PayPal is enormously popular around the world - and justifiably so. From shopping online to splitting bills with friends, PayPal has made life a lot easier for many people. However, although PayPal is handy and relatively good value for buying goods and services online here in Australia, and for sending domestic payments, the costs ramp up when the transaction crosses borders.
For international transactions, PayPal’s fee structure is pretty complex, and payments to friends and family overseas can end up costing you far more than they need to if they’re processed with PayPal.
Don’t get taken by surprise by PayPal’s international fees. Here’s all you need to know.
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Now, back to what you came here to read.
The answer is - it depends.
If you’re making a payment to an Australian PayPal account, and you can fund the transfer using your PayPal balance, or a linked Australian bank account then there is no fee to worry about.
However, if you choose to use a credit, debit or prepaid card to fund the payment, you’ll be charged 2.6% and a small fixed fee. The fixed fee is the same as the one set out in the table below - so 0.30AUD assuming you’re sending money in dollars.
The international transfer and payment fees charged vary pretty wildly depending on how you fund the transfer, and where it’s going. The fees are relatively straightforward - although not cheap - if you plan on funding the transfer from your linked Australian bank account, or with PayPal balance you already have:
Sending money to friends and family overseas - transfer funded from your PayPal balance or linked Australian bank account
|Amount||PayPal Australia Fee|
|Sending $0-$49.99:||$0.99 + exchange rate markup|
|Sending $50-$99.99:||$2.99 + exchange rate markup|
|Sending $100+:||$4.99 + exchange rate markup|
However, if you’re planning on using your card to fund some or all of the international transfer, you’ll face much higher fees - we will look at these different costs individually in a moment:
Sending money to friends and family overseas - transfer funded with a credit, debit or prepaid card
|Amount||PayPal Australia Fee|
|Sending $0-$49.99:||$0.99 + exchange rate markup + 2.6% of the transaction amount + a fixed fee based on currency|
|Sending $50-$99.99:||$2.99 + exchange rate markup + 2.6% of the transaction amount + a fixed fee based on currency|
|Sending $100+:||$4.99 + exchange rate markup + 2.6% of the transaction amount + a fixed fee based on currency|
You’ll notice that one of the costs you need to consider when using PayPal is the exchange rate markup. That’s because PayPal add a percentage to the exchange rate they use when processing any currency conversion, which varies depending on the currency in question.
What PayPal do is to take the mid-market exchange rate - the one you’d get on Google, for example - and then add a margin to it, to increase their profit. This can mean that sending money internationally using PayPal can cost you a lot more than you expect.
Here’s the markup for different currencies:
- +3.5% if sending to US or Canadian dollars
- +4% for all other currencies
It’s not at all uncommon for international payment providers to add a markup like this, to the exchange rate they use for customers sending small amounts of money overseas. However, it means that the conversion rate used by PayPal is significantly poorer than the one you’ll see if you google the currency pairing you want to exchange - and so your recipient might get less than you expect.
If you want to send your payment using the real exchange rate instead, try an alternative service like Transferwise.
Another fee to know about is the fixed fee based on currency. This is applied if you’re sending money to anyone using a card, and is set according to the currency you’re sending. The fees are as follows:
|Australian dollar||0.30 AUD|
|Brazilian real||0.60 BRL|
|Canadian dollar||0.30 CAD|
|Czech koruna||10.00 CZK|
|Danish krone||2.60 DKK|
|Hong Kong dollar||2.35 HKD|
|Hungarian forint||90 HUF|
|Israeli shekel||1.20 ILS|
|Japanese yen||40 JPY|
|Malaysian ringgit||2.00 MYR|
|Mexican peso||4.00 MXN|
|New Zealand dollar||0.45 NZD|
|Norwegian krone||2.80 NOK|
|Philippine peso||15.00 PHP|
|Polish zloty||1.35 PLN|
|Russian ruble||10 RUB|
|Singapore dollar||0.50 SGD|
|Swedish krona||3.25 SEK|
|Swiss franc||0.55 CHF|
|Taiwan new dollar||10.00 TWD|
|Thai baht||11.00 THB|
|U.K. pounds sterling||0.20 GBP|
|U.S. dollar||0.30 USD|
PayPal doesn’t offer a fee calculator so you can easily see all the fees upfront. However, there are some third-party calculators available online which can make it easier to see the different costs of making a payment with PayPal, and how they stack up.
If you don’t want to use PayPal for your international payment, you do have other options. For example, you could make a bank transfer to your recipient. In this case, you can use your online banking system, or telephone banking, or you can visit your local bank branch to arrange the payment. Do check out the costs of different options, because it can be relatively expensive to make international transfers with a traditional bank. An international payment with Westpac will set you back $20, for example, and NAB charge between $10 and $35, depending on whether you make the transfer online or in a branch.
Another option is to use a specialist like Western Union, to send your international payment. In this case you can send your money either from an agent location near you, or online, and have your recipient collect their cash or have it deposited in their bank account directly. There are different costs depending on what amount you’re sending, how you’re funding the payment, and where it will go to. Sending AUD1,000 online, to a recipient in the United Kingdom will cost $4 if you fund the payment by bank transfer, and $10 if you use a card, and there will be an exchange rate markup added to the transfer too. You can model the costs and exchange rates on offer for your particular transfer, on the Western Union website. Because of the exchange rate markup, it’s always best to compare the final amount that will arrive into the recipients account with other services you are considering.
A better alternative for many customers is to use a specialist in international payments, like TransferWise. TransferWise allows customers to send money to bank accounts all over the world, using the real exchange rate, and with just a low upfront fee added. This means it’s easy to see what your transfer is costing you - and there are no hidden fees to worry about. You could save up to 8x compared to using your regular bank. Transfers are quick and safe - and because the entire process is carried out online, convenient too.
You might be able to save even more time and money if you get yourself a new multi-currency borderless account from TransferWise. You can hold your money in over 40 different currencies all in one account, and make and receive payments from all over the world. Because the fees are simple and transparent, and TransferWise always use the real exchange rate, there are no nasty hidden costs to worry about, either.
PayPal is a simple way to send and spend money online - but while domestic transactions are often competitively priced, the fees for international transfers can be a surprise to many customers. Don’t get caught out. If you want to send money to a friend or family member overseas, check out all the alternatives before you decide which service to use.
All sources correct as of 28 November 2018
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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