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PayPal vs. Canadian banks for international money transfers

You might get a better exchange rate from a bank, but PayPal Instant Transfers can't be beat for speed.

Not sure whether to use PayPal or your bank to send an international money transfer? We take a look at fees, exchange rates and transfer speed to see how this payment industry giant compares to typical Canadian banks.

The information on this page is current as of June 2, 2022.

What options do Canadian banks offer for sending money internationally?

For many years, the primary means of sending money abroad from Canadian banks was by wire transfer. To compete with online money transfer companies like PayPal, most Canadian banks started offering separate international money transfer services that are faster, cheaper and more convenient than wire transfers.

Wire transfers are still considered one of the safest ways to send money internationally. But bank international money transfers are usually quicker and less expensive.

When comparing Canadian banks to PayPal, we’ll take into account both bank wire transfers and bank international money transfer services.

Which offers lower fees?

PayPal

It’s free to transfer money from your PayPal account or bank account to someone in Canada. It costs $2.99 to transfer from your PayPal account or bank account to someone living in the US or most European countries. For all other countries, the fee is $4.99.

If you pay by card instead, you’ll be charged an additional 2.9% of the transfer amount plus a small fixed fee (often under $0.50 CAD) based on the receiving currency. This makes it expensive to send large amounts if you need to pay by debit or credit. Instant Transfers cost an extra 1% (up to a maximum of $10.00).

Canadian banks

Sending a bank wire transfer from a Canadian bank will likely set you back between $30 and $50+. You could lose even more to intermediary bank fees. Intermediary banks are financial institutions through which money must pass to reach recipients’ accounts.

Bank international money transfers are much cheaper, often costing less than $10. In fact, CIBC Global Money Transfer offers fee-free transfers to 130+ countries. RBC international money transfers costs $6 to send $1,000 or less and $10 to send more than $1,000.

The downside is that you need to have an account with any bank from which you want to send funds, and these accounts will likely come with a monthly fee.

Trophy iconWinner: Tie
Canadian bank wire transfers can be super expensive, but most banks offer alternative international money transfer services that are comparably-priced to PayPal (assuming you pay from a PayPal account balance or bank account).

Which offers better exchange rates?

The midmarket rate is the “true” exchange rate between 2 currencies, or the real value of one currency when exchanged for another currency. The exchange rate you get from money transfer services like PayPal or a bank is the midmarket rate minus a small fee worth a percentage of the midmarket rate. This fee is sometimes referred to as a markup on the exchange rate.

A lower exchange rate means more of your money is pocketed by the transfer service and your recipient gets less money. A higher exchange rate means the transfer service pockets less of your money and more goes to your recipient.

PayPal

We found that PayPal’s exchange rates are often under the midmarket rate by 4%-5% or more. For perspective, a 2%-3% margin on the exchange rate means you could lose hundreds of dollars when sending $10,000 or more.

Here’s how PayPal’s exchange rate could work if you’re sending CAD to euros (EUR):

  • If the midmarket rate is 1 CAD = 0.73974 EUR
  • PayPal’s exchange rate might be 1 CAD = 0.7090 EUR (4.16% markup)

Canadian banks

We checked the exchanged rates offered by a number of major Canadian banks and found that the margins charged for popular currencies tended to range from less than 1% to over 3%.

Here’s how bank exchange rates could work if you’re sending CAD to euros (EUR):

  • If the mid-market rate is 1 CAD = 0.73974 EUR
  • The bank’s exchange rate might be 1 CAD = 0.72995 EUR (1.32% markup)
Trophy iconWinner: Canadian banks
We found that Canadian banks typically deduct a much lower margin from the exchange rate than PayPal, although the exact rate you get from either service could differ depending on the type of transfer.

Which is faster?

PayPal

Standard transfers are free and take between 1 and 3 business days. Instant Transfers come with an additional 1% fee (up to a maximum of $10.00) but arrive within minutes.

Canadian banks

Bank wire transfers are pretty slow, usually taking between 3-5 business days. Bank international wire transfers are usually quicker, taking 1-3 business days. It’s possible to find next-day transfers, but you’ll have a hard time finding a bank that offers same-day transfers to destinations outside of Canada.

Trophy iconWinner: PayPal
PayPal and bank international money transfer services typically take a similar amount of time to process. But PayPal offers Instant Transfers, which banks don’t usually offer for sending money abroad.

PayPal vs. Canadian banks: Sending $1,000 to the United States

Here’s how fees, exchange rates and transfer speeds break down if you send $1,000 from Canada to the United States via PayPal, bank international money transfer and bank wire transfer. We’ll assume funds are sent to a bank account, payment is made by bank transfer and the fee is deducted from the sending amount (not paid on top of it).

PayPalBank international money transferBank wire transfer
Transfer fee$0$5$50+
Exchange rate1 CAD = 0.7567 USD1 CAD = 0.7572 USD*1 CAD = 0.7572 USD*
Transfer speed1-3 business days1-3 business days3-5 business days
Total received$756.70 USD$753.41 USD$719.34 USD

*Average exchange rate is based on data obtained from several major Canadian banks on June 2, 2022.

In this example, PayPal comes out on top with zero transfer fees and more money in your recipient’s pocket, although its exchange rate is a little weaker than the average Canadian bank rate.

PayPal could be more expensive if you use a different payment method (thereby incurring a fee) and send a much larger amount. This is because most bank fees stay the same regardless of the amount you send, whereas PayPal’s fees increase with the transfer amount.

Send money to the US

PayPalTypical Canadian bank*
AvailabilitySend to 200+ countries in 25 currenciesSend almost anywhere in the world
FeesIf you pay from your PayPal or bank account balance:
  • Free for domestic transfers
  • $2.99 to the US and most European countries
  • $4.99 to all other countries

If you pay by debit or credit, add 2.9% + fixed fee (often under $0.50 CAD)

  • Bank wire transfers usually cost $30-$50+
  • Bank international money transfers usually cost under $10
Exchange rate marginTypically around 4%-5% or moreTypically less than 1% to over 3%
Speed
  • Standard: 1-3 business days
  • Instant: Within minutes
  • Bank wire transfers: 3-5 business days
  • Bank international money transfers: 1-3 business days
Transfer limits
  • Minimum: None
  • Maximum: $60,000 CAD per transfer (requires account verification; other limits may apply)
  • Bank wire transfers: Any amount
  • Bank international money transfers: Limits vary
Payment methods
  • PayPal account balance
  • Bank account
  • Debit
  • Credit
  • Bank wire transfer: Bank account
  • Bank international money transfer: Bank account. Credit cards issued by the same bank may also be accepted.
Receiving methods
  • Deposit to PayPal account (can be withdraw to a bank account or debit card)
Direct deposit to bank account
Read our PayPal reviewLearn more about wire transfers

*This information is meant to be representative of Canadian banks. Check with your bank to find out exactly what fees and features are available to you.

Check out our review of Xoom to learn more about how PayPal has positioned itself to stay competitive in the international money transfer services market.

Compare alternative international money transfer services

Our table below lets you compare services you can use to send money abroad. Compare fees, exchange rates and discounts from different money transfer services, and when you have made your choice, click Go to site.
1 - 12 of 12
Name Product Filter Values Fastest Transfer Speed Fees (Pay by Bank Transfer) Learn More
Dunbridge Financial
24 hours
$0

View details
Dunbridge Financial offers competitive exchange rates and zero fees on transfers to more than 120 countries.
OFX
24 hours
From $15

View details
Exclusive offer: Discounted exchange rates for your first and ongoing transactions. $0 transfer fee.
OFX has no maximum limit transfers, with competitive exchange rates for 45+ currencies.
XE Business Transfers
XE Business Transfers
Within minutes
$0

View details
XE Money Transfer can help your business unlock international transfers. Forward contract and limit order options available.
CurrencyTransfer
24 hours
$0

View details
CurrencyTransfer lets you shop around for the best exchange rate on its online marketplace.
Remitly
Within an hour
$1.99

View details
Special offers like free transfers and better exchange rates available for new customers.
Remitly has quick, affordable transfers around the world, with both express and economy options.
Wise (TransferWise) - Under 10k
24 hours
From 0.35%

View details
Wise uses the mid-market rate and transparent fees to help you send money in 45+ currencies.
XE Money Transfers
Within minutes
$0

View details
XE has fast transfers with low fees and a range of foreign currency tools.
XE Money Transfers
Within minutes
$0

View details
XE has fast transfers with low fees and a range of foreign currency tools.
Simplii Financial
Within minutes
$0

View details
Up to $300 off your first Global Money Transfer with our code GMTEVENT depending on the amount you send. For cash pickups instead, earn $50 using code CASH. Limits and regulations apply.
Send money without fees and at competitive exchange rates to 130+ countries.
Simplii Financial
Within minutes
$0

View details
Up to $300 off your first Global Money Transfer with our code GMTEVENT depending on the amount you send. For cash pickups instead, earn $50 using code CASH. Limits and regulations apply.
Send money without fees and at competitive exchange rates to 130+ countries.
Africhange
Within an hour
$0

View details
Send money in CAD to Africa on this blockchain and P2P powered provider.
Instarem
Within minutes
From $0

View details
Use code NEW 20 to access the $250 discount.
Instarem offers zero transfer fees on all transfers.
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Compare up to 4 providers

Bottom line

Canadian banks typically offer stronger exchange rates than PayPal, but PayPal offers a wider range of payment options. PayPal also offers Instant Transfers, which you likely won’t be able to get from Canadian banks for international transfers.

If you’re looking to save on fees, both PayPal and bank international money transfers offer competitive options, but you should steer clear of bank wire transfers.

Learn more about convenient, cost-effective ways to send money overseas in our guide to international money transfers.

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