How to Accept Email Based Payments for Free as a Freelancer
Let's talk about the pros and cons of various payment methods and even cover a new way to get paid electronically without any fees.
Quick Jump: PayPal | Check | Wire Transfer | Zelle | When Should You Use Each Payment Method?
This is something I’m constantly dealing with since I do both freelance work as well as send out affiliate payments to my course sales partners. In a previous article I talked about how to get high quality freelance clients and now I want to talk about how to get paid.
As a freelancer you need to be very protective of your money because a huge chunk of your income gets eaten up by taxes, social security, health insurance and you’re missing out on employment bonuses like having your employer match your 401(k) and stock benefits.
Before you know it, if you live in the US, 50%-60% of your income is absorbed by the govt, and that’s not counting having to pay an extra 8-9% in sales tax on everything you buy.
So with that said, when it comes to accepting payments, it’s a very good idea to do everything in your power to minimize transfer fees when you can.
Before we get into the newest and coolest way to accept payments for free via email (which only works in the US for now btw), let’s go over a few different ways to get paid as a freelancer and at the end I will go over when to use each one.
PayPal
This is a pretty easy way to get paid for you, but often times non-technical folks won’t have a PayPal account and trying to get them to sign up for it is a huge burden.
But, if both parties have a PayPal account, it’s as simple as giving them your email address and you’re done. A few business days later you could have that money sitting in your bank account.
It works internationally and even converts currencies for you under the hood. This sounds sweet until you realize how much revenue they are taking from you in fees.
If both parties live in the same country, it’s 2.9% + 30c for each transfer. Fees go way up if you’re dealing with international transfers. It could end up being as high as 5-6% depending on the countries involved.
Let’s say you do part time freelance work and you manage to generate $60,000 in revenue for the year. If you used PayPal at let’s say 3.5% you are losing $2,100 of your income.
That’s a non-trivial amount of money. You could buy a pretty amazing new laptop or take an epic vacation every year from those fees alone.
Check
You can’t go wrong with the good old check. Everyone you do business with will know how to use a check and it works internationally.
Other than paying the postage fee to send it anywhere in the world, there are no additional costs associated to sending and receiving a check.
However, convenience wise it’s pretty annoying. I try to make things as easy as possible for my clients and asking them to write a check and mail it is kind of lame. Personally I only write 4 checks a year (to mail in taxes). Other than that, I don’t touch my checkbook.
Now of course you need to wait for the check to arrive. Over here in the US, it takes around 3-5 days to receive a letter from someone in the US. I’ve also accepted checks from Greece and they took over 2 weeks to arrive.
On top of that, you need to wait for the check to clear. This could be anywhere from a few days to 10 days depending on the amount of the check and where it comes from.
It really sucks to be stuck in payment lingo for that long. I mean, realistically you’re talking about 8 or so business days for most local checks to be received and cleared. That’s a long time, and I hate being like “well, I can’t start working until the first payment clears”.
Wire Transfer
That leads us to the trusted wire transfer. They allow us to send and receive money electronically and it’s very fast.
The biggest concern with them is how annoying it is to set up. The first time you send someone a wire transfer your bank is going to ask you 80 billion questions. It’s by far more annoying than sending a check.
There are also fees associated to sending and receiving wire transfers and those fees vary depending on the banks involved as well as the transfer being local or international.
For example, my bank charges $15 to receive local and international transfers but they charge $25 and $40 to send local and international payments.
So let’s say it costs $40 for the transfer (to both send and receive) and you get paid every month. That’s $480 in fees per year. The reason I combined both is because I absorb those fees for larger contracts.
The upside is they are very fast and secure. You’ll get paid in about 1 day.
Zelle
Now it’s time to introduce the hero of the story, Zelle.
They are a fairly new company but they offer an interesting solution because unlike PayPal, you don’t need to sign up for anything with Zelle.
They integrate directly with most major US banks. You can check if your bank is supported by going to their partners page.
The whole process is abstracted away from you. Chances are your bank has a “Pay with Zelle” option somewhere in your bank’s dashboard. Then it’s as simple as putting in an email address and a payment. That’s it.
You’ll get your money within a day usually, and sometimes it happens within minutes. I haven’t figured out what causes the difference in time. In either case it works and it’s reliable. I’ve used it about 15 times for both sending and receiving payments – it worked without a hitch.
Even my most non-technical clients were able to do it without assistance because they already do their banking online and the interface was familiar to them.
I really hope they expand internationally!
When Should You Use Each Payment Method?
If you can use, always use Zelle. It’s free, nearly instant, secure and easy to use.
For international transfers where a check doesn’t make sense then PayPal or a Wire Transfer is your best best. You’ll want to calculate the PayPal fee vs the wire fee and use the solution that ends up being the cheapest in the end.
For example, if you’re receiving $300, then PayPal is going to be much cheaper because even at 5%, that’s going to be a $15 fee vs $65 for both ends of an international wire transfer.
Have you ever used Zelle before? Let me know below.