You know that banks charge hefty fees for international money transfers. If you’re looking for alternatives, there’s PayPal and bitcoin platforms.
Both payment options have a claim to fame: PayPal is a behemoth in the online payments market, and Bitcoin is often billed as the currency of the future. Naturally, they’ve attracted a lot of attention as options for international money transfers.
Let’s compare them head-to-head — how they work, what they cost and how quick they are from send to receipt. We’ll also go over a few case studies to decide a winner.
 |
 |
|
|---|---|---|
| Bitcoin | PayPal | |
| Fees | Varies by provider | Varies by country |
| Exchange rates | Exchange rates will vary depending on which service you use | Wholesale rate Paypal gets from the banks and a 2.5% margin, plus currency conversion fees |
| Speed | As soon as next business day | As soon as next business day |
| Max Transfer Amount | No limit | $10,000 per transaction |
| Read Review | Read Review |
Bitcoin vs. PayPal: How they work
Let’s go over the bare-bones processes of transferring money through bitcoin platforms and PayPal.
Bitcoin
Very simply, transferring money through bitcoin involves:
- Using your local currency to purchase bitcoin.
- Selling your bitcoin for the international currency you want.
Your recipient receives your bitcoin transfer in a bitcoin wallet. They need to sell the bitcoin for their local currency. Finally, they need to withdraw the currency to their bank account.
PayPal
Here’s how to transfer money through PayPal:
- Fund your transfer with your PayPal balance, bank account, credit or debit card, or PayPal Credit.
- Send money to your recipient’s PayPal account.
After your recipient receives the money, they can either keep the funds in their PayPal account or withdraw the money to their bank account.
Who offers better exchange rates?
To understand who offers better exchange rates, you’ll need to first look at the mid-market rate. This is the true exchange rate that averages the buying and selling rate of a global currency — and the rate banks and transfer services use when they trade among themselves.
Say you’re sending £1,000 to the US:
- If the mid-market rate is £1 = $1.35
- A bank may instead offer a rate of £1 = $1.33
By exchanging your money at a lower rate, the bank makes money on the difference — to the tune of 20 more pounds.
Bitcoin
Because bitcoin isn’t distributed by one provider, exchange rates will vary depending on which service you use. You might find exchange rates of a fraction of percent to a few percentage points above the mid-market rate. The best way to find a good exchange rate is to compare multiple bitcoin platforms against the mid-market rate.
PayPal
To calculate the exchange rate it offers to customers, PayPal takes the wholesale rate it gets from its bank and adds a 2.5% margin. PayPal updates this rate twice a day.
Since you can’t know what PayPal’s wholesale rate is, it’s difficult to determine on your own what exchange rate you’ll get.
The best way to find accurate exchange rates is by using PayPal’s currency exchange calculator, which you can find after you log in to your account.
Winner: It depends
It’s hard to pick a winner here because you’ll find a variety of bitcoin providers. You’ll find providers with worse exchange rates than PayPal, as well as providers with better rates.
Who has lower fees?
Bitcoin
To get a feel for the fees you might pay when transferring bitcoin, take a look at what you’ll pay at Coinbase, one of the world’s largest bitcoin platforms.
| Depositing money | |
|---|---|
| ACH transfer | Free |
| Wire transfer | $10 ($25 outgoing) |
| Buying bitcoin | |
|---|---|
| US bank account | 1.49% ($0.15 minimum) |
| Coinbase USD wallet | 1.49% |
| Credit or debit card | 3.99% |
| Payout after selling bitcoin | |
|---|---|
| US bank account | 1.49% ($0.15 minimum) |
| Coinbase USD wallet | 1.49% |
| Credit or debit card | 3.99% |
In other countries, there may be a small fee to withdraw money from Coinbase to a bank account. However, this fee is usually small — 0.15 euros, for example.
PayPal
These are the fees for sending money to another PayPal account.
| Pay entirely with your PayPal balance or linked bank account | Pay with credit or debit card or PayPal Credit | |
|---|---|---|
| In the UK | No fee | 3.4% + fixed fee of £0.20 |
| Other countries | 0.4% to 2% | 3.4% + fixed fee of £0.20 |
Winner: PayPal
For initial transfer fees, you’ll pay about the same amount for both PayPal and bitcoin (assuming we use Coinbase as an example).
But PayPal has a slight edge. When you sell your bitcoin for fiat currency (or government-issued currency, like dollars and euros), you’ll pay another fee. Meanwhile, with PayPal you only pay a fee when you initiate the transfer.
See how Bitcoin and PayPal compare to other money transfer companies
Which is faster?
Bitcoin (Coinbase)
Payment method and buying bitcoin
Bank account transfer
- 3–5 days
Credit or debit card or GBP wallet
- Instant
PayPal
Transferring money to another PayPal account
Transferring between PayPal accounts
- Instant
Withdrawing money from PayPal
Withdrawing from PayPal to bank account
- Next business day
What is a SEPA transfer?
Short for Single Euro Payments Area, SEPA is an initiative of the European banking industry that makes e-payments across credit or debit cards, bank transfers and direct deposits as easy as domestic payments within one country.
Winner: Tie
Transferring through PayPal or bitcoin takes about the same time. You can fund your transfer through your bank account (which is a little slower) or through instant methods like credit card payment.
Who offers more options?
| Payment methods | Minimum and maximum transfers | Delivery methods | Transfer speeds | Countries and currencies | |
|---|---|---|---|---|---|
| Bitcoin (Coinbase) | Bank transfer, credit or debit card | No minimum; no maximum | Bank transfer, wire transfer | As soon as next business day | 33 countries (other platforms may offer more countries) |
| PayPal | Bank transfer, credit or debit card, PayPal Credit | Varies by country (about £0.02); £10,000 per transaction | PayPal transfer, bank transfer | As soon as next business day | 202 countries |
Winner: Varies
Here are the total costs for the various methods from least expensive:
- PayPal — linked bank account: £29.96
- Bitcoin — bank transfer: $35.16
- PayPal — credit card: $44.53
- Bitcoin — credit card: $54.34
To save money, fund the transfer with your bank account — paying with a credit card can get expensive.
Further, look at the exchange rate you’ll get compared to the mid-market rate. PayPal came out on top in our case studies, but bitcoin could be a better option if you can find a more competitive rate.
Bottom line
The main reason you’ll probably lose less money through PayPal is because your funds are only converted once. For example, dollars are immediately converted to euros.
With bitcoins, your funds are converted twice. In other words, you have to convert dollars to bitcoins and then convert bitcoins to euros. If you want to use bitcoins, take a good look at the exchange rate you’re getting — it could make a bitcoin transfer cheaper than using PayPal.