[box type=”note”]Glenn Santos is a freelance writer and the man behind Memokitchen Copywriting.[/box]
While withdrawing money from oDesk has never been a problem for freelancers like me, getting your hard-earned cash can be quite difficult if you’re just starting out.
Between the account verifications and extra fees, withdrawal can get a bit frustrating for newbies. That is probably the reason oDesk rolled out Local Funds Transfers or LFT.
As a short primer, LFT gives Pinoy oDeskers a way to deposit their earnings direct to their bank account. No more middleman: oDesk’s own bank handles these transfers. I’m guessing they started this because of the recent troubles with PayPal like blocking access to Indian contractors and the sudden delay in funds retrieval some of our countrymen (including myself) have experienced.
Of course, this is just an additional way to procure your funds and you can still use any of the existing withdrawal methods like PayPal and Payoneer. If you’re like me, you may have wondered if switching to LFT is worth the trouble. To help you out, I conducted my own experiment on the new service.
I set out to compare my current payment method versus LFT. Right now, my transfer method of choice is sending funds from oDesk to PayPal and then withdraw it to my bank account with BPI.
For LFT, the process is pretty much the same but without the PayPal part. You will need a day or two though before LFT shows up as a payment method in your profile but it goes through without a hitch provided all the info you input is correct.
So, I initiated a transfer on the same day and roughly the same time using the two methods. I’m sure that as an oDesk-er, you already know that the best time to withdraw is during 8-9am (or 00-01am GMT) on Wednesday to get your funds before the weekend hits, which is what I did.
First off, let’s look at the fees. For easy conversion, I consider $1 equal to P45, a few pesos above the current rates.oDesk’s Fee table
$1 > free (if P7,000) > P150
oDesk charges $1 per transfer to PayPal and the latter doesn’t charge anything for bank transfers P7,000 worth (roughly $170-$175). On the bank’s end though, they might charge you for incoming foreign transfers, and in this case BPI charges me P150 for that. The total fee per withdrawal rings up to P195.
$1.99 > free
For the LFT, oDesk only charges $1.99 or around P90. BPI does not charge any fees because of their deal with oDesk, lucky for me. It might not be the case for other banks though. The second best banks you can use are Union Bank and Land Bank which charge only P50 for this transaction.
Fee-wise, it looks like oDesk’s LFT is a winner but of course that’s not the only factor to consider. If you use a bank that has lower fees, that might tip the scales towards the PayPal route. Feel free to share your experiences and info on the fees and I’ll update this post accordingly.
My second point of comparison is the exchange rate. It will probably make or break the decision for you since the rate has the greatest impact on the amount of pesos you will earn, especially for oDesk regulars.PayPal’s Exchange Rate During My Withdrawal
Since oDesk doesn’t show the actual exchange rate they use for a transfer and only the previous day’s rate, I couldn’t compare it off the bat. In contrast, PayPal shows you the rate they will use and you can decide then and there if it’s worth going ahead with the transfer or not.
PayPal Forex: P42.4681
*as per transaction logs
oDesk’s rate is not that much different from PayPal’s rate, which is a good thing since you won’t be tied to one or the other too much. From this transaction, oDesk is only 1.4% above PayPal’s rate.
Both exchange rates are dismal though compared to what you see in the papers. But that is a topic for some other time.
I withdrew both funds on February 16, as you can see from the image below.My oDesk Withdrawal
oDesk: 6 days
The PayPal transfer was fast as always, with the money appearing in my account the next day, February 17. oDesk’s LFT though was a bit slow. I got my funds pretty late, February 22. To be fair, oDesk did state that it would take 3-5 business days for the transaction to complete though PayPal says the same thing and always sends funds ahead of the deadline.
I’m also not sure whose business days they mean since a US business day is not the same as a local business day. oDesk to PayPal is always an instantaneous transfer, by the way, so that doesn’t really matter here.
The oDesk LFT withdrawal is the best option for those starting out their freelancing gig, especially for those who can wait. The first transfer is free and if you use BPI, there are no bank charges so you get your first paycheck in full.
It’s also attractive for newcomers to oDesk since all you really need is a bank account. No minimum withdrawal limits, no credit card verifications, no hoops to go through. Once you connect oDesk and your account, you can withdraw as much as you want, as often as you want.
If you’ve been freelancing for a while, the PayPal option is better especially if you tend to funnel payments for your other ventures into PayPal as well. Withdrawing to PayPal also contributes to the sales needed for a Merchant Account, which lowers your PayPal fees if you maintain a certain level of sales.
If a signifant amount of your other business is paid directly through PayPal, you’re better off continuing to use it. The fees are negligible compared to the speed of the transfers you get, a must if you want to keep paying your bills on time.
[box]Glenn Santos: I’ve been freelancing for several years now and I’ve been honing my skills and experience ever since. If you need some advice on how to be productive and get the best out of your freelancing career, let me help you out.[/box]