What Canadians need to know about getting paid internationally

Years ago, fresh off earning my engineering degree from the University of Waterloo, I moved to New York City to jumpstart my career in one of the world’s most buzzing tech scenes. What was a major step then is now becoming normal. Thanks to new tools that simplify how professionals showcase their work, it’s easier than ever for businesses to find talent from across the globe. This, matched with the rise of fintech, grants Canadians the freedom to easily work abroad, as well as at home, with international clients.

In fact, millennial freelancers in Canada now earn more than a quarter of their income (27 per cent) internationally, according to a new Maru/Matchbox survey conducted on behalf of TransferWise. Additionally, more than two-thirds of young freelancers (69 per cent) said they were looking to grow their global clientele this year.

With businesses eager to hire Canadian talent and young Canadians keen to take advantage of a bigger client pool and get paid in higher-value currencies, the recipe for success is certainly there. However, there are a few financial obstacles to consider.

Exchange rates

While the term “exchange rate” sounds official, anyone who has exchanged money at an airport knows you don’t always get your fair share. Banks and other providers add a markup to their exchange rate while advertising low fees. Once these hidden charges are added up with transfer fees, those being paid internationally will often have their paycheque docked by up to seven per cent, which hardly seems fair.  

Payment problems

Rigid payment processes can often be the biggest issue when it comes to getting paid. Some businesses, for instance, may believe that hiring foreign talent is not worth the hassle of deviating from their standard invoicing processes to undergo an international transfer. On the other hand, some American companies will ask for items many people simply do not have when they’re working abroad or from outside of the US (such as a U.S.-dollar bank account, U.S. tax ID#). Lastly, while international wire transfers are common, they involve an outgoing international transfer fee that the company pays, plus the freelancer often gets hit with a receiving fee on their end.

This presents an obvious challenge, because if you can’t make it easy for international clients to pay you, they’ll simply find someone else to do business with.

Communication breakdowns

When working abroad and/or with international clients, you need to be clear and upfront about the actual amount of money you want to show up in your bank account. Will all these fees be taken out of your paycheque, or will the business cover the transfer costs and pay you the full amount? Keep in mind that businesses have limited visibility when sending an international wire transfer, so while they may think they’re sending you US$1,000, you could receive much less by the time it shows up in your Canadian bank account.  

Removing barriers

Just as innovation is opening new markets for Canadians, it’s also removing payment obstacles. In the previously cited survey, payment/invoicing solutions ranked No. 1 when freelancers were asked to rank the types of tools or services that are most vital to their success.

With consumer adoption of fintech expected to increase in Canada from 18 per cent to 34 per cent in the next few years, Canadians should be in a prime position to increase their international income. Many have already turned to new fintech solutions, such as borderless accounts. Similar to having a local bank account in another country without ever having to set foot there, this account allows businesses and freelancers to get local account details (i.e. a unique account and routing number) for the U.S., Europe, and the U.K.

This enables businesses outside the country to pay you the exact way they pay domestic employees. They can also avoid exchange-rate markups when moving money across currencies. With a borderless account, there are no account fees – there’s only a small transparent fee each time currency is converted and all conversions are made at the real mid-market exchange rate (i.e. the one you see on Google).

• Josh Aziz is product manager, North America, for TransferWise