International Bank Transfers via SWIFT The method has proven its reliability through years, and companies today feel safe when sending money via banks even across the border. One serious argument in favor of good old bank transfers is that you know where your money is. If it doesn’t go through, it comes back.
Still, there are serious cost sacrifices involved. You can expect up to $ 50 in fees per transfer plus flat fees that banks may charge for currency conversion plus significant time lags before the money sent reaches the recipient. High commissions are also a shared burden, and someone will have to pay. Either you send more money than charged, or the freelancer charges more than they could have to make up for banking expenditures. For example, one unexpected thing that banks might charge you for is due diligence fees. They are supposed to cover a bank’s extra work it puts in investigation of certain operations they find suspicious.
On top of that, sending money through an established financial institution means providing a lot of documents, especially if it is your company sending money to a foreign natural person working as a freelancer for you. Not only you, but also your freelancer may have to provide documents to explain the origin of funds.
Banking Transfers In Broad Strokes - A bank transfer is an electronic movement of funds from senders to recipients.
- There are two types of transfers, bank credit and bank debit transfers. Credit transfers occur when the sender pushes their money to the recipient’s bank. Conversely, a bank debit transfer is when the recipient pulls money out of the sender’s account by feeding their bank the sender’s bank details.
- For international money transfers, banks are likely to request additional documents, such as contracts, so there is grounds for the payment.
- While bank transfers are highly secure, one serious disadvantage is time lags and payment costs that come in the form of flat fees and dynamic commissions charged by banks.
Online payment platforms Another popular payment method in contractor management is online money transferring services. The names are well-known even among the general public — PayPal, Payoneer, Wise, etc. In essence, they are an alternative to bank SWIFT-enabled transfers, except for high and unpredictable commissions and ages of waiting times. Normally, you will punch in your card details so money is taken from you. After that, money is sent to the recipient. Whichever solution you choose, the service works best for smaller amounts of money and is not worldwide. Any online payment service is only supported in a varied, yet limited number of countries. Another unexpected limitation is that not every business can open an online payment system account. For one, businesses registered outside of Europe are faced with serious eligibility requirements that are extremely difficult to overcome.
Though it sounds like a dream come true, online payment platforms are not as flexible when it comes to adding money to your account and withdrawal methods on your recipient’s end. For example, Wise charges quite a hefty fee which makes a bank transfer cheaper than funding your account.
Online Payment Systems In Broad Strokes
- For small payments abroad, online payment systems may be just the choice.
- Their fees are mostly lower than those in traditional banking, and wait times are shorter.
- However, a serious downside is closing documents and funding fees. After all, any PayPal or Payoneer are only tools, and they won’t be able to provide your business with compliance and documentation to present to tax authorities.
Paying in Cryptocurrency Cryptocurrency is still new, despite being around for some time. One reason it is currently getting a whole new level of traction, is because more and more freelancers as well as companies test it as a full-fledged payment method. And there is no denial it has the potential of being equal to traditional fiat money in that capacity.
By nature, crypto means a whole new level of ownership. In the fiat money world, dollars and euros are, after all, owned by banks. Cash is owned by you and nobody can take it from you, yet it is not as mobile as electronic money. In a nutshell, cryptocurrency offers you cash-like ownership over electronic money. In other words, it makes your online capital omnipotent so it can pay anything anywhere.
The level of freedom comes with its limitations though. One is that cryptocurrency is poorly controlled by governments or any bank-like institutions. So once money is sent, it is instantly credited to the recipient and there is simply no way to get it back or pause an operation.
Additionally, since cryptocurrency is still in the gray zone, its compliance is rather restricted. How do you issue a closing document for a type of money that is sort of uncharted? How do you explain the origin of funds, given it was just sent to you through Blockchain? These are serious questions that may make cryptocurrency seem unattainable or useless when it comes to contractor management.
Cryptocurrency In Broad Strokes - The method offers an unseen extent of finance freedom. Cryptocurrency can be sent anywhere to pay for anything which makes it a powerful payment method.
- An important limitation of crypto is that it is poorly controlled. While it makes it difficult to tax cryptocurrency operations, it also entails multiple risks.
- Compliance is almost off limits when it comes to crypto. Since there is no official body issuing and controlling cryptocurrency, creating documents to underpin a cryptocurrency operation is challenging, to say the least.
Contractor Management Systems, also known as Freelancer Management Systems Thankfully, there are multiple providers today that focus on compliance in international contractor management. Their goal is to transfer payments to overseas teams so that the company that pays is free of risks associated with international contractor management. What distinguishes solutions from each other is fee structure and capacity. For example, Deel Contractor Management charges $ 49/month per contract, which means you need to have a monthly subscription to operate Deel. Platforms that require such a level of commitment are likely to request voluminous sets of documents to verify that your business is real and legit.
Other solutions, such as EasyStaff, charge a commission per transfer. For example, EasyStaff sets a 10% tariff for every new user which can be changed based on turnover and funding and withdrawal methods. Joining a CMS like EasyStaff is simple and fast. The documents required to verify a company are the bare minimum, and verification times are no more than 24 hours. So paying international contractors or freelancers is available within a couple of days.
Although the registration process slightly changes, EasyStaff and its alternatives maintain rapid payment transfer times. Your overseas contractor will receive their payment in about 3 working days. But even this deadline is far-fetched, as realistic times are up to only a few hours.