A guide to using real-time payment methods to pay freelance and contract workers.
Freelance work has quickly replaced the 9-5 and become the new normal. Over 1.1 billion workers worldwide are now freelancers and part of the gig economy. This means many companies have decisions to make about how they can pay these workers in a way that’s both fair and competitive.
Did you know that many freelancers say they would switch clients to receive quick, real-time payments? In fact, up to 62% of freelancers would work for a company that offers real-time payments. Even more surprisingly, 3 out of 4 gig workers are willing to pay a fee to receive real-time payments.
Both clients and freelancers need to agree on a payment method that is quick, reliable, and easy to use. We thought we’d make that a little easier for you by reviewing some of the most important features to look for in payment methods and including some examples of the latest payment methods you can use.
Features to Look for and Look Out for in Payment Methods
Both contract workers and their clients may have different criteria for choosing their payment methods. Make sure you’re both clear on your wants and needs. For example, are transaction fees a big deal for you? Or does timing matter the most? You’ll have to weigh the pros and cons before deciding which features are dealbreakers and which ones can slide.
Some things to consider include:
- Fees (and hidden costs)
- A few payment methods have transaction fees that may appear minor but add up rather quickly. Some freelancers may choose a slower but free method if fees are a dealbreaker.
- Currencies/Exchange Rates
- If your company is in a different country than the freelance worker you hire, the exchange rate will be a factor to account for. Some freelancers may choose payment methods that match the mid-market exchange rate, including ones that offer their local currency.
- Timing
- Will your payment be processed immediately? How long will it take the money to transfer from your company’s bank account to the worker’s bank account? If it takes more than five business days, some freelancers may want a faster option.
- Security
- Is your and their bank account information secure within the app? Is there fraud prevention? Both clients and freelancers may prefer more reputable payment methods with security features they trust.
- Ease of Use
- User-friendly payer and payee features could be the most significant factor for some freelancers and clients.
Some Real-Time Payment Methods to Choose From
PayPal
PayPal is a popular, user-friendly app with over 270 million users. Users can pay with bank cards, account transfers, or PayPal balances. PayPal respects its users’ privacy, so you’ll never see any financial information from either party. However, PayPal can take 3-5 business days to transfer the PayPal balance into a personal bank account. There are also a few small fees, like a small fixed fee for each U.S. transaction plus a 3.49% transaction fee for domestic sales. These fees might be a dealbreaker for some gig workers.
Western Union
Western Union’s reliable money transfer process makes sending and receiving payments simple. Western Union has an easy-to-use app, a website, and in-store locations to send and receive money transfers. Western Union has a long, established history with over years in the business. It also has an excellent reputation for sending international payments serving over 140 currencies. There are a few transaction fees depending on how money is sent and received. You can download WU’s app or visit wu.com or an agent location for transfer fee information.
Bank Transfer
A bank transfer is another popular option since there are typically no transaction fees. However, receiving payment from a foreign or international client may take longer. For example, it may take several days for freelancers to receive payment into their bank account. Some gig workers may also worry about security since they have to share their bank account information with your company.
When choosing a payment method, it’s important to consider which features are the most important to you. Whether that be reputation, security, transfer speed, or fees, you’ll need to do your research to determine which one is best for you. There are advantages and disadvantages to each real-time payment method, so it’s okay to take your time choosing your go-to method.
Check out Western Union’s international payroll program to take all the stress out of the payroll process and securely and efficiently pay your international employees on time.
