Saving money on international payments as a remote freelancer
blog.jurn.io
blog.jurn.io
TransferWise is fantastic for receiving money. They have local bank accounts in USD, EUR, GBP, AUD, NZD and PLN. However for sending money and converting money, their fees can really suck: for $10k USD -> EUR (EURUSD is one of the most liquid forex pairs), they charge 81 USD in fees, or %0.8. Even for local transfers (which should be free) they charge ~1 USD.
Revolut is kinda crap for receiving money (the only local accounts are EUR and GBP, the rest are GB IBANs) but sending and conversion are both free (conversion as long as the amount is <$6k/month). If you use it a lot, they have a ~$100/yr plan that gives you unlimited on both.
Interactive Brokers is literally useless for sending and receiving money (they only accept transactions to/from your own accounts) but they're fantastic for conversion. They process your orders directly against the forex market and charge ~1USD per trade for the kinds of trades we're talking about. The downside is that their minimum account balance is pretty high (~$6k IIRC) and they have a $10/month "inactivity" fee if your balance is below $100k and you generate <$10/month in commissions. That said, if you need a brokerage account anyway, their currency conversion is a great bonus.
And finally, Charles Schwab is great in the US. They charge minimal markup on deposits and withdrawals in foreign currencies (~0.5-1% depending on amount) and they have a debit visa card with no international transaction fees and Visa's exchange rate (~0.3% spread). They're not the best around but they're really great if you don't want to put your money in the hands of a less-regulated FinTech company that has minimal deposit guarantees.
- All currencies: Top-up Revolut with the TransferWise debit card - this is free and IIRC works for all the currencies TransferWise supports receiving. However there are limits on both the TransferWise side (how much you can spend with the card) and the Revolut side (how much they permit you to top-up with a debit card). The latter limit increases as you use the card.
- EUR and GBP: Straight local bank transfer - costs ~$1 but only works for these two currencies.
- CHF: Local bank transfer as above - costs ~$1 but requires correctly entering the reference number.
- USD: SWIFT - costs ~$5 and takes around a week.
- AUD, NZD, PLN: Unsupported. Revolut only has a UK-based IBAN and TransferWise requires local account details for these currencies.
Sorta. Orders below 25k are odd lots
I agree IB is still a pretty good way to go overall though
If you want to check for yourself how much you could save with TransferWise (or one of their competitors) vs banks or PayPal, we've built a comparison site for international money transfer: www.monito.com which compares live exchange rates and fees for any amount you'd like to transfer between two countries/currencies (e.g. US-Euro https://www.monito.com/send-money/united-states/netherlands/...)
Our initial goal was to help migrants save money when they support family back home, but the tool can be used by businesses/freelancers/travellers as well.
Let me know if I can be of any help in the comments, we've become payment geeks over the years!
That being said, in the case of money transfers from India to the USA: InstaReM temporarily suspended money transfers from India last month. As soon as this is re-activated, they will once again appear in our comparison table on all supported corridors from India.
> Here’s how you can use this ETF to exchange $10,000 Canadian:
> 1. Get a quote for DLR and calculate how many shares you can buy for $10,000 Canadian.
> 2. Place an order for that number of shares. The trade will settle in Canadian dollars.
> 3. Call your discount brokerage’s customer service desk and ask them to take your DLR shares and “journal them over” to the U.S. dollar side of your account, where they should show up as DLR.U.
> 4. Place an order to sell all of your DLR.U shares. The trade will settle in U.S. dollars.
* https://www.moneysense.ca/magazine-archive/norberts-gambit-a...
* https://www.finiki.org/wiki/Norbert%27s_gambit
* https://canadiancouchpotato.com/2013/12/03/norberts-gambit-t...
Technically this would work with any interlisted stock, though the DLR ETF is very popular for this because of its liquidity. One could probably find stocks for GBP and EUR as well:
* https://www.tmxmoney.com/en/research/interlisted.html
The overhead of the exchange is the cost of buying/selling the stock, which is fixed price, so it it's not like a percentage cut.
An interlisted bank/telecom stock has far more liquidity than DLR does.
This is a bit of a problem because you’ll pay at least half a cent or a cent in spread for your purchase and sale to the market makers. This adds up a lot more quickly on a $10 DLR than a $100 bank stock that’s liquid enough to have the same spread.
A 1cent spread costs you 0.1% for the buy and then again for the sale on DLR. On a $100 stock, it’s 0.01%.
DLR’s advantage is that it isn’t volatile because it only holds dollars and nothing else.
If you use a bank stock, the advantage is that you’re “in the market” during the duration of your trade. On average, that’s a plus, but you could lose/gain a few percent in the time it takes to journal.
The other disadvantage of DLR is that it does have a management fee. You shouldn’t hold it for long periods, but it’s another mark against DLR.
Their economy of scale enables them to offer increasingly lower fees, but I can speak first hand to the pain felt by everyone at the company when costs have to increase.
Anyway, I trust them far more than any bank and cannot recommend them more highly both as a customer and workplace.
Even if this comment is genuine, culture within a company is temporary, and once a company has built up a trusted brand, the amount of money that can be made by taking advantage of this trust grows substantially.
Especially for fast growing companies built out of venture capital, most will eventually sell out. It becomes especially difficult to avoid these pressures after IPO.
> I really hope that PR firms don't pick this up.
That ship sailed years ago, alas :(
I just hope they don't get bought out :(
Wonderful ethics!
i.e. how do they actually enact the exchange of the funds? Do they have a contract with one of the big investment banks? Do they work directly via Forex markets? Can they leverage their scale now to minimise actual exchange costs – for example internally matching up (say) a one customer transferring USD to EUR, and another transferring EUR to USD, so that TW’s costs are minimised?
From what I've read, apparently that was their idea since inception, do their own reconciliation as far as they can.
TransferWise charges end-user 900 USD + spread for the same operation, which is rather comical when you see their ads "banks are scamming you"
That is not a consumer-friendly site. Is it even practical for the typical case TransferWise targets: sending a few payments a year, or a few a month?
The pricing page for foreign exchange has the cheapest category as under $1 billion -- is transferring $200 something they'd do? I don't know what a "basis point" is, or "trade value".
That said, its currency conversion is the real deal. If you have an account with them (I do), you can convert as little or as much as you like and withdraw it to your own account elsewhere.
I wouldn't recommend opening an account there just for currency conversion but their brokerage offering is fantastic so I'd consider currency conversion a nice benefit that comes with that.
If you want a more direct comparison, Revolut does conversion for free if your amount is under 6k/month.
But yes, they can exchange even a dollar or two. I've exchanged five figures a few times there between CAD and USD, as an American living in Canada and actively using a US credit card.
So far I've found them to be much more affordable than TransferWise, but equally, they are a very complicated broker to use, and it may not be worth the hassle just for FX. They have other benefits that make them worth the tradeoff for me, like good margin interest rates and the ability to provide tax forms complying with both the US and Canadian tax systems each year.
From the homepage, Pricing → Commissions → Forex leads to the 1,000,000,000 cutoff.
To clarify the terms in that table: one basis point is 1/100 of 1%, as they themselves clarify in a footnote rather than assuming all readers know it. And trade value is, well, the amount you trade. :) The footnote for that term clarifies that they convert and charge this commission in whatever currency you have configured as the base currency for your account. (For example, I've chosen USD for my base currency since most of my transactions are US stocks on US exchanges, even though I'm in Canada and therefore the legal entity I'm officially dealing with is IB's Canadian arm.)
So, to convert anywhere up to US$100,000 (or its foreign currency equivalent) to any other currency, they charge their minimum fee of US$2 - mathematically, 2 / (1/100 of 0.20) = 100,000. Above that and up to US$1 billion, you take the amount you're trading, multiply by 1/100 of 0.20, and that's the fee.
$2 is a ridiculously low fee to convert five USD figures or less of currency, given that they also directly pass through the very tight exchange rates collectively quoted by their suppliers without building any profit for them into the rate itself.
They don't charge spread. That's the entire point of Transferwise.
> On InteractiveBrokers for example, you pay +/- 2.33 USD in total to convert 100'000 USD to EUR
My understanding is that Interactive Brokers allows access to the forex market , indeed with a low fee, however Transferwise will use mid-market rate which is unattainable via the forex market.
It's trivially visible on Transferwise what are you paying, where can I see the same for Interactive Brokers ?
As long as they have a decent float in a bank account in each country, they can just do frequent (daily? hourly?) forex transactions to balance their reserves between countries.
At their scale, if the total amount sent by customers is X, then they probably transact 0.2X in the Forex market.
The frequency of the forex transactions will of course affect costs and exposure. Too frequent would increase transaction costs. Too infrequent and you risk exchange rates moving against you. Too infrequent and you need to hold more money in popular destination countries.
I’d say that they are probably transacting 0.9X or something in that range.
Reason being that, I suspect, a lot of their transfer flow is from richer countries to poorer countries, as payments for services.
Of course that money flows back at some point, but as payments for goods shipped, which typically doesn’t happen through transfer wise.
I wonder what % of their total transaction costs are from FX spread and fees. Maybe, even at 0.9X, total transaction costs are dominated by local bank transfer fees.
Nice try, TransferWise CEO.
I know someone who had their money frozen because they made the mistake of mentioning that the money being sent was for kava. You simply can't trust TransferWise to put their customers first.
Kava is illegal/regulated in Europe and the UK and therefore the money and account would obviously be frozen pending an investigation.
Go read the Acceptable Usage Policy... nowhere in it will you find anything about every customer being subject to UK law. In fact they go out of their way to make you think the opposite is true... by showing you different AUP's depending on which country you're in.
Assuming that there are two parties interested in doing a hawala exchange in two countries where this is legal, they still cannot (openly) use a bank that does business in US/EU because if the bank knowingly executes that transaction they could be facing serious fines.
The grandparent comment is about how the CEO of TransferWise is obsessed with customer satisfaction. If X is banned on TransferWise, then TransferWise should say so in their AUP.
To simply lock accounts out of the blue is ridiculous.
UK law on kava (and many other drugs) is stupid, but that's not TransferWise's fault.
On top of that it is legal in a lot of pacific islands.
Keeping a close eye on compliance/risk is going to help keep their transaction costs down, which keeps the cost of their service down for everyone else.
It is literally the first item in the AUP that you're not allowed to use the service for anything unlawful. Of course they monitor that. They did everything right. And I'm sure your "friend" got their money back reasonably promptly after TW completed their review.
Criticism is fine, but taking a company to task for refusing to break the law for you is just silly. They didn't make the rules, and they'd be risking their own existence by breaking them.
Again, kava isn't unlawful. It's a food product. The UK law says it is illegal to import kava for consumption, and illegal to trade in it in the UK.
TransferWise is neither trading in kava, nor importing it into the UK.
All they're doing is moving money from one person to another, neither of whom is in the UK or importing kava into the UK.
Can’t thanks them enough for their business: traveling with my primitive European bank was a nightmare.
They make everything so painlessly easy. It could take a couple of days to get cash from the UK to NZ where it can be under an hour with TransferWise. I can’t sing their praises loud enough, especially after having the deal with UK banks
All of my contractors have previously agreed to pay all fees associated with their payment, so I always type into the USD box. TransferWise withdraws exactly that amount from my bank and in 2-3 seconds tells me the amount that will be deposited into their account.
If hypothetically a new contractor wanted 1M RUB up-front, meaning that I would be responsible for payment fees, I'd simply paste 1000000 into the RUB box, and the recipient will get that exact amount, while TransferWise will calculate and tell me the USD amount to be deducted in my bank. Also couldn't be simpler.
PayPal makes this a nightmare. In order to make a payment such that exactly $1000 USD is withdrawn from my bank, I have to basically apply Newton's algorithm (or successive guessing) to the Send Money page (with each load time being ~30 seconds), because the number you enter is post-fees but pre-exchange. They couldn't have chosen a more useless variable for me to input, since I'd only either want to enter an amount pre-everything in USD or post-everything in RUB. I don't want to enter some weird intermediate amount.
out of curiosity, do you have an estimate of how much are those fees?
Similarly, the TransferWise business account is a bit of a joke. Features that should have been there on day one were not there, and are still not there. Things like multiple signatories, the sort of thing you take for granted at a real bank.
Additionally "Borderless" is marketing hype. You can only actually deposit in a small number of the available currencies. You're better off with a real bank.
Or the half-hearted implementation of M-PESA. Using Transferwise you can only pay private individuals on M-PESA. Paying businesses on M-PESA is impossible because TransferWise are not correctly integrated.
Need I go on ?
Not saying avoid TransferWise. I'm just saying caveat emptor, look beyond the marketing hype.
This was my first transfer on my first ever account with them, it's not like I had any prior history with them.
Woo.
I'd love to see some insider of these companies explain the obsessive habit of booting and then refusing to explain a single reason why.
I suspect one such report got filed for me or a nonprofit I volunteered with when I came across the Canada-US border a few years back to deposit several Canada Post USD money orders plus a single US$20 bill into the nonprofit's US bank account, representing the cash receipts at a conference the nonprofit had held in Canada. (The Canada Post money orders were the CAD cash receipts converted to USD in a way that was safe for transport. We received the US$20 bill physically. Most of the money received for the conference was done via credit cards or PayPal, but not all.)
My reason for suspecting this is how many people came over to the teller's desk to help with handling the deposit, and how long it took with mostly periods of silence. But that said, the deposit happened just fine with no objections raised and no follow-up inquiries reaching me or the nonprofit.
So I don't know whether it happened - but I do know the bank couldn't confirm it if it had. Probably likewise if the same laws required closing an account.
If it's the company's choice without legal obligation, maybe it's just to avoid giving fraudsters information on what works and what doesn't work. Definitely a shitty experience for honest people caught in the mess.
Just confirming what I've read: you suspect that a report was filed, but your non-profit's account has not been closed by the bank?
Many suspicious activity reports are filed defensively by banks to avoid the risk of getting regulators mad at them for not filing one if something shady did turn out to happen, not because of real individualized suspicions. Many aren't even looked at by investigators.
> What is the bloody fucking point of rules that cause you to kick off customers if you can't even give some transparency on how those rules work. It's insane and even if it complies with some bullshit government regulations on money laundering, grotesquely shitty of major financial services companies. Users should at least be given the benefit of the doubt and told why they're being punished before being booted.
Your problem here is with United States KYC & AML requirements, not with payments processors.
It is so brazenly unjust, it strikes me right at the firmament of my being. If this is AML and KYC and not the financial institutions, why aren't there advocacy groups standing up against this gross mistreatment?
A ton of scam / fraud calls into the US are done using overseas garbage voip providers who do nothing to try to reduce the impact their crap has on individuals.
Thank you for not bothering to read my post. You know, the bit where I said "long-established reputable, not fly-by-night".
You know, the bit where I am talking about a long-established company with offices in the US and Europe ? A company that is regulated in all juristictions, pays its taxes and obeys all laws ?
You know, the bit where I talk about a company that hates "crap" on their network as much as you hate receiving it.
You know, the company that actively takes steps to identify and deal with miscreants on its network ?
Well of course not, because you want to tarnish all VOIP providers with the same brush !
I'm sure it works for most large countries, but the reality is that they sell the idea that they can transfer anywhere, list almost every country to give the illusion of ubiquity, but haven't actually tested transfers to all those countries.
Support was responsive.
In addition, their interview included a debugging / code refactoring segment which felt more "real" than most other interviews that I've done, and hopefully provided a better signal to them.
It is cheaper because the company already owns Bitcoin, so it doesn't need to buy them. What I do is:
- Getting BTC transferred to a wallet at an exchange I trust - Sell the BTC ones I receive them and put the money on my bank account
I switch between using Transferwise and BTC. The downsides are obviously that the price can fluctuate quite heavily. But my experience is that I saved a few hundred Euros each year (around 450 Euros) from using BTC instead of Transferwise.
That's not a lot in the grand scheme of things. What I like about a BTC transaction is that I can monitor it, it is even more transparent then Transferwise and I truly "own" the BTC ones sent.
It is a bit sad that I can't use it as much as I would like so I sell around 90% immediately to pay rent, buy stocks etc, and 10% stay there for future gains.
I am not tight to them, but for me it's the less concerning option.
Right now, you are probably losing more money that Ttansferwise because it costs a considerable amount of money to convert them to Fiat currency.
But moreover, BTC back to fiat is significantly more expensive than "expensive" currency exchange with usually levels as high as 3%
Moving one billion USD worth of BTC can cost as little as 0.065 BTC or ~440 USD.
https://www.independent.co.uk/life-style/gadgets-and-tech/ne...
https://www.blockchain.com/btc/tx/4410c8d14ff9f87ceeed1d65cb...
Which is ridiculous, given anyone (legally) moving a billion dollars pays zero for an instantaneous Fedwire.
Do you happen to have a source? PS: seems not to be available to retail customers?
Your bank will generally make this available to you through some online interface. If not, you can visit the teller. They will likely charge you $20-$40 to send a wire if you are a small account, but, even with something like Chase's mid-level "Signature" checking (~$10-$20k minimum to avoid monthly fees iirc) they will waive this fee. And, of course, if you're really moving a billion, not only would you have a banking relationship where your wire fees are waived, that fee would be peanuts anyway.
Generally speaking I'm quite familiar with payment infra in Europe, I've worked on it for ~20 years after all.
I have precious little information to offer you on the workings of European funds transfer services, however; I posted here to discuss Fedwire specifically, since you brought it up.
My anxiety is peaking lately... I have no idea exactly why I answered like that but what I meant was that while I'm not familiar with the US payment system, I do know the European one quite well and that's why earlier I'd expressed incredulity that any traditional banking system could offer zero cost transfers. I think I didn't notice you were not JumpCrisscross
Even $15 would have been too much, looking at other transactions in the block.
Of course, you already need to own Bitcoin. If not, the fees are slightly more expensive, but still cheaper then using "normal Banks".
At a certain amount exchanges will ask a lot of questions (at least in Europe they do). And they want to see proof for the whole chain back, so you better hope your client can provide these infos as well.
And even if everything is 100% legit, you will wait a while for your money.
This has never been a good idea, unless you’ve been immediately selling upon receipt.
It evens out over time.
Unless you are getting international transfers for the purpose of buying drugs or speculating/trading I completely disagree with this.
Have taken payment for consulting in BTC a few times and would always get it into a local exchange then sell/transfer out within an hour, it's pretty painless when you are all setup with the exchange, fee's on my end come to 0.8% total amount, not capped.
So $80 for a $10k payment in BTC, that's not including the senders fees, exchange movements and time spent. Looking at transferwise now they will do the same $10K from USD to AUD for $80.60
So with using BTC, you actually have the BTC when it is transferred. The banking system has to cheat itself to keep low fees and fast transaction times. With BTC, you may wait 10-15 minutes. With Fiat, you would usually wait a day or two. But, you can "cheat" your way through the system.
One way I don't get why people won't support BTC: It is a system where everyone can contribute, see every transaction and improve it. The banking system however is old, slow and deeply flawed. And there is no way of improving it. So yeah, even if BTC would be more expensive and slow, I would still use it more often then not, since it's software, and you can fix and improve software.
To elaborate, there is a tax on buying dollars, so although the 'official' price is X, the true price is X + 30% if you want to buy.
I think there might be a possibility for arbitrage eventually, since sometimes the true price is lower than the price you might get for bitcoin but the difference is so minuscule that it would take years to make an interesting profit out of it. Also, it would be a pain in the ass to wire the transfer out of the country, since for example Transferwise doesn't allow you to send money in my homeland's currency, only receive.
Sorry, i am unconviced. Could you show the numbers including all costs and exposure times to fx risks from your client's BTC account to your landlords bank account and compare those to using e.g. Transferwise?
Since it works with pub/priv key cryptography its a push model and so you can securely send money to anyone, anywhere, anytime. No bank needed.
With the current setup the only cost I have are the TransferWise fees for USD to EUR conversion when I send the money to my local bank.
In the end I don't care about these fees, it's the world we're living in and I prefer to have fun with my projects instead.
I also don't mind paying since so far it's been the best method to get projects for me so far.
I no longer use Upwork, and the "loss" is only one of the reasons. But it's probably the best way to find projects easily though.
If however you do more long term projects (I have one active project that has been open for 2 years) then you quickly get to the 10% charge.
I wish they reduced the amount of money you need to earn to enter 5% charge range (it's currently $10k AFAIK) and I imagine it's quite rare for freelancers to get there.
What I think is quite bad on UpWork when it comes to charges is the 'connects' that you have to pay for since last year I think. Last I checked it was up to $1 USD per project proposal, which might make it very difficult for some people to get their foot in.
Their messaging and time tracking tools are mediocre at best, and they certainly aren't worth the 5% charge. Payments are held for a week, and it still costs money for the worker to withdraw them. Their local currency withdraw is 2-3% lower than Transferwise.
The tracking tools is just as it should be. I don't want a keylogger, so the fact that they simply count keystrokes and mouse clicks is good enough to not step too much into privacy zone.
Payments are held for a week in order to allow the paying customer to analyze screenshots, and if necessary to allow for complaints to be filed.
As for local currency withdrawal, I'd say they don't make a dime on that one at all. That's completely based on your local bank currency exchange rate, which is always skewed for them to make a buck too. Also they have plenty of different payment methods. And in the end it doesn't even matter.
Care to share any better online market for freelancers that you're happy with instead Upwork?
This is really misleading. (Disclosure: I work for a remittance provider.)
It's true that non-bank money service businesses do not operate as banks, but it's totally false that they "run without... governmental oversight" or are "a little riskier."
The level of government oversight of non-bank MSB's is extreme by the standards of anything but banking. For example in the US, you have to apply to each state government individually for a license to send transfers from that state. It takes years and is extremely onerous. Many of our applications ran into the hundreds of pages of paperwork and were followed by weeks of on-site examinations plus an intensity of financial auditing usually reserved for companies nearing IPO.
(In Europe the situation is better because MSB regulation happens at the EU level. This regulatory difference is a big part of why Europe has a much larger share of great fintech startups compared to other sectors.)
On risk, most regulators require money transmitters to insure their liabilities to customers so that, if they ever collapse, the insurer will be able to make their customers whole. In our case, we never have liabilities to customers (because we pay out instantly) but we still have to buy this insurance... kind of a belt-and-suspenders approach.
I was astonished when I tried to change some money in the retail market and instead of the 5th decimal digit being different, it would be the 2nd.
Luckily these days there's several services that will give you something near the same spread, close enough to not care to search for improvements. Revolut does something like that, as does TW. I'm sure some of the other challenger banks are doing this as well.
Another big bonus is they don't force you to change your money. This is a big deal if you have an old bank like Barclays that will see your incoming USD and change it to GBP, losing you several percent in the process. If you have Revolut or TW you can actually just keep your USD, chances are there's something you pay for in dollars.
For what it's worth, I can add my two cents regarding PayPal. From a customer experience perspective, PayPal is pretty great - the UI is smooth and I like being able to pay with my PayPal balance online.
Having said that, their fees are nothing short of exorbitant - for international transfers, if I'm not mistaken, the fee is 4.4% + a fixed price per transaction + 2.5% on top of that if you also want to exchange currencies. A $1,000 bill paid to my PayPal account by a U.S.-based client can easily become $930 or even less by the time it reaches my bank account. I've stopped accepting payments via PayPal for that reason.
Furthermore - this isn't personal experience, just word on the street - I hear PayPal Customer Service can be pretty atrocious to merchants, which is another thing I'm not too happy about when it comes to their service.
Two months ago, they asked me to provide charity information for my personal account, and subsequently limited my receiving/sending privileges.
Phone calls to them trying to sort this out have always ended up at some call centre in the Philippines, where the agents can only tell their users that the account limitation is "for their safety".
They've also limited the personal account of a friend of mine (who was interestingly enough ex-PayPal) before, also asking for charity information.
It's saved us a ton of time/hassle, even ignoring the fee savings (which have been somewhat substantial for most countries & currencies).
They've also increased some of the fees over the last year
They also have a peer-to-peer element, where you can choose your own exchange rate and wait for another customer (sending money in the opposite direction) to accept that rate. If you are willing to wait a little longer to send your money, you can get excellent value using this feature.
They currently have an excellent sign up offer at the moment that you can access using my link: https://www.currencyfair.com/rafland/?channel=RMZIY1
(Disclaimer: I currently work there. I love the product and I know you will too:))
Their onboarding and ease-of-use are phenomenal - even for senior people who are not technically literate. I recommend it to friends, family, clients.
Meanwhile, Paypal is a frauster and should be mass-boycotted. So do Upwork.
My bank doesn't even have an online interface for international wire transfers, plus, their UI looks like something developed in coldfusion by an ex-myspace engineer.
The first few times Transferwise insisted it's a broken card reader, then a few calls and emails later it became the merchant's terminal that's at fault.
On some of the calls, Transferwise simply hung up on me when I didn't take "you should try it again" for an answer.
Finally after escalation it became the terminal's providing bank, which didn't recognize my Transferwise card number (issued in New Zealand).
Meanwhile other people used their Transferwise cards at the same locations mine failed. So I requested a European version of my Transferwise card but TW insisted that would break their contract with Mastercard or something.
3 or 4 weeks later, after I had already left Bulgaria, they emailed to update that my card would now be working.
Needless to say, I always travel with more than 1 provider's card with me, and this runaround from Transferwise is why.
We, and I'm sure other companies, would love to partner with TransferWise, however they've yet to create API's that allows for a product to work with their system effectively. Once they do so, this will be a game changer for doing payroll globally.
A lot (most?) of the fintechs in the UK/EU seem to use TransferWise under the covers for their foreign currency exchange, and while I haven't used the api itself yet I have skimmed the docs for it and they seem detailed enough.
They (intentionally, afaict) don't provide a checkout flow, but there's still a lot there.
Nilan
Deel (letsdeel.com): They are an amazing option for paying and hiring freelancers/remote employees. They have a great feature where you can sign up as an individual contractor. They shine on their simplicity of onboarding and scheduling. They also offer a free consultation if you have tax questions etc.
Transferwise: They are great. If you are making individual payments you cannot go wrong. I wouldn't want to operate my payroll off of them, but they are great for one-off payments. (I used them to send payments to Italy for my wedding)
Pilot (pilot.co): Pilot makes it ridiculously easy to pay your international team members. They handle payroll, benefits, and compliance for international employees and contractors. They have some great tech behind their products, utilizing integrations like Plaid to get you up and running fast, they also beat TW in currency pricing all day.
Rippling (rippling.com) They have a great HR product and domestic payroll solution. They have recently launched an international payroll solution and it is just a great as their domestic.
Payoneer: Payoneer has been the industry standard for quite some time. I think the only downside is they are expensive (exchange rates are not competitive). Still would be a great option, but would not be my first option.
If you have any questions about moving money internationally, I would love to chat with you and answer them. Whether is helps Routefusion or not, more than happy to spread knowledge! :)
founders@routefusion.co https://www.linkedin.com/in/coltonseal/
Nilan
Just checked the exchange rate on TransferWise and it seems it is way better than any bank exchange rate in my country (not EUR).
So, what I am concerned about right now is taxes. It seems I can create an USD bank account in US on the name of my company for free. Then I can invoice my customers in USD (as I currently do) and tell them to pay the invoice to the US bank account in TransferWise. Then I transfer the USD to my local bank account (in local currency, using TransferWise exchange rate). So far so good.
But what about my USD bank account in US - wouldn't I need to pay taxes for my USD income in a US bank account?
If you have doubts you should ask an accountant, rather than randoms on HN.
That aside, suppose I work nomadically, ssh in to a computer in USA, perform actions there ... where is the work carried out? It's it necessarily the location of the employee? So USA based remote workers can geographically move to a low tax regime and save money? How about if I'm in USA working for an offshore company using a desktop and systems located in that companies premises but again I dial in to a USA based client; seems my work is offshore, at the companies premises?
E.g. in the UK, Barclays offer these for a range of currencies:
https://www.barclays.co.uk/business-banking/business-abroad/...
So I'm doing accounting in EUR and invoice 10,000 USD. For accounting purposes my 10,000 USD gets converted to EUR on the invoice date, at the ECB USDEUR exchange rate.
Then you hold that 10,000 USD for 2 months in your USD account, and the USDEUR exchange rate has dropped or increased 10% in that period. When you then exchange the USD into EUR, you'll generally pay tax on the exchange difference (= capital gain)
My Belgian bank accounts are all multi currency. I can hold, receive and send USD/EUR (and others if I wanted to).
However in the situation you describe if your economic activity isn't done in the US you probably won't owe tax on this but if your USD account bears interest, that would be considered US income. You may need to fill out US tax forms anyway, and it will depend on the tax treaties involved.
Currency fluctuation will results in capital gain/loss but you should talk to a knowledgeable accountant local to where you are filing taxes - in some cases this can be categorized equivalent to a bank fee (i.e. an expense), in some cases it has to be tracked as income.
They are having difficulties receiving payments from many clients because: * They're a small company so many traditional banks aren't interested in banking them because they perceive risk to be too high (I guess from an AML standpoint?) * TW does not support receiving funds from these countries.
There just doesn't seem to exist a reliable way to receive money from many of these countries. Does anyone know of a solution or bank that offers this kind of service?
Edit: make debit cards available anywhere.
Payoneer is US based.
Skrill is UK based, and I don't think they have prepaid debit cards? Even if they do, nobody should use them. They were moneybookers once, and from first hand experience, they are highly unpredictable when it comes to fees and conversion rates.
Revolut is also European and doesn't offer debit cards throughout the world.
The borderless bank account seems available in a ton of countires too - https://transferwise.com/gb/borderless/
From time to time I used TransferWise, and I am happy with the service. However, it is a transfer, not an account. For some contracts (universities in various places) a bank account is a must, so to fulfill local procedures. Revolut Business works like a bank account (including SWIFT transfer) with seamless exchanges between accounts. I created an account specifically to be paid in SGD (Singaporean dollar). If I used my "normal" bank account, the charges would be enormous (effective ~10%).
Last year it was not possible (and took me some time to discover that).
Just straight gross cash.
To be fair, I’m not 100% sure how this works in the US, in PL where I’m from and probably in all of the EU countries if you are on a job contract then the employer pays the taxes and social insurance for you. If you are self-employed / freelance you have a business registered in your name and it’s your responsibility.
Either way, I don’t see how the taxman’s cut disappears. Also lot of countries have higher taxes + social insurance than the US.
If you really want to make a case, you can say that the contractors from a low-cost-of-living countries may undercut American workers (but then, if they work remotely I think they mostly undercut the office jobs, not “workers”) because they ask less money for the same.
When we pay US contract labor, we generally send the "gross cash amount". The US contractor actually has to fill out a form upon commencement that says how their taxes & social insurance will be paid; at the end of the year they get a form from the businesses they did work for which shows total paid, and they use that to do their taxes.
Same thing for international contractors -- they just have to deal with their local jurisdiction's taxes, instead of the US IRS.
If wage disparity is big enough, it can still be a "win".
Also it doesn't always work this way, often US companies have subsidiaries to handle payroll etc. in other countries.
I’ll leave it to TW to explain when they changed their AUP, how come SimWood s was able to use them later, and also for SimWood to explain how come they didn’t track the AUP changes at TW, and instead felt the account closure to be sudden.
I do, but only when I really need to, because my country's money isn't worth the nickel it is imprinted on and devaluates all the time, so I'd rather keep my savings at $$.
Revolut is the cheapest one and I can not understand the 50 euros charge as the exchange rate is super low.
Just checked my Revolt and 1000 USF to EUR is 1090,84, in google the exchange rate would bring me 1091,20. I don’t get your 50 euros difference.
I remember somewhere about how the conversion rates are dictated by Visa/Mastercard on most credit/debit cards. Wondering how those rates compare to TransferWise's, and if their extra fee on top is justified.
Some examples: https://www.schwab.com/checking https://creditcards.chase.com/rewards-credit-cards/sapphire/...
So in practice, the main difference is that Transferwise uses an instant "mid-market" rate at the time of the transaction, and then applies its fees (which are very reasonable on common pairs). Mastercard and Visa use a daily average rate that is not computed until the day after. In the end, Transferwise can sometimes be a little better, sometimes a little worse. They should all be within 0.1%. So, to answer your question, no it's not really worth it for you.
Only Revolut regularly beats everyone else since they don't charge any fee on top of their spot rate on most common pairs, except for the weekends.
I use a local bank account for incoming wires so that, if there is a problem, I can go down to the bank and talk to someone in person instead of being subject to the customer service whims of a tech startup. For me, that's worth the $10/transfer fee (though I bill in USD so I don't see forex or origination fees).
And Western Union.
*I've worked at one of the major remittance companies.
They have their own pools of different currencies, and receive/disburse into/from those pools rather than selling/buying.
So if you send $100 to someone who will receive EU, TW doesn't actually change $100 into EU; they credit your $100 to their dollar pool, and pay the recipient from their EU pool. As long as the pool sizes remain well matched with the inflow/outflow in that currency, TW isn't actually having to deal with any currency conversion at all.
This is simultaneously similar to and utterly different from what banks have done for international transfers. The difference is that TW is free to take on the risk of the rates changing because the risk is reduced substantively.
They only support disbursements in six currencies (AUD, EUR, GBP, NZD, PLN, and USD), but they can accept eighteen currencies; presumably because they already have a large balance of those and they are relatively stable -- the one question mark for me would be PLN, but I would guess that it might be an important remote work market.
It seems the main difference is the lack of a requirement for an intermediate bank or banks; even a large international bank like HSBC might have to go through a third party for currency conversion in certain circumstances. It seems a lot easier if you are only making increases / decreases to your own balance sheet (cut out the middle man, no settlement requirements, etc).
Presumably you issue bonds to get the to do this with, which is relatively safe because it stays as cash and you know your churn rate. Does TransferWise have any levers they can pull besides halting disbursements in a given currency if there is a sudden devaluation, e.g. Poland goes bankrupt and PLN goes to zero?
My understanding is this applies to all of the services operating in this space, not just TW.
But the suggestion that banks are more expensive is not necessarily correct. My new bank charges nothing at all for IBAN transfers to my old bank in another country. Money usually arrives next day, or sometimes same day if sent early enough. The exchange rate seems to be the interbank rate and not a consumer rate, so it's all very simple and cheap.
Anyway, I opened an account at a US bank with branches in Germany and it cost me only the usual fee (which was still high, though). Nowadays I'm using Fastspring.
I looked into setting up TransferWise for my company, but half way through the validation process I decided to check what my bank charged. ~$30 with the actual exchange rate, compared to about ~$14 for Transferwise.
I applaud TransferWise for taking it to the banks, but saving ~$16 on the occasional international transaction for me isn't worth explaining to my accountant a random debit from my account.
I have never seen this (TW user here too!) and I transfer money pretty often. Are you sure the exchange rate was the same? Because that's how they get you - a fairly minimal charge (your $30, or often "free") but then pad out the exchange rate in their favour, sometimes up to 5%(!)
Or maybe you just have a really excellent bank. None of mine even come close. Hell, I've used TW to move between currencies in the same bank account because of the clip the fuckers wanted for the privilege of moving some numbers from column A to column B.
How do you do this? Last I tried, TW didn't let me choose currencies (it used the default currency for the source/destination country)
It would definitely be nice if they opened that up a bit, plenty of countries these days can do multi-currencies.
Also, given that I actually have a part of my account in USD that means I can wait and change money when I need it rather than when I invoice.
Although I've noticed an increase in fees over the year or so with TW, especially now. Next time I'm withdrawing from upwork I'm gonna compare rate/fees and check whether TW gives me better outcome. (I feel it might be not true anymore)
Does anyone have a better way to receive paper checks that doesn’t involve me establishing a bank account in the sending nation?
One feature, I liked was Exchange rates alerts.
While cost saving has almost no risk. Here's a relevant piece of the article:
> But what if it's a 6-month project and instead of billing them 1000 per month, you are billing them 10.000 per month?
> Now you could have saved €150 per month for 6 months, meaning you lost €900 just on currency conversion on this project. Ouch!
> It could very well be that you can buy a brand new MacBook Pro every few years with just the savings on your international payments.
A business is also not good if you just let money slip through your fingers.
The premise of the scenario is the freelancer is absorbing the risks of currency exchange. The client is not compensating the freelancer for the currency risk. The only way the freelancer gets compensated is by charging more or placing the risk on the client by requiring payment in the freelancer’s local currency. Neither creates a dependency on a third party, their API’s, business model, or terms of service. All of those are a distraction from doing the things that are the basis of the business.
You can try to charge more, but it's rarely obvious you will receive that extra money.
Currency risk is a cost of doing exports. Of course, sometimes it's also advantageous if your local currency is devaluing against the customer's currency.
On the other hand, this problem is partly fees, partly rates. The fee part gets taken care of by making sure you can absorb them as cost of business. The rate part doesn't, it grows with your revenue. So it's bad business to ignore it.
Freelancers are in a weird place on this because of the size of income. Just handwaving with numbers, if you are exchanging 10k the most you can save is about $100 or so, not worth a lot of time. At 100k though it's often worth it. At a million in forex, you are being irresponsible not to chase a good rate.
So freelancers usually fall somewhere around the middle, where there are real savings possible but it isn't worth a ton of time. Personally the last time I did this sort of thing 15 minutes on the phone saved me a few thousand a year so worth it.