Dear Someone Who's Financially Literate,
What do you do if you're going to regularly receive bank drafts (checks/cheques) for small amounts of money in foreign currencies (pounds and euros), and the sender can't send the money any other way, but no bank anywhere remotely near you can accept such checks for deposit?
Signed,
Stumped in Rural New York
If the checks/cheques are for small amounts, say, less than $300, there are solutions but no cost effective solutions. The world of banking in the USA and many other countries, is really not well set up to process small dollar cross-currency payments by check or wire transfer efficiently.
Banks such as Wells Fargo, TD aka Toronto Dominion and JP Morgan Chase will process these cheques but the processing fees can range from $45 to $90, in my experience. International wire transfers are little better, also in my experience. My bank overseas charges a minimum of $25 for all overseas wires into the US. My receiving bank charges an extra $20 for incoming foreign wires.
Paypal and Transferwise exist for this reason. The centuries old, utterly reliable, cheap and very quick human-to-human folk system known as Hawala would have done the trick, but sadly, after 9/11 the US Government has done its level best to stamp this multi-billion dollar payment system out globally when it discovered that some terrorists had used it. It is now illegal in the United States to use it.
Posted by: Alan Carmody | Sunday, 13 September 2015 at 11:10 PM
I'm no expert on this, but it sounds like Paypal might be the answer. That said, you might want to contact one of the mega banks like Chase, that has a branch in Ithaca or Rochester that you can easily visit. See what they would charge for setting up a lockbox account for processing and what the conversion fees will be.
Warning: New York is relentless about sales tax and will attempt to tax the air that you breath. You need to talk to an accountant.
Posted by: Peter | Monday, 14 September 2015 at 10:12 AM
Set up an account with a bank that can accept checks in foreign currency and deposit the checks by mail seems to be the simplest answer. Watch those fees!
Posted by: Randolph | Tuesday, 15 September 2015 at 01:41 AM
Since you're in New York State, Chase and other major banks will handle your foreign checks, but the fee usually isn't worth it for small amounts. Paypal is ideal and the fees are fairly modest, compared to what the bank charges, but if you're getting paid by a foreign company, they might not do PayPal or Western Union, in which case, you're usually stuck with wire transfer, which may be a bit less costly than clearing a foreign check, but still can eat up a fair amount of a small payment. If I have to invoice a European company or agency, I include both my PayPal and international wire transfer info as methods of payment. If the payments are too small to deal with, you might consider in-kind payment, like if I do something for a publisher that is interesting to me, I could propose payment in books figured at the wholesale price.
Posted by: David A. Goldfarb | Tuesday, 15 September 2015 at 04:56 AM
I know you're already aware of PayPal, so I'm presuming the problem is with those who can't use PayPal (which is the case in some countries), or don't want to.
For the first problem I found Skrill, a PayPal like service, was able to deal with at least some countries which couldn't use PayPal
For the 2nd problem - well I guess you have to be tough and say you just won't accept cheques. Never mind the bank charges, just the hassle of handling them makes cheques uneconomic for small amounts.
Posted by: Colin K Work | Wednesday, 16 September 2015 at 05:03 AM