US Bank Account - The Importance to a Non Resident by Okereke Uma
in Finance / Banking (submitted 2011-01-06)
In this article I am going to highlight the importance of a US bank account for a non resident. If you are online doing business, you will realize that over 85% of the people or companies you will be dealing with are from the US. What it means is that when they want to pay you, it will be easier if you have an account with a bank or financial institution in the US.
Let us just take for example that you are a merchant and you process your card payments via a third party credit card processing company like plimus.com. What happens is that at the end of the selling period when they want to remit your proceeds to you less their commissions, you are left with the following options namely: a check payment, wire transfer, and ACH / direct deposits (for US Bank accounts only). Let us look at the each of them individually and see why the option for those with a US Bank account is the best.
For those taking payments by check, what happens is that the check is drawn on a US bank and sent to you by airmail. This can take 3-4 weeks to get to you depending on your location. After you get the check, assuming it did not get lost in transit, you now have to deposit the check with your bank in your country. The local bank will now send the check back to US to be collected / cleared by its correspondent bank or Agent in US. This also can take anywhere from 3-4 weeks depending again on your location.
When your check gets to US, assuming again it did not get lost in transit, the corresponding bank will present the check for clearing through the US financial system. This will take between 2-3 working days. After that, they will give value to your bank in your country. They will charge a fee for this ranging from $25 to $100 depending on the bank. You local bank also will charge her own fee too. This could be anywhere around the above figure. Remember they are there to make profit. In all you could be looking at a total fee of between $35 to $100 to clear just one check that you received. And for all they care, the check could be for $150! Imagine paying $100 on a check of $150? You are left with only $50. Not so good at all! Imagine if you are involved in some many programs that pay you by check like that.
Now another option is to have the company paying you, wire the proceeds to you via your local bank. This usually incurs a fee of $25 to $35 and takes up to five days to arrive. On a proceed of $150, you are left with around $115 net. Some companies would even charge you for sending the wire, plus your bank will charge you to receive. You may be looking at $50 wire fees here on the $150. Imagine how much you will pay for the whole year.
Now let us see what happens if you have a US bank account. First the ACH or direct deposit is free. That means you get your whole $150 intact! Also it takes 2-3 working days to hit your account. Do you see the difference? Yes it is beneficial to have a US Bank as a non resident.
How do you withdraw from your US Bank account you may be asking? Simple! The US Bank will give you a Visa or ATM card attached to your account. You can use this to withdraw cash from an ATM in your country instantly. So no waiting and no charge to you except the cost of withdrawing from the ATMs. So as you can see, the importance of a US bank account for a non resident who is online making money can not be over emphasized.
