PayPal vs Canadian banks for international transfers

We compare the digital payments giant against your typical bank transfer to see which offers the better deal.

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PayPal and bank transfers are both popular ways to get your money where it needs to go, but by comparing fees, rates and speeds, you might be able to figure out which offers the better deal.

The fees and rates used in this comparison are accurate as of 30 October 2018.

At a glance: General features

Payment methods Minimum and maximum transfers Delivery methods Transfer speeds Countries
PayPal Bank transfer, credit or debit card, PayPal Credit Minimum: $15

Maximum: $60,000

PayPal transfer, bank transfer 3 - 5 days 190+ countries
Bank Transfers Online, in person, app (when available) Varies by bank Bank transfer Typically within 2 business days 190+ countries

Which has lower fees?

PayPal

PayPal lets you pay out of your PayPal account balance, directly from a linked bank account, by credit or by debit. But regardless of how you pay, PayPal charges a flat fee of $2.99 to send funds from Canada to the US, and a flat fee of $4.99 to send funds to other parts of the world.

However, if you pay by credit or debit, you’ll also pay a 2.9% + fixed fee based on the currency being transferred. Additionally, you’ll be charged a nominal fee (usually around $0.50 CAD), which is also based on the currency being transferred.

Bank transfers

While most of our banks offer free bank-to-bank domestic transfers, they’re often the most expensive option when sending money internationally.

Banks charge higher fees – usually between $20 to $80, depending on the details of your transfer. Additionally, transfers are sent through a network of financial institutions and intermediary banks in order to arrive into the recipient’s account, and these banks may deduct a small portion of the transferred funds as a fee. The recipient’s bank may also deduct a fee to receive the funds, which further lessens the amount being transmitted.

Altogether, you might typically be charged anywhere from $30 – $100 to send a wire transfer, but the amount the recipient gets can vary due to the money passing through many hands before arriving at its final destination.

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Winner: PayPal

For most types of transfers, banks and PayPal base their fees in part on the amount being sent – as the amount increases, so do the fees. However, PayPal waives many of its fees if you pay out of your PayPal account balance or from a linked bank account. Even without this waiver, PayPal may be more cost effective for small and medium-sized transfers, because its base rates are smaller than the bank.

In the end, the service provider with the lowest fees may depend on the details of your transfer, but we think PayPal comes out the winner here. Remember to compare PayPal’s fees against other money transfer specialists to find the best deal possible.

Let’s crunch the numbers: Sending $1,000 to Germany

Let’s bring this into context a little. In our scenario, we’re going to send $1,000 to Germany using both PayPal and a local bank to see which is better. Keep in mind, rates vary for other countries.

PayPal Major Canadan bank
Exchange rate 1 CAD = 0.60 EUR 1 CAD = 0.58 EUR
Transfer fee $4.99 $18
Transfer speed 1 business day 3 to 5 business days
Transfer options Bank transfer Bank transfer
Total euros received EUR€596 EUR€570
Receiver gets EUR€26 more EUR€26 less

The result? A transfer through PayPal results in your recipient receiving EUR€26 more. We can also see that PayPal offers a fairer exchange rate and fee for this particular transfer.

Which offers better exchange rates?

PayPal

To calculate the exchange rate it offers to customers, PayPal takes the current mid-market rate and adds a margin. PayPal updates this rate twice a day. The margin depends on what currency you’re sending to, but in general:

  • To USD: 3.5%
  • To other currencies: 4%

What does this mean for you? If you want to make a transfer in euros (EUR):

  • If the mid-market rate is 1 CAD = 0.67 EUR
  • PayPal’s exchange rate might be 1 CAD = 0.65 EUR

Bank transfers

Nearly all banks skew the mid-market exchange rate for a profit, but you’ll typically pay higher margins than you would with PayPal.

Using the example of a transfer to euros (EUR):

  • If the mid-market rate is 1 CAD = 0.67 EUR
  • Your bank’s exchange rate might be 1 CAD = 0.63 EUR

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Winner: PayPal

Again, PayPal’s exchange rates are typically more competitive than those offered by your local bank. Check out the exchange rates offered by other money transfer providers and compare them with PayPal’s in the table below.

Which is faster?

PayPal

Money transfers with PayPal are speedy. If you’re transferring between PayPal accounts, funds are available immediately. If you withdraw money from your PayPal account into a bank account, you can expect the funds to get there within the next business day.

Bank transfers

Most banks offer international money transfers that will arrive within two business days, but your transfer speed depends on your specific bank and type of account.

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Winner: PayPal

Even though both PayPal and a bank transfer can get your money where it needs to go pretty quickly, PayPal edges out the competition with instant transfer options between PayPal accounts. See how PayPal’s transfer speed stacks up against other money transfer companies.

How do they work?

PayPal

To transfer money through PayPal, you’ll need to create a free PayPal account. You can then send a transfer to your recipient’s PayPal account, funding it with your PayPal balance, bank account, credit card, debit card or PayPal Credit. After your recipient receives the money, they can either keep the funds in their PayPal account or withdraw the money to their bank account.

Bank transfers

A bank transfer lets you move your money from one bank account to another through existing banking networks. While in the past you had to visit a bank branch to initiate a money transfer, these days most banks allow you to initiate transfers online and by phone as well. However, delivery options are typically limited to bank account deposits, usually within a few days. You might also hear it referred to as a telegraphic transfer (TT) or a SWIFT transfer.

Learn more about using PayPal to send money abroad

Bottom line

Although much of the comparison between PayPal and a bank transfer varies depending on your bank account, PayPal tends to come out on top for faster service and better fee options.

Ultimately, you’ll want to compare your options to find the service that best fits your individual needs.

Looking for more options?

Check out some other international money transfer options in the table below.

Rates last updated November 13th, 2019
Name Product Min. Transfer Amount Transfer Speed Services Description Online Transfer Fee Rate Amount Received
OFX International Money Transfers
USD 150
1 day
Online, Phone, Agent
Exclusive offer: Discounted exchange rates for your first and ongoing transactions. $0 transfer fee.
A higher exchange rate applies to non-finder customers. Send money in 45 currencies.
WorldRemit International Money Transfers
CAD 0
Within an hour
Online, Bank Account to Bank Account, Cash Transfer
Use code FINDERCA and pay zero fees on your first transfer. Conditions apply.
An online money transfer service with cash pick-up, bank account to bank account and airtime transfers available.
TransferWise International Money Transfers
CAD 1
1 - 2 days
Online
Make online transfers with transparent exchange rates, low fees and low minimum amounts.
InstaReM International Money Transfers
CAD 50
1 - 2 days
Online, Bank Account to Bank Account
Quick and simple international money transfers with zero-margin exchange rates. Earn loyalty points on sign up, referral and every transaction.
XE International Money Transfers
CAD 0
1 day
Online, Phone, Bank Account to Bank Account
Send money in more than 60 currencies. Fee-free international money transfers with a global brand.
CurrencyTransfer International Money Transfers
GBP 5,000
1 - 2 days
Online, Phone, Bank Account to Bank Account, International Money Order
Aimed at larger transfers, CurrencyTransfer is an online marketplace that lets you shop around for the best exchange rate.
TorFX International Money Transfers
CAD 2,000
1 day
Online, Phone, Agent
TorFX guarantee to beat any competitor's exchange rate for a transaction. Conditions apply.

Send money overseas in 45 currencies.
The ‘Rate’ and ‘Amount Received’ displayed are indicative rates that have been supplied by each brand or gathered by Finder.

Exchange rates are volatile and change often. As a result, the exchange rate listed on Finder may vary to the actual exchange rate quoted for the brand. Please confirm the actual exchange rate and mention “Finder” before you commit to a brand.

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