International payments for online English teachers in Australasia

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If you are getting paid by foreign online English teaching companies or students overseas, the process can leave you receiving much less than you anticipated. We’ll compare traditional banks and online money transfer services to save some serious $$$!

Photo by Anna Shvets from Pexels.

Disclaimer: We are teachers, not financial experts, so please take all of our information as suggestions not financial advice! If you are unsure, please speak with a professional. We receive a small commission for sending you (at no cost to you) but we offer all of your available options in an unbiased fashion. We are based in Australia so our information is “Aussie-centric” but if you have any New Zealand related info, please comment below or email us and we’ll update our post.

Receiving money from overseas

If you receive your salary from a foreign/overseas company or students to your Australian/New Zealand bank account, it is known my many terms, including:

  • BANK-TO-BANK transfer; SWIFT transfer; Wire transfer; Telegraphic transfer; IBAN money transfer; Inward transfer;
  • Electronic Funds Transfer (EFT);
  • International money transfer;

These are all electronic transactions but differ slightly in how the money goes from A to B.

BANK-TO-BANK TRANSFER

Also known as an “Inward transfer, SWIFT transfer, Wire transfer, Telegraphic transfer, or IBAN money transfer”, this is the most common way to receive money from overseas. Most of the major online English teaching companies use this method. The sender has to ‘initiate’ the transfer of funds from their bank account to yours. This then occurs via a third party system such as the SWIFT (Society for Worldwide Interbank Financial Telecommunication) International payment network, for a fee (of course).

You’ll need to provide information including your name, bank account and BSB number, residential address, your bank’s name and a SWIFT or a Bank Identifier Code (BIC) to receive money. If you don’t know these, a quick search for “Bank X SWIFT and/or BIC” will usually bring them up but you can request these from your bank if in doubt.

As well as the most common method, it is also usually the most expensive. Banks generally charge a ‘receiver’ fee to accept the money into your account.

How much are "bank-to-bank" transfer receiving fees?

Receiving fees (per transaction) for the major Australian/NZ banks (2021):

Why not just use those banks that charge $0?

If only it was that simple!

As you can see from the table above, two of the “fee-free” banks (Beyond and Heritage Banks) use Western Union Business Services. If you are working for an overseas company, they must be happy to use this for payment and most don’t (or won’t). You can always ask or check your contract to see your options. Suncorp only offers transfers in limited currencies, so check if your company’s bank is available and if so, you might save yourself money here. Citibank charge 2.50% on the Australian dollar conversion of the relevant transaction which might be cheaper but it will depend on the total amount of the payment as to whether this is true. As per usual, what you save in one area, you might pay for another, so read the T&C’s carefully.

Other fees

As well as receiving fees, some banks also ‘skim’ a little more of your money off in the form of a foreign exchange fee. Read the T&C’s of your bank (in the above links) to see if there are any other hidden fees that you are being charged as well.

Transfers may also pass through another intermediary ‘middle-man’ bank between the sender and you and they may also take a fee as well. It’s really hard to find out IF this is going to happen and all the literature on the bank’s websites isn’t totally clear on this either. If you see another charge on your account from a bank that it not yours, it is likely to have come from this third party.

Photo by Pixabay from Pexels.

Exchange rates

It’s also important to consider the exchange rate that your bank uses to convert your money from another currency to AUD/NZD. The exchange rate that appears when you search for “CNY to AUD” in a search engine, for example, is called the mid-market rate. This is the average of all the rates. This is not the one the bank uses though. They use their own rate. Consider this when calculating your salary. Unfortunately, banks are far from transparent about this and we could not compile a list of exchange rates (as they change daily) but if you receive a little less than you were expecting, this is likely the cause.

Real-life example

I was paid 135CNY for a class. This converted to $27.48 (AUD) by the mid-market rate but my bank (NAB) paid me $26.94 (AUD) using their “own” rate. They then charged me $4.94 (AUD) in foreign currency transfer fees, leaving me with $22.00 (AUD). I paid $5.48 (AUD) in fees – or 22%!!!

As you can see, bank-to-bank transfers are NOT the best deal around.

Finally, think about sending fees as well.

Some companies will also charge you a monthly fee to cover their costs to send your money, so check your contract.

If you are getting payments directly from students and they insist on bank-to-bank transfer, it is worth looking into the sending fees for your bank as well as the receiving ones, as this adds to what the students pays for your services.

ELECTRONIC FUNDS (EFT) TRANSFER

If you and the sender of your money use the same bank, the transfer with be considered an Electronic Funds Transfer (EFT), just like a domestic transaction within the country. It’s worth asking the company that you work for what bank they use and opening an account with the same bank to save yourself money. This is going to be the exception (likely with international banks like HSBC or Citibank) rather than the rule but it never hurts to ask. If you are teaching privately, ask your students the same question.

INTERNATIONAL MONEY TRANSFER

There has been a big surge in the use of online money transfer services such as PayPal, Payoneer and Transferwise and they are a great way to avoid some of the fees that we encountered from the traditional banks above. If you are working for a company, you’ll need to ask if they send payments via these methods but at this stage, only about 10-15% of companies do.

Wise

Many teachers rave about Wise and for good reason – they will convert your money at the mid-market rate instead of the marked up rate that the bank offers and their fees are very reasonable (A flat fee of 0.58 AUD (approx) + 0.42% of the total amount per transaction). Unfortunately though, at this stage, there are some limitations.

How does it work?

Firstly, you’ll need to open an account. You’ll get an Australian or New Zealand Account (with a BSB for Australians) that functions just like a bank account. You can open a multi-currency account to receive payments from (as the name states) multiple currencies, currently – EUR, GBP, AUD, NZD, RON, HUF & SGD. If you are receiving payments in any of these currencies, you get them straight into your Wise account and then transfer them into your ‘traditional’ bank account if you want. This way you can avoid the receiving fees that we covered above. A physical Mastercard can be purchased for an additional $10 (AUD) and you can withdraw $250 AUD for free each month.

This is from Wise customer support:

“We’re unable to support CNY payments into the multi-currency account due to regulations. Additionally, we’re unable to accept SWIFT payments into the AUD balance for this reason; however… we can support receiving USD via SWIFT.

We don’t charge a fee for you to receive USD into your account via SWIFT but there’s a possibility you may receive less due to SWIFT fees charged by intermediary banks.  You can read more about SWIFT payments here.

To send the money from your USD balance to your Australian bank account, we charge a fixed fee of 0.44 USD (approx. 0.58 AUD) plus 0.42% of the amount converted.

You can use our pricing calculator here to confirm fees for the multi-currency account.”

So, if you work for a major Chinese company or your students are located in other countries/currencies, you can ask them to pay you in one of the eligible currencies. If not, Wise might not work for you at this time.

Up bank and TransferWise

If you also send money overseas on a regular basis, you may also want to consider opening an Up bank account. Up is a “neo-bank” (or a digital bank) backed by Bendigo and Adelaide Bank. While you can’t use Wise to receive money (yet), it is integrated into your account for sending payments. Save yourself the sending fee from the major banks. They offer the (joint) lowest receiving fee at $10 (AUD) and you even get $5 (AUD) just for signing up. Read more here.

Payoneer

Payoneer works similarly to Wise, accepting EUR, GBP, JPY, AUD, CAD, MXN for free. You pay between 0-1% to accept USD but the exact fee is different in each country. They also convert at the mid-market rate. Their fees to withdraw money are a little confusing (see below) but it appears that on top of that mid market rate, you’ll pay up to an additional 2%. Again, like TransferWise, they offer a physical MasterCard but you’ll be converting currency with MasterCards rates plus a conversion fee of up to 3.5%. We recommend emailing their customer service and asking about your specific situation.

Many of the major English teaching companies are now offering this as alternative to a bank-to-bank transfer so it’s worth investigating. It’s a great option if you also work for freelance platforms such as Upwork or Fiverr, which pay via Payoneer. They are also offering $25 to sign-up, so go check them out.

Paypal

The most well-known online international money transfer service, this is the service most commonly used by online English teaching companies other than bank-to-bank. We counted 24 currently supported currencies. You’ll save yourself the receiving fee but you’ll also pay PayPal’s own fees. In our research, we found PayPal’s fees the most confusing of all (see below).

If your company offers you the choice between receiving payment via PayPal or bank account, we recommend “guesstimating” a likely monthly salary, calculating the bank fees then emailing PayPal’s customer service with your particular scenario (currency, amount etc.) and asking them to calculate the fees you’ll likely pay. It might be cheaper, it might not.

I have paid approximately ~5.5% fees on payments via PayPal and WooCommerce on WordPress, after all fees are considered (but this is just a guide and you might pay more or less).

Stripe

Another option if you have your own website is Stripe. You’ll need to set up your classes as a product using a WordPress Plug-in such as WooCommerce. You can then accept payment using a variety of methods (Credit Card, Apple Pay etc.) via Stripe. If you want to accept payment from Chinese students, you can use AliPay.

I’ve found that Stripe fees are about half (~2.7%) of PayPal.

CONCLUSION

Traditional ‘bank-to-bank’ transfers are still the most common way to receive payment. While the receiver fee from your bank is generally the highest of all your options, it is also the most simple to calculate and you don’t have to convert the currency yourself. For this convenience, you will be also be losing a portion of your money during the currency conversion and possibly via any ‘middle-men’ banks that your funds pass through.

Depending on your currency and the willingness of your payer to use a service like Western Union, some banks will not charge the receiver fee but check T&C’s carefully as there are often hidden charges. If you can use the same bank as your payer, there are real savings here. For freelance teachers, also consider Sender fees encountered by your students.

International Funds Transfer companies like TransferWise, Payoneer and PayPal are all excellent alternatives if your company offers them and will GENERALLY be much less than via a traditional bank. BUT… Again, please take a look at the T&C’s and email them if you are unsure or contact a financial professional. Intermediary banks may still charge a fee during the transfer.

If you have your own website, Stripe is an affordable option.

Ask your teaching company or students for their preferences and check your contract. Email the customer service of your chosen International Transfer Fund company and ask to get an idea of the particular fees and charges for your situation. When you start teaching English Online, spend an hour or so looking at your options and you can save yourself a nice chunk of change every pay day.

Any other payment options we have missed or any tips and trick on how to save on fees? Comment below.

Good luck and happy teaching!

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