Save Yourself from Fiverr’s Foreign Exchange Fees

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Fiverr is a great freelance storefront with one glaring problem — it discriminates against non-U.S. workers. The site allows you to put your services, or gigs as it prefers to call them, in front of thousands more eyeballs than you could yourself. That’s thousands of potential clients for you!

It costs you nothing to put your work on the site, with Fiverr instead taking a cut of your revenue. That share is pretty sizeable too. You will pay 20% of your gigs price to the site for the privilege of them providing their service. So if you charge a client $100, you end up with $80.

Except you don’t when you’re not an American.

If you aren’t from ‘MuricaFREEDOMLtd land, you instead end up with $77 at best, or more like $73-$74 depending on how rough the exchange rate is. So $3–$7 less than what somebody blessed with an American bank account would get for the same fee.

That may not sound like much in this $100 example, but switch to a $1000 gig and all of a sudden Fiverrs disregard for non-U.S. sellers creates a $30–70 deficit.

Your choices seem to be limited to 1: increasing your rate to cover the cost, which puts you at a disadvantage against your competition, 2: suck it up and deal with it. But, ladies and gentlemen freelancers, in this very article I will present to you option number three.

Why I’m using Fiverr

For those of you sticking with me, a little history. I began using Fiverr last year for a handful of freelance articles (most of which you can find on this very site may I add) and made a modest sum. The work is mainly supplemental income and not my primary source.

Nonetheless, I invoice through my company and charge the post-20% rate for my books. Payments come in 2 weeks after the work is complete, which is an entirely different issue, but long story short — I withdraw every month for my cash flow.

And every month I get annoyed by the lower amount that ends up in the bank, relative to the amount I charged. As a Brit, I ultimately want my money to land in a British bank account with an amount as close to the USD/GBP exchange rate as possible. You can swap Brit and GBP with your nationality and currency because the end goal is the same.

You want your fair share of your hard-earned money.

So let’s go back to that $100 gig I mentioned earlier. If you are in the U.S., you can withdraw the $80 you end up with to your bank via Paypal or bank transfer. There is a much-celebrated 0% withdrawal fee that Fiverr agreed with Paypal a couple of years ago making their payment system a no-brainer. That is, of course, unless you’re relying on currency conversion which turns this into a complete headache.

The fees of Fiverr, and their friend Paypal

Transaction #1

In case you weren’t aware. Paypal offers an atrocious foreign exchange rate way below market rate. Let us take my first Fiverr withdrawal of 2020, for example.

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I had made $205 from Fiverr that month. They took their 20%, leaving me with $164. So far, same as everyone else on the site. As I had a Paypal business account already, I withdrew to that. If I had a U.S. bank account, I’d now end up with $164 in my bank.

But Paypal wants a share too. They get this by skimming on the exchange rate. This transaction was 2nd February 2020 when the USD/GBP exchange rate closed at 0.75728.

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I’d be lucky to get that exact rate, but some exchange services get close. Not Paypal who deemed 0.73817 was right for me.

If you’re not a numbers person, I’ll turn this into another $1000 example. If I created a $1250 gig on Fiverr, they’d take $250 and I’d end up with $1000 I’d need exchanging. I would get £757.28 in exact currency conversion, but with Paypal, I’d get £738.17; £20 lower.

To put it another way. While someone with a U.S. bank would get $1000 landing in it, I, as a Brit, would get $974.76. That’s taking the amount Paypal sends me and converting back using the exchange rate of the day without commission.

In my exact case, I got £121.06 when I should’ve been getting closer to £124.19. £3 is not a big difference, but this isn’t a big invoice.

Transaction #2

To show this isn’t a one-off, let’s look at another transfer from the end of February.

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A lower $112 turning into £84.53 with a USD/GBP exchange rate of 0.75474. The exchange rate on the day? 0.78001.

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So, again it’s a small amount, but instead of getting £87.36, I received £84.53, leaving me another £3 out of pocket compared to my fictional American twin.

Not a life-changing amount, but it’s a tax I have to pay for being foreign. An unfair tax. If I’d earnt $1000 post-Fiverrs fee, I’d get £754.74 thanks to Paypal, and not £780.01. £25.27 less, or $32.39 below American Jim.

The Paypal alternative

Now, Fiverr does have a bank transfer option. This isn’t as straightforwards nor direct as it sounds. I’m not hugely familiar with U.S. banking even though I did work in the U.S. for a summer. But when I transfer money from one U.K. account to another, it’s done instantaneously and fee-free.

So, when I see bank transfer, I would expect an “enter bank account number and sort code” form. Not so with Fiverr. Going through the steps to set-up a bank, we are directed to a third-party service called Payoneer.

I could write an article about the intuitiveness of Payoneers website, or lack of, but life’s just too short.

Anyway, after I battled with the setup I got my first non-Paypal payment from Fiverr…

Transaction #3

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So Payoneer was giving me a USD/GBP exchange rate of 0.7904 while the actual rate on the day was 0.80311, according to xe.com.

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If my $152 went on the ‘going rate’, I should’ve ended up with £122.07. But I got paid with Payoneers rate, so I got £120.14 instead, right?

Because $152x0.7904 = £120.14, correct?

Well, yes, but again, this is the within the Fiverr sphere so it doesn’t. Take a second glance at the Payoneer payment.

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Fee. 3.00 USD. So they aren’t screwing me on the exchange rate as much on first glance. Yet I’m still getting charged to change money, again because I’m not American.

The only saving grace, as far as I can tell, is that fictional American Jim (I like to imagine him with a Stetson and moustache, in case you wondered) would also get charged.

According to the Fees page on Payoneer, USD transfers from Fiverr will result in a 1% fee. But all other currencies are subject to a whopping 3%. So I’m only taking solace from the fact everyone had to bend over in this service, but us’ international types’ need to swallow an extra couple of percent.

Payoneer vs Paypal

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Annoyingly, I don’t have a Payoneer transfer that’s the same amount as Paypal with an identical exchange rate to go off to make a direct comparison. So I’ll need to play the percentage game to see who screws me over the most.

My first transaction with Paypal was for $164, and I got £121.06. Converting back that using the xe.com exchange rate for that day gets me to $159.86. So I lose 2.6%.

My transaction with Payoneer was for $152, and I got £117.78. Converting that back using the xe.com exchange rate for that day gets me to $146.65. I lose 3.6%.

So even though I’m now avoiding Paypal and their horrendous transaction fees, I’m swapping them for a greater evil.

Jim and American Jim charge a $190 fee to their client.

American Jim loses 20% and walks away with $152 via Paypal, or loses 20.7% and gets $150.50 with Payoneer.

Meanwhile, non-U.S. Jim would walk away with $148.15 if he went with Paypal, losing 22%. Or they get $146.65 with Payoneer, losing 22.8% of the original $190.

Let’s extrapolate all that to a full-time salary. Let’s say invoices out to clients reach a round $50,000 over the year. An American Fiverr user would get $40,000 of that if they opt for the lowest fee route, i.e. the fee-free Paypal option. A non-American user would get $39,000 at best with Paypal or $38,600 if transferring via Payoneer.

A $1,000-$1,400 discriminatory surcharge is imposed on you because of your country of residence.

Welcome to the party, Transferwise

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After realising I was no better off using Payoneer after that third transaction, I looked for another alternative. The only remaining option on Fiverr was to make use of a Fiverr Revenue Card. Essentially a prepaid Mastercard.

As I’m working as a business I have no interest in withdrawing to a prepaid card. From a cursory read on the Fiverr forum, it looks as though I’d be charged $5 to activate the card and $29 per year to own it too. No thanks.

So I took a step back and thought about how I’d previously used Transferwise as the lowest cost way to pay rent when I lived overseas. I’d transfer money from my U.K. bank account to the landlords’ bank account via Transferwise at an exchange rate that was much better than going through my bank.

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Transferwise shows their rate against other providers too.

Transferwise is essentially a payment platform that can handle multiple currencies and gives one of the most competitive exchange rates I’ve found. They show their rate against other providers too and let you know if they aren’t the best. You can hold multiple currencies in your account and convert them with within Transferwise, or out to banks around the world.

The problem was, how to get Fiverr to pay Transferwise. Well, luckily, the Transferwise service provides you with that hitherto elusive U.S. bank account. A routing number, wire transfer number, account number… basically whatever needed to send money.

The best foreign currency Fiverr solution

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So to recap, my thinking is I will switch my main currency in Paypal over to USD, add my Transferwise account as a withdrawal option, then send that sweet money over in GBP to my U.K. business bank. Alas, no. Nothing is ever simple with getting money out of Fiverr, it seems.

As my Paypal account is not of the U.S. variety, there is no way I can add my U.S. Transferwise account details to it. My U.K. Paypal asks for an account number and sort code, the two things required for bank transfers on our ye olde British Isles. Well, Transferwise provides those too, so I could just add them in instead. Again, another hurdle. To transfer out to GBP I first need to convert from USD. And that conversion rate is, of course, Paypals ridiculous one which defeats the whole purpose.

So I turn to option two. The overcharging Payoneer. They may charge me more than Paypal to get my money, but they do let me add U.S. bank accounts despite my country of residence. Now, if you’ve read this far, don’t do what I did because you’ll have phone calls and messages to change things.

I initially added my U.K. bank to Payoneer and switching it was no simple task. Proof of identity and bank statements and online request forms and phone calls and all sorts. But it eventually got sorted, painfully.

So now, we are making three jumps of money between four different locations…

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First, we withdraw from Fiverr to Payoneer. In this case, it was $148 — $185 of charges, minus 20% Fiverr platform fees.

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Next up, we transfer from Payoneer to our USD Transferwise bank account. Payoneer charges 1% for USD income, but this was $1, not $1.48. Not sure why, but no complaints.

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Then finally we’ll get that money from my USD Transferwise account to my British account. The $148 turned into $147 at Payoneer, before landing in the U.K. at £117.06.

The exchange rate was so much closer to what xe.com had that in the time between screenshots, the Transferwise conversion was actually better than what the markets had. xe.com had 0.80387 while I exchanged at 0.803988. Their guaranteed rate really held up.

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Doing the same logic as earlier, and converting my GBP amount back to USD at the market exchange rate means that the $148 American Jim gets is $145.62. A 1.6% difference. It’s still a loss, but lower than the 2.6% with Paypal or 3.6% with Payoneer.

But there’s a further difference in favour of Transferwise too. While I send relatively small amounts, it’s slightly more beneficial when sending a higher value. Transferwise has a fixed ACH funded USD fee of $0.74 at the time of writing. Then I’m charged 0.45% of the amount being transferred. So in my example, I actually was charged more by the fixed fee than the variable 0.45%.

If I were to instead transfer ten times the amount at $1,480 I’d end up losing:

$14.80 to Payoneers 1% charge.
$7.30 to Transferwise from a fixed $0.74 fee, plus a $6.56 variable 0.45% conversion charge.

Resulting in my netting whatever $1457.90 converts to on the day, or just 1.5% less than American Jim. And two-thirds of that loss is thanks to Fiverr’s forcing me to use Payoneer, not because of Transferwise.

It may not be perfect, and we non-Americans may still be getting the short stick on Fiverr, but by receiving cash with Transferwise if it’s available in your country, we can claw back some of our losses.

TL;DR I used Transferwise connected to Payoneer to reduce the exchange fees when working on Fiverr.

If you’re reading this and want to give Transferwise a shot, they’ve given me this referral link which provides a free transfer of up to £250 for new users. For full transparency, it’s a friend invitation, not an affiliate link and I’ll earn £50 if all three transfers are for over £150. Go nuts, guys.

A tall man, living around the world, watching fast cars

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