Freelancers face a great many problems with getting paid for their work. In fact, according to a recent survey, at least 58% of them experienced situations where they didn’t get their honestly earned pay. Small business owners and entrepreneurs that work with clients from all over the world also face similar problems often. In light of this, these people cannot afford to lose even more money due to international money transfers. PayPal is the most popular of such services today, but it’s very far from perfect. Therefore, despite its numerous benefits, one should consider using specialized money transfer companies.
Pros of Using PayPal as a Freelancer or a Small Business Owner
- Simple to use
- Very convenient
- Many people (read clients) are familiar with the service and have accounts of their own
- Offers handy features, like recurring payments
- Can be integrated with a variety of common software for ecommerce and other online businesses
Overall, the main advantage offered by PayPal is convenience. This service simplifies the process of making overseas payments and you can manage all your transactions effectively through a simple app. Even a non-tech-savvy person will be able to master the app fast. And if you are targeting an audience of active PayPal users, offering this payment method is a must.
Freelancers, in particular, might need to have a PayPal account regardless of how they personally feel about the service. Many of the top freelance job marketplaces use PayPal as their standard payment solution.
Cons of Using PayPal as a Freelancer or a Small Business Owner
- High fees
- Bad customer service
- Reported cases of blocked accounts due to “suspicious activity”
- Withdrawals can be tricky and take several days
- Full service functionality is only available to US residents
Convenience is good, but you need to think hard about how much it’s worth to you exactly. As a freelancer or a business owner who chooses to use this service to accept payments you will learn one important thing very fast. That thing is that PayPal’s fees are mind blowing. And that are only fees charged by the service. You will most likely have to lose more money because when money is transferred from a bank account, the bank will also charge a fee.
The fact that PayPal isn’t available everywhere is another major con. This is especially important for those who live outside America because it might not be possible to withdraw your money from the account easily if you aren’t a US resident.
Moreover, freelancers in the US need to understand that PayPal reports to the IRS, which means they must report all their earnings paid through this service on their tax return. The relationship between PayPal and taxes in America is rather complex by default, so you’ll need to research it in order to make sure you don’t make any mistakes that will come back to haunt you. The same goes for small businesses.
Another important con of PayPal is the outright appalling customer service. One can easily find a dozen stories from customers who share their frustrations about trying to get any support from PayPal. The bigger problem is that this service is very loose with account suspensions. This means that cases of frozen accounts are very common and you might lose access to your funds for up to 180 days. These situations result from “suspicious account activity”. But in many cases any accusations are unfounded and people end up stuck in this mess for no reason at all. The stellar customer service makes it nearly impossible to unfreeze the account fast.
PayPal Alternatives with Lower Fees and Better Service
All in all, while PayPal remains the top payment service used by freelancers today, its popularity begins to wane as more alternatives appear. If you are a freelancer or own a company that needs to accept payments from other countries, you should consider using specialized international money transfer services, like Payoneer.
These solutions are as safe as PayPal is and many of them are also fast and offer the same measure of convenience. However, they are also available in more countries and have simpler withdrawal procedures.
Most importantly, online money transfer companies specialize in this specific type of transaction. This means they work specifically to make international transfers the best and cheapest they can be. These are the only services of the kind today that offer lowest possible currency exchange rates. For businesses and freelancers working with foreign clients, this might make a huge difference in the total amount of money they receive.
Of course, online money transfer companies aren’t perfect as well. They are unavailable in some countries and they do not accept all currencies. However, overall, they are convenient, cheap, and reliable.
Note that the number of these services has skyrocketed recently as the demand for them has increased. Not all of those are trustworthy. Therefore, you should research the company thoroughly before using it. Stick with industry veterans with good reputations on consumer forums.