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TransferWise vs PayPal
TransferWise is usually cheaper - but it isn't always faster.
TransferWise and PayPal are two convenient options for sending an online money transfer, but which one will net you a better deal on your next transfer?
To find out, we’ll compare TransferWise and PayPal side by side to see who offers the lowest fees, the best exchange rates and the fastest transfer speeds.
The fees and rates used in this comparison are accurate as of 10 June 2019.
Which has lower fees?
TransferWise’s fee is usually a combination of a small percentage of your transaction amount (typically ranging from 0.45% to 1.5%) plus a flat fee.
PayPal’s fee structure is quite complicated. The amount you pay depends on your transfer amount and whether you pay for the transaction with your PayPal balance, bank account or credit/debit card.
There are two separate costs you need to take into account: the fee PayPal will charge for sending the money, (either €1.99 or €3.99) and the one for converting the currency (if there’s any currency exchange involved at all).
If paying for your transfer from your PayPal balance or bank account, PayPal’s international transfer fees can be quite competitive. However, fees quickly add up if paying with your credit/debit card, and the complicated fee structure can be difficult to understand.
TransferWise also offers minimal fees for most transactions, and offers a handy online tool to help you calculate the total cost of your transaction.
Compare fees between the two providers for your specific transaction to find the best value for money.
Let’s crunch the numbers: Sending €50 and €1,000 to Australia
Let’s take a closer look at how TransferWise and PayPal compare when sending two different amounts to Australia. In this example, we’ll assume the PayPal transaction will be funded from your bank account and the TransferWise transaction paid for with a bank transfer.
Sending €50 to Australia
|Exchange rate||1 EUR = 1.62399 AUD||1 EUR = 1.5552 AUD|
|Transfer speed||1-2 days||Instant|
|Amount received (in AUD)||AUD$ 79.98||AUD$ 77.76|
As you can see, not only will you pay €3.99 less to send the money with TransferWise (TransferWise deducts the fee from your €50 transfer amount), but your recipient will also end up with AUD$2 more.
Sending €1000 to Australia
|Exchange rate||1 EUR = 1.63468||1 EUR = 1.5552 AUD|
|Transfer speed||1-2 days||Instant|
|Amount received (in AUD)||AUD$ 1,615||AUD$ 1,555|
TransferWise is a clear winner in this second comparison. Not only does it allow you to pay $3.99 less for the transfer than PayPal, but your beneficiary receives an extra AUD$60.
Which offers better exchange rates?
TransferWise offers international money transfers using the mid-market exchange rate. This is the rate which you see listed on Google and sites like XE, and it represents the real market value of one currency relative to another. For example, if the mid-market rate is 1 EUR = 1.14 USD, that’s the rate you’ll get for your transfer.
PayPal adds a margin on top of the mid-market rate. While this margin is typically smaller than that offered by the banks, it’s generally around the 3-4% range.
Using the same example as we did for TransferWise:
- If the mid-market rate is 1 EUR = 1.14 USD
- PayPal’s rate might be 1 EUR = 1.1029 USD
TransferWise’s exchange rates are much better than those offered by PayPal, which means more of the money you send arrives in your recipient’s bank account.
Which is faster
Transfer times vary depending on the currency you send and the payment method you select.
While most transactions take between 1 and 2 business days, it’s possible to send funds to some destinations within minutes.
Your recipient should be able to access the funds you send to their PayPal account almost immediately. However, please note that if the recipient doesn’t want to leave this balance in their PayPal account, withdrawing to their bank account will take one or more business days.
PayPal transfers are generally faster – but only if your recipient is happy to spend the money you send directly from their PayPal account. If they want it sitting in their bank account, you may find that TransferWise will get the money there quicker.
|Payment methods||Receiving options||Minimum and maximum transfers||Transfer speeds||Currencies|
|TransferWise||Bank transfer||1 – 2 days||20+ countries|
|PayPal||PayPal account transfer||1 day||190+ countries|
While TransferWise offers a handy fee and exchange rate calculator on its website, you’ll need to sign up for a TransferWise account before you can make a transfer. You can then initiate a transfer by specifying the amount and currency you want to send and providing your recipient’s bank account details.
You’ll receive email updates throughout the transfer process and can track your transaction online or using the TransferWise app.
Before you can send money overseas with PayPal, both you and your recipient will need to have your own PayPal accounts. You can then link your bank account or credit/debit card to your PayPal account to fund your transaction.
To send a transfer, enter the email address or phone number of your recipient. You will then have to enter the details of your transaction, specify the reason why you are sending funds, and then take a moment to review the full cost of your transaction before submitting your transfer.
TransferWise generally offers much better value for money than PayPal on international transfers. While fee amounts often work out fairly similar between the two companies when paying from your bank account, TransferWise’s commitment to offering the mid-market rate means that more of the money you send will end up in your recipient’s pocket.
While PayPal can be useful when sending a small amount or when you need to make a quick transfer, TransferWise usually comes out on top.
Looking for more options?
Use our calculator below to compare the fees, exchange rates and transfer speeds of a range of international money transfer services. Simply enter your transaction details in the calculator to find out what fees and exchange rates are on offer.
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