PayPal Investigated: Are They Good For International Transfers?

PayPal for International Transfers LogoInternational transfers with PayPal is one of the most convenient ways to do them, though it isn’t always the best. Consequently, learn if converting and sending currency abroad via Paypal is really worth it.

What will we cover in this article?

Paypal has over 179 million account holders online, and is one of the world’s most popular ways to buy goods and services. Chances are, you’ve used Paypal at least once to perform a transaction, be it internationally or within your own country. Many people worldwide use Paypal to transfer their money internationally, but we’ve laid out all the information below for you to work out if this option is really worth it.

In this article, we will explore:

  • Pros and Cons of using Paypal to transfer money
  • How Paypal works
  • The fees and exchange rates
  • Understanding the fine print
  • Who should use Paypal, and why?

You can use our comparison table to view the rates and fees of a number of money transfer providers and banks to see how PayPal measures up. To view the table, click here.

Pros and Cons to using Paypal to transfer money

Pros  Cons
If you’re sending money within your country’s borders, then it is great. Easy, simple and convenient, with reasonable fees. Not good if you are funding your account via debit or credit card
If you and the recipient both have a Paypal account Transferring money internationally can incur hefty fees
You can fund your account using direct debit This can incur fees

How does Paypal work?

Paypal is, in general terms, quite a simple system. The website directs you quite clearly to all the relevant steps you need to do to be able to either send or receive money. In this case, the sending money steps are as follows:

In this case, the sending money steps are as follows:

  • Open an account

Like most other online payment platforms, you’ll need to set up your own account before sending money overseas via paypal. You’ll need to add your name, email address and other personal and payment information – and as it’s one of the biggest and most popular payment services out there, it’s highly secure so you don’t have to worry! Paypal will then send an email to your address for you to confirm, and you’re good to go.

  • Get the Paypal address and account of the person you wish to send money to

If you want to transfer money, you’ll need the Paypal account of the person or organization where you’re transferring money. This is normally the email address they have associated with the account. If they don’t have an account, they will need to set one up too. If you send someone money via Paypal, and they don’t have an account, then they will need to set one up to retrieve it. So always best to check before you send!!

Fund your account

Before you can send your money, you’ll need to credit funds to using your account. You can do this from your bank (fee free), which would add to your ‘Paypal balance’, or by using a debit or credit (which Paypal does charge fees for.)

Send the money

You can then arrange sending money overseas via PayPal. You can pay in your local currency and they’ll receive money in their currency after Paypal have exchanged the funds and deducted their fees.

The fees and exchange rates for Sending Money Overseas Via PayPal

So where does Paypal make its money? Well, in two ways: through providing an exchange rate slightly below the interbank rate, and by charging you (and possibly the receiver) fees on a transfer.

Paypal uses a higher exchange rate because they can afford to. This rate is seldom as good as the rate you can get from other currency exchange providers. Paypal say that their rates compare with airport exchange rates, which if you’re interested in the value of currency conversion, you’ll know to avoid when you can!

Paypal fees are set out below in a simple table for to view:

Receiving and sending payments within Canada using your Paypal balance

Sending and receiving payments within Canada using another method to fund your transfer, e.g. debit or credit card

Receiving and sending payments internationally using your Paypal balance

Sending and receiving payments internationally using another method to fund your transfer e.g. debit or credit card

Free 2.9% + $0.30CAD

(either sender or receiver can pay the fee)

Varies by country

Up to 2%

Varies by country

2.9-7.4% + fixed fee + additional fees for currency conversion*

*The ‘additional fees’ can be quite hefty when sending or receiving money internationally. There may also be other additional fees that you will need to consider.
In some instances, Paypal will ask you to verify your debit or credit card and charge you for it.

Understanding the Fine Print

Hopefully the above table and fees are enough information to give you a rough idea of the fees and additional charges that you’ll pay for the convenience of going through Paypal. Especially as Paypal tends to charge percentages, rather than fixed fees. This means as the sender or receiver you can be the victim, the more money you decide to transfer.

Our suggestion would be to assess the three main points that trigger additional fees and decide whether these can be changed to lower the price:

  1. Method of payment used
  2. Destination of where the payment is coming from
  3. Destination of where the payment is going to

In general, you can expect to pay anything between 0.3%-7.4% for your transaction, taking into account the exchange rate, fixed fee and currency conversion fee added onto this. Do your research beforehand, and see if it’s really worth it!

Who should use Paypal, and why?

It can be expensive to go through Paypal when conducting a personal payment abroad. However, we are not here to put you off entirely – Paypal, like any other service, has serious perks.

It’s good for several reasons:

  • If you are sending money within Canada, or the country you are in.
  • Both you and the recipient have a Paypal account (and can, therefore, send money from your existing Paypal balance).
  • You can fund your account via direct debit from your bank account
  • If you need to make a quick payment, and not transferring large amounts, and you know the recipients Paypal email address, then it is a highly convenient and quick way.

Need some help?

If you want to talk to someone about your situation, call us on 1800 004 930.

We also offer free personalised advice via phone, email or even face-to-face if it all seems a bit overwhelming. Get in contact to arrange a chat with one of our local consultants, you’ll be surprised by what’s out there.

So whether you’re an importer paying a supplier in a foreign currency, an expat sending money home, or a holidaymaker looking for the best deal on Travel Money, avoid the hassle of shopping around and get in touch today.

To read more about PayPal in Canada, you can refer to their website.

Case Study

Dave is a regular user of Paypal in Canada. The easy to use app and the convenience of simply having his email connected to his bank account allows Dave to shop or transfer online with ease. As Dave uses Paypal so regularly, his Paypal balance always has funds in it, so when he purchases something or transfers some money, it comes directly from his Paypal balance before his bank account – handy! So when Dave needed to make a payment to his brother in Australia, he transferred his CAD to AUD quickly, easily and securely to his brother’s Paypal account. He avoided large fees because the small transfer came from his Paypal balance rather than a bank account.

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