PayPal vs TransferWise Comparison

Introduction

Making a money transfer to a family member or friend back home isn’t complicated anymore. Today, there are thousands of platforms that have made it absolutely hassle-free, such as PayPal, Payoneer and even TransferWise. These platforms have simplified the whole exchange process ensuring that just a few clicks from the comfort of your home lets your money travel and reach safely to places outside your home country.

But just like we’re charged slightly extra for an international call, that foreign transfer would also cost you an amount. The amount you pay varies for such a service and it’s all about finding the provider that works best for you. Quite similar to how we buy sims from the network with the best schemes for international calls.

In this article, we would go into great detail to help you understand the best benefits and features of PayPal and TransferWise. Both considered great options and preferred over bank transfers. But we have done a bit more digging for you, so you have a better understanding of which platform would work best for your requirement.

What is PayPal?

Even if you’re new to the world of online transactions, you must’ve definitely heard about PayPal. Arguably the biggest player in the market for cross border money transfers. PayPal is a widely accepted method used for international and domestic payments. Presently, the online payments system has around 346 million users worldwide.

Most websites, and physical stores too, have the option to pay via PayPal during checkout. It’s to an extent an upgraded version of cashless transactions. This service works best in scenarios where you either have a business for which you often make international purchases, or simply if your source of income is from another country.

What is TransferWise?

Transferwise is a great website to make international transfers without your money actually crossing the border. Doesn’t it sound like magic? Truth is, TransferWise’s account in your recipient's country sends the money straight to them. This automatically allows them to charge a very small fee. Also, the recipient doesn’t need to have an account with Transferwise to receive the amount. It’s easy, cheap and transparent because the company provides you with an upfront calculator on their website to show you the exchange fee you’ll be paying. No wonder there are over 8 million people who use TransferWise.

Transaction Fees

1. How much currency are you transferring?
2. The fixed commission the platform charges for sending money across borders.
3. Any other commission applied for transferring money only for specific countries.
4. What’s the exchange rate taken? Average of Bank or current market exchange rate?

For instance, your international relative may ask you to send $1000. If you expect them to receive this exact amount, you’ll need to figure out how much will be lost on fees.

Here’s an example to reiterate the above points - if you send exactly $1000, your relative would probably receive $955.70. To get an exact indication and breakdown of $44.3, both Transferwise and PayPal have currency convertors on their websites.

Base Rate:

The base rate that PayPal charges is a maximum of 2.5% + a fixed fee.
The base rate that Transferwise charges is around 0.4% + a fixed Fee.

Arriving at this conclusion is tough on both websites because it all depends on the sum you’re going to be sending. There’s no chart defining these deductions since there are numerous floating variables which dictate what the final price is going to be.

On TransferWise when you click on ‘see calculation’, you see the fees they’ve charged you. Also, TransferWise uses the real market exchange rate and even has a exchange rate tracker on their website. While for PayPal, gives you access to such a calculator on your account but the fees are not exactly highlighted. Using a third party platform to calculate the exact fees PayPal is charging you is possibly a great way to know how you would receive, or how much you should send out.

See also: PayPal Alternatives

Additional Features

PayPal

PayPal helps you securely store and link all your credit, debit card and bank information all in one place. It definitely saves you the trouble of filling up your credit card details, cvv and so on, just to make that one online purchase. The great part about PayPal is that you can make domestic payments on PayPal which is not an option on TransferWise. They even have a shopping tab where you get offers, coupons and gift cards, thus making online shopping easier. In most cases when you purchase a service via PayPal, the seller is requested to bear the cost of the fee. PayPal also has an anti-fraud system and is used globally by a huge number of ecommerce websites.

TransferWise

TransferWise on the other hand has a new feature on their website known as the ‘multi-currency account’. In other terms, it’s nothing but a borderless account. This is ideally most useful for freelancers, expats and of course travellers. A great advantage here is that there’s no fee charged for anyone to receive money. This is a new venture that is working very well for TransferWise and would work for you too.

How to keep track of your transactions on PayPal & TransferWise?

The activity column on your PayPal app helps you keep track of the funds you’ve received and sent out. You can even filter certain transactions and download it by clicking on statements. TransferWise provides users with a money tracker where you can view all your transfer details.

Setting up process

You can set up your TransferWise account simply by using your facebook or google account. The sign up is pretty basic. You just have to set a password and share your email address.

For PayPal it’s a slightly longer process of filling up two online forms where you fill your name, password, give out your email address and only when your identity is verified, you move on to fill up all your card details and bank details so it’s all linked to PayPal.

PayPal also allows you to create a business account where the layout is customized. Just a better interface to keep track of the funds for your business. You can securely make your transactions with the email address you provide here.

Conclusion

PayPal works as a gateway to sending/receiving money internationally and within your country. It’s also much more profitable for a business simply because there’s so many customers using PayPal today. TransferWise is the safer bet for an international transaction because it’s way cheaper. Another advantage is that they use the real market exchange rate. Thus, you can always justify the amount you’re sending out to someone. Perhaps, this works best especially when you’re settling some bills or travel accounts. TransferWise is growing rapidly and online reviews show that their idea of borderless accounts has been a great success.

Both PayPal and TransferWise have different features alongside their own distinct strengths and weaknesses. At the end of the day, it’s about choosing the one which suits your requirement the best!

See also: PayPal vs Payoneer