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By Arya Bharti
Published on 12 Mar 2024 Updated on 19 Mar 2024 9 min read Updated on 19 Mar 2024
The digital world has opened doors for businesses of all sizes to operate internationally. This presents exciting opportunities, but also new challenges, especially when it comes to managing finances across borders. International money transfers and business payments can be a complex and costly affair, riddled with hidden fees, unfavorable exchange rates, and slow processing times.
Statista reports that the global digital remittances market will have 18 million users by 2028 and the transaction value is expected to reach $151 billion in 2024. A recent report by BNY Mellon also reveals that 80% of businesses expect to have an increase in their cross-border payments.
Hence, reducing friction, latency, and transaction costs becomes crucial, paving the way for digital platforms offering international money transfers and business transactions. However, choosing the right platform to navigate these complexities can be tricky.
Hidden costs, lack of personal/business-specific services and transaction/card-based charges – are just some of the considerations that businesses need to keep in mind while investing in payment solutions.
Here, we discuss two of the leading choices at length – Wise (formerly TransferWise) and Payoneer, taking a deep dive into their features and service offerings to help you make the right choice for your business.
Payoneer vs Wise: What You Need to Know
Wise: A Brief Overview
Wise has revolutionized international money transfers by offering transparent fees and competitive exchange rates with easy-to-use calculators that are readily available on their interfaces for quick price calculation for all sorts of transactions.
They bypass the traditional banking system, using the mid-market rate with a small upfront fee, saving you money compared to hidden bank charges. Their user-friendly platform allows for sending and receiving money in multiple currencies, making them ideal for freelancers, businesses, and individuals with international needs.
Wise shines in multi-currency management and allows you to hold balances and exchange funds seamlessly within the platform. For businesses, sending bulk international payments is a breeze. They also provide virtual bank accounts in various currencies, simplifying receiving international payments.
Payoneer: A Brief Overview
Payoneer caters to freelancers, marketplaces, and businesses looking for an all-in-one solution for international payments. Their user-friendly platform streamlines international transactions, allowing you to receive payments in a secure bank account, manage virtual cards for online payments, and even withdraw funds from local ATMs.
Integration with popular marketplaces makes it especially convenient for freelancers as well as businesses with multiple sales channels across different geographies. For businesses, Payoneer offers local receiving accounts in select currencies, simplifying international sales. They facilitate sending and receiving payments globally, with a focus on ease of use and accessibility.
While exchange rates might involve a markup compared to Wise, Payoneer offers features like a physical debit card for added flexibility and also offers services for different use cases, such as sending invoice payments, payments for ad services, VAT, contractors, suppliers, etc.
Another critical service differentiator is that Payoneer caters to different industries, such as eCommerce sellers, wholesalers, dropshippers, marketing agencies, exporters, web & mobile developers, etc.
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Identifying Which Platforms Support Your Business Type
Choosing the right platform for managing your business finances involves navigating various features and services to find the best fit. From considering fees and exchange rates to assessing ease of use and special features, each aspect plays a crucial role in determining which platform aligns with your business type.
Let’s take a look at the most important factors to keep in mind.
#1 – Fees and Exchange Rates
Transparency and competitiveness of fees are crucial. Wise offers transparent fees and real mid-market exchange rates.
Payoneer has a more complex fee structure with variable fees and potential exchange rate margins. You might have to pay a standard fee for maintaining the accounts, based on the type of services you are using.
#2 – Ease of Use
A user-friendly platform is essential for managing finances efficiently and effortlessly. The ability to access and manage transactions across multiple devices in a robust and secure manner is crucial.
Both Wise and Payoneer offer user-friendly interfaces, with Wise focusing on mobile apps and web access. Payoneer offers business solutions within their platform as well as via apps that allow effortless transaction management.
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#3 – Special Features
Wise provides a Borderless account for spending and receiving in multiple currencies. Payoneer offers mass payout services and business solutions like billing and tax automation. Payoneer also allows multi-currency payout in 190+ countries for marketplaces which is a huge differentiator for businesses working across multiple channels.
#4 – Business Model and Platform Suitability
The best platform for you will depend on your specific business model. Here is a business model-specific range of Wise and Payoneer’s features.
- Freelancers
As a freelancer, you might find Wise a better fit due to its lower fees and transparent pricing, helping you keep more of your hard-earned income.
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Payoneer’s platform may be less suitable for individual freelancers and cater more to businesses.
- Ecommerce Businesses
Wise’s multi-currency accounts can simplify receiving payments in local currencies.
Payoneer also offers local receiving accounts, but in fewer currencies. However, the different use cases across multiple industries and marketplaces make it a strong contender to Wise.
- Agencies & Businesses With Multiple Freelancers
Wise facilitates easy mass payouts to freelancers globally.
Additional factors for freelancers: Freelancers may prioritize features that save them money. Wise’s clear fee structure and real exchange rates could be a significant benefit.
The transaction-based pricing in Payoneer might be a concern for small and medium-sized businesses. However, Payoneer has been in the market longer than Wise and offers a more mature set of services, designed for freelancers, contractors, businesses, and professionals who receive payments globally.
Similar to Wise, Payoneer offers cards in multiple currencies. These cards function just like any Mastercard – you can use them for online purchases, in-store transactions, or even shopping on cross-continental websites. The convenience of your Payoneer card allows you to manage your international finances seamlessly.
Choosing the Right Account: Payoneer vs Wise for Your Business
Selecting the ideal financial platform for your business depends on its specific needs and size.
Here’s a breakdown of Payoneer Business Account and Wise Business Account to help you decide:
Payoneer Business Account
- Target Audience: Ideal for freelancers and small businesses.
- Core Features:
- US bank account: Receive international payments directly into a designated US bank account, simplifying bookkeeping and potentially reducing foreign transaction fees.
- Payoneer debit card: Make local ATM withdrawals, pay online, and manage everyday business expenses in the currency of your choice.
- Marketplace integrations: Seamlessly connect with popular marketplaces like Fiverr, Upwork, and Amazon to receive payouts directly into your Payoneer account.
Benefits for Freelancers and Small Businesses
- Simplified Payment Collection: Eliminates the hassle of complex international transfers. Clients can pay you directly into your US bank account.
- Reduced Fees: Potentially avoid high foreign transaction fees associated with receiving payments from international clients.
- Convenience: Manage your finances with the Payoneer debit card, eliminating the need for multiple currency exchanges.
- Marketplace Efficiency: Streamline receiving payments from freelance platforms you already use.
Limitations for Larger Businesses
- Limited Local Bank Accounts: Payoneer primarily offers US bank accounts, which may not be suitable for businesses operating in multiple countries.
- Bulk Payment Limitations: Sending mass payouts to a large number of employees or contractors may be cumbersome.
Wise Business Account
- Target Audience: Designed for businesses of all sizes, from startups to established enterprises.
- Core Features:
- Multi-currency accounts: Hold and manage funds in various currencies, allowing you to receive payments and make international transactions without hidden fees.
- Local bank details: Get virtual bank details in multiple currencies, enabling clients to pay you directly in their local currency, reducing conversion costs for them.
- Bulk payment automation: Easily send mass payouts to employees, contractors, or vendors internationally with minimal fees.
- Accounting software integration: Connect your Wise account with popular accounting software for streamlined financial management and reporting.
Benefits for Businesses of All Sizes
- Global Reach: Receive payments and make international transactions in various currencies, catering to a wider customer base.
- Reduced Costs: Eliminate hidden fees and benefit from real mid-market exchange rates.
- Efficiency: Simplify mass payouts and manage international finances effortlessly.
- Improved Reporting: Gain better control over your finances with accounting software integration.
Considerations for Freelancers
- Monthly Fees: Wise Business Account has a monthly fee, which might not be ideal for freelancers with low or inconsistent income.
Payoneer vs Wise: Costs and Exchange Rate
Now that we’ve had a deep dive into the service offerings and relevance of both the platforms as per the business use cases, let us explore how Wise and Payoneer fare against each other in terms of exchange rates and costs.
Fee Structures
Payoneer
Payoneer’s fees can vary depending on the transaction type. Here’s a breakdown of some common fees:
- Receiving payments: A fixed fee or a percentage of the received amount may apply, depending on the payment method.
- Currency conversion: Payoneer charges a currency conversion margin of up to 3% when exchanging funds within your account.
- ATM withdrawals: Fees for using your Payoneer card at ATMs outside their network can be significant.
- International card payments: A percentage fee may apply when using your Payoneer card for international online transactions.
Wise
Wise generally offers a more transparent fee structure. They typically charge a fixed, low percentage fee for international transfers.
This fee is upfront and clearly communicated before you initiate a transfer, allowing for better budgeting. Wise also uses real mid-market exchange rates, eliminating hidden markups on currency conversions.
Exchange Rates and Their Impact
The exchange rate significantly impacts the amount you receive or pay for international transactions.
Payoneer
As mentioned earlier, Payoneer applies a currency conversion margin of up to 3% when converting funds within your account. This means you receive less than the real mid-market exchange rate, impacting your overall earnings.
Wise
Wise prides itself on using real mid-market exchange rates, the same rate used by major banks and currency exchanges. This ensures you get the most competitive rate possible, minimizing the impact on your finances.
Hidden Costs: What to Watch Out For
Both platforms strive for transparency, but there can be some hidden costs to consider:
Payoneer
- Inactivity fees: Payoneer may charge a fee for inactive accounts.
- Minimum withdrawal amounts: There may be minimum withdrawal amounts for transferring funds out of your Payoneer account.
Wise
- Monthly account fees: Wise Business accounts have a monthly fee, which might not be suitable for low-volume users.
- Weekend and off-peak exchange rates: Wise’s exchange rates may be slightly less favorable on weekends and off-peak hours.
Payoneer vs Wise: Additional Considerations
Beyond the core account features, consider these additional factors when choosing between Payoneer and Wise:
#1 – Speed
- Payoneer: Transfer speeds can vary with Payoneer depending on the chosen method. Local bank transfers and debit card transactions are generally faster, while international transfers may take several business days.
- Wise: Wise offers faster transfer speeds, with many transactions completed within the same day, especially for transfers between Wise accounts. However, international bank transfers can still take 1-2 business days.
#2 – Ease of Use and Accessibility
- Payoneer: Payoneer offers a user-friendly platform with a mobile app and web interface. However, the platform is geared more towards businesses and may require a slightly steeper learning curve for individual freelancers.
- Wise: Wise prides itself on a simple and intuitive user experience. Their platform and mobile app are designed for ease of use, making it a good choice for both businesses and individual freelancers.
#3 – Security and Reliability
- Payoneer: Payoneer employs industry-standard security measures to protect user data and financial information. They offer two-factor authentication and account verification processes.
- Wise: Wise is a regulated financial institution authorized by various financial authorities around the world. They utilize robust security measures to safeguard user funds and comply with anti-fraud regulations.
FAQs
What are the key differences between Wise and Payoneer in terms of supported accounts for businesses?
Wise offers virtual bank accounts in multiple currencies, while Payoneer primarily offers US bank accounts for businesses.
How do the costs and exchange rates compare between Payoneer and Wise for international transactions?
Wise wins on costs! Flat fees & mid-market real exchange rates vs. Payoneer’s variable fees and currency markups.
What are the standout features that distinguish Wise and Payoneer as financial service providers?
Wise shines with low fees & real exchange rates, while Payoneer caters to freelancers with US bank accounts & marketplace integrations.
How can Wise Business help businesses effectively manage international payments and multi-currency cash flow?
Wise Business simplifies global finances with multi-currency accounts, real exchange rates, and easy mass payouts – all for less.
Which is better between Wise and Payoneer?
The choice depends on your business size. Wise offers lower fees and wider currency options for all businesses, while Payoneer caters to diverse business types, marketplaces, and business use cases, with features like US bank accounts and marketplace integrations.
