Financial Travel Tip #34: How to Get Paid Online

by Nora on June 23, 2012

 

One of the keys to a location independent career is the ability to make money anywhere in the world. Your payor could be in Beijing and you could be in Timbuktu, or your payor in New York and you in Venice…and you still need to get paid right on time.

 

But how do you get paid remotely, juggle different currencies, and then access that money?

 

In a few cases, regular payors I work with transfer money directly to my bank account when I invoice them.

But most of the time, I rely on the cheapest and most widely used way to get paid (and pay for things online): Paypal.

 

A personal account has all the nuts and bolts to get you started, with various ways of getting paid – and paying for things.

 

 

Getting Paid

If somebody wants to pay me, I simply give them the email address that’s associated with my Paypal account. They can log into their own Paypal account and send me money – lickedy split. (They can transfer money from their own Paypal balance, or use their credit card, or direct banking info on file).

 

I can also send an invoice through Paypal via email, create buttons for my website to accept donations, and set up recurring payments.

 

 

Getting At The Money

Then, it’s a matter of accessing all this income. You can maintain balances in multiple currencies. If you want to transfer the money to a bank account that’s not in the corresponding currency, Paypal converts it (for a hidden fee of course).

 

Whenever you want, you can transfer your Paypal balance to your bank account, or pay for something online with your Paypal balance, and in some cases (ie: if you have a U.S. Paypal account) you can even use a Paypal debit or credit card to access your Paypal balance at an ATM or in stores.

 

Fees

Paypal takes a cut when you receive certain kinds of payments; depending on the nature of the transfer. Personal transfers and those direct from bank accounts are free, but credit/debit card payments and fees for services or products have about 3-5% clipped off the top.

 

Although the fees used to really ire me, I now acquiesce that it’s the cost of doing business. Setting up a custom merchant account costs more and is labour-intensive; so unless you have something big to sell for a lot of money to a wide market on a customized site, Paypal will probably suit your needs.

 

 

Security, and Changing Locations

Sometimes when you log into your Paypal account from somewhere new, Paypal will send up a red flag and freeze your account as a protection mechanism. You’ll need to verify your identity (it’s relatively painless if you have scans of your official documents), and despite the slight hassle there’s something to be said for Paypal’s attention to account security.

 

If you’re concerned about managing finances securely, you can add an extra layer of protection with a credit-card-sized security key. I had one for a few years, but actually found that my account was frozen more often with the key than without! Eventually the number generator stopped working and I haven’t replaced it as yet.

 

 

Other Options?

A few years ago I searched for other ways of getting paid, and I couldn’t come up with anything that was a viable (or cheaper) alternative to Paypal.

Do any other location independent professionals out there have a different way of getting paid online? Please share!

 

 

 

{ 23 comments… read them below or add one }

1 Gigi June 23, 2012 at 11:45 am

I have a couple of other ways that I let clients pay me:

1. My bank actually offers a service that allows my clients to mail checks directly to them and the bank deposits them into my account for me. I bank with Wells Fargo and this service is free (and pretty simple – the clients just have to include an account number in the notes area of the check and mail it to a specific address and care of person). I’ve only done it a few times so far, but it’s worked out really well.

2. You could also elect a friend/family member/assistant back home to receive and deposit checks for you. If you are getting tons of little checks, an assistant (who you pay for their time) is probably your best bet. If you have a couple big clients and just get one or two checks monthly, a friend or family member might be willing to do it. Just make sure you send Belgian chocolates or something every once in a while to let them know you appreciate their help.

3. As you noted, Pay Pal’s fees only happen in certain circumstances. I have a Pay Pal account, but I only have one or two small clients pay me that way. I can transfer up to $500 per month into my bank account with no fees, so that’s what I do.

I’ve also thought about charging a fee for large clients who want to pay via Pay Pal, but since most of them send checks directly to my bank, it hasn’t come up yet.

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2 T.W. Anderson @ Marginal Boundaries June 23, 2012 at 12:03 pm

I do about 85% of my work through PayPal, and only about 15% through direct bank deposits. I haven’t done paper checks in years. That being said, given PayPal’s recent changes to comply with the IRS and the fact that I don’t like being forced to deal with FACTA and other tyrannical U.S. policies, I’m preparing to make the switch to a Asian-based merchant account later in 2012 so that my income goes where I want, how I want, without dealing with U.S. forced fees along the way.

I’ve never considered PayPal’s small % to be a hassle; I just consider it the cost of doing business. But the new laws are making it incredibly intrusive. I’ve had PayPal in numerous countries and this year when I started my Mexican PayPal I was told I had to provide my SSN when I signed up, which is totally invasive and absolute crap…and the new policy stating that if an account from a U.S. citizen has more than 20k per year in income coming through it, PayPal has to automatically declare it to the IRS?

Sorry, but my privacy is more important to me than anything else.

In any case….direct bank transfers also work, but with FACTA in place now, even my bank accounts in X, Y and Z countries are no longer safe. I’ve been slowly moving all of my money out of the banks and into physical assets/precious metals, and bank accounts in countries that aren’t complying with FACTA or the bully tactics of the U.S.

That’s the beauty of living abroad….there are numerous ways to get paid and numerous ways to control your money without dealing with the stormtrooper tactics of the U.S. government in regards to your global income.

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3 Mark Mercer June 23, 2012 at 12:32 pm

Another PayPal alternative is a Google Checkout merchant account linked to your Google ID. Which can be a non-Gmail address. On the consumer side and as of next week on the seller side, renamed as Google Wallet.

I’ve got a client who refuses to use Paypal. Rather than argue the issuer, I got him to use Google Wallet to pay me.

Similar fee as Paypal for professional accounts/credit card payments. Unlike Paypal, the payment auto-magically transfers into your US bank or credit union single designated account. Initial payment on you as a new merchant is 30 days after receipt by Google. After the first month, it’s only 2 business days. You can set it up so that charges are automatically processed and transferred to you as soon as your client pays, or only upon you proactively processing them, on case you want to acknowledge or need to ship before actually charging the card.

More automatic, less flexible: only one bank account at a time unlike Paypal’s choice-at-transfer time, and harder for your client to pay in cash via bank transfer. But a good alternative if you want full payment automation all the way to your receiving account, or if you have PayPal-averse clients.

Fully US-Based however, so the privacy issues TW mentions are still a concern. But no worse.

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4 Peachfront June 23, 2012 at 1:01 pm

Well, for those of us for whom our integrity is worth more to us than anything else, Paypal is just fine. Both of these methods work fine for me as a freelancer/seller — Paypal or company check. When somebody comes out with a weird story of how they can’t use Paypal because they want to keep their identity secret from Paypal, that’s a pretty good clue I don’t want to do business with the shady person myself.

I would love to hear from you about how you arrange to have your customers send the check to Wells Fargo without any fee. I have a bird guide in Argentina, and the last time I wanted to pay him, I had to walk the money to a big branch in Vegas not to pay any fee, as wire transfer fees are extremely high and there is no Wells Fargo here in Louisiana. I can’t remember if I paid cash or personal check, I just remember I had to do it in person for it to be free. I don’t want to cause any fees to him or his research, but I’m on a budget myself, so I’d love to hear exactly how you arrange this. Do you send the customer a stack of deposit slips/envelopes from Wells Fargo they can use to mail in the check or…? Thanks in advance, and happy travels.

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5 Abhi June 23, 2012 at 2:27 pm

Can you advise on how to deal with taxes for paypal payments (say for someone who has a different permanent job and some small regular payments from Paypal)? Lemme know if it’s better to mail you on this, or read up some old post you might have already written! Thanks!

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6 theprofessionalhobo June 23, 2012 at 7:09 pm

@Gigi – Thanks for sharing your methods of getting paid! I too, occasionally get cheques in the mail, which are sent to my “designated representative” in Canada, who deposits them for me. But it’s a hassle for her, so I try to stay away from paper cheques as much as possible.

And ultimately, yes, the Paypal fees (which are the cost of doing business) are worked into my rates.

@T.W. – I don’t have to contend with these issues as much since I’m not a US Citizen, although I might have my head in the sand as a Canadian. For simplicity’s sake, I just tend to keep everything going through regular channels.
However I have met some location independent people who have started companies in tax-haven countries to shelter their earnings. Like you say, there are many options out there!

@Mark – I’m sure Google Wallet will become even easier to use (and more widely useable) as time goes on. With so many services (Google Voice, Gmail, Wallet, etc etc), I think they may be gunning for world domination! 🙂

@Peachfront – The Wells Fargo question would be for Gigi, since I know nothing about this system.
Gigi? Can you weigh in on this?

@Abhi – The tax regulations depend on what country you’re from. In my case, it’s my responsibility to claim my worldwide income on my Canadian tax return.
In your example, any income like this earned outside of a permanent job would be considered self employment income, and you claim it on your tax return in addition to your regular wages. This means you’ll need to pay tax on the extra income.
With self employment income though, you can also claim deductions for work-related expenses, so in an ideal world your actual tax liability will be little to nothing. Heck – if you play it right, you’ll get money back! (But again, all this depends on what country you live in).

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7 Gigi June 24, 2012 at 8:40 am

Re: Wells Fargo. On my invoices, instead of providing my own address, I give clients the address of my bank (c/o the bank manager usually). In the notes area of the check, they need to write my account number (which I also provide on the invoice, with instructions in bold so they can’t miss it). And then they can send it direct!

It’s pretty simple.

The bank prefers it if you give your clients deposit slips to enclose with the check, but if you can’t get one to them or if they forget to include it, that’s okay as long as the check has your account number on it. That’s the most important thing.

I’d give Wells Fargo a call on their toll-free line (or have your contact stop into WF and talk to a rep about his account) to make sure this applies to his specific types of accounts and to find out what address he should provide you with. Then, once you have the address and the account number, you should be set to go!

Hope that helps!

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8 Peachfront June 24, 2012 at 10:05 am

Yes, Gigi, this is a tremendous help. I already have his bank account number, since he usually asks people to wire the money. Before the next trip, I’ll find out the address of the branch where he would prefer to have the check sent. Actually, I suspect with Wells Fargo, it might not matter which branch I send it to. The Vegas branch was not his branch, obviously, I just happened to be a couple blocks away from that one with money on that occasion. (I won money in Vegas, tee hee.) But my guess is the deposit would get in the right place faster if I sent it directly to his branch…It seems like such a simple idea now that you have spelled it out, and I wonder why I never thought of it before. Best wishes, Peachfront

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9 Mark Mercer June 24, 2012 at 11:18 am

Gigi

Re: WF deposits by your clients. Clever, convenient, but perhaps overly trusting? If someone has your account number and branch address they also have or can easily get the routing number. Which gives then everything they need to print and write checks or to do transfers or ACH-Pull type bill pays from your account.

This works if you absolutely trust your clients with all your money, not just what they owe you. But I’d be very wary with most clients and heck even most friends & relatives!

Perhaps you can “firewall” your money by a) keeping most money in another account, maybe in a different credit union/bank with free external transfer capability, b) transferring the money paid into WF out of there into your other bank via a “pull” initiated at that other bank, and c) giving instructions to WF (if they will do it) not to honor any checks or drafts issued against your account except for ACH withdrawals issued by your other bank.

Yes, complicated, but better than getting your account cleaned out maliciously or even just from carelessness by having too many people with your account number.

I don’t like my option due to the complexity. Lisa Marie Mercer and I have to solve this. A few of her clients insist on mailing checks. Come August I no longer will be going back to the States every month or 2 as I have during this transitional year. It may be worth it to us to get one of those US malik forwarding services that will send mail to us bundled once per month. Then use the online check scan deposit-by-check-image feature of our credit union.

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10 Gigi June 24, 2012 at 3:37 pm

@Peachfront: Glad I could help! I’d just make sure you/he speak with Wells Fargo before you start sending checks. Just to make sure they’re expecting it/he’s eligible for the service.

@Mark: Yes, to do this you do have to trust your clients in order to do it this way (the clients I do this with are long-time, ongoing clients). But it’s certainly good to cover all your bases, too. In my case, my accounts are not linked, so in a worst-case scenario, the only account that could get compromised is a small checking account. Excellent point – thanks for adding it.

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11 Baron's June 24, 2012 at 10:03 pm

I learned something new here today with google wallet and I will be checking it out…sounds like it’s the way to go in the future…Never had a problem with PayPal and it works well for me…but google wallet is something new I”l be sure to look into… Thanks all…

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12 Dyanne@TravelnLass June 24, 2012 at 10:51 pm

Just my .02 here…

Mark’s advice re: keeping your precious rubles in several different accounts (not to mention having different account ATM cards should one account’s card get lost or stolen) is excellent.

I have 3 different accounts (2 w/ one bank plus a Schwab account – no ATM fees, yay!) plus my PayPal account (that, for example I just used to pay for my air to Mongolia), and can swiftly move rubles around pretty much at will.

As for mailing checks – though my clients all happily pay via PayPal (with their nifty invoicing system), for checks that must be mailed, I use the check deposit option on my (supremely handy for we nomads) virtual U.S. mailbox. After much research, the one I chose is virtualpostmail.com and I’m very happy with them. For $5 they’ll deposit any checks that come in (I can scan/view them online) and simply request a deposit to my bank (your bank must allow mail-in deposits of course.)

HTH.

YMMV.

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13 theprofessionalhobo June 25, 2012 at 4:56 am

@Dyanne – Thanks for your two cents! If I didn’t have a willing and able “designated representative” (hi Mum!) willing to open my mail, I’d certainly go for a virtual mailing service as I’ve heard good things. Some services will even renew your drivers’ licenses and do other tasks that you’d assume would only be possible yourself.

Is it expensive to have a virtual mailbox? (That’s the only beef I’ve heard).

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14 Dyanne@TravelnLass June 25, 2012 at 5:24 am

Short answer: nope, not expensive at all – I pay just $10/month w/ VPM. It’s great not to bother my family/friends with shuffling my snail mail and I like being able to SEE/handle all my mail myself as it comes in.

That said, there’s a myriad of virtual mailbox options out there, and it can be quite dizzying to sort through them. It all depends on what you need/your personal snail mail profile. I receive but a handful each month (I switched all possible to online delivery, got myself off all stray mailing lists, etc. before I left the States) so the cheapest VPM option works great for me and their customer service is outstanding.

The various online mail services vary significantly in their pricing, reliability and customer service. So you need to do your homework to find the one best for you.

You can read about my experience in “Desperately Seeking a Mail Forwarding Service” here: http://tinyurl.com/43uuc8v

Interestingly… that particular post is my all-time most viewed!

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15 Peachfront June 25, 2012 at 10:23 am

Actually, I think Mark’s point is completely ridiculous. Mark, did you know that every time your electric company, water company, car insurance, homeowner’s insurance, credit card company, and so on pull a payment THEY KNOW YOUR ROUTING NUMBER AND YOUR CHECKING ACCOUNT NUMBER? Mark, did you know that everyone who gets many thousands of dollars internationally by wire transfer, such as travel agencies in a different country, to get that wire transfer, they have to send unknown new customers complete routing information so that they can pick up the wire transfer? Mark, have you ever looked at a check? Your routing number is on every single check you ever wrote! The virtual ones too! I promise!!!

And yet: No disgruntled employee among the hundreds of people I don’t know, working at many private companies and public agencies, has ever been able to empty my bank account. And yet: We never hear about travel agents or tour guides who innocently request a wire transfer so that they can reserve a trip or a lodge for you and, instead, getting cleaned out of their bank account for everything they had. You know why we don’t hear that? Because it doesn’t happen! You are afraid of ghosts!

Sheesh. Give Wells Fargo a little credit for sending money to the account holder and not to all of the probably hundreds of people who ALREADY know your account number and routing information, including (if you bank there) any number of their own employees and anyone you have ever paid by virtual or physical check at any time ever.

Yes. Avoid shady people. If people have a sad story for why they don’t use Paypal and it’s obvious that they’re dishonest people, tax cheats or don’t want to give their real name or whatever, don’t do business with crooks. But even if by mistake you gave information so that a shady person could deposit money in your bank account, they’re not gonna be able to empty your bank account. They’ll just come back with ANOTHER b.s. shady story about why they’re not gonna pay you.

OK, OK, sorry for the rant, but why do people give ridiculous “warnings” based on absolutely nothing but some monster in the back of their head? What you described doesn’t happen, Mark. If it did, how could anyone ever get new customers and new business?

Thanks for your patience with my rant. I’m sure your heart was in the right place. But don’t worry people with stuff that just doesn’t and probably can’t happen. Yes, maybe some super dooper Russian mafia hacker can empty your bank account. But they don’t need to pose as your customer to do it.

Small businesses die because people have trouble getting new customers. Anything that makes you afraid to reach out to new customers AND GET PAID is a serious financial threat to the freelance worker or the small business owner. Nonsense scare stories do hurt people who believe them and become fearful. So if I seem a bit exercised, I hope you’ll excuse me.

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16 Mark Mercer June 25, 2012 at 11:07 am

Wow, Peachfront, you feel better after telling me I’m ridiculous for being concerned about account security? Or that TW doesn’t have integrity for being concerned about the over-invasiveness of the USA which makes it hard for US citizens to open and use foreign accounts for totally legitimate purposes?

To rebut:
1. Getting new debit cards, checks, new account when out of US semi permanently is far more difficult and time-consuming not to mention costly, than in the US near your home branch. This the cost of an account compromise is worse even if the risk of it happening is relatively low. Because the cost is worse, why would I also want to make the risk any higher?

2. You still mail around dead tree checks??

3. Again on risk mitigation: A major deep pockets company that I pay even by a dead tree check is far less likely to do something stupid and evil with my routing and account number than some smalltime possibly one-time client. Thus I have no worries about Xcel Energy, T-Mobile or whomever having those data. Whereas Jimmy Runsablog buying one $15 article? Hey, not so much. Even with that higher level of trust (hah!) For big corporations, I tend to pay them with a Bill Payment Push as an epay from my credit union, not as an epay Pull issued by them against my account info. Putting my account details in fewer places in their systems and in front of far fewer eyeballs.

4. I would trust one of the virtual mailbox services and appreciate the upthread suggestions and reviews. At least I trust the more than Nancy Newsletter buying the occasional article and paying often with a personal, not even a business, check. Yes I get the irony of me getting Nancy’s numbers as a result. But I already know that I am honest and won’t misuse them. I don’t know that about her. Yes it’s an asymmetric trust level, based on asymmetric information.

5. If you really have enough dead-tree-payer clients that must send checjs, I suggest you talk to your bank about using their “Lockbox” service, as do many large and medium firms for receiving mailed payments without disclosing banking account details. No it won’t be free like your current informal arrangement. It also won’t be naively dangerously insecure.

6. And yes, I Am A Financial Servicees Information Security Expert. Doing InfoSec-related design and development projects, including international wire receipts, and account-to-authenticated-federated-identity projects over a career of about 22 years for the likes of Fidelity Investments, Bank of New York, a division of what is now in Goldman Sachs (Don’t blame me), and Lehman Brothers (PLEASE Really don’t blame me!), before the world moved on.

You want to become the perfect social engineering phishing victim, go right ahead. But don’t demean and denigrate solid advice to other expats on the risks.

Btw are you the same “Peachfront” as on Flyertalk? I (MarkXS) am sensing similar vibes 🙂

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17 Hotelopia UK July 9, 2012 at 10:46 am

I agree, Paypal and bank transfers are by far the best options out there. What would we all do without Paypal?! I get payments into my Paypal account all the time and normally just send the money to my bank account, but when I’m on holiday it’s great as I can get it sent to someone else’s account (a friend of course!) in that country, they give me the cash and voila, instant foreign currency with minimal fees 🙂 Of course, it only works if you have friends you can trust in lots of different countries!

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18 theprofessionalhobo July 9, 2012 at 10:51 am

@Hotelopia – What a great idea….I must try that some time. I’ve never thought of a transfer of funds to a local friend’s account in exchange for cash. Thanks!

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19 Hotelopia UK July 10, 2012 at 10:52 am

Glad I could be of assistance 😉

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20 Linda January 23, 2013 at 3:16 pm

This has been fascinating for me. Although I’ve been blogging for a few years I’ve only recently decided to take it seriously, and am beginning to get other work. I also recently decided to ask for PayPal payment where possible – so huge relief to know that’s the right decision!

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21 theprofessionalhobo January 24, 2013 at 7:40 am

Hey Linda – I’m glad this post helped to reinforce your decision! PayPal certainly has a corner on the market….but they’re doing a pretty good job too.

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22 peachfront January 24, 2013 at 9:11 am

I don’t “blame you,” Mark, but I do think your confession that you are involved in the security industry and thus have a vested interest in selling scare stories should be at the top of your long post and not at the bottom. Your experience working for Goldman Sachs etc. is of little value to the person who is working for a small business and has to be able to communicate, invoice, etc. on terms the small business owner is familiar with. I would never demean solid advice. I do have to protest advice that creates fear — as well as advice that pushes fear to sell an unneeded service. Paypal works very well. And paper checks are a reality if you are doing any business with senior citizens, many of whom actually have more disposable income than young people just starting out. This site is called “professional hobo,” not “be a quant on Wall Street,” and the reality is that real people will be very frequently getting Paypals or business/personal checks, probably both. And it’s fine. It’s standard. It works. No need to hire some “security consultant” who wants to bill hundreds if not thousands of dollars for a scare story.

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23 Mark Mercer January 24, 2013 at 9:48 am

Peachfront you continue to amaze and insult. And mislead. And make a flying leap from Information Security *for* Wall Street firms to “be a quant on Wall Street.” Also point-missing that I was telling people NOT to trust directly giving banking/financial services-firms account numbers to unknown people.

Where the heck did you get the utterly false ideal that I am against PayPal? I use PayPal, I get paid by some clients by PayPal. There is also a substantial minority of people who still do not trust PayPal, some for good reason from getting burned by their draconian account hold policies. For them, I offer Google Checkout as an alternative. Works fine for a client in Boston who pays me via Google Wallet using his credit card and I get it in my nonprofit Credit Union account based in the USA. Which is hopefully non-WallStreet Bankster enough for you.

If you read anything of my extensive postings across social networking and forums, you would realize I am quite the anti-bankster anti-Wall Street type. That doesn’t negate my significant experience in projects related to Information Security for Wall Street and Wall Street type firms, which I have not done for several years. And being involved in customer account security is utterly different from being involved in creating or marketing or selling the toxic crap with some firms unloaded on the world.

What the heck “service” do you think I am selling? I’m not selling a darn thing in this area except the very valid free advice that you should not give your banking information directly to people you do not know well and do not implicitly trust, when there are far safer ways to get paid. To suggest that expats and constant travelers deal with USA-based paper checks as a preferred means of getting paid while overseas is itself the height of irresponsible advice.

A wise location independent digital professional should make every attempt to switch all clients to one of the many ways to get paid safely and electronically: PayPal, Google Wallet, Skrill MoneyBookers, the PopMoney person-to-person email/mobile-phone transfer service now offered by many banks and credit unions (sadly by Bankster Citi but you cannot totally avoid them all the time.) And if a client refuses to do business other than by a paper check (which in many countries is already legally obsolete), said digital professional should evaluate and consider firing the customer. That’s exactly what I had to pose to a Boston client, the one who is afraid of PayPal, when I moved out of the USA. I was not going to accept paper checks anymore, so I gave him the option of Google Checkout (now Wallet), but made clear that if he couldn’t use that as his payment method I’d need to let him go.

Feel free to criticize my post. But please criticize what I actually write, not your fantasy strawmen.

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