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Alternatives to Paypal for freelancers
May. 7th, 2015 03:42 pmA colleague recently contacted me to express her displeasure with Paypal, and asked for my advice about alternatives. I definitely think that Paypal has gotten fat and lazy sucking the blood from our payments because it hasn't had much competition until recently, and that it's time for a change. There's a growing number of options that I wish I had the time to explore, but until I do, here's a summary of the ones I have tried and the ones I hope to try at some point in the future:
Western Union is a great choice if you have an office near you and the amount you're receiving is within their payment limit, which varies among their contractors. For example, I can receive up to C$750 at my local supermarket, up to C$1000 at a bank 5 minutes from me by car, and up to their maximum at a MoneyMart 20 minutes away by car. All fees are paid up-front by the person sending the money, so you generally get exactly what you asked to receive. The only complication arises when currency conversions are involved; for example, some of my clients can only send U.S. dollars, and I can only receive Canadian dollars (C$). In that case, there's some variation due to exchange rates. I haven't found this to be a huge problem, since the rates have generally worked in my favor.
The SWIFT system is fast and efficient, and is an international standard that seems quite secure. The main drawback is that it's expensive: it typically costs ca. C$15 to send the money and a like amount to receive it; my bank just raised their fees, which I'll have to remember to account for in future. To ensure that you're not out of pocket C$30 for each payment, you need to be aware of a corollary: I've frequently had problems in which the client forgot to pay this fee and I lost C$15 to C$30 on the transaction. Once this has been explained, it's no longer a problem, and most clients have let me add this amount to subsequent invoices to recoup my loss.
For inexpensive payments between Canadian bank accounts, try an
Interac e-transfer. This used to be free, but now costs a reasonable C$1 per transaction for the sender at the time of writing; expect the fee to rise as banks turn this into a cash cow. Currently free for the recipient.
If you're being paid from Japan, the GoRemit service may be useful. At the time of writing, I've been paid twice this way. It's a wire service, and the sender pays a fee of ca. US$15, but the transfer doesn't seem to incur any costs for the receiver. No idea how that works, but it's a very nice alternative to SWIFT payments if it continues working this way. The only drawback is that it takes about a week to register your bank account information with the Shinsei Bank.
International bank drafts are a good option if you're willing to wait for them to arrive in the mail. (Avoid U.S. post office money orders if you're Canadian; you can't cash the money order outside the U.S. I visit the U.S. often enough that it's not been a problem when I received them, but beware!) Of course, even such a simple solution is not idiot-proof. Most of my Chinese clients pay me using bank drafts from the Bank of China, but for these to work, (i) they must be specified as being paid by the Toronto (Ontario) branch of the Bank of China, (ii) they must be defined in Canadian dollars, and (iii) they must have 2 signatures at the bottom right of the check. (They must also be mailed to you; a couple clients thought that the bank would transfer the money electronically until I pointed out that this wasn't the case.) I learned the hard way that the Canadian clearinghouse can't always clear bank drafts denominated in U.S. dollars drawn on the New York branch; $800 suddenly disappeared from my account several months after I'd deposited the problematic money order. I did eventually get paid, but it was a major hassle.
As noted above, there's a raft of alternatives that I've been too busy to try. For a good starting point, see The Top 12 Online Payment Alternatives to PayPal.
For payments within Canada, there appears to be a newish service called nTrust.
If you can find an online bank with zero or minimal service fees that allows both you and your client to set up an account, transfers between the accounts will be inexpensive or free. For example, Tangerine Bank offers such a service, but appears to be Canada-only at this point.
Got any other suggestions or warnings? Please contribute them (click the "blather at me" link) so others can benefit from your experiences.
Ones I've tried
Western Union is a great choice if you have an office near you and the amount you're receiving is within their payment limit, which varies among their contractors. For example, I can receive up to C$750 at my local supermarket, up to C$1000 at a bank 5 minutes from me by car, and up to their maximum at a MoneyMart 20 minutes away by car. All fees are paid up-front by the person sending the money, so you generally get exactly what you asked to receive. The only complication arises when currency conversions are involved; for example, some of my clients can only send U.S. dollars, and I can only receive Canadian dollars (C$). In that case, there's some variation due to exchange rates. I haven't found this to be a huge problem, since the rates have generally worked in my favor.
The SWIFT system is fast and efficient, and is an international standard that seems quite secure. The main drawback is that it's expensive: it typically costs ca. C$15 to send the money and a like amount to receive it; my bank just raised their fees, which I'll have to remember to account for in future. To ensure that you're not out of pocket C$30 for each payment, you need to be aware of a corollary: I've frequently had problems in which the client forgot to pay this fee and I lost C$15 to C$30 on the transaction. Once this has been explained, it's no longer a problem, and most clients have let me add this amount to subsequent invoices to recoup my loss.
For inexpensive payments between Canadian bank accounts, try an
Interac e-transfer. This used to be free, but now costs a reasonable C$1 per transaction for the sender at the time of writing; expect the fee to rise as banks turn this into a cash cow. Currently free for the recipient.
If you're being paid from Japan, the GoRemit service may be useful. At the time of writing, I've been paid twice this way. It's a wire service, and the sender pays a fee of ca. US$15, but the transfer doesn't seem to incur any costs for the receiver. No idea how that works, but it's a very nice alternative to SWIFT payments if it continues working this way. The only drawback is that it takes about a week to register your bank account information with the Shinsei Bank.
International bank drafts are a good option if you're willing to wait for them to arrive in the mail. (Avoid U.S. post office money orders if you're Canadian; you can't cash the money order outside the U.S. I visit the U.S. often enough that it's not been a problem when I received them, but beware!) Of course, even such a simple solution is not idiot-proof. Most of my Chinese clients pay me using bank drafts from the Bank of China, but for these to work, (i) they must be specified as being paid by the Toronto (Ontario) branch of the Bank of China, (ii) they must be defined in Canadian dollars, and (iii) they must have 2 signatures at the bottom right of the check. (They must also be mailed to you; a couple clients thought that the bank would transfer the money electronically until I pointed out that this wasn't the case.) I learned the hard way that the Canadian clearinghouse can't always clear bank drafts denominated in U.S. dollars drawn on the New York branch; $800 suddenly disappeared from my account several months after I'd deposited the problematic money order. I did eventually get paid, but it was a major hassle.
Ones I hope to try
As noted above, there's a raft of alternatives that I've been too busy to try. For a good starting point, see The Top 12 Online Payment Alternatives to PayPal.
For payments within Canada, there appears to be a newish service called nTrust.
If you can find an online bank with zero or minimal service fees that allows both you and your client to set up an account, transfers between the accounts will be inexpensive or free. For example, Tangerine Bank offers such a service, but appears to be Canada-only at this point.
Got any other suggestions or warnings? Please contribute them (click the "blather at me" link) so others can benefit from your experiences.