International Payments for UK Freelancers: Stop Losing 5% on Every Invoice

If you freelance for international clients, you are almost certainly losing money on every payment you receive. Not because your rates are too low, but because the financial system between you and your client is quietly skimming a percentage off the top every single time.

A UK freelancer invoicing a US client for 5,000 dollars could lose anywhere from 150 to 250 pounds per transaction through a combination of exchange rate markups and transfer fees, depending on how the payment is processed. Over a year of regular international work, that adds up to thousands of pounds walking out of your business.

Here is how it works, and more importantly, how to stop it.

The Hidden Cost Nobody Talks About

When you receive an international payment through a traditional bank, two separate costs are at play.

The Transfer Fee

This is the visible charge. Your bank might charge 10 to 25 pounds to receive an international wire transfer. The sending bank may also charge a fee on their end, and sometimes there is an intermediary bank in between that takes a cut too. These fees are annoying but at least they are transparent.

The Exchange Rate Markup

This is where the real money disappears. There is a “real” exchange rate, known as the mid-market rate or interbank rate, which is the rate banks use when they trade currencies with each other. You can see it on Google, XE.com, or any financial data site at any time.

When your bank converts your incoming payment from dollars to pounds, they do not use this rate. They use their own rate, which includes a markup of typically 2.5 to 5 percent. This markup is never shown as a separate fee. It is simply baked into a less favourable exchange rate.

Let us put numbers on it. If the mid-market rate is 1 GBP = 1.27 USD, your 5,000 dollar payment should convert to approximately 3,937 pounds. But if your bank applies a 3 percent markup, you receive roughly 3,819 pounds instead. That is 118 pounds gone, and it does not appear as a fee on any statement. It simply looks like “the exchange rate.”

Multiply that across twelve months of international invoicing and you could be losing over a thousand pounds per year to exchange rate markups alone, on top of transfer fees.

Comparing Your Options

Wise (Formerly TransferWise) - The Gold Standard

How it works: Wise uses the mid-market exchange rate and charges a small, transparent percentage fee on top. No hidden markup, no inflated exchange rate.

Typical cost: For receiving USD and converting to GBP, the fee is typically around 0.35 to 0.6 percent. On a 5,000 dollar payment, you might pay around 15 to 25 pounds in total fees and receive very close to the mid-market rate.

Key features for freelancers:

• Local bank details in over ten currencies. You can give your US client a US bank account number, your European client a SEPA account number, and your Australian client a local BSB. The client pays as if sending a domestic transfer, which is faster and cheaper for them too.
• Automatic conversion or hold funds in the original currency and convert when the rate suits you.
• Integrates with Xero and QuickBooks for automatic bank reconciliation.
• Batch payments if you need to pay multiple international suppliers.

The verdict: Wise is the default recommendation for most UK freelancers with international clients. The combination of mid-market rates, low transparent fees, and local receiving account details makes it the most cost-effective option for regular international payments.

Revolut Business - Strong Alternative with Broader Banking

How it works: Revolut offers multi-currency accounts with competitive exchange rates. The free plan includes five free international transfers per month at the interbank rate during market hours (Monday to Friday). Outside market hours, a small markup applies.

Typical cost: Free transfers during market hours on the interbank rate (within monthly limits). The paid Grow plan at 10 pounds per month increases limits and adds features.

Key features for freelancers:

• Hold and manage over 25 currencies in one account.
• Local account details for GBP, EUR, and USD.
• Full business banking features including card spending, expense management, and invoicing.
• Virtual cards for managing subscriptions and online spending.

The verdict: Revolut is a strong choice if you want multi-currency capabilities combined with a full business bank account. The free international transfers during market hours are excellent, but be aware of the markup that applies at weekends and outside trading hours. If you often receive payments on Fridays that settle over the weekend, this matters.

PayPal - Convenient but Expensive (Avoid for Large Amounts)

How it works: PayPal is ubiquitous, and many international clients default to it because it is easy. However, convenience comes at a significant cost.

Typical cost: PayPal charges a currency conversion fee of around 3 to 4 percent above the mid-market rate, plus a transaction fee of typically 2.9 percent plus a fixed fee for commercial payments. On a 5,000 dollar invoice, you could lose 250 to 350 pounds between the exchange rate markup and transaction fees.

Key features for freelancers:

• Nearly universal acceptance. Almost every client can pay via PayPal.
• Buyer and seller protection on eligible transactions.
• Instant access to funds in your PayPal balance.
• Easy invoicing through PayPal’s own system.

The verdict: PayPal’s convenience is undeniable, but the costs are brutal for regular international invoicing. If a client insists on PayPal, consider increasing your rates by 5 percent to cover the fees, or have a frank conversation about alternative payment methods. For occasional small payments, PayPal is fine. For regular invoicing of significant amounts, it is one of the most expensive options available.

Traditional UK Banks - The Worst Option

How it works: Your high street bank will happily receive international wire transfers into your business account. They will charge you a receiving fee and apply their own exchange rate, which includes a substantial markup.

Typical cost: Receiving fees of 10 to 25 pounds per transfer, plus exchange rate markups of 2.5 to 5 percent. On a 5,000 dollar payment, you might lose 150 to 275 pounds in total.

The verdict: Unless you have no alternative, avoid receiving international payments through a traditional UK bank. The combination of fees and exchange rate markups makes this the most expensive option for freelancers. Traditional banks are designed for domestic banking; international transfers are an afterthought with pricing to match.

Payoneer - Good for Marketplace Freelancers

How it works: Payoneer is popular with freelancers who work through international marketplaces and platforms. It provides local receiving accounts in multiple currencies and offers competitive exchange rates for conversion.

Typical cost: The currency conversion fee is typically around 2 percent above the mid-market rate, which is better than PayPal or banks but worse than Wise. Transfers between Payoneer accounts are free.

Key features for freelancers:

• Local receiving accounts in USD, EUR, GBP, and other currencies.
• Integration with major freelance platforms like Upwork, Fiverr, and Amazon.
• Payoneer-to-Payoneer transfers are free and instant.
• Prepaid Mastercard for direct spending from your balance.

The verdict: Payoneer is a solid choice if you primarily earn through freelance marketplaces that integrate with it. The exchange rate markup of around 2 percent is not ideal but is competitive for the convenience offered. For direct client invoicing, Wise or Revolut are better options.

Cost Comparison at a Glance

Here is what you would actually receive from a 5,000 USD payment, assuming a mid-market rate of 1 GBP = 1.27 USD (so the “true” value is approximately 3,937 GBP):

Provider	Approximate Amount Received (GBP)	Total Cost
Wise	~3,910 - 3,920	~17 - 27
Revolut (market hours)	~3,925 - 3,937	~0 - 12
Payoneer	~3,855 - 3,860	~77 - 82
PayPal	~3,590 - 3,690	~247 - 347
Traditional bank	~3,660 - 3,790	~147 - 277

The difference between the best and worst option is up to 330 pounds on a single 5,000 dollar payment. Over a year of monthly invoicing at this level, you are looking at a difference of nearly 4,000 pounds.

Practical Tips to Reduce International Payment Costs

Invoice in GBP When Possible

If you can agree with your client to invoice in British pounds, you eliminate the exchange rate risk entirely. The client handles the conversion on their end, and you receive exactly what your invoice states. Many clients are happy to do this, especially if you explain that it simplifies your accounting. You can use the current exchange rate as a reference when setting your GBP price.

Use Local Receiving Accounts

Services like Wise and Revolut provide local bank details in multiple countries. When you give your US client a US account number, they send a domestic ACH transfer instead of an international wire. This is faster (typically one to two business days versus three to five), cheaper for the client (often free), and eliminates intermediary bank fees.

Time Your Conversions

If you use a multi-currency account that lets you hold foreign currency, you do not have to convert immediately. Watch the exchange rate and convert when it is favourable. This requires some attention and carries the risk that the rate moves against you, but for larger sums, timing a conversion over a few days can save meaningful amounts.

Batch Your Conversions

Rather than converting each payment as it arrives, let foreign currency accumulate and convert a larger sum less frequently. Many providers offer slightly better rates on larger conversions, and you reduce the number of individual transaction fees.

Build Fees Into Your Rates

If a client will only pay via PayPal or another expensive method, factor the cost into your pricing. There is nothing wrong with having different rates depending on the payment method, just as shops charge differently for card versus cash. Be transparent about it if asked, and most clients will understand or choose a cheaper payment method.

Avoid Double Conversion

Be careful of scenarios where money is converted twice. For example, if a European client pays you in USD (converting their EUR to USD) and then you convert USD to GBP, two currency conversions have occurred and fees have been taken both times. Where possible, agree on the most direct currency path.

Setting Up for International Payments: A Quick Checklist

1. Open a Wise or Revolut Business account (or both, they are free to open).
2. Get your local receiving account details for the currencies your clients pay in.
3. Update your invoices with the local bank details for each client’s currency.
4. Inform existing clients about your new payment details, emphasising that it will be easier and cheaper for them too.
5. Track every payment including the exchange rate applied, so you can calculate the true cost and claim any fees as a business expense.
6. Review quarterly to ensure you are still using the most cost-effective method as your payment volumes and currencies change.

The Bottom Line

International payments do not have to be a source of lost income. The gap between the worst option (PayPal or a traditional bank) and the best option (Wise or Revolut) can easily amount to thousands of pounds per year for an active freelancer.

Switching takes less than an hour. Open a Wise or Revolut account, get your local receiving details, and update your next invoice. Your clients will not mind, the payment is often easier for them too, and your bottom line will notice the difference immediately.

Stop paying a hidden tax on every international invoice. The tools to eliminate it are free and take minutes to set up.