PayPal unfortunately is still the best way to get paid for a Microstock producer. Some agencies agree to send money through alternative methods, such as
- Payoneer: Istockphoto, Dreamstime.
- Skrill (once called Moneybookers): Pond5, Shutterstock, 123RF, Depositphoto, Istockphoto, Fotolia…
I have tried Skrill and it’s not worth it: I had a problem with the conversion rate, as I live in Italy and we use the Euro and Microstock agencies use to send only dollars. I wrote to their email service and I got an answer in my language whose quality seemed out of those stereotypical Chinese chefs that you see in the movies. Even my English is not perfect, but I’m just writing a blog, I’m not handling your money.
From there I decided to close my account with them, because if they can’t pay trained staff they should not be reliable for keeping the royalties I got from Microstock.
Then a friend of mine tried Payoneer. When exchanging the currency, they have a (hidden) higher commission than Paypal, so they’re not a convenient alternative method of payment.
PayPal wins, but as I said before, I’m not so happy about that.
Ok Daniele, but why you’re not happy?
When you open a PayPal account everything seems to be free:
- Sign up for free
- Send money to your bank account or your credit card for free
- Currency exchange without fees (false!!!)
Microstock agencies used to pay in dollars. Only Fotolia and Clipcanvass, which are not my favourites as I explain in my course can pay in Euro.
If you open a PayPal account in a country where Euro is the currency there is no way to get the money without paying an hidden commission on the exchange rate.
It works this way:
- You get the exact amount of dollars coming from the Microstock agency in your PayPal account.
- When you decide to convert those dollars into Euro, you pay a fee to PayPal.
Of course, I think PayPal can charge you whatever they want to. It’s a business and they have to earn money somewhere, as they give a service to their customers.
I’m going to show you how it works.
Let’s say I got 100 dollars from Pond5 and I want to exchange those 100 dollars into Euro.
While I’m writing, Paypal pays 91.39 Euro.
The currency exchange without any fee/commission would have been 95.38 Euro.
I’m not happy to pay 3.99 Euro, but as I said before, PayPal gives me a service and of course I have to pay for it. Once that fee was hidden, but today they say:
This rate is our wholesale cost of foreign currency plus a currency conversion fee. This fee depends on the currency you are converting into.
The best way to tell customers about the fee would have been something like:
We charge you 3.99 Euro for the exchange
I’m naive and think they don’t write it because they forgot to, not because they would get tons of complaints if they wrote it.
I’m quite sure the smartest people have already thought about how to hack the exchange commissions, but I guarantee that there are no ways to do it because I already tried. Consider one simple thing:
- At the moment, I earn about $ 40,000 a year with Microstock sales.
Paying 4.0% commission (actually I think is 3.5%+a fixed amount, but I’m not sure) on the exchange rate it means that this year I’m going to pay $1,600, which is not something I like.
This happens due to the lack of competition between methods of payment (Skrill does almost the same thing).
Now I’m going to tell you why I’m going crazy with PayPal. I opened a bank account in dollars in Italy, which is free (in the bank system there’s a lot of competition instead…), but even in that case, PayPal converts dollars into Euro and transfers Euro-commissions, because my bank account is in a country which uses Euro. Guess why?
No technical reasons, but just an excuse to charge you money (it is my personal opinion).
I spent years to build my stock footage collection, and sometimes productions contact me to ask me to license my footage after watching videos on my Youtube channel. It’s great to have that kind of passive income:
- They write me an email
- I ask a price
- They accept and send the money
- I spend 30 seconds to link them the footage I previously uploaded on my Amazon Cloud Drive
- I book a holiday with my family to spend those money
Ok, booking the holiday is not what I always do. Let’s focus on point three. There are two solutions:
- Get the money with Paypal one second after my customer sent them
- Get the money with my bank account in dollars two to five days later.
What do you think is my preferred method?
I got $200 (not exactly, but I’m going to explain you why in another post). When I’ll exchange them into Euro I’ll pay the fee.
If I choose to get the money in my bank account I wouldn’t pay any fee, but in the Microstock world nobody will send me money and wait five days to have the link of the footage.
My idea to hack PayPal fees was simple:
- I open a bank account in dollars in Italy, and transfer dollars to dollars.
I’m not an accountant, so I first called PayPal to ask the operator of their call center if my idea was correct. The answer was the most logical:
Yes you can do it.
Then I would have taken advantage of the exchange rate without commissions of my bank. Unfortunately, the PayPal operator was wrong:
I transferred dollars to my bank account in dollars but they transferred Euro, because their policy is: as my bank account is in Italy and Euro is the currency of the country, they have to transfer Euro.
I called Paypal and complained. The next day I was contacted by a supervisor who was very professional and apologized for the misunderstanding I had with his colleague. I’m a businessman and losing $1,600 a year for just an “I’m sorry” is not the best way to make money.
My further attempt to avoid PayPal commissions was to inform myself on how to open a bank account in the US, something that seemed to be quite expensive (opening a bank account in the European Union is usually free). Doing that from Italy, I would have spent a few hundred Euros, but still less than $1,600 a year. I again called the PayPal call center:
- The first operator told me that in that case the exchange commissions would have not been applied.
- The second claimed the opposite: once you have dollars in your PayPal account opened in a country where there’s another currency, you always pay exchange commissions.
At that point I gave up. Just one thing:
- If somebody sends me dollars from U.S.A. to my Italian bank account in dollars, I received dollars, not Euro as it happens with PayPal. The reason why I got Euro is not technical, it is PayPal policy (or better: PayPal business plan).
PayPal gives me a lot of benefits. Thanks to them, today it is normal to get money one second after your customer sends them. PayPal has better customer service than Skrill and other competitors, regardless of the wrong answer their operator gave me.
What makes me crazy is the way they communicate, because it is not clear, but I can’t use another service. The lack of competition is never a good thing. Please Mister Bezos, invent something that can help us!