Translator Pay: Will waving a magic wand be enough to make the pain of international payments disappear?

“I always get paid in full – no fees or deductions and in my own currency. Is that magic, or what?”

What magic is making this translator so happy?

(Hint. Her foreign customers always pay her invoices in full – in her own currency and free of any foreign exchange charges or bank fees.)

Is this just some sleight of hand or are we talking about real, practical solutions here?

In several previous posts, I looked at some of the problems translators have when getting paid by translation agencies and direct customers outside their own currency zone.

In this post I look at a potential solution from “Translator Pay”, an international money transfer system purposely designed for translators.

When working with foreign customers, translators often discover that they get paid less than they expect and LSPs frequently find the process of paying their freelancers a costly, time-consuming process.

Given that translators must inevitably work in an international environment, it makes sense to eliminate some of the annoying obstacles that get in the way of doing business across national boundaries.

How can translators (freelancers and translation companies alike) get paid the full amount of their invoices in their own currency – free of deductions, foreign exchange charges and bank fees?

In a previous post, we saw how Frank, an American freelance translator, ended up receiving some $US 60 less than he expected for a translation job he did for an agency in UK. Not only were sending and receiving fees automatically deducted from his payment  by the banks, but he also took a hit from a not-so-good exchange rate when pounds were converted into US dollars.

In a different scenario, Veronica’s London agency had to pay all the fees to get Frank paid. Veronica discovered that she had paid him 15% more than she had originally budgeted for.

So here we have a dilemma – either Frank gets paid in full (and Veronica feels she is out of pocket), or Frank’s translation fee shrinks while Veronica manages to avoid all the costs in getting the money into his bank account. If one of them wins, the other guy always loses [1].

Well, why don’t they just share the costs of international transfers? Would that work?

Sharing is getting close, but negotiating this is far more difficult than it sounds.

It would be hard for Frank to know in advance what Veronica’s sending fees are going to be. What bank or money transfer company will she choose? What sending method will she opt for? What will the exchange rate be on the day the transfer is made? Does Veronica have any incentive to look for the best possible exchange rate? Or would she check who is offering the lowest transfer fees? Can she even afford the time to go to such trouble?

Veronica may very well be happy to share the costs of an international transfer with Frank – in principle. But to negotiate splitting the fees, she would also have to know what fee Frank’s US bank will charge. With dozens of other freelancers to worry about, (all in different countries, all with accounts in different banks, all of which have different sets of fees) just making all the payments is trouble enough without this extra task.

Let’s face it, Veronica’s best strategy is to pay all her foreign freelancers in British pounds via the bank’s default system. She has no real incentive to hunt down the best possible exchange rates. That can just be left to chance – after all how many dollars Frank gets for her pounds is Frank’s problem. Why should she have to worry about the fees either? By default, the banks will automatically deduct all their various sending and receiving fees from whatever money she  sends off to Frank. This is Veronica’s most rational, easiest and cheapest option – isn’t it? She’s not running a charity here!

So now let’s look at the problem from her freelancers’ point of view. Ideally, they want to receive the full amount of their translation fee – why should they settle for less just because Veronica happens to be in a different country? It’s her problem if she wants to use foreign  translators. So she should pay!

So why don’t more freelancers ask Veronica’s agency to take full responsibility for paying all the fees and to make sure that their invoices are paid free of any deductions? [2] The main reason is that many of them will worry that the overseas LSPs they work for will think that such a request is a demand for a higher fee. They fear that foreign LSPs will consider them as troublesome or too expensive and stop sending them work.

Thus many freelancers feel that they are in a weak position and just accept the situation (but feel very resentful as a result). Some just refuse to work for clients outside their currency zone to avoid the problem altogether.

So what would it take to change this situation so that both parties get a benefit? Is there some sort of trade-off we can engineer which would turn this into a practical win-win situation? [3]

We can reformulate the question like this: What problems would we have to solve for Veronica to motivate her to ensure that Frank always got paid 100% of his fee in his own currency?

Now, Veronica really does have some big, messy admin problems associated with paying her freelancers. She has to manage the banking details of dozens of foreign translators; one wants to be paid via PayPal, another wants to be paid via telegraphic transfer via the bank and yet another one wants to be paid in some other way. Going through the motions of paying each translator one by one in his or her own particular way, sorting out all the bank accounts, the exchange rates and different currencies can eat up a lot of time.

… then Veronica gets this email:

Dear Veronica,

Frank and his fellow translators overseas want to get paid the full amount of their invoices, in their own currency – just like they do when they get paid by their local customers. However, we understand that it’s very expensive for you to organise this for all your foreign translators.

But, let’s say we could:

Completely eliminate any “receiving fees” when making international transfers? Frank would be very pleased if he discovered that his bank had stopped charging him a $16 fee every time you pay him. If we can get rid of this, you can be sure that your other freelancers won’t be pestering you to pay them something extra to cover their bank fees.

Hunt down more favourable exchange rates on your behalf – better than you could ever get from your bank? The better the exchange rate we can find, the less you’ll have to pay (in your currency) to ensure that translators like Frank get their payments in full in their currency.

What about those bank “sending fees” – your bank charges you £17 (and sometimes £30)? Now, either you have to pay them or they get deducted from Frank’s payment. Either way, one of you is going to be unhappy about it. What say we can get someone to send the money to your translators for, say, £5? Would that make a difference?

Now we know that, on average, an agency like yours spends around  14 hours a month just processing payments to freelancers like Frank [4]. Multiply that by the hourly cost of your company’s overheads, and then multiply that by 12 months and you’ll find that paying your freelancers can be very expensive. Instead of 14 hours a month, let’s say it just took you an hour, or even just half an hour to pay them all? [5]

Let’s say you didn’t have to store and manage all your freelancers’ constantly changing bank account details (let’s put all that sort of information securely in the cloud and let the freelancers manage that by themselves).

What about a system where you just enter the amount you have to pay each translator and then you just click a button and the system sorts out which translators get paid in which currency, works out the best exchange rate for each one and deposits the money into the correct foreign bank account.

Now, let’s also imagine that this system is completely free. You wouldn’t have to buy anything or pay any subscription fees. You can just use it. Of course it would be completely free for Frank and his fellow translators too.

Do you think you’d go for such a system? I’m sure that Frank and the other translators would think that you’re just the best agency around!

Your sincerely,
Translator Pay

PS. It’s not just Frank who can get paid the full amount of his invoice in own currency. As a translation agency, you also need to get paid by your foreign customers. You just need to ask them to pay you via Translator Pay. You’ll get the full amount of your invoice in your own currency just like Frank – free of any bank fees and forex charges. Of course, your customers will like the system too – with exchange rates better than their own bank can give them you, they get to save money too. We don’t think they’ll even notice the £5 transfer fee.

Magic tricks?

Not at all! It’s all just common sense. Translator Pay will be provided by an established international money transfer provider who has been prepared to invest some money in a new system to meet the special needs of translators. [6]

There’s no catch – it will be free for all translators, LSPs and their customers to use. A small group of LSPs is about to begin testing the system. When that’s finished anyone in the translation industry can use it!

Next post: Who is behind Translator Pay? How will it work in practice?


[1] The analysis of the problems Frank and Veronica have is taken from game theory, which was developed in the 1940s and 1950s at Princeton. In game theory this situation is called a zero-sum game. The the sum of the gains of one player equals the sum of the losses of the other. See http://en.wikipedia.org/wiki/Zero_sum

[2] Most freelancers think LSPs should pay the fees. See The Banks vs. Translators: What do freelancers think about how they get paid? http://bit.ly/LRlFXl

[3] A non-zero-sum describes a situation in which the parties’ combined gains (in this case) are more than zero – i.e. they both “win”.

[4] The headache and heartache of paying translators. How LSPs feel about cross-border payments. http://bit.ly/LIByuH

[5] At the time of writing (July 2012), the Translator Pay system is about to begin live testing with a number of LSPs. More reliable statistics on how much time it will save LSPs will be available soon!

[6] I too have also invested a small sum in Translator Pay to help get it developed.

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6 Responses to Translator Pay: Will waving a magic wand be enough to make the pain of international payments disappear?

  1. Pingback: Weekly favorites (Aug 6-12) | Adventures in Freelance Translation

  2. Pingback: Translator Pay: Will waving a magic wand be enough to make the pain of international payments disappear? | LinguaGreca | Scoop.it

  3. Chris says:

    About once a year a new company comes along making the exact same promises: international money transfers anywhere in the world with no fees. But they all have had a catch. And while the article says no one has to pay anything, there are two basic problems with that.

    (1) It’s illogical. Decades ago some tycoons saw the possibility of getting rich by manipulating foreign exchange rates, and long ago it developed into an entire industry. The service provider / middleman / Translator Pay may not charge you anything. But why would the banks on both ends of the process, who have used foreign exchange AND money transfers as easy to manage revenue streams for a very long time, all of sudden agree to just give away their services for free? Technological advancements? Oh really. So now that we have CAT tools, LSPs are going to give away ‘their’ services for free? Banks are already complaining that increased regulation is slowing down their ability to become as filthy rich. Fees are the one thing they have always felt comfortable using to maintain revenue. Why would they all change now? And I did say “all”. This assumes that Translator Pay can get every bank in the world to agree to giving away for free services they have always relied on for revenue. Not to mention, why would any business spend so much time and money for zero revenue? And if this company has to pay the banks, they surely are going to at least charge that much to cover COGS. Otherwise it would be like an LSP not charging their clients, but still paying translators and editors. It is all so illogical. There has to be a catch.

    (2) Even the Translator Pay website (just a homepage and “Coming Soon” banner at the moment) says that translators don’t have to pay (certain) fees, but that LSPs themselves will pay fees for these transfers. So it is not free.

    And other such companies that have come in the past have always had a catch. “You don’t have to pay fee A or fee B or fee C! Yay!” [fine print: but you will have to pay fee D, which is a new type of fee structure which we made up]

    Prove me wrong! Like every other LSP, I would love to find a solution like the one proposed in this marketing. But having been around the block before only to discover the marketing is just empty misleading hype, I am a hardened skeptic.

    • Paul says:

      Thanks for your comments, Chris.
      I have no doubt that many translators will share your scepticism about whether the sort of solution proposed by Translator Pay is really feasible. I understand that it sounds “too good to be true”. However the reality is that the established international payments gateway that the banks use to transfer money (the Swift system) is available to translators too. There is no magic here – the only real difference between what Translator Pay will do and what the banks will currently do is that Translator Pay will not be charging exorbitant fees. It can all be done for around GBP 5 using the conventional system. This allows for a profit to sustain the business and still leaves enough to donate a small percentage on each transaction to Translators Without Borders – a charity which I am personally committed to.
      I will deal with some more of your concerns more specifically in my next post.
      I look forward to the challenge you raise to “prove you wrong”.

  4. Karolina Karczmarek-Giel says:

    …and I stumbled upon this in 2014, where Translator Pay is a reality already. However, I don’t know any translators that actually use it. I wonder how do you think their promises paid off?

    __________________
    Karolina Karczmarek-Giel
    Office Assistant
    wantwords.co.uk

  5. Arun says:

    Hi,
    I am also a freelance translator in Singapore . I also think that, it is too good to be true. I don’t know whether any translator is using it or not?

    Thanks!
    Arun

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