Within the creator economy, there is a steady (and growing) funnel of business — creative products or services sell themselves online, creators and influencers market those products or services, and consumers convert into customers right from their fingertips.

The digital space is continually evolving. Since the events of 2020, international working relationships have become quite common. Suddenly, boutique to mid-sized agencies have gone global, hiring a remote team or working with international brands and creators.

So, what do those international relationships and collaborations mean for the financial health of your business?

As online collaborations continue to expand beyond borders, here’s what you need to know about the cost of international payments for creative small businesses, marketing agencies, and creators.

The fees and exchange rates

Banks, wire transfer services, and payment platforms charge a variety of bank fees to send and receive international payments. Most banks charge a transfer fee for sending or receiving an international payment in your bank account, up to $50, depending on the Bank, country, and amount. And it doesn’t stop there. Often, there is an additional fee ranging from 1%-4% of the total payment, especially to withdraw the money in a local currency.

For a multi-million dollar & established business, this may seem like par for the course — but for a boutique agency or freelance online creator, these fees can definitely add up.

In addition to the transfer fees, international payments are affected by the foreign exchange rates (the price of one country's currency in terms of another country's currency). These rates fluctuate based on the global economy (and yes, you guessed it — inflation tends to devalue a country’s currency). In turn, exchange rates can cost businesses much more than anticipated when they send payments to international brands, creators, and freelancers.

The cost in context

Imagine you own and operate a creative agency based in the U.S. and are hoping to work with a freelancer based in Canada. If you use PayPal to send and receive international payments via a credit or debit card, you’ll pay a 2.9% fee plus a fixed fee of 0.30 CAD ($23 USD).

In addition to that fee, if the payment needs to be converted to a different currency before processing, PayPal charges a currency conversion fee of 4%.

So if you owe the freelancer 2,000 U.S. dollars for their work, you’re paying an additional $59 (2.9% fee) + $23 (flat fee) + a possible currency conversion fee. Unfortunately, there’s no denying this adds up.

So, is international business worth it?

Here’s the truth: If you’re a small business that wants to work with awesome freelancers, brands, or creators, and you don’t want costly fees and exchange rates to be the reason you can’t work together. We get it — these collaborations could ultimately help you meet your business goals. We’d hate to see you close the door on international working relationships because of accumulating fees.

Our best advice? Get to know your numbers first. Call your bank or payment platform to gain a real understanding of any service or transfer fees before you engage in international payments. With an accurate estimation of what it will cost you, you can make a wise decision on whether it’s the right time to expand into global collaborations.

Lumanu is taking steps to help facilitate and make working with international clients easier. The Lumanu app is now available to creators and freelancers internationally in Canada, Australia, the UK, South Korea, Japan and select countries in Europe. If you’re interested in how international payments work at Lumanu, schedule a demo with us!