One of the most common questions from new Upwork users is “How does Upwork pay out?” As a freelance marketplace, Upwork processes payments between clients and freelancers for thousands of remote jobs daily. This guide covers Upwork’s payment system and process.
Table of Contents
Overview of Upwork Payments
Upwork’s managed payments system handles all invoicing, billing, and payment transfers between clients and freelancers on the platform. Key attributes:
- Clients deposit project funds into an escrow account.
- Freelancers complete milestones or hourly work.
- Completed work is approved by the client.
- Upwork releases escrowed funds to the freelancer minus their service fee.
Upwork also handles payment protection for fixed price jobs, mediates disputes, and complies with taxation requirements.
Getting Set Up for Payments
To receive payments, freelancers must provide:
- Bank account information – Where withdrawn funds will be deposited.
- Tax information – Federal tax ID number or SSN plus completed W-9.
- Identity verification – To confirm payment recipient. Typically photo ID.
Upwork’s onboarding walks first-time users through entering this essential payment information.
Upwork offers several payment withdrawal methods:
- Direct bank deposit – Transfer funds to U.S. checking/savings accounts.
- Payoneer – Withdraw into a Payoneer account.
- PayPal – Instant transfers to linked PayPal account.
- Wire transfer – For international bank accounts.
Select your preferred payout method in Account Settings.
Payments for Fixed Price Contracts
For fixed price jobs, the full payment amount is held securely in escrow until milestones are completed or the entire job is done.
- Client must approve submitted work before escrow funds are released.
- Upwork pays out approved funds 24 hours after the client’s approval, minus their service fee percentage.
This provides payment protection for the agreed upon fixed price.
Payments for Hourly Contracts
For hourly jobs, Upwork pays for approved hours worked on a biweekly basis:
- Freelancer submits and logs hours into Upwork after each work session.
- Client reviews and approves hours every two weeks.
- Upwork calculates exchange rates if applicable and processes payment for approved hours every second Friday.
Hourly freelancers receive much more frequent payouts for blocks of hours worked rather than one lump sum.
Failed Deliverables and Disputes
If contracted work is never completed or disputed:
- Hourly payments are reversed for the disputed period only.
- Fixed price escrow is locked until resolution is reached between freelancer and client.
Upwork mediates payment disputes but the outcome depends on evidence of work completed or contractual violations.
Service and Conversion Fees
In addition to facilitating payments, Upwork also deducts:
- Their service fee percentage from each payment. Typically 5% to 20%.
- A 1% payment processing fee and exchange fees if cross-border transactions are involved.
All other payment transfers between client and freelancer happen with no middleman fees.
Frequently Asked Questions
When are funds available for withdrawal from Upwork?
For fixed price jobs, full payment is released 24 hours after client approval. Hourly earnings can be withdrawn every 2nd Friday.
What happens if a client disputes completed work?
The payment will be frozen in escrow until resolution. Provide evidence of fulfilling deliverables as agreed.
Can I change my payout withdrawal method?
Yes, you can update your withdrawal payment method at any time within Account Settings.
Is there a minimum payout threshold to withdraw funds on Upwork?
No, there is no minimum payout amount. You can withdraw any amount available in your Upwork account balance.
What fees do freelancers pay to Upwork besides their service fee?
The only other fee is a 1% processing fee on cross-border payments. No other hidden freelancer fees exist.
When will I receive a 1099 tax form from Upwork?
1099s are issued in January for earnings over $600 in the prior tax year. You are still responsible for taxes if you earned less.
By understanding Upwork’s reliable and secure payment process, freelancers can get paid for remote contract work smoothly and efficiently.