As a freelancer, the importance of having a means of receiving payments from clients cannot be overstated. Sometimes, it may be more convenient to use a regular bank account. In other cases, you may need to use an alternative payment method to receive your funds from clients because of the locale and region.
Imagine being unable to land a client because they live in regions that forbid financial dealings with yours. Or, even when you can make a deal, fees and long transaction times may make the funds virtually useless upon arrival. Here is where alternative payment methods come in.
What Are Alternative Payment Methods (APMs)?
Alternative payment methods are substitute financial platforms that help you get paid as a freelancer. Unlike traditional banking, they don't necessarily involve physical assets like cash, credit, or debit cards. Instead, they take the form of prepaid cards, mobile payments, e-wallets, bank transfers, and "buy now, pay later" instant financing.
Nowadays, APMs are the usual go-to choice for many freelancers, especially as they offer flexibilities that traditional financial institutions lack. Additionally, they are more abreast of the changing tides of the integration of the Internet with society, and you have payment methods that adapt to changing times and rise to the occasion when necessary.
Despite their popularity, many people only know a handful of APMs, with PayPal foremost on their minds. However, many alternative payment methods are ready for use at any time, each with unique features and global availability. That said, let's get into some of the ones used by freelancers both on and away from freelancing sites:
This payment platform is the closest rival and alternative to PayPal. With a few taps, you can make and receive payments through Payoneer. It's easy to navigate the platform's interface and keep track of your transaction history and account balance. Key features include mass and single payouts, and integrated payments, allowing users to receive and send funds fast. One advantage of Payoneer is the speed of transactions.
The platform is recognized in over 200 countries, and there are about 150 currencies available on the platform. Transactions from Payoneer accounts are free in the following currencies: USD, JPY, EUR, and GBP. The disadvantages of Payoneer are that there is a 2% charge for withdrawing foreign currencies, plus the charge on MasterCard withdrawals is pretty high. It also takes up to a week for your money to reflect in your bank account.
This payment system allows users to send money across different countries. The most outstanding features of Skrill are that it supports free accounts, supports credit card transactions, performs transactions through email addresses, and allows quick access. The service also offers cheap transaction fees, which stands out the most.
It supports transactions using your email address and has a high-security level and fraud control. However, Skrill also places certain limitations on accounts. For example, you cannot withdraw over $2,000 at one go. Additionally, it takes 2 to 5 working days to complete any funds transfer. If you perform a transaction over the weekend, it will take longer to complete.
But there's good news: you won't have to pay any fees when you receive your funds in the U.S. The withdrawal fee is flat at $5.50. You can learn more about Skrill's fees and structure on its website.
This payment system is considered one of the leading electronic money transfer services today, offering diverse online payment options to its users. You can use it to send and receive money, allowing easy control of your money and helping you keep money in a safe online wallet.
The advantages of using Neteller are its availability in several countries. It also supports more than 22 currencies and offers fast top-ups on your account through new payment systems like cryptocurrencies. A major disadvantage is the transaction fees. To deposit funds costs about 5% of your deposit, while withdrawal to bank accounts costs 10% per transaction.
PayPal is the most popular APM for many freelancers for several reasons. For one, it takes about 24 hours for transferred funds to reflect in one's bank account. However, for a small fee, you can opt for faster processing speeds with the instant payment method.
The charges on PayPal transactions are based on your location, and you will be charged 2.9% in most cases. For cross-border transactions, charges can get up to 4.4%. The advantages of using PayPal include speedy receipt of funds, online invoicing, payment through email addresses, and support in multiple languages. PayPal is available in more than 200 countries today.
Its biggest disadvantage is the higher account fees compared to other payment methods. Also, your account could be frozen at their discretion without any prior notice or infraction of rules. It's also rife with malicious instruments and users. You want to be wary of PayPal chargeback scams and how to avoid them.
Making and taking payments on Square is fast, straightforward, and secure. Funds can be received as quickly as the next working day. Square has since changed its name to Block, allowing it to bring its other services, such as Tidal, Cash App, and TBD, under one umbrella.
The platform allows users to accept payments wherever and whenever, even without an internet connection. Users can also monitor their cash flow with real-time updates. It is available in about 150 countries and supports about 90 currencies. The transaction charges on the platform depend on the amount involved, so it changes from time to time.
Venmo is another reliable payment method used by freelancers today. Initially, people only used Venmo for online payments. Today, it provides electronic wallets and various payment gateways for freelancers and entrepreneurs. The service is also owned by PayPal, with the acquisition made in 2013.
The outstanding advantage of Venmo is that accounts are free to open, and you can get in via Facebook or an email account. It is the perfect go-to for fast and convenient payments. Payments via credit cards also attract low fees.
The disadvantages of Venmo are that it does not support international payments, can't be used outside the United States, and requires a bank account in the country to be eligible. Transaction charges range from 2% to 4%.
Why Freelancers Prefer APMs
The primary reasons freelancers flock to alternative payment methods are flexibility, borderless payments, and low charges. With primary inhibitions posed by traditional banks avoided, freelancers can easily bid for more gigs and pitch themselves to more clients without the fear of losing out.
Additionally, APMs allow you to attract new clients. Clients will be more willing to give you a shot when making payments is easy and painless, especially when dealing with international transactions.
The Downside of APMs
APMs aren't without their downsides, the most obvious being transaction charges. For example, Neteller charges about 10% for withdrawals. There's also the possibility of delayed transactions.
Some payment systems could tie your money down for as long as six to seven days—which can be frustrating, especially if the money is needed urgently. Finally, some payment methods are not available in all countries. Venmo, for example, is available only in the U.S.
Pick an APM That Works for You
There is a lot of debate about using alternative payment methods as a freelancer today, even though the advantages far outweigh the disadvantages. Nonetheless, before settling on any, ensure that you understand their terms of engagement, coverage, availability, fees, customer support system, etcetera.