The last few months have been tremendously exciting times. After reading MJ DeMarco’s Millionaire Fastlane, you’ve ditched the “slowlane.” In doing so, you’ve stopped trading your present for millions 40 years from now. Instead, you’re working on a side hustle – if everything goes well, it could deliver untold wealth in four years.
However, to scale daily revenue to a point where financial freedom becomes possible, you’ll have to go international. Doing so means you’ll have to deal with a whole host of issues. Here’s one you may not have thought of – money transfer.
Too many entrepreneurs blindly trust their bank. This is a HUGE mistake, as their fees and margins will siphon away your precious cash. In today’s article, we’ll show you how to move money internationally with maximum efficiency.
In 2019, it’s nearly impossible NOT to do business internationally
For decades, you could build a business exclusively in America. Entrepreneurs could source all their infrastructure, suppliers, and contractors here. Not only that, but they also had direct access to the most ravenous consumer market on Earth.
Things have changed drastically. Americans are still rabid consumers, but they have less purchasing power than before. With mounting debt and an escalating cost of living, it’s tougher to scale a business in our country these days.
Fortunately, the internet has opened up the world. The theoretical upper limit of our market isn’t in the thousands or millions, but the BILLIONS. We have access to a worldwide pool of labor, vendors, and suppliers. As a result, skill & selection is abundant, all at unbeatable prices.
If you love money, there’s no excuse NOT to go international!
The banks are NOT your friend. PayPal is NOT your friend.
Business is hard. As an employee, all you have to do is (a) show up and (b) do your work. As an entrepreneur, you have to create products/services, prospect for customers/clients, deal with taxes, and so forth. It’s easy to get overwhelmed by it all!
Going international adds another layer of complexity. Now, you get to deal with language barriers, cultures & customs, mounds of red tape, and SO MUCH MORE!
However, consider one of the most insidious risks to your bottom line – the cost of international money transfer. To pay freelancers, suppliers, and vendors abroad, many small business owners send cash through their bank.
Aside from taking on high-interest debt, this is among the most financially destructive things you can do. Forget about the wire fees for a second. You know the exchange rate the banks give you? It’s not the REAL rate of exchange!
Instead, they charge a rate of 5% off the interbank rate. Let’s say your financial institution has a USD/EUR rate of 0.8627. If you need to pay your Romanian programmer 1,000 EUR, you’ll need to send 1,159 USD. However, at the interbank rate, you’d only need to send 1,102 USD – more than fifty bucks LESS!
Some opt for PayPal. Sadly, the once-great online payment processor now preys on the ignorance of long-time customers. These days, they charge margins of about 3% on common pairings like USD/CAD.
Multiply these disparities over multiple transfers per month, every month. The money you lose will soon amass to a number that would make a HUGE difference in your business. Thankfully, there is a better way.
Why has money transfer been slow to catch on in America?
If the banks are ripping all of us off, why do so many continue to go through their bank? There’s a variety of reasons. Some do it because it’s convenient. Others complain about the cost but aren’t aware of the alternatives. And some do know, but worry about security.
Let’s start with the “unaware” argument. Back when Western Union & Moneygram were the only non-bank alternatives, there were no cost savings. In fact, for some currency pairings, they were a worse deal than the banks.
Until the 1990s, the money transfer industry was an oligarchy. Its players stayed out of each other’s way, as there was plenty of profit to go around.
And then, the internet happened. In the late 1990s and early 2000s, startups like Currencies Direct, OFX, and Global Reach launched. Growth was slow but steady at first. But as Millennials slowly came of age, more people began to trust these services.
Most people in America think we still live in the “old world.” In 2019, Europeans routinely shop and do business internationally. Because of this, they make liberal use of money transfer. Over here, we barely ever cross borders. As a result, many people aren’t unaware of alternatives besides Western Union.
Some express concern about the safety of online money transfer. Every so often, CNN will report on the latest hacker breach of a major retail chain. However, money transfer firms are as secure as banks. In every jurisdiction, these businesses register with regulators like the Financial Conduct Authority (UK).
Here in the USA, money transfer firms report to FinCEN, or the Financial Crimes Enforcement Network. This organization compels them to adhere to best practices, like the separation of operational and client funds.
Finally, simple inertia is the only thing preventing some business owners from switching to non-bank money transfers. Truth is, it’s easier than they think – today’s currency exchange services have slick interfaces that put many banks to shame. Providing routing information and other documentation is the only labor-intensive part. Once complete, moving money becomes as easy as any online banking task you already do.
Which money transfer service will work best for my side hustle?
That depends on your needs. Since you’re still building your business, it’s unlikely you’ll have any need for Global Reach. This firm focuses on large corporate clients – accordingly, they have a minimum send requirement of $1,000 per transfer.
In the early days of your business, Transferwise will do just fine. They have no minimum send requirement, they do transfers at the interbank rate, and have super-low fees. Best of all, you’ll pay far less than through PayPal or your bank.
In fact, transferring from PayPal to Transferwise is far easier than you think. In less than ten minutes, you can create a Transferwise Borderless Account and move your balance over.
If you’re a freelancer or own an e-commerce store, you’ll need to receive payments. In either case, Payoneer is a great solution. This experienced payment solutions firm offers entrepreneurs like yourself a suite of useful services.
Need to repatriate profits from Amazon.co.uk? Don’t use Amazon’s conversion service. Instead, make use of Payoneer’s receiving accounts. Since it’s a domestic transfer, they won’t charge fees. Then, you can move your profits home at Payoneer’s (much better) exchange rate.
They also offer a handy debit card. With a few clicks, you can invoice your clients. Then, when they pay, it goes on your card. You can then spend your balance anywhere MasterCard is accepted, or withdraw at any MasterCard-friendly ATM.
Revolut is another viable option for both sending and receiving cash. Unlike Payoneer, Revolut allows you to move currency at the interbank rate. You only pay a 0.5% fee on transfers after you’ve moved more than $8,000 in a given month. This proposition is an extremely attractive one for those who are still in “side hustle” mode.
However, Revolut isn’t without its limitations. For starters, it’s only available in America, the European Economic Area, Australia, and Singapore. If you go on a trip to Canada or Mexico, you won’t be able to use Revolut.
In startup mode, EVERY dollar counts!
At some point, you’ll have to go all-in on your side hustle. At that point, you’ll be in business for real. When you are, every dollar matters. From taxes to paying employees to investing in growth, each is a solider in your army.
By choosing the most cash-efficient money transfer or payment firm, you’ll minimize the needless loss of your most valuable resource.