Finances

6 Methods: How to Receive Payment for Freelance Work

Pick a few favourites, but try to offer as many as you can.

Money bag, cash and coins

Let’s be honest:

As much as you may love your craft, you’re freelancing because you want to be paid for your services.

So how do you receive payment for freelance work?

In this guide, I’ll cover some 6 common freelancer payment methods, how they work, their fees and their pros and cons.

(This includes alternatives to the infamous PayPal, which I try to avoid like the plague)

Read on to learn more!

Contents Menu

  1. Bank Transfer
  2. Credit and Debit Cards
  3. Wise (previously known as TransferWise)
  4. PayPal
  5. Cash
  6. Cheque
  7. Comparison Table of the Various Freelancer Payment Methods

1. Bank Transfer

Payment being transferred from one bank to another

Bank transfers are a no-brainer:

The client transfers payment from their bank account to your bank account. Done!

Bank transfers are also my preferred option, wherever I can help it.

That’s because the payment goes straight into my bank account. I don’t need to worry about counting and handling stacks of cash, and I don’t need to pay any fees for the transfer.

(If there are fees, they are generally paid for by the client instead.)

How soon you receive the payment depends on things such as:

  • The type of funds transfer used: For example, transfers made by PayNow are completed almost instantaneously
  • Whether the payment is being transferred from accounts within the same bank, or from accounts between different banks: If the sending and receiving bank accounts are in different banks, the transfer may take a bit longer (e.g. a few days) to be completed.

Also, if you have a multi-currency bank account, you’ll be able to receive payments in foreign currency. This helps you avoid currency conversion fees when getting paid by overseas clients.

(If your bank account doesn’t support multiple currencies, Wise may be able to help you with that—more on this below)

To get paid by bank transfer, include your bank account details in your freelance invoice. Be sure that you’ve provided the correct details, because you don’t want your client paying the wrong bank account!

If there’s anything troublesome about getting paid by bank transfer, it’s that you have to check your bank account to confirm receipt of payment.

(You could rely on your client’s word, but not all clients are trustworthy. Just saying.)

Alternatively, some banks offer an e-alert service that notifies you of new transactions in your account. This service may not be free though.

2. Credit and Debit Cards

Hand holding a credit card

Some clients love paying by credit or debit card for the convenience this brings (and also the fact that they may also be able to chalk up card rewards).

If you want to accept payment by credit or debit card, sign up for a Stripe account. Stripe is a globally trusted payment processing platform for accepting card payments, so you’re in good hands.

Then, link your Stripe account to a platform for collecting payments. Here are some examples:

  • Xero, AND.CO and other invoicing software that support credit card payments. You can set up your invoices to include a link for clients to pay you by card.
  • Creator platforms that help people sell digital products and services, such as Gumroad, Payhip or ConvertKit Commerce.

When a client has paid you, Stripe will collate the payments and deposit them into your bank account according to a certain schedule.

This could be every day, week or month depending on the partner platform you’re using and/or your payment schedule settings in Stripe.

Stripe will also deduct a processing fee before releasing the payments to you. In Singapore, Stripe’s fee is 3.4% + S$0.50 for every successful card charge.

If Stripe needs to convert the payment from foreign currency to your local currency first, it will apply the daily mid-market exchange rate and charge an extra 2% fee for the conversion.

Also, take note that the Stripe fee excludes the partner platform’s own fees (if any).

For example, Gumroad charges a 5% fee for every successful payment, on top of Stripe’s own fee.

3. Wise (previously known as TransferWise)

Wise homepage

To avoid incurring high currency conversion fees when getting paid in foreign currency, you can ask your overseas clients to pay you via Wise.

Previously known as TransferWise, Wise is a service that allows you to send and receive money overseas at lower fees compared to typical bank rates. That’s because it charges only “a small margin” to convert payments at the daily mid-market rate.

The exact fee charged depends on:

  • The transfer amount
  • How the client is paying for the transfer (e.g. bank transfer or credit card)
  • The current exchange rate

If you want to get paid using Wise, ask your client to sign up for a Wise account (if they don’t already have one).

Your client can then transfer payment in their currency that you will receive in your local currency. Note that Wise deducts its fee from the payment amount before converting and transferring the rest to you.

If your client doesn’t have a Wise account and isn’t willing to create one, here’s an alternative:

Wise also lets you receive and hold funds in certain foreign currencies. These currencies include the US dollar, British pound and Australian dollar.

If your client’s currency is supported, use your Wise account to get local bank account details for that currency. For example, this could be US bank account details for a US client paying you in US dollars.

Then, give your client your local bank account details so they can transfer payment in their currency to your Wise account.

Once you’ve received the foreign currency payment, you can then either:

  • Hold the payment for your own spending in foreign currency, or
  • Use Wise to convert the payment to your local currency (for a small fee) for depositing into your local bank account.

Keen to get started with Wise? Register for a Wise account here.

4. PayPal

PayPal

PayPal is a popular option with both freelancers and clients globally—largely because the service has been around for so long and it supports a wide range of currencies.

Using PayPal is easy too.

After you’ve created your account, give your client the email address you used to sign up for PayPal. The client then uses their own PayPal account to send payment to your email address. And that’s it!

My main issue with using PayPal however is that its service fees are really high.

For example, if you’re using PayPal to get paid by Singapore clients, you’re charged a fee of 3.9% + S$0.50 per transaction.

And PayPal’s fees for collecting payment from overseas clients are even higher:

They’re 4.4% + a fixed fee whose amount depends on the currency of the payment. For example, the fixed fee is USD$0.30 for US-dollar payments received.

What’s more, these fees are just for receiving payments in your PayPal account. If you want to withdraw the payments to your bank account, you’re also charged withdrawal fees.

PayPal charges S$1.00 for withdrawing less than S$200 at a time. This means that to avoid this fee, you’ll have to accumulate at least S$200 in your PayPal balance before withdrawing it.

Also, do you need to convert your payment from a foreign currency to Singapore dollars before withdrawing it? Get ready to pay a currency conversion fee of 3–4%.

Previously, Singapore freelancers who got paid in US dollars could get around this by:

  • Doing a free transfer of their US dollar balance from PayPal to their Wise US bank details
  • Using Wise to convert the US dollar amount to Singapore dollars at a cheaper rate

But as of 31 Oct 2020, PayPal has started charging Singapore users a 3% fee to withdraw US dollars from their PayPal account to a US bank account. Which erases any savings you could get from this PayPal-to-Wise strategy, sadly.

Apart from its high fees, PayPal is also notorious for freezing accounts (and the funds in them) without notice. So as far as possible, I’d try not to keep too much money in my PayPal account.

And while I’d still agree to receiving payment by PayPal if a client insisted on it, it wouldn’t be one of my preferred options.

5. Cash

Cash

Depending on the work that you do, getting paid in cash could be a viable option.

For example, if you’re seeing the client in person and the payment can be manageably paid in cash.

When you get paid in cash, you generally don’t need to pay any fees to receive it. (Except maybe say transport fees, if you need to travel to the client’s office to collect the cash.)

But while they say cash is king, I try not to get paid in cash where I can help it.

I’m not worried about clients trying to pay me with counterfeit money, but it’s a hassle to receive and count stacks of cash, before depositing it into my bank account myself.

I’d rather have my clients transfer the payment straight into my bank account instead (as mentioned above).

Then when I see the figures in my account go up, I know that I’ve received the payment.

But of course, if a client insists on paying me in cash for some reason, and if it’s convenient for me to meet the client to collect it, I’d try to make it work somehow.

6. Cheque

Cheque for $1,000

Between getting paid by cash and by cheque, cheques win out slightly because they can be posted in the mail to reach you. This saves you a trip to the client’s office to get paid. (No, posting cash is not a good idea.)

When you receive a cheque, you just need to write your bank account details at the back of it, and drop it with the bank that your account is with. You’ll then generally receive the funds within one to two business days.

That said, between getting paid by bank transfer and by cheque, I’d still prefer getting paid by bank transfer.

That’s because there’s the risk of the cheque:

  • Getting lost (especially if it’s being mailed to you), or
  • Bouncing if the client’s bank account doesn’t have enough money to honour the cheque (e.g. if the client is *cough* trying to cheat you out of payment)

Getting paid by bank transfer helps you avoid most of these problems.

7. Comparison Table of the Various Freelancer Payment Methods

Payment methodBest for…Fees incurred by the freelancerProsCons
Bank transferClients whose bank accounts are in the same country as yoursGenerally noneConvenient for both freelancer and clientPayment may take a few days to reach you
Credit and debit cardsClients who enjoy the convenience and perks that come with paying by card3.4% + S$0.50 Stripe fee for every successful card charge by Singapore clients, excluding any currency conversion feesConvenient for both freelancer and clientIncurs extra cost for freelancers compared to bank transfers
WiseOverseas clientsA small fee that depends on the amount transferred (calculate the fee here)Low currency conversion feesNewer service that clients may not be comfortable using
PayPalOverseas clients who want to pay you using a trusted payment method3.9% + S$0.50 per transaction for local clients; 4.4% + a variable fee per transaction for overseas clients. Extra fees may apply for converting and withdrawing fundsGlobally recognised payment solutionReally high fees
CashClients whom you work with in personNoneHelps you get paid on the spot after you’ve completed the jobHandling and counting cash can be troublesome
ChequeClients who want to keep a paper record of their paymentsNoneCan feel more satisfying receiving a cheque instead of seeing the numbers in your bank account go upRisk of cheque getting lost or bouncing

What are Your Preferred Freelancer Payment Methods?

I hope this guide has helped you decide which payment methods to offer as a freelancer.

While I have a few preferred payment methods, I generally try to offer as many as possible so it’s easy for clients to pay me.

But for the payment methods that I don’t like as much, I don’t include them in my list of standard payment methods.

This is unless a client asks for them—and only then will I (reluctantly) share my payment details for those methods.

That said, knowing what freelancer payment methods there are is only one side of the story.

Making sure that you get paid for your hard work is a whole other ball game that involves having a contract with your client, preparing proper invoices and knowing your options if a client has missed your payment deadline.

To find out how to tackle these issues, sign up for my Painless Freelance Payments course! Click here to learn more and check out a free course preview.

Tan Siew Ann
I’m a freelance writer for some of the most amazing software businesses in the world. On this blog, I share tips on how you, too, can run a sustainable and meaningful freelance business. Let’s forge your freedom. 💪

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