If you operate internationally, a conventional business account in your local currency at a traditional bank may not be sufficient. Maintaining such accounts can be costly, and you might face high charges when receiving money from overseas clients, whether in your local currency or a foreign currency. Fortunately, there are several alternatives you can use alongside your traditional bank account.
Remember that transaction fees can be treated as business expenses, no matter which payment solution you select. All the banks and payment solutions listed below provide monthly statements that clearly outline your fees, making it easy for your accountant to record them in your business ledgers.
Multi-currency bank accounts
It is highly recommended that you open a bank account in your local currency for your business. If you are self-employed, using your personal bank account may be possible and legal in some countries. However, having a dedicated business account helps you separate personal and business expenses, and your accountant will appreciate this when preparing your tax return. If your company is structured as a specific legal entity, you will likely be required by law to open a business account.
Additionally, due to the international nature of your business, it is wise to consider opening business accounts in EUR, GBP, and USD at your local bank. Alternative solutions like Wise offer more flexibility and are usually cheaper than traditional banks, but they do have limitations on the maximum balance you can maintain. This means that you may need to transfer funds to a conventional bank once you exceed those limits. Furthermore, such alternatives typically do not provide interest on your capital.
Alternative payment solutions
Remember that such payment solutions are very similar to banks or neobanks, and you need to submit certain documents to open a business account. If you fail to provide such documents, your account will most likely become blocked until you do. In addition, you must become familiarised with the terms and conditions of the solution you select and read any amendments they send you in the future.
PayPal
PayPal is a well-known payment solution many of us already use. It is ideal if you have individual clients who pay you small sums since they can use their PayPal balance, a credit card or a bank account to pay you. In addition, they do not reveal any bank account or credit card information to you. You can also use PayPal for small amounts with B2B clients.
You can receive payments in EUR, GBP, or USD by setting up these currencies in your PayPal account. Transferring money from one currency to another within the same account is quick and easy; however, PayPal’s fees can become significant for larger amounts.
Since the recipient is responsible for paying the fees, the larger the amount, the higher the costs you will incur with PayPal. If the payments you receive increase in size, using PayPal can become costly. In such cases, it may be more advantageous to use a traditional bank or another payment solution.
Be sure to read PayPal’s terms and conditions carefully to understand the applicable charges in your country. After reviewing, you can determine the maximum amount for which PayPal is a viable option. This threshold typically does not exceed 300 EUR, USD or GBP, but you should verify what applies in your specific country.
Additionally, PayPal offers prepaid cards in certain countries, such as the UK. These cards are convenient because they allow you to use your funds immediately for business expenses without having to wait for a couple of days for the money to reach your traditional bank account.
In some countries, like the UK and the US, PayPal also allows you to connect your account to a POS with PayPal Zettle.
Wise
Wise is one of the best payment solutions globally, irrespective of the amounts you receive. It provides you with local bank accounts in several currencies, and you can easily shift money from one currency account to another within the same Wise account with a small conversion fee. It provides you with a prepaid card in many countries, which you can use for your business expenses. You can also open a personal Wise account to withdraw money easily for personal use. You can also set up direct debits in certain countries, such as the UK.
Wise offers significantly lower fees for currency conversion and money transfers compared to other payment solutions and traditional banks. They generally do not charge for receiving money from local bank accounts in most countries; however, fees may apply for receiving money from overseas banks. If your client also has a Wise account, you can accept payments for free using your email.
Wise functions similarly to a conventional bank, allowing you to make payments to traditional bank accounts. Their fees are low, and many transactions are processed instantly in various countries. You can use the local bank accounts associated with each currency account on Wise, just like traditional bank accounts, to receive payments from your clients.
It’s important to note that you do not earn interest on the money held in your Wise account; you might receive a monthly cashback, though. Therefore, if you find yourself with more funds in Wise than you need for your monthly business expenses, it is advisable to transfer the excess to your conventional bank account. Additionally, Wise imposes limits on the amount of money you can keep in your account, so be sure to read the terms and conditions carefully.
Payoneer
Payoneer works almost like Wise, but you cannot make payments to other bank accounts directly from your Payoneer account or set up direct debits. Only certain payments, such as tax payments, are available in certain countries, such as the UK. Payoneer charges higher fees than Wise, and shifting money from one currency to another within a Payoneer account is subject to a minimum amount and charges. Withdrawing money to your bank account is also significantly more expensive than Wise, and it takes longer for the funds to reach you. Payoneer offers a prepaid card per currency, not one for all currencies, like Wise.
You can receive payments from your clients abroad through local bank accounts for each currency. Additionally, some clients may have Payoneer business accounts, allowing them to send you money using your email, often at a lower fee than conventional bank transfers or local currency accounts linked to Payoneer. Transfers using your email are typically faster than traditional bank transfers.
Skrill
Skrill is very similar to PayPal. The advantage is that Skrill’s fees are lower than those of PayPal. The disadvantage is that it is not as popular as PayPal, and not many clients use it. Skrill also provides you with a prepaid card you can use for your business expenses.
VIVA
VIVA is like Wise and Payoneer, but it is a neobank. It is a popular payment solution in Greece and is available in more than 24 countries. You can open a business account only in the local currency. You receive a virtual or physical prepaid card connected to your account. You can make payments to other bank accounts or pay bills, and you may choose between instant transfers or transfers within one or two business days, which have different charges.
The advantage of VIVA is that you can connect this account to a POS system. In some countries, such as Greece, having a POS available is required if you run a business, even if you may never use it.
N26
N26 is also a neobank located in Germany. You can open a bank account only in euros, which can be beneficial if you have many clients in Germany and want to provide them with the option to make payments to a local bank. As a conventional bank, it allows you to transfer funds to other bank accounts and receive either an electronic or physical prepaid card.
N26 used to offer business accounts exclusively to certain professionals, but now you can open a bank account for nearly any type of business. Various account types are available to suit your needs, and you also have the option to open a free personal account if desired.
