How to Handle International Payments as a Freelancer
My first international client paid me through PayPal. On a $4,000 invoice, I received $3,720. PayPal took $120 in transaction fees plus another $160 in currency conversion spread. That’s $280 in fees — 7% of the invoice. I nearly fell over.
After researching alternatives, I switched to Wise for international payments. Same $4,000 invoice now costs about $35 in total fees. Over a year with regular international clients, this saves me $500-800.
The Payment Options Compared
| Platform | Fee on $5,000 | Exchange Rate Markup | Speed | Best For |
|---|---|---|---|---|
| Wise | ~$35-45 | 0% (mid-market rate) | 1-3 days | Best overall |
| PayPal | ~$200 | 3-4% above mid-market | 1-2 days | Client convenience |
| Stripe | ~$70-85 | 1% above mid-market | 2 days | Integrated invoicing |
| International wire | $25-45 (your bank) + $15-30 (their bank) | Varies (1-3%) | 2-5 days | Large payments |
| Payoneer | ~$50-60 | 0.5-2% | 2-3 days | Marketplace freelancers |
Wise wins on cost for most international payments. PayPal wins on client convenience (everyone has it). Stripe wins if you’re already using it for invoicing.
My International Payment Setup
I have about 25% of my income from international clients (UK and Canada). Here’s my setup:
Primary: Wise multi-currency account. I have USD, GBP, and CAD accounts on Wise. Clients can pay to local bank details in their own currency (a UK client pays to a UK account number), avoiding international wire fees entirely. Wise converts at mid-market rates with transparent fees.
Secondary: Stripe (through FreshBooks). For clients who prefer paying by credit card on my invoices. The 1.5% international fee adds up, but some clients won’t use Wise.
Backup: PayPal. For clients who insist on PayPal. I quote higher for PayPal payments to offset the fees (“$4,200 via PayPal or $4,000 via Wise/bank transfer”).
Tax Considerations
All international income is taxable in the US. Report it on Schedule C like any other freelance income. International clients don’t issue 1099s, but you still report the income.
Currency conversion for taxes: Report income in USD at the exchange rate on the date you received payment. Most accounting software handles this automatically when connected to your bank.
VAT/GST: You generally don’t need to charge VAT on services exported to other countries, but rules vary. If a client asks you to register for VAT, consult your CPA.
The Bottom Line
For international payments: use Wise (cheapest), accept PayPal (for convenience), and set up Stripe (for invoicing). The fee savings from Wise over PayPal on a $50K/year international revenue stream are $1,000-2,000. Worth the 20-minute setup.