If you are a consultant living in Canada, you have the privilege of banking in Canada which means you are most likely still receiving mailed cheques from the majority of your clients. That is until Monday when the Canada Post strike kicks in. How then will your clients pay their invoices?
Canadian banks still do not offer the option to do wire transfers between banks through online banking. When I lived in Australia, the banking was wonderful. You could login to your online banking, submit the amount, person’s name, account number, etc and you were done. This is how it should be. It is absolutely absurd in this day and age to be printing cheques, then addressing, stuffing, posting, and shipping envelopes for payment. Then of course there’s the hassel of going to the bank and caching the cheques. Medium and large companies have automated systems for this, so it’s not a huge deal for them, but for small businesses this is a burden.
So, what alternatives are there to the paper cheque?
What about Email Money Transfers (EMTs)? They are great for transferring small amounts, but not really designed for paying invoices. EMTs are limited to your daily debit withdrawal limit (usually $1,000), so to pay invoices you would have to pay several times over several days, splitting payments between invoices, and producing a wonderful tangled mess of transactions in your accounting. Do your accountant a favour and reject this option.
Most banks offer its customers the option to do a wire transfer to another one of its customers. So if you and your client happen to bank with the same bank, this is a good option. However, since it’s unlikely that all your clients are with the same bank as you, back to the drawing board.
Accepting credit card payment via PayPal is by far the easiest option. Your client doesn’t even need a PayPal account to do this. However, with a transaction fee of 2.9% + $0.30, I find this unacceptable for paying invoices. On a $5,000 invoice, that’s $150 in fees. Not acceptable in my opinion, but I’ll let you be the judge of that.
I’ve found that PayPal’s eCheck is the best option. There’s absolutely no fees involved in transferring money, but unfortunately there can be a bit of setup involved. If your client doesn’t have a PayPal account, they will need to create one. They will also need to link their bank account to their PayPal account following these simple directions:
Linking your bank account to your PayPal account
- Log in to your PayPal account.
- Click Profile near the top of the page.
- Click My money under My Profile.
- Click Add my bank in the Bank accounts section.
- Select Checking or Savings account and enter your information.
- Click Continue.
Then just confirm your bank account to complete the process. If you bank online, you can usually do this instantly. If you don’t have online access to your bank account, it’ll take a few days.
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Once they’ve added their bank account, they can easily send you an eCheck by following these simple directions:
Sending an eCheck payment via PayPal
- Log in to your PayPal account.
- Click Send Money.
- Enter the required information.
- Click Continue.
- Click Change.
- Select eCheck.
- Click Continue.
- Review the information and click Send Money to complete the transaction.
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I suggest you copy and paste the eCheck payment directions to your client and explicitly tell them that you do not accept credit card payments via PayPal. This is important as PayPal implies credit card payment for most people.