
You’ve got the talent, the intelligence and the determination to make it as a freelance blogger.
But when you sell your work to clients, there’s something you might want to think about:
Are you wasting some of your hard-earned money every time your client pays your fees?
Most payment methods involve a cost, especially for online payments. If your client’s sending your money from another country, there might be an extra fee for currency conversions, too.
Some clients are darlings who want you to receive the full invoice amount, and will pay the transaction costs themselves where that’s possible. If you find one of those clients, treat them well — they’re a keeper! But most of your clients won’t spare a thought for how much you pay to receive their money. It’s none of their business.
Because it’s your business.
As a freelancer, it’s up to you to know what payment methods work well for you, and to avoid the ones that don’t. To help you do that with minimal effort, here’s a guide to the most important things you need to know about receiving online payments from your clients.

Why am I only talking about online payments? Because you’ll need at least one online payment option if you want to do business in the international, internet-based blogosphere.
I’ve received US dollar cheques in the mail from clients, only to lose 40% of the payment to fees for cashing a foreign cheque. I’ve had clients who wanted to pay me by international wire transfer, until I explained I’d have to add the ridiculously high fees to their invoice amount.
It’s not only foreign clients, either. Even people who live only an hour’s drive away from me have used PayPal to send me money. A lot of the time, online payments are the simplest option for everyone involved — but they might not be the cheapest.
Who Pays What?
If you invoice a client for $400, then pay a 5% transaction fee on the payment, you just lost $20 to fees.
Let’s put this into a longer-term perspective: if you make $80,000 per year and pay a 5% fee on every transaction, you’ll lose $4,000 to fees each year. If you can avoid paying the fees, you’ll save enough money to make a big difference to your freelance blogging business!
The easy way to do this is to add a little extra to your invoice to account for the fees. If you charge $420 instead of $400 and pay the same 5% fee, you’ll wind up with $399 and your client will have paid the transaction costs for you. [No need to explain why you added the extra $20. Most clients don’t care as long as they get the results they want without going over budget, so just tell them your total fee.]
If you work with clients in other countries, this next part is even more important to your business:
Paying for Currency Exchange
When you convert foreign currency into your local currency, there’s almost always a cost involved. And it’s easy to get tangled up by all the numbers you read on an online payments site, so here’s the fast track to sanity:
- Whether you’re changing US dollars into Australian dollars, British pounds into Euro, or Canadian dollars into Philippine pesos doesn’t matter.
- Whether you’re charged a commission percentage or a flat fee or a combination of the two doesn’t matter.
- What matters is the total cost of the currency conversion relative to the amount you converted.
If you like maths, here’s how to do it. [If you don’t like maths, just pretend the bulleted list ends with “because mathematics” and skip straight to the “What’s the Best Service?” section.]
total conversion cost ÷ amount converted × 100 = cost as % of payment
For example, imagine you’re US-based and your client sends you $400 of Canadian money. There’s a 5% transaction fee to receive the money, and 5% of $400 is $20, so that leaves you with $380 Canadian.
Then you want to convert that into US dollars, and your online payments service charges you a 3% commission plus a $5 (US dollars) flat fee for converting currencies.
That 3% commission works out to $11.40 in Canadian dollars. The $5 US dollar fee is a little trickier to handle because until now we’ve been working in Canadian dollars, but to get a reasonably close estimate you can multiply the 5 US dollars by the current exchange rate into Canadian dollars. Today, $5 US is roughly $6.50 Canadian.
Use the equation above to make sense of it all:
total conversion cost ÷ amount converted × 100 = cost as % of payment
($11.40 + $6.50) ÷ $380 × 100 = 4.7
So in this example, the total conversion cost is 4.7% of the amount you converted. Whether that’s a good thing or a bad thing depends on what alternative options you have available to you!
If you expect to receive a lot of foreign currency payments, check out the total conversion cost of each available payment method. Use a round number like $100 as your imaginary payment amount to make your calculations easier, and weigh up the conversion cost against the general transaction cost (the fees you pay even if there’s no currency conversion).
What’s the Best Service?
The best online payment method for you depends on where you live, how much money you expect to receive, and what you want your payment service to do for you. There are a lot of options, so I’m just going to tell you about 3 for now.
Merchant Accounts: Ideal but expensive
A merchant account is a good solution if your income via online payments is high. But if you don’t make a lot of money per year yet, or if only a small amount of it comes in via online payment services, then the fees on most merchant accounts are simply too high to make it worth your while.
I’ve seen merchant accounts charging an account opening fee plus a monthly subscription plus a percentage commission and a flat fee for every transaction. One merchant account provider in the UK quoted me a £99 setup fee and a £10 per month subscription, plus fees on every transaction, just to be able to receive payments from UK clients — receiving and converting foreign currency payments would’ve required a whole extra package (with a whole extra fee).
That’s too much money to spend if you’re only using your online payment method to receive occasional payments, but could be worth considering at some point in the future if you make freelance blogging your full-time living.
PayPal: Common but far from perfect
I receive a lot of PayPal payments each month in a whole range of currencies.
Then, because I’m in the UK and want my money in Great British Pounds, I’ll have to suffer PayPal’s foreign currency exchange rates. See, PayPal exchange rates are shockingly different to the ones you’d see on a specialist currency exchange site, or the rates that banks give each other when they convert currencies. [Hat tip to Peter Sandeen for pointing out this secret PayPal thievery.]
I’m usually pretty good with tech stuff, but there’ve been times when setting up PayPal buttons for my services frustrated the hell out of me, or when my carefully-prepared buttons started acting weird the moment I pasted the HTML code into my website. And I never liked the way PayPal makes my clients go from my site to PayPal’s own website to complete their payment — it makes one simple step into a journey across the internet!
The biggest issue I have with PayPal, though, is the array of different fees they charge for different things. There are so many little rules, and tables of fees that “start from 3.4%” without telling you where they’ll finish, I sometimes have to sit down and figure it all out with a calculator before I know what fees to expect.
Despite all that, I still accept PayPal payments from a lot of my clients. Why? Because so many people use it, I’d be silly not to have an account.
Selz: Super-easy but only takes Visa & Mastercard
I got introduced to Selz by Gary Korisko of Reboot Authentic [thanks, Gary!]. This new-ish online payment service launched earlier this year and has straightforward transaction fees of 5% plus $0.25 on any payment you receive. That’s it. No “starts from”, no monthly subscription, no tables of numbers that make your eyes go crazy.
**Full disclosure: When I decided to write a post about Selz, the people at Selz asked if they could pay me for the work I put into writing it. I told them they’re welcome to send me money provided they understand that (1) I’ll tell everyone about the offer of payment and (2) I’ll write exactly the same post whether they pay me or not.**
The nice thing about Selz is its fast, easy payment button setup process, with no fiddly techy stuff. Like PayPal buttons, you can do it by copying and pasting some HTML code into your website. But if that sounds too high-tech, use their WordPress plugin instead to create a button or widget anywhere in your site’s pages and posts in just a few seconds.
Seriously, just a few seconds. For the tech-terrified, that’s a big help. Watch how fast it is in this video:
I’ve used the Selz plugin, and it took me about 2 minutes from start to finish — that includes creating a Selz account, linking it to my PayPal, installing the Selz plugin on my WordPress site, and using it to create a fancy widget with a sales button.
A nice set of package deals like “1 Standard Post Per Week”, “1 Deluxe Post Per Week”, “3 Standard Posts Per Week”, and so on, each with its own Buy button, can be an easy way to make a sale right off your freelance business website from time to time instead of always negotiating via email. Just be sure to define exactly what’s included in each package!
Two more things I like about Selz:
- People can make a payment without ever leaving your site. Watch the video above to see the Selz overlay in action. Much nicer-looking than an abrupt trip to Paypal’s login page.
- Selz will store and deliver digital products like PDFs for you and stamp them with the name of the buyer. So you can set up a professional-looking PDF voucher for a free 15-minute blog consultation and it’ll be delivered to anyone who clicks the “Buy Now: FREE” button on your site. Then all they have to do is email you their voucher to book a consultation appointment — and you get 15 minutes to explain why this prospect should hire you as a freelance blogger. 😉
The only major drawback I’ve found with Selz is that they’ll pay your money into your PayPal account, but they don’t accept payments via PayPal. [Update: they do now! But you have to pay a small extra fee to accept PayPal via Selz.] Check out the Selz blog for more news about what payment types they work with. I’m still testing out the Selz system, and I’ll report back after I’ve tried it for another couple of months.
There are a lot of other potential alternatives for receiving online payments. None of them are perfect, none of them work for everybody, and the best thing you can do is try a few out before you make your final decision.
It’s your business. It’s your money.
Take a moment to realise just how fucking splendid that is. 🙂
Now go and earn some more!
Image: M4D Group
This is really helpful for me Sophie because I too live (mainly) in the UK and have clients in the US. There are so many options out there now that it can be hard knowing which one is the best fit. As you say though, it’s our business and our money so we gotta step up and work it out one way or another!
Exactly, Kirsty. The thought of all that money draining out of freelance writers’ accounts just to pay transaction fees makes me shudder!
Sophie
I do like the look of that Selz button.
Instead of faffing around emailing back and forth over payment arrangements the client just clicks a button and – bang – they’re done.
Anything that helps the purchasing process has gotta be a good thing – the easier you make things for people, the likelier they are to buy your services.
And if you’re tired of bullshit emails from clients who keep saying they’ve lost your payment details then that Selz button gives them one less excuse to try on.
Once you start thinking about it, payment buttons have a lot of potential even if you don’t create any package deals…
I like the idea of using Selz to deliver free digital downloads like the PDF consultation voucher I talked about in this post, or a free report on the benefits of hiring a freelance blogger. At the moment I’m trying it out on the info page for my latest course, but I plan to test Selz buttons in a few different places and see what results I get.
LOL @ “because mathematics”! For me, the tech aspect of setting up payment accounts and getting the buttons to work right can make becoming a yak rancher seem like a workable alternative to doing anything online. But your article gives me confidence that I can start doing a better job of getting paid by my foreign clients if I’m willing to invest a little time and energy in the setup. Thanks!
That’s why Selz is a nice solution for people who don’t want to fiddle with code on their site – it’s all point and click. 🙂
Great breakdown Sophie!
And… I’m hearing that just this week Selz has launched integration for 3 major email service providers so you can use it to build your optin list. Plus they’re launching a new easier way to sell services (as opposed to products) as well.
It’s already a great service… and it’s getting better!
Excellent news, thanks Gary. 🙂
Right now I’m loving Freshbooks because it makes things really simple, and if the customer pays by bank account via PayPal, it’s only 50 cents per transaction! I haven’t had any international clients, though, so I will check out these other alternatives.
I wish the Freshbooks deal was available in the UK!
I’ve been using Freshbooks, per Carol Tice’s recommendation, and I love it! They charge $.50 per Paypal transaction, and you also have the option to pay by echeck with no fee. Most of my clients have used an echeck, so there’s no fee at all! And you can have 2 clients with a free Freshbooks account. They also let you delete clients indefinitely (as far as I can tell), so up till now I haven’t even needed to upgrade to a paid ($10/month) account, because I don’t have a lot of ongoing clients. When I have a one-off client, I’ll add them, bill them, and then delete the client after they pay. Once I get 3 ongoing clients I’ll upgrade to a paid account. 🙂
*Sigh* C’mon, Freshbooks, why can’t I have this deal too?
Nice overview!
I haven’t had to deal with currency exchange issues, but have used a few tools for accepting online payments in my consulting practice. The least expensive by far is Dwolla, which charges $0.25 per transaction for transactions over $10.00; yep, no percentages sliced off the top, just 25 cents per transaction.
The next best provider is Intuit’s Payment Network, which I use since I also use Quickbooks Online for my accounting. Transactions through Intuit’s Payment Network are $0.50 per transaction, again, without any percentage sliced off the top of your billing.
Both Dwolla and Intuit’s Payment Network use ACH, which is essentially bank-to-bank funds transfer, which is why they’re so cheap.
Other non-ACH payment providers will take a percentage cut from your billing, such as Square, PayPal, merchant accounts, etc. Bummer, but that’s how it works.
Also, while reducing fees is great, another thing to keep in mind for freelancers/consultants is getting paid faster. While online payments can speed up the process, there are other things you can do to structure your client relationships to help get paid faster.
One thing I’ve done is to offer 2 payment terms: clients can either (1) pay 50% before work begins and 50% 30 days later, or (2) 100% up front and get a 5% discount. That works far better than what many freelancers/consultants do, which is to do the work, then invoice for it, then wait 30-45 days until the client pays.
Another thing that’s worked well to collect cash faster–and reduce accounts receivable–is to invoice clients 2x/month; getting a 2nd invoice in the middle of the month essentially acts as a reminder that they need to pay any outstanding balance.
I *love* those payment terms! Stealing that idea for sure. 😀 I usually ask for full upfront payment anyway, but that 5% discount could sway a couple more clients away from the 50/50 split.
If you have clients with a U.S. bank, you might give
Dwolla your most serious consideration. They are an
Iowa-based mover company with a solid track record
and absolutely no long term debt on their books.
Here are the pros:
* No percentages or hidden fees
* A flat rate of 25 cents per transaction
* Only one party pays the fee (typically, the sender)
* Transactions less than USD 10 are *free*
* Individual and business accounts are available,
but both pay the same flat fee of 25 cents per transaction
*All transfers between Dwolla and your bank or
credit union are absolutely *free*
* No debit or credit card headaches because
Dwolla links directly to a bank account
Now for the Cons:
* U.S. based only ( for now )
* You have to do the initial 4 cents or 8 cents
“test deposit” just like PayPal to verify the account
* Absolutely no credit/debit card payments. Dwolla
is a stand alone, independent network that’s positioned
as an alternative to merchant accounts and their high fees
For more info, check out their corporate link below:
http://www.dwolla.com
I’ve also included a YouTube interview with Dwolla’s CEO,
Ben Milne. He explains how Dwolla works, why he founded
the company, and all of the benefits to the end user:
http://youtu.be/_FPTma3J2Kc
Essentially, you can move a million dollars for the same
cost as $10 – a flat rate of 25 cents. So for the price of one
Starbucks coffee, you could move money once a month
for an entire year.
Anyway, just some food (and coffee) for thought….
Kick ass post as always, Sophie!!! 🙂
Michael
Dwolla sounds interesting – I wish all these US companies would extend their payment goodness to the UK!
I agree, Sophie. But all things in time.
A few moments ago I finished watching a CNBC business
segment on Bitcoins. It’s a digital global currency that’s
growing in popularity. Details can be found below:
http://www.weusecoins.com/en/
Bitcoin is a fascinating phenomenon. Nobody’s offered to pay me with them yet, but if they do I’ll be likely to accept out of curiosity!
Oops! I meant to say that Dwolla is an
Iowa-based “money mover” company.
Sorry for the faux pas…
I’m with Lisa and Willi on this one: Freshbooks is best to use for US-based clients and freelancers because it will only take that 50 cents per transaction as long as your client doesn’t pay with a credit card. Then it’s the same fees as PayPal. I’ve heard good things about Dwolla, but I haven’t tried it yet.
I’ve been thinking about selling products off my site but had no clue where to start besides PayPal, so thank you for informing me about Selz. 🙂
You’re welcome! It’s particularly useful if you want a “one stop” solution to take payments and deliver digital goods without a complicated setup. I’ve also used E-Junkie.com, which lets you provide digital downloads in a similar way, but the Selz buttons and overlays look nicer IMO.
Great information! Selz is new to me but it definitely sounds like a good thing. Also, some banks, or maybe it’s just credit unions, won’t take foreign transactions. The first time I got paid by a European client, I found out my credit union wouldn’t even accept a wire, so I had to have it sent to my son, then he mailed me a check.
Wow, that’s overcomplicated! It amazes me that getting paid by someone in another country is still such a big deal to some financial organisations.
There is a way to pay a flat 50 cents each for Paypal payments. I use a free Freshbooks account, which allows me to manage three clients at a time. I don’t think the free option is really advertised on the site, but if you sign up for the free trial and then don’t sign up for a paid subscription at the end, they will offer it (at least they did back when I signed up).
When I create an invoice, I can choose from Paypal Standard or Paypal Business Payments. The Paypal Business Payments option costs only 50 cents, but doesn’t allow the client to pay via credit card. They either have to pay from their Paypal balance or from their bank account. This slows things down because most of the time they use their bank account. It then takes up to 5 days for the payment to clear after your client pays.
Because of the delay, if I need money fast, I choose Paypal Standard and pay the percentage-based fee. If I can wait a week or two to get paid, I use Paypal Business Payments and pay 50 cents.
Business clients are often fine with sending a check through the mail as well. That’s great for me since there are no fees at all. Of course, you don’t want to do that with international clients because of the currency conversion issue.
Damn you, Freshbooks! I demand my 50 cent PayPal solution!
At least it’s good to know you US-based freelancers can get your accounts and invoicing done without paying silly amounts to receive your money. 🙂
As embarrassing as it is, I was totally unaware of the fees when I was starting out. But i’m a little wiser now. 🙂
I add a paypal fee on top of what the client owes me.
I should try Freshbooks…
Glad you’ve got the fees covered, Glori! Yeah, look around at what deals you can get in terms of transaction fees – it’s worth the research time if you can save yourself a few extra dollars on every payment you take.
hey sophie.
‘my’ government, (kenyan) recently imposed a 10% levy on all financial transactions. add that to banks’ usual *buy low, sell high,* forex deals and ATM withdrawal fees=”moneycide!”
thanks for the great tips, but unfortunately, my current overseas client (uk based) has a set writing fee she wires to my account that she thankfully pays. however, how do i add the 10% without risking her ‘firing’ me?
You’ve got 2 options: either ask politely if your client would be OK with you raising your price on future work to cover payment processing fees, or ask for a raise based on the results you’ve delivered for your client so far. Check out this post by Francesca Nicasio for more raise-earning tips!
What a timely post! I’m trying to figure out international transactions too, since my only option is Paypal at the moment. I’m currently based in China and banks here are NOT at all friendly. *sigh*
Sucks. Sometimes the only thing you *can* do is raise your rates for international clients to cover the costs.
Thanks for this post Sophie. I’m also facing the same problem.
The transaction costs are building up and the exchange rates are ridiculously lower than the actual forex rates.
Its always a bit of a gamble increasing the rates for clients, especially if they’ve just got on board.
So glad you found the article helpful, Jawad! 🙂
It can be tricky to raise your rates, yes. I know we have an article on here about that, but I can’t seem to find it… (I’ll come back later and post the link when I do).
In the meantime, here’s a great (recent) article on why you owe it, not only to yourself, but to other writers to charge a little more: http://beafreelanceblogger.com/charge-more/ 😉
Good luck out there!
Found it! 🙂 http://beafreelanceblogger.com/freelance-raise-rates/
Thanks for sharing the link Lauren.
I’ll definitely have a look.
You’re very welcome. Enjoy!
I really miss google checkout. It was so easy to use, send them an invoice, the click, pay and I would get the cash the same day. Low fees too. (sigh)
First of all I want to say great blog! I had a quick question in which I’d like
to ask if you do not mind. I was curious to know how you center yourself and clear your mind before writing.
I’ve had difficulty clearing my thoughts in getting my thoughts
out there. I do take pleasure in writing however it just seems like the
first 10 to 15 minutes are wasted simply just trying to figure out how to begin. Any suggestions or tips?
Appreciate it!
Any suggestion for those in countries that are not PayPal compatible? I am only able to make payments with PayPal but not receive any. Selz only works in countries that are PayPal compatible and Freshbooks works in USA and Canada only.
You mention fees even for domestic clients, but a domestic bank transfer is free with most banks. For those of us living in a country that uses the euro, thanks to the Single Euro Payments Area, even transfers from most countries in Western Europe are now free.
I can suggest an alernative to all the above mentioned solutions. If
you use Foreign Exchange brokers you end up paying smaller fees and
enjoy much improved exchange rates.
The method is simple.
You
supply your employer with the bank details of the broker so they can be
paid directly (removing the need for you to open an account in the
respective currency, saving on any monthly fees). Once received the
foreign exchange broker will then forward the GBP equivelant to your GBP
account.
I am a foreign exchange broker for a company called
SGM-FX and we help many people in this way. If you have any interest in
the above I would be more than happy to explain this in much more
detail.Please contact me via email – tom@sgm-fx.com
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