oDesk released Local Wire Transfer recently, a payment method that allow you to receive money directly into your bank account, in your local currency. In this post I’ll attempt to make a comparison between Local Wire Transfer and Payoneer’s Prepaid Master Card, another payment method.
First, some numbers about the two methods: The minimum amount of money you can withdraw using Local Currency Wire Transfer (COP) is $51 (plus a $3.99 fee). With Payoneer the minimum amount is $20 (plus a $2 fee). You can check Payoneer fees here.
Now, let me tell you a story… or something like that:
Friday, Jul 8, 2:00 PM: I withdrew $55 using Local Currency Wire Transfer to my account in Colombia (Bancolombia) and then transferred the same amount to my Payoneer Debit Card. The fees for each transaction were as described above. oDesk notified me about both transactions and I’m now waiting for the next step.
Monday, Jul 11, 8:27 AM: oDesk sent me a notification email saying my withdrawal request had been processed, the important part of the email is shown below:
We have processed your withdrawal request submitted on 08-Jul-2011.
- Amount withdrawn: $51.01 USD
- Amount you should receive: 87989.46 COP (*)
- Bank account: <censored>
- Exchange rate on 07-11-2011 13:05 UTC: 1724.9228 COP/USD
- Expected date of delivery: 14-Jul-2011
- oDesk Ref ID: <censored>
(*) This amount does not include any fees your bank may deduct.
At the same time, I checked my Payoneer account and noticed there was a pending transaction with a link that reads “Click to load your card”. When I followed the link I was asked to choose between Standard Load or Immediate Load (with a $2.5 fee); I chose Standard Load and I was told:
Your account will be loaded with $53.00 (Fees will be deducted on card load) by the 7/13/2011 11:00:00 PM EST.
I checked my account on Friday and saw the pending transaction but didn’t knew I had to follow that link for the transaction to be processed, I thought that was necessary only if I wanted to use Immediate Load. That said, I think I could have choose Standard Load on Friday and have the money loaded on Tuesday (2 business day later).
Wednesday, Jul 13: My personal account was loaded with 85041.00 COP (exchange rate was 1765.32 COP). At 8:00 PM, my Payoneer card was also loaded with $53. I’ll withdraw the money from my card tomorrow and then I’ll compare.
Thursday, Jul 14: I withdrew 80000.00 COP from my Payoneer account, the cost of the transaction was $48.84 (including a withdrawal fee: $2.15).
Using Payoneer, I received 1713.43 COP for each dollar and if I would be able to withdraw all the money I received from oDesk that would give me 1713.42 COP/$ * ($53.00 – $2.15) = 87127.91 COP for the $55 I withdrew last week; that’s a bit more than the 85041.00 COP I received using Local Wire Transfer.
When you do the maths, assuming the bank paid me with that day’s exchange rate, you realize that using Local Wire Transfer I received only $48.17 of the $51.01 I was supposed to get. Unfortunately, I wasn’t able to clarify whether the bank was using a different exchange rate or they charged a fee for the transaction and without that kind of information is hard to give a conclusion. However, I used Local Wire Transfer before; a that time I transferred $117 and the bank told they received about $114 so I’m starting to think they charge a fee for the transaction that is somewhere between $2 and $3.
The information I gathered is insufficient to give any general advise but, at least for this time, I can say the following:
- The exchange rate when using Payoneer’s Card to withdraw money is
lowergreater (Updated Jul 17, 2011) than the exchange rate used by the bank (assuming both transactions occur on the same day).
- Payoneer fees are lower (Withdrawal from oDesk: $2, Withdrawal from ATM (Outside USA): $2.15) than Local Wire Transfer fees – with Bancolombia (Withdrawal from oDesk: $3.99, Transaction fee (worst-case, unverified): $3).
- The time between the time I withdrew money from my oDesk account and when I received the money into my bank account or Payoneer card was about the same, although I could have paid an extra $2.5 to have Payoneer’s money last week.
- If you are withdrawing $150 or less, you’re probably going to get a bit more money if you use Payoneer (please note that if you use the ATM several times you’ll have to pay $2.15 each time). For larger movements I believe Local Wire Transfer is a better option (if the bank charges constant fees and they use the standard exchange rate).
- Using Local Wire Transfer you are able to convert every dollar to cash in your local currency, with Payoneer you are restricted by the amounts returned by the ATM which are usually multiple of 10000 COP. That means you’ll have to lave a few dollars in you card and those can be evaporated by the maintenance fees. ATMs also have a maximum amount of money you can withdraw and that means more fees if you can’t withdraw all your money in one transaction.
When I started writing this post I was thinking I would be able to say which one of the methods was better, but the truth is the experiment didn’t gave me all the information I wanted. I still don’t know which one should I use to get more of my earnings. I’ll try to withdraw more money next week and hopefully would be able to provide a better comparison between these two methods. I’ll let you know.
If you happen to work on oDesk and have some information about this methods (or other you use to get your money), please let me know in the comments section.
Update [Jul 17, 2011]: I received a receipt from my Bank saying the total amount I received using Local Wire Transfer was $49.85 (I withdrew $51.01 from oDesk) and that the exchange rate used was 1705.93 COP.
Update [Jul 26, 2011]: Last week I withdrew $300.00 using Local Wire Transfer and received $290.11 in my bank account with an exchange rate of 1702.03 COP. That means there was a cost for the transaction of $5.90 (because oDesk takes another $3.99). Given this information, I would say that my bank is taking about 2% of the money I send through oDesk.