Western Union is nearly synonymous with international money transfers. And then there’s electronic payment giant, which also allows you to send money overseas. Which is cheaper and faster for sending funds to friends, family and businesses outside the UK?
MoneyGram and PayPal both offer easy online processes to exchange and send money around the world.
With MoneyGram, you go to its site, enter how much you’re transferring and confirm how you’re sending it and how it should be received. (You also have the option of visiting or calling an agent.) Once you’ve approved the exchange rate and fees you’ll pay, MoneyGram converts and delivers your money to your recipient’s bank account or for cash pickups at locations worldwide.
To transfer money through PayPal, you’ll need to create a free PayPal account. You then send a transfer to your recipient’s PayPal account, funding the transfer with your PayPal balance, bank account, credit or 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.
Figuring out much you’ll pay to transfer money internationally with Western Union can be muddied. Although most fees start at £1.90, they can be a lot higher when paying by credit or debit card for cash pickup in certain countries. When sending money to high-traffic countries such as Mexico or India, however, some agents offer fee-free transfer options.
If you pay for a transfer with your PayPal balance or a linked bank account, you’ll pay a fee of 0.5% to 2% of the transfer amount, depending on where you’re sending it. If you pay with a credit card, debit card or PayPal Credit, that percentage jumps to 2.9% to 3.9% of your total transfer.
Winner: It depends
If you’re sending smaller amounts, you could pay minimal fees with PayPal — again, depending on where you’re sending it. For larger amounts, Western Union may be a more ideal provider.
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.
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. But because 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.
For your typical overseas transfer, you’ll get a stronger exchange rate with PayPal.
Case study: Sending £1,000 to Germany
Kendra wants to send £1,000 to her friend in Munich ahead of Oktoberfest. With so many locations worldwide, she thought she’d give Western Union a try. Then her friend suggested she look into PayPal.
Here’s what it’d look like to send a £1,000 bank-to-bank transfer with Western Union and PayPal.
1 GBP = 1.097 EUR
1 GBP = 1.057 EUR
2 business days
Kendra won’t pay any fees to transfer her money with Western Union, and with the stronger exchange rate it offers, it will allow her to send about 40 more euros to her friend. That’s a few more steins of bier to enjoy.
Delivery speeds varies with transfer options. At an agent location or by phone, your transfer could be delivered in minutes (at higher costs). Your cheapest options could take five days or longer, depending on the country.
With PayPal, transferring among existing PayPal accounts is instantaneous. Payments from your PayPal account to another bank account are delivered by the next business day.
Whichever way you send your money, it’ll get to your recipient more quickly with PayPal. For deposits to an account, up to four days sooner. Is Western Union safe?
That you’ll get stronger exchange rates with PayPal is clear-cut. But depending on how much you’re sending, you could pay higher transfer fees with PayPal. Then if your recipient doesn’t have a bank account, Western Union’s cash pickup may be your best option.
Charlie Barton is a publisher at Finder. He specialises in banking and investments products, including banking apps, current accounts, share-dealing platforms and stocks and shares ISAs. Charlie has a first-class degree from the London School of Economics, and in his spare time enjoys long walks on the beach.
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