Saving money on international payments as a remote freelancer • Hacker News Board

Re: Saving money on international payments as a remote freelancer

#201

Post by jkaplowitz » Mon, Apr 13, 2020, 6:58 PM UTC

koheripbal wrote: post #110

emdowling wrote: post #6

I’m a former TransferWise employee and I cannot speak more highly of them. Yes, they aim to make money like every business, but I’ve never seen a company so focused on transparency to customers. The CEO intensely interrogates roadmaps from the customer perspective, and fairness to customers is non-negotiable. Their economy of scale enables them to offer increasingly lower fees, but I can speak first hand to the pain…

I don't know... the only time I tried to use Transferwise was to make a transfer to Haiti. Their website claims they support it, they allowed for the transfer to be initiated - but in the end it failed for some unknown opaque reason. I'm sure it works for most large countries, but the reality is that they sell the idea that they can transfer anywhere, list almost every country to give the illusion of ubiquity, but ha…

Sometimes they support countries in some ways but not others. For example, as of when I last checked, they support sending Canadian dollars south to Mexico to be converted into Mexican pesos for delivery there, but not the reverse transaction.

Re: Saving money on international payments as a remote freelancer

#202

Post by notdang » Mon, Apr 13, 2020, 7:07 PM UTC

sealthedeal wrote: post #192

I am the CEO of Routefusion (routefusion.co). While we don't handle individual international freelancer payments, we have the most comprehensive API for companies to send cross-border/international payments to contractors, or SMBs, etc. Based on my experience, here are some recommendations for whom I would use in no particular order. Deel (letsdeel.com): They are an amazing option for paying and hiring freelancers/re…

I think you are missing the main point why so many prefer Payoneer. It's not about the fees, it's about having a card in a different country that your fiscal residency country.

Re: Saving money on international payments as a remote freelancer

#203

Post by konschubert » Mon, Apr 13, 2020, 7:24 PM UTC

rahimnathwani wrote: post #174

mft_ wrote: post #22

Earlier quoted context omitted.

Are you able to offer any insight (top level, non-confidential, obvs) into how TransferWise works, behind-the-scenes? i.e. how do they actually enact the exchange of the funds? Do they have a contract with one of the big investment banks? Do they work directly via Forex markets? Can they leverage their scale now to minimise actual exchange costs – for example internally matching up (say) a one customer transferring U…

They don't need to 'match up' individual transactions. As long as they have a decent float in a bank account in each country, they can just do frequent (daily? hourly?) forex transactions to balance their reserves between countries. At their scale, if the total amount sent by customers is X, then they probably transact 0.2X in the Forex market. The frequency of the forex transactions will of course affect costs and e…

I hope I’m wrong because I want them to be successful but I’m less optimistic about the optimization potential.

I’d say that they are probably transacting 0.9X or something in that range.

Reason being that, I suspect, a lot of their transfer flow is from richer countries to poorer countries, as payments for services.

Of course that money flows back at some point, but as payments for goods shipped, which typically doesn’t happen through transfer wise.

Re: Saving money on international payments as a remote freelancer

#204

Post by throwaway849342 » Mon, Apr 13, 2020, 7:31 PM UTC

leifg wrote: post #159

cik wrote: post #70

Earlier quoted context omitted.

This has always been more of the dream of BTC than the reality. Transferring BTC around can cost 0.1 - 0.4% which becomes quite expensive. The cost of a wire transfer from Canada to the various countries I make them is a flat $36 - though receiving fees can be as high as $15 (CAD). That means that BTC only makes sense if you're transferring less than $5100. But moreover, BTC back to fiat is significantly more expensi…

Another factor with BTC is. If you receive the money in BTC and the exchange course happens to be relatively stable. Depending on your country, you will have a hard time converting this into your currency. At a certain amount exchanges will ask a lot of questions (at least in Europe they do). And they want to see proof for the whole chain back, so you better hope your client can provide these infos as well. And even…

Not if you use something like Bisq to exchange BTC for fiat.

Re: Saving money on international payments as a remote freelancer

#205

Post by novok » Mon, Apr 13, 2020, 7:44 PM UTC

renewiltord wrote: post #193

xii22 wrote: post #102

Earlier quoted context omitted.

Personally I use Bitcoin to transfer money to my home country monthly. It's not much, around 1000-1500 euro (hopefully for just one more month), and it's to pay my credit card debt back home. It's very convenient, fast, and I get the best market price for my euros. Using Transferwise is out of the question since my homeland uses an artificial price for the dollar, and thus if I were to use them I'd lose on about 25%…

If $1 = 100 Homeland units through Bitcoin but only 75 Homeland units through currency conversion. Why don't you move 1000 dollars over and bring back $1333.33 and repeat?

It's probably done by government fiat and transferring homeland units to usd probably has a similar penalty to prevent such arbitrage.

Re: Saving money on international payments as a remote freelancer

#206

Post by ska » Mon, Apr 13, 2020, 7:46 PM UTC

EastSmith wrote: post #21

I am receiving SWIFT payments each months in EU as a commercial entity. I am invoicing in USD, providing a bank account number, where the money I receive are automatically converted to the local currency (not EUR). Just checked the exchange rate on TransferWise and it seems it is way better than any bank exchange rate in my country (not EUR). So, what I am concerned about right now is taxes. It seems I can create an…

Can you open a USD bank account in with your own local bank? I know this works some places; it makes things much easier, and with sufficient funds your bank may let you trade directly on their desk which should get you within 0.5% or less of the spot rate. Wire fees shouldn't be much. SO this looks closest to what you do now but separates the sending money from the currency exchange parts.

However in the situation you describe if your economic activity isn't done in the US you probably won't owe tax on this but if your USD account bears interest, that would be considered US income. You may need to fill out US tax forms anyway, and it will depend on the tax treaties involved.

Currency fluctuation will results in capital gain/loss but you should talk to a knowledgeable accountant local to where you are filing taxes - in some cases this can be categorized equivalent to a bank fee (i.e. an expense), in some cases it has to be tracked as income.

Re: Saving money on international payments as a remote freelancer

#207

Post by novok » Mon, Apr 13, 2020, 7:48 PM UTC

puszczyk wrote: post #127

ransom1538 wrote: post #121

FYI American worker: When an international employee makes $40 per hour and they perform two weeks of work -- their US employer sends them 80 * 40 = $3200. No Federal Income Tax Withholding, no Social Security and Medicare deductions, no Federal Unemployment (FUTA) Tax, no State withholdings, nothing. Employers love it. No drama. Just straight gross cash.

Well, they likely need to pay income tax and social insurance in their own country. The burden has just been shifted to them. To be fair, I’m not 100% sure how this works in the US, in PL where I’m from and probably in all of the EU countries if you are on a job contract then the employer pays the taxes and social insurance for you. If you are self-employed / freelance you have a business registered in your name and…

He is talking about avoiding paperwork & payroll management stress, not avoiding taxes per say.

Re: Saving money on international payments as a remote freelancer

#208

Post by rahimnathwani » Mon, Apr 13, 2020, 7:48 PM UTC

konschubert wrote: post #203

rahimnathwani wrote: post #174

Earlier quoted context omitted.

They don't need to 'match up' individual transactions. As long as they have a decent float in a bank account in each country, they can just do frequent (daily? hourly?) forex transactions to balance their reserves between countries. At their scale, if the total amount sent by customers is X, then they probably transact 0.2X in the Forex market. The frequency of the forex transactions will of course affect costs and e…

I hope I’m wrong because I want them to be successful but I’m less optimistic about the optimization potential. I’d say that they are probably transacting 0.9X or something in that range. Reason being that, I suspect, a lot of their transfer flow is from richer countries to poorer countries, as payments for services. Of course that money flows back at some point, but as payments for goods shipped, which typically doe…

You are right. 0.2X is reasonable for a transfer company with a more general audience.

I wonder what % of their total transaction costs are from FX spread and fees. Maybe, even at 0.9X, total transaction costs are dominated by local bank transfer fees.

Re: Saving money on international payments as a remote freelancer

#209

Post by ska » Mon, Apr 13, 2020, 7:49 PM UTC

EastSmith wrote: post #163

jsty wrote: post #48

Earlier quoted context omitted.

It may also be worth looking into whether you can open a Foreign Currency account with a bank where you're incorporated which is probably a lot simpler than opening one cross-border. E.g. in the UK, Barclays offer these for a range of currencies: https://www.barclays.co.uk/business-banking/business-abroad/...

Thanks, I can open an USD account, but then I need to pay fees for it and the currency exchange rate is not as good as TransferWise's rate.

Retail exchange rates are never good but talk to your bank. If you have enough volume to do they may allow you access to their own trading desk for a much better rate.

Re: Saving money on international payments as a remote freelancer

#210

Post by ska » Mon, Apr 13, 2020, 7:52 PM UTC

pbhjpbhj wrote: post #88

noelwelsh wrote: post #26

Earlier quoted context omitted.

If you don't pay tax now it is my understanding you shouldn't pay tax after changing to Transferwise. The general rule is that tax is paid in the country where the work is carried out. If you have doubts you should ask an accountant, rather than randoms on HN.

I thought USA charged income taxes on dollar earnings paid in USA too. That aside, suppose I work nomadically, ssh in to a computer in USA, perform actions there ... where is the work carried out? It's it necessarily the location of the employee? So USA based remote workers can geographically move to a low tax regime and save money? How about if I'm in USA working for an offshore company using a desktop and systems l…

The answer to this is "it depends". This is really dependent on tax treaties and the nature of the work, it's as simple as where the computer is. The laws are basically set up to avoid setting up easy tax avoidance so it's not as simple as moving people around.