Are social media platforms unknowingly draining income from creators?
Imagine this:
You've invested time, energy and built a massive following, your content is racking up views, and your influence is soaring. Your revenue flows in, but whether you realise it or not there's an invisible drain on your income—currency conversion fees and unfavourable exchange rates. While you’re being paid in USD, every conversion to your local currency means you could be losing thousands. The world might be connected, but most platforms still pay like they’re stuck in one country. It’s time to ask: how much of your earnings are slipping away, and what can you do to take back control?
Let’s take a look at Forbes Top Creators 2024: The 2024 Forbes Top Creators list features 50 influential individuals. Among them, 48 are based in the United States. The two exceptions are Khaby Lame, who resides in Italy, and KSI (Olajide Olatunji), who is based in the United Kingdom. Does this show an advantage to USD residents or are they just not losing tens and hundreds of thousands on currency fees…?
Not only are Ronaldo and Messi two of the most renowned footballers, but they seem to both be wearing the crowns for 1st and 2nd highest paid Instagram stars (influencers move over). Cristiano Ronaldo is reported to earn $3,234,000 per post and Leo Messi a whopping $2,597,000 per. We wonder how much they pay per conversion from USD? Ronaldo, for example, is Portuguese whilst playing football in Saudi Arabia, so he would most likely want Euro’s or Saudi Riyals.....
Social media giants have connected the whole world and empowered creators worldwide to monetise their content. However, a significant challenge persists: many platforms predominantly disburse earnings in U.S. dollars (USD), regardless of the creator's location. This practice can lead to substantial financial losses for influencers due to currency conversion fees and unfavourable exchange rates.
Why Do Platforms Pay in USD?
Several factors contribute to the prevalence of USD payouts:
- Global Standardisation: The USD serves as a primary reserve currency, facilitating standardised transactions across borders.
- Platform Origin: Many leading social media companies are based in the United States, naturally aligning their financial operations with the USD.
- Simplicity in Transactions: Handling a single currency simplifies accounting and reduces complexities associated with managing multiple currencies.
Financial Implications for Creators
Receiving payments in USD can have notable financial repercussions for creators operating in other currencies:
- Currency Conversion Fees: Financial institutions often impose fees for converting USD to the creator's local currency. Most banks are charging you a fee to convert money between currencies in your account.
- Unfavourable Exchange Rates: The exchange rates offered by banks or payment processors may not be competitive, leading to reduced earnings. For example, the exchange rate from USD to GBP fluctuates, and creators may not always receive the most favourable rates.
Quantifying Potential Losses
To illustrate the potential financial impact, consider a creator earning $100,000 annually through a platform that pays exclusively in USD. If the creator's local currency is the British Pound (GBP), and the average exchange rate is 1 USD = 0.77 GBP, the gross earnings would be £77,000. However, after accounting for conversion fees—typically ranging from 1% to 3%—the net amount could decrease by £770 to £2,310, significantly affecting the creator's income.
Mitigating Financial Losses with BLK.FX
To minimise these losses, creators can utilise specialised foreign exchange services like BLK.FX, which offer competitive exchange rates and lower fees compared to traditional banks. By leveraging such services, creators can retain 2% more of their overall international earnings, enhancing their overall financial well-being.
Conclusion
While social media platforms have democratised content monetisation globally, the predominance of USD payouts presents financial challenges for non-U.S. creators. By understanding the implications of currency conversions and employing strategic financial tools, influencers and talent agencies can optimise earnings and navigate the complexities of the global digital economy more effectively.
