cases, the exchange is unable to prove that the payment given was actually for the bitcoin they sent out. Plus, since bitcoin wallets don’t have names on them, it is very difficult for the exchange to prove that the bitcoin wallet they sent the money to was the persons who paid by PayPal. More times than not, PayPal will have to side with the buyer and refund his or her money.
The bitcoin scammers are the reason why many bitcoin exchanges no longer accept PayPal as a payment method. What’s more, there are some bitcoin marketplaces where traders will accept PayPal as a payment method, but they want oodles of ID from you, and some are even asking twice the market rate for their sale to act as a buffer for the times when people get a PayPal charge back.
Like an indecisive Bee (a maybe), I cannot make my mind up. When you make an exchange with PayPal, they make their money by giving you a less than perfect exchange rate. They make the exchange and skim a little off. For example, if the Google search engine says that the market rate for dollars means that you get $0.71 for your foreign currency, then PayPal will give you $0.69 and keep the $0.02 for themselves. There are plenty of other places where you may get more for your money.
I think the exchange rates are probably the ugliest thing about PayPal, especially since it is difficult (but not impossible) to get your money off of PayPal and into another exchange account. The poor exchange rate that PayPal offers wouldn’t be such a big deal if I knew I could simply transfer my money from my account to an exchange company that offers a better deal, but too few exchange companies accept PayPal. I have to use my PayPal Access MasterCard to upload to another exchange company.
You have two choices, you can find a way to get your money off of PayPal and exchange it with another company, or you can accept PayPal’s exchange rate and get a less than perfect deal. In my opinion, both are pretty ugly options, it would be far nicer if PayPal gave us more for our money when we exchanged with them.
Payoneer – 6/10
If you run a business or you are self employed and you wish to pay other businesses or self employed people, then you may like to consider Payoneer. They have a business-to-business payment solution that allows you to draw money from your bank account and send it to another person’s Payoneer account. Users get a Payoneer online account and a MasterCard so that they may withdraw to their bank account, withdraw via their card, or use their card to purchase things. I tried to give money to a charity that supports acceptance…and they wouldn’t accept my American Express card.
There are a few good things about Payoneer, and if you are running a business or are self employed and you have to pay numerous people regularly, then Payoneer will be a great help. However, it was built for a specific target group, which is why some people are a little disappointed by it.
If you are tired of paying people via your bank account because you are tired of entering their details, verifying them, and then sending frequent or infrequent payments, then Payoneer takes all the work out of it. You may initiate payments using just the users email address that they use with Payoneer, and that will send a payment to your recipient into that person’s Payoneer account. Or, you may have other people send you payment requests and/or invoices, and you simply click a link to take you through to the payments page. If you pay numerous people, or you pay often pay different and new people, then Payoneer is going to save you a lot of time.
The fees are pretty good, and the transfer times are not bad. You gain access to more advanced features if you sign up for a company account and you have five or more employees who you have to pay regularly. Make sure you pay them on time too, I once forgot to pay my exorcist and I was repossessed.
There are plenty of negative reviews about Payoneer on the Internet, especially user reviews, and it is mostly Payoneer’s fault, but not for the reason you may think. They have a very aggressive marketing campaign that misses a few details, such as how it is a business-to-business payment system, and how most users are unable to load money directly into their account. In addition, their customer service sucks like an Electrolux, and nofin…sucks…like…an…Electrolux. Many people are calling Payoneer fraudsters, and even though they are not, they need a serious kicking for having such a terrible customer service department.
You have probably guessed it, but their ugliest feature is their customer service department. It is currently 2017, and I hope that things have changed by the time you read this, but at the moment their customer support is the worst I have ever experienced—and this is coming from a guy who spent 45 minutes on the phone with HSBC customer support trying to learn the Urdu words for, “Give me back my money you Doggyknobber.” Payoneer are at serious fault for letting their customer service department degrade so badly, after all, they are dealing with people’s money, so poor service in any area is disgraceful. If you have a problem that needs solving, you will have to phone several times until you find somebody who isn’t completely incompetent and lazy, and several times to find somebody who actually has English in his or her top ten languages.
Skrill – 5/10
Some people compare Skrill to PayPal, but it is a little unfair because PayPal is a large and wide-reaching financial tool that has many uses, whereas Skrill has a different goal. Skrill’s job is to mop up the market segments that other payment processing tools are not touching.
Skrill is an online wallet that allows you to pay and receive money in a wide variety of countries, including countries that other payment processing tools are not able to serve. Skrill has done this by lowering its standards in a way that allows it to operate in countries where others cannot. As a result of this, you do not get the buyer, seller, sender or receiver protection that you do with other payment processing and financial tools.
In addition, Skrill has teamed up with other payment processing companies in different countries so that people may send money through Skrill and back again, even if Skrill is not the one that actually moves the money. Don’t worry, all the companies they have partnered up with are all real and legitimate so far as our research team can figure. I mean, they won’t by tying your cash to the back of a donkey to get it into Nepal, (Nepal is actually one of the countries they cover, which is handy if you are hoping that your bank balance will rise…they could send it up Everest).
They are able to get your money in and out of countries that other payment companies are not going to touch, which is very handy if you have business to do in those countries. It doesn’t sound like a big deal, but there are times when people in such countries are the only ones you can rely on for certain answers. There are some highly developed areas in countries that are still considered to be developing countries, and they may be the only people you can consult or hire for certain tasks, especially if the country happens to be the major manufacturing point for certain items.
Some people are attracted by the fact that Skrill’s sending fee is lower than PayPal, but what they don’t realize is that Skrill’s total charge for sending and converting money is far higher than PayPal’s. In that case, Skrill is only less expensive if you are sending within your own country and in your own currency. Sending money costs 1.9%, and converting costs 3.99%. PayPal’s fees are 2.9% to receive, and 2% to convert, which means Skrill is the more expensive of the two if you are sending abroad.
Some people do not consider the withdrawal charge an ugly charge, but it is if you are an active Skrill user. It seems to punish people who receive less and/or people who wish to withdraw on a regular basis. The $5.50 charge for withdrawing may not seem like much, but I withdrew from PayPal 6 times last month, and it cost me nothing to withdraw, but it would have cost me $33 with Skrill. That is enough money to buy a ticket to see Madonna in concert…on second thoughts, I think I would rather pay the fees.
Some people are miffed by the fact that Skrill starts to drain your account after a year, which is a little unfair of them, but if you have left money in your account for that long without touching it, and since the Skrill account doesn’t earn interest, then you probably won’t miss the money when it is gone.
A Currency Exchange Service – 5/10
If we assume that you are looking for the cheapest ways to pay freelancers online because you want to pay somebody abroad, then a currency exchange service may be helpful in some respects. We have written quite a few articles on this subject, so here is a quick selection for people who are looking for a currency exchange service.
Money Transfer Companies Compared (2017 Edition)
Best Money Transfer Companies (2017 Edition)
The Cheapest Ways To Get Your Currency Exchanged
Where to Exchange Currency Without Paying Huge Fees For Your Currency Exchange
Best Ways to Send Money Abroad
They are Fooking EveryWhere. There have not been so many money changers since Jesus threw them out of the temple. Finding a money exchange company is like trying to find crumbs in the Cookie Monster’s bed.
Search for them on the Internet and their adverts will follow you until you completely clear your browsing history, temp files, and cookies. The industry is very competitive and they all have affiliate advertising accounts to the point where you are guaranteed to see the same money exchange adverts everywhere. The exchange industry is also so competitive that companies will do anything to get on top, which includes hundreds of different tricks to rank up comparison websites. They offer things such as a free first exchange, or free exchanges up to $1000, so that they appear cheaper on comparison websites.
Most exchange companies are going to hide their fees from you in one way or another. Some do it by charging you to upload, others by charging you to withdraw, and others by charging a monthly fee. One of the most insidious ways is to tell you that they have no fees at all, and then do what I call, “Skimming from the exchange rate.”
For example, if Google says you are supposed to get $2 USD for every 1 Euro, the exchange company will give you $1.85 for every 1 Euro. They claim they are not charging you fees, but they are not giving you the mid-market rate for your exchange. You walk away thinking that you got a good deal because you didn’t pay fees, but you actually walked away with less money than you may have paid if you went with a company that charges fees.
The mid-market rate is the one you see on Google, Bing or XE.com. You can run your exchange through Google to see what the mid market rate price is. For example, you could Google something such as “$1 to CAD” (without the quotes) and it will show you how many Canadian dollars you should get for your US dollar at the mid-market rate.
Conclusion – The Most Bankable Service….Trust
If you trust your freelancer and your freelancer trusts you, then payment becomes a lot easier. If your freelancer believes that you will pay up eventually, then you may take a little longer or may choose a slightly cheaper payment method.
Trust allows the development of a working relationship where both sides are able to work around each other’s circumstances to secure the best sending prices and best receiving prices.
As a final note, here are a few ideas that didn’t make the cut. These three ideas didn’t make the cut because they are far from the cheapest and/or best, but they may still be useful if none of the other options on this article have worked for you.
There are currency exchange companies that offer cash pickup, such as Western Union or MoneyGram for freelancers who do not have a bank account. There are freelance websites that have a payment system installed in their website, and there is Escrow. The idea with Escrow is that the payer uploads the money and releases it when the freelancer has finished. Escrow can get a little pricey, so here is their fees calculator.