Since launching close on 20 years ago, PayPal has played a big role in transforming ecommerce. Today, you can use your PayPal account to shop online, receive payments if you’re a freelancer or entrepreneur, and send cash to family and friends.
If you’re considering sending money abroad using your PayPal account, there are a few things you need to know about how to set up your international money transfer.
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Banks and money transfer providers often give you a bad exchange rate to make extra profits.
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Yes, PayPal is a useful tool for sending money internationally. And if you’re going to send money abroad with PayPal, then it pays to know a little about the fees and charges you’ll encounter along the way.
All the fees and charges discussed here relate to a PayPal USA account - if you’re based elsewhere in the world the costs might be slightly different. Check out the fees section of PayPal’s local website wherever you are, for more details.
When you arrange an international transfer with PayPal, from a PayPal account based in the USA, you need to understand both the fee structure, and the currency conversion rate applied.
The international transfer fees you’ll be charged depend on where you’re sending money to - and how you fund the transfer. It’s free to send money within the US and Canada to friends and family, but if you want to send cash to another country using either your PayPal balance, or a linked bank account, it’ll cost you between 5.00% of the transaction amount.¹
If you choose to fund your transfer using a credit card, debit card, or PayPal credit, then you’ll pay even more. The fees in this case range from 3.4%-3.9% of the total transaction amount, plus a small fixed fee which depends on the currency involved.¹
Find out all you need to know about PayPal’s international transfer fees for the US - and how best to avoid them.
PayPal charges international transfer fees, but that’s not all you need to know about. If you’re sending money internationally, you’ll also find that you pay a currency conversion spread of 3.00%², which is added onto the wholesale exchange rate.
What that means, is that PayPal takes the exchange rate they get from a third party, and adds their conversion spread. You can see this if you compare the PayPal exchange rate with the mid-market rate, sometimes called wholesale, spot, or interbank rate.
It’s the same rate you can find if you google USD (US dollars) along with the other currency involved in your international transfer. Exchange rates change all the time, but you can see the exchange rate that PayPal is offering you for your transfer, by logging into your PayPal account.
The mid-market rate is the only real exchange rate - it’s what you’ll find on Google, and the one that banks use to trade money on global financial markets. The difference between the mid-market rate and the one that PayPal offers, is another part of the profit they’re making on that transaction.
Between this and the international transaction charges described above, you can find that the costs of making an international money transfer with PayPal mount up pretty quickly.
If you decide against sending money abroad with PayPal, you have a couple of other options.
- Try a different money transfer service: which might be cheaper that PayPal
- Turn to your regular bank: which could be slower, but at least it’s familiar
If you frequently make cross-border payments, you may consider signing up for the TransferWise borderless multi-currency account. You can also get the TransferWise multi-currency debit card, which you can use to pay for goods and services all over the world.
If you’d rather process your international money transfer - also known as a wire transfer - in person, then you can always call into your local bank. However, the costs of making an international transfer with your bank are a shock for many people.
The fees related to making a wire transfer online, or on the phone via your normal bank, are usually a little lower. That’s if your bank even offers the service online. Check out the terms and conditions for your particular account before you commit.
Unfortunately, if you choose to send your money via a traditional bank, they often won’t be able to tell you exactly what your transfer will cost you if your transfer is processed using the SWIFT network.
The SWIFT network is how international transfers are passed from one bank to another, using a system of international protocols to make sure the money stays safe, and finds its way to the correct account in the end.
Banks all over the globe work together to complete the transaction - so there could be several intermediaries working on a single international transfer. Each of these banks take a fee of their own. These fees add up, and can mean that the recipient gets less money than you might expect, as it has been eroded by charges.
Alternatives like PayPal are convenient and simple to use - but while PayPal is great for local transfers and shopping online, the fees for international transactions are fairly high.
If you do decide to make an international money transfer with PayPal, you’ll have a few options³.
Depending on where you’re sending money to, you’ll be able to choose from some of the following payment routes:
- Send money to another individual’s PayPal wallet
- Set up a home delivery of cash
- Make a direct bank deposit
- Have your recipient pick up the money you send from a participating location
Some of these services are delivered through Xoom³, which is a PayPal subsidiary specialising in certain types of payments and transfers. If you send cash to your recipient’s PayPal wallet then they’ll need to have a PayPal account themselves to be able to access it. However, for the other options you can transfer cash via PayPal, even if the recipient doesn’t have a PayPal account themselves.
Not all transfer options are available in all countries and currencies.
To find out what delivery options are available for the country you’re sending money to, you’ll have to visit the PayPal webpage. Here you can input the country you want to transfer cash to, and pull up a list of the options available - and the fees.
Once you have chosen the delivery option that suits you, simply click ‘send money now’³, to log into your account and process the transfer. The details you will need to input depend on the route you choose, but you’ll be guided through the process by on-screen prompts.
- PayPal: International Business Payments True Cost
- PayPal: Business Accounts
- PayPal: Invoicing Guide
- PayPal: Paying International Invoices Guide
- PayPal: Exchange Rates and Currency Conversion
- PayPal: International Fees (US)
- PayPal: International Fees (UK)
All sources checked as of 11 December, 2020
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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