Why Freelancers Should Embrace Dwolla

Payment processing is something of a pet peeve for me. Getting paid through a site like PayPal is very convenient, but I have to give up 2.9 percent of my income (plus an added 30 cent fee) on every transaction. Consider what that means I’m paying:

Income Payment to PayPal
$100 $3.12
$1,000 $29.30
$10,000 $290.30

That amount doesn’t seem like all that much, but it only ever goes up even as the expense of having a bank account remains the same. I don’t feel like I get all that much for my money, especially since PayPal doesn’t always protect service providers from scams.

The real reason I still use PayPal at all is because all of my clients are familiar with the company. They mostly have accounts already and don’t have to think about the process of making a payment. I generally ask clients to pay with a check over sending a PayPal payment, though, or use Stripe’s integrations with invoicing tools to pay with a credit card.

In an ideal world where clients are willing to try new things, though, I would ask everyone to use Dwolla. Dwolla costs 25 cents per transaction (look at that adorable flat rate!) and has real humans in charge of customer service. Unlike both PayPal and banks (including my nice, local credit union), I’ve heard almost no stories of problems and even those seem to be either resolved to the customer’s satisfaction or be the results of misunderstandings. The main exception seems to involve using Dwolla to purchase Bitcoin, so I’m not too worried. About 35,000 businesses were using Dwolla as of June, along with several state governmental agencies.

Now I just need to convince some clients…

Tax Write Offs: Paypal Fees

It seems like every client these days wants to pay me via Paypal, which, unfortunately, takes a nasty little bite out every payment. While a dollar here and 75 cents there doesn’t seem like much, it adds up pretty quickly. The thought of just plain not getting my full rate just peeves me. But there is a bit of a solution. It doesn’t put the cash back in my wallet, but it does mean that, down the road, I’ll have a bit more.

Because these Paypal fees are a necessary cost of doing business, I can write them off on my taxes. All I have to do is add up the total I spent on fees and put it on my itemized deduction.

It’s like finding a handful of spare change in the couch cushions — you thought that you’d lost the money, but after just a minute of digging, you get it back.

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