Taking payments but based abroad is what holds me back
As an aspiring Internet Marketer based outside of the US, my issue is probably quite common to non-US marketers. I’m really a newbie in terms of starting an online business, and essentially I’m looking to get into the affiliate model. So far I’ve done some market research on a few niches and feel ready to dive in one, even if it’s just for learning in the first instance. I’m planning to do this with a Wordpress blog and add a theme to give it a not too bloggy look and feel.
I realize though that I’ve been stuck at this point for a while and the big thing that holds me back is that it is currently totally unclear to me how I will be able to take payments from affiliate programs or even customers further down the line. Being based in Europe in a non-Anglo saxon country, but planning to market to the Anglo-saxon market and then mostly to US purchasers, I will probably be paid in commission checks as an affiliate. This is where I’m stuck. If I want them to send the checks to me in Europe, a few issues come up: 1. Cheques could get ‘lost’ in the post. 2. Cashing in US cheques here means you lose about half the money in fees to the bank. If the cheques are in small amounts it would actually cost more in administrative cost than the cheque is worth.
Could any of you help me figuring out what other options I have?
- Opening a bank account in the US (remote)? It looks unlikely that this will be accepted by US banks (to provide an account to non- residents, I mean). Additionally how do I send them the cheques. Back from Europe to America (invoking shipping costs and risk of loss), or straight to the bank? How? If anyone knows of a bank where this is possible, I would love to hear about it in more detail.
- PayPal: Probably best option. However I’m a total newbie as far as this is concerned as well. Can they create me a credit card that I can then also use to make my business expenses with (hosting, advertising,…)? Do affiliates always offer the possibility to pay you out in a paypal account, or will I be very limited when choosing affiliate programs that do this? Will I pay a lot of commissions? Is there a webpage that explains the PayPal system for dummies like me in this subject?
- Are there other ways of taking the payments especially when based abroad without a US bank account?
I look forward to hear your suggestions or better even to hear about currently working models.
First of all, welcome to the wonderful world of Internet Marketing!
I am in the UK but I would imagine most of your issues are similar.
I use PayPal for as many foreign payments as possible. You do get a percentage charge but it is usually better than paying the bank charges for foreign transfers or cheques. Many business expenses can be paid through PayPal - you have to link your PayPal account to a bank account and credit card. If you don't have or want a credit card then either use a Visa debit card (if your bank allows this) or use one of the sorts of credit cards that you actually load up with money and don't get into debt with (like Payoneer) - again this carries a charge.
Many affiliate companies now offer bank transfers on commissions you make, which is even better.
If you are stuck with cheques then set your payment terms to a higher amount (they usually offer the choice of receiving a payout at $50, $100 etc). Decide what is worthwhile for you. Amazon will only pay out to foreign affiliates by cheque and not until the commission is $100 so you can wait a long time for them when you are just getting started.
Another alternative (but one that will probably not be worth your while until you are making significant amounts) is to get a US Dollar account. Many banks offer this worldwide (depending on the country you are in) and means that when you get paid in dollars you don't have to take the hit of a currency charge and poor exchange rate. You can then use that account to pay dollar payments out again or transfer to your local currency account when the amount is more significant.
Many thanks for the useful feedback. This certainly gives me options to start working on.
My first action is to look deeper into PayPal.
Lisa, you mentioned that you can link PayPal to a credit card. Is this explained somewhere (on their site I don’t really find this back).
Do any of you know of a good overview of what can be done with PayPal, especially as an Internet marketer, not as a shopper, preferably an easy to understand overview?
Geno Prussakov’s overview was also very useful. I hope I can find products through any of these 5 affiliate networks within the niche I would like to market to.
As bank transfers to Western European countries bank accounts also is an option in some cases, I will also look into this.
1. Check with banks in your country/city to see if they'll
cash USD checks. Many multinational banks will, though
charges are all over the place.
2. Charges for encashing checks are NEGOTIABLE! I learned
this after paying a LOT. Talk to the manager, or the person
in charge of forex transactions. Explain you may be depositing
many small denomination checks, and ask them to come up with
creative solutions to minimize your cost.
3. Bank charges are usually tax-deductible, so talk to your
accountant about that.
4. Set your affiliate program preferences to hold your commissions
until they reach a threshold that makes sense ($100 or $250 or
higher)
5. Direct debit bank deposits are often VERY expensive, esp.
when your affiliate income from individual services isn't
big. I'd hold off on them until you're banking $1,000+
in commissions checks, at which point the advantage of quicker
and more reliable deposits make the cost worthwhile.
6. Use PayPal for as many as you can, and set up PP to be
able to withdraw to your bank account. Make sure what the
limit is for your country (in India, it is $2,500 a month
for most accounts, so you may have to work around those limits)
7. If you have a trustworthy friend or relative who lives
in the US or UK, you may use their help to collect payments,
though the legal and accounting hassles can be enormous - for
both you and them.
8. I once explored the details of setting up an LLC in the
US, and that's an option that suits certain kinds of business
activities. You might research that further.
9. Take advantage of your local tax laws. Many countries
treat "Internet income" differently from how the US or UK
do. There are MULTIPLE options to list your income in a
tax-efficient way, in compliance with your local laws. Talk
to a GOOD auditor/accountant (I emphasize the 'good' because
my first one cost me over $750 in taxes I didn't need to
pay, in 1997. Changing to another one has saved me a lot
since then!)
10. Factor in currency conversion rates and commissions
charged for it when you compute projected earnings.
11. Price your products/services in line with these costs.
When my Internet earnings lost their 'tax exempt' status in
2005, I simply hiked the price of all my infoproducts by
25% to cover the extra cost!
Hope this helps
All success
Dr.Mani
P.S. - Don't make a mistake I did early on. I worried
about how to handle bigger payments, and so held back on
trying hard to earn them! No matter what you pay in taxes
or expenses, you'll still get to keep a part of your
earnings - so the more you earn, the more you keep
Francis, You got some good advice here and I say PayPal as well. It's easy and shouldn't cause you too much trouble. Just check that your country is connected to PayPal so you can transfer the money directly into your bank account.
Taking payments but based abroad is what holds me back
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