As you may know, I outsource a lot of my work to the Philippines. I have several Independent Contractors that I use for website design, editing, and article creation. For payment, I have always recommended XOOM and the service has been very reliable and economical. However, recent changes to XOOM’s policies have caused me to reevaluate this option.
Several months ago, XOOM stopped accepting payments from users that did not have a US Bank account or US credit card. This change in policy didn’t affect me due to my enviable position of having a US Bank account.
However, when I submitted a payment recently, I became aware of another policy change. The minimum payment amount had been increased to $50.00. This will not affect my full time Independent Contractors, as their monthly fee is higher than the new limit. I can continue to make deposits to their accounts using XOOM.
This new minimum will prevent me from paying writers in amounts of less than $50.00 using XOOM. This will affect my ability to pay my writers. My writers usually produce batches of articles for me on a sliding scale of $3.00 to $5.00 per article. I have set a payout threshold of five articles. This would mean that a writer would have to complete at least five articles before getting paid for the whole batch. This has worked out fairly well for me. It allowed me to pay my writers as their work was completed, kept the assignment tracking simple, and allowed my writers to set their own schedule.
The first thing you would think is, “Phil, hire a full time writer. You would get consistent output without worrying about the $50.00 minimum.” You would be right. Unfortunately, I have had no success in getting a full time writer. I have offered the job to several of my best writers, but they have refused due to other commitments. I have had a few other “full time” writers, but their output was inconsistent at best. Therefore, until I find a good full time writer, I am stuck using my current system.
There is also the fact that, other than my writers, I have family in the Philippines and the new limits will impact my ability to send birthday gifts and such to them.
I checked the XOOM forums and saw a lot of whining, complaining and demands that XOOM change back to the old system. Face it people, XOOM is a business that has to decide how to please their largest segment of customers. Obviously they have run the numbers and decided that first, they have a lot of problems with non-US based originators, and secondly, their core market is not marketers making payments to Independent Contractors.
As a business, they have every right to run it as they please. The market will decide if they have made a good decision or not. My goal is to find a way to adapt to the new rules. A general rule of engineering is that it’s useless to bitch without also proposing a solution. Here’s a rundown of the solutions I found.
I have checked into alternative payment methods for smaller amounts and have found that bank transfers from my local Philippine bank are around $25.00 (no matter how small the amount transferred), Western Union is around $15.00, and the other online methods require a lot of set up. PayPal appears to be the best alternative.
Being the belt and suspenders type, I had previously set up a merchant PayPal account, which I haven’t used in a long time. I stopped using PayPal after I found that most of my writers preferred the XOOM bank transfer option. There were also some problems with the exchange rates. It seemed as if my writers would never get the amount in Pesos that they should have received due to extra banking charges.
I made a test transfer using PayPal to one of my workers in the Philippines. The transfer fee for a $25.00 transfer was less than a dollar. However, there were some losses due to PayPal’s exchange rate. If I continue using this method, the extra charges will have to be taken into consideration.
So, now I have the suspenders working as an emergency backup, but the belt is missing. I needed to come up with a new backup method.
I talked with one of my workers and she volunteered to accept payments into her bank account and then pay out the other writers. Since the transfers I am asking her to make are from bank to bank in the Philippines, the costs are minimal. Naturally I can transfer money to her in amounts greater than the new $50.00 minimum.
So now I have three possible payment methods. XOOM is still the best, but the recent changes show that they are not “Outsource Friendly.” I can use PayPal, keeping in mind the exchange rate differences. Lastly, I have a person I trust in the PI who can accept lump sum payments and make the smaller payments for me.
The lesson here is that as a marketer, you should never be dependent on only one way to accomplish your goals. Take a look at your current payment processing plan today and see if you can develop a back up method.
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