Getting Paid as a Freelancer: 5 Payment Methods and Their Pros and Cons

Freelancing is a great way to make money on your own terms. However, before you get started, you need to know how to get paid as a freelancer and the pros and cons of each payment option. In this guest post, Gilad David Maayan of Agile SEO discusses five popular methods.

Freelancers are self-employed individuals who offer their services to clients on a project-by-project basis. They are not employees of the clients they work for, but rather, they are independent contractors who are responsible for their own taxes, insurance, and business expenses. Freelancers can work in a variety of fields offering their services either on a full-time or part-time basis.

An often overlooked aspect of working as a freelancer is how you get paid. There are many payment methods, each of which has different pros and cons in terms of speed of payment and the risks to you as a freelancer. Below, you’ll find five of the most common payment methods and what you should consider before selecting the one that’s right for you.

5 Common Ways to Get Paid as a Freelancer

There are several common payment options for freelancers, including:

Checks

One of the most traditional ways to pay freelancers is through a check. Checks are a type of payment instrument that allow an individual to transfer money from their bank account to another individual or business. Checks are typically printed on special paper and include information such as the date, the payer’s name and signature, and the payee’s name. 

Pros of using checks:

Simplicity: Writing and mailing a check is a simple and straightforward process that does not require any specialized knowledge or technical skills.
Universality: Checks can be used to pay freelancers anywhere in the world, as long as the freelancer has a bank account.
Record-keeping: Checks provide a physical record of the payment, which can be useful for tracking expenses and maintaining accurate financial records.

Cons of using checks:

Processing time: Checks can take several days to clear, which can slow down the payment process. This can be especially problematic for freelancers who rely on timely payments to manage their finances.
Security: Checks can be lost or stolen in the mail, which can result in the loss of the payment. Additionally, checks can be fraudulently altered, which can result in the payment of an incorrect amount.
Cost: Checks may involve additional costs, such as the cost of printing and mailing the check, or the cost of cashing it at a bank.
Inconvenience: The process of writing, mailing, and depositing a check can be inconvenient for both the client and the freelancer. This can be especially problematic for freelancers who live in remote areas or who do not have access to a bank branch.

Electronic Funds Transfer (EFT)

Electronic Funds Transfer (EFT) is a method of transferring money electronically from one bank account to another. To use EFT, the sender must provide the recipient’s bank information. This includes the account number and routing number. The client then authorizes the transfer of funds. The funds are transferred from the sender’s account to the recipient’s account, typically within a few business days.

Pros of using an EFT:

Security: EFT is a secure and reliable way to transfer funds, as it eliminates the risk of lost or stolen checks.
Speed: EFT payments are processed quickly, which allows freelancers to receive their earnings in a timely manner.
Record-keeping: EFT transactions are recorded in both the client’s and the freelancer’s bank records, which can be useful for tracking expenses and maintaining accurate financial records.
Cost-effectiveness: EFT is often less expensive than other payment methods, such as wire transfers or check processing fees.

Cons of using an EFT:

Technical knowledge: Both the client and the freelancer must have a basic understanding of how EFT works and be familiar with the process of initiating and receiving electronic transfers.
Bank account requirements: Both the client and the freelancer must have a bank account to use EFT, which can be a barrier for some individuals.
Limited availability: EFT may not be available in all countries or for all types of bank accounts, which can limit its use as a payment method.
Processing time: While EFT payments are processed quickly, they may not be instantly available, as some banks may have processing times or limits on the availability of funds.
Technical issues: Technical issues, such as system downtime or errors, can impact the ability to initiate or receive EFT payments.

PayPal

PayPal is an online payment platform that allows individuals and businesses to send and receive money electronically. With PayPal, individuals can create a personal account and link it to their credit card or bank account. This allows them to send or receive payments from other PayPal users or make purchases from online merchants that accept PayPal. 

Pros of using PayPal:

Convenience: PayPal is a fast and easy way to send money to freelancers, as it can be used from anywhere with an internet connection.
Security: PayPal offers a variety of security features, such as buyer protection and dispute resolution, to help protect both the client and the freelancer.
Speed: PayPal payments are processed quickly, which allows freelancers to receive their earnings in a timely manner.
Global availability: PayPal is a global payment platform that can be used to send and receive payments from anywhere in the world.

Cons of using PayPal:

Processing fees: PayPal charges processing fees for each transaction, which can impact the amount of money that the freelancer receives.
Account requirements: Both the client and the freelancer must have a PayPal account to use this payment method, which can be a barrier for some individuals.
Limited dispute resolution: While PayPal offers dispute resolution services, they may not be able to resolve all disputes between the client and the freelancer.
Technical issues: PayPal can experience technical issues, such as downtime or system errors, which can impact the ability to send or receive payments.
Fraud risk: As with any online payment platform, there is a risk of fraud when using PayPal. It is important for both the client and the freelancer to take steps to protect their account information and monitor their transactions for any suspicious activity.

Credit Cards

To make an online credit card payment, the cardholder must enter their credit card information into the payment form on the website or app. Then the payment processor processess the payment, verifies the card information, and transfers the funds from the cardholder’s account to the recipient’s account.

Pros of using credit cards:

Convenience: Credit cards offer a fast and easy way to pay freelancers, as the client can simply provide their credit card information and authorize the payment.
Widely accepted: Credit cards are widely accepted by freelancers and are a familiar payment method for many clients.
Rewards and benefits: Many credit cards offer rewards and benefits, such as cash back or points, for using the card to make payments.
Record-keeping: Credit card transactions are recorded on the cardholder’s statement, which can be useful for tracking expenses and maintaining accurate financial records.

Cons of using credit cards:

Processing fees: Credit card payments are subject to processing fees, which can impact the amount of money that the freelancer receives.
Security: Credit card information can be vulnerable to fraud or theft, which can result in unauthorized charges or the loss of sensitive financial information.
Disputes: Credit card disputes can be complex and time-consuming to resolve, and may require involvement from the card issuer or the bank.
Interest and fees: If the client carries a balance on their credit card, they may incur interest and other fees, which can impact the cost of the payment.
Limited acceptance: Some freelancers may not accept credit cards as a form of payment, which can limit the options for the client.

Freelancer Platforms

A freelance platform is a website or application that connects freelancers with clients who need their services. Freelance platforms provide a centralized location for freelancers to showcase their skills and portfolios. Clients can browse and hire freelancers for their projects. These platforms typically charge a fee for using their services. This occurs either by taking a percentage of the payment made to the freelancer or by charging a membership fee to the freelancer or the client. 

Pros of using a freelancer platform:

Convenience: Freelancer platforms often have built-in payment systems that handle the transfer of funds from the client to the freelancer. This can be a convenient option for both parties, as it eliminates the need to deal with payment outside of the platform.
Security: Freelancer platforms typically have security measures in place, such as escrow services or dispute resolution, to help protect both the client and the freelancer.
Record-keeping: Freelancer platforms often provide detailed transaction records and invoices, which can be useful for tracking expenses and maintaining accurate financial records.
Global reach: Freelancer platforms connect clients with freelancers from all over the world, making it a useful tool for finding talent and managing remote teams.

Cons of using a freelancer platform:

Processing fees: Freelancer platforms may charge processing fees for each transaction, which can impact the amount of money that the freelancer receives.
Limited flexibility: Freelancer platforms may have restrictions on how payments can be made or may limit the payment methods available to clients.
Account requirements: Both the client and the freelancer must have an account on the freelancer platform to use its payment system, which can be a barrier for some individuals.
Technical issues: Freelancer platforms can experience technical issues, such as downtime or system errors, which can impact the ability to send or receive payments.
Limited dispute resolution: While freelancer platforms may offer dispute resolution services, they may not be able to resolve all disputes between the client and the freelancer.

Conclusion

Getting paid is a crucial aspect of working as a freelancer. There are several payment methods available, including checks, PayPal, credit cards, EFT, and freelance platforms. This in-depth blog post on freelancer payments offers more information about additional wire transfer options such as ACH (otherwise known as direct deposit) and eChecks. Each of these methods has its own pros and cons, and it’s important to choose the one that best fits your needs as a freelancer and your client.

Ultimately, choosing a payment method depends on factors such as the amount of the payment, the location of the client and freelancer, and the level of security and convenience required. By understanding the pros and cons of each payment method, freelancers can make informed decisions and ensure that their financial transactions occur smoothly and efficiently.

Author Bio

Gilad David Maayan is a technology writer who has worked with over 150 technology companies including SAP, Imperva, Samsung NEXT, NetApp and Check Point, producing technical and thought leadership content that elucidates technical solutions for developers and IT leadership. Today he heads Agile SEO, the leading marketing agency in the technology industry.