TransferWise vs. PayPal 2021

transferwise vs paypal

It’s a battle for the ages: PayPal vs. TransferWise.

In one corner is the challenger: TransferWise, a money transfer service that allows people to send and receive money abroad at a rate they boast is eight times cheaper than the banks in exchange for a small, non hidden fee, all while offering over 50 currencies.

In the other corner is the returning champion: PayPal, which stands as the original option for transferring money between people. Its biggest advantage is its plugin, allowing online retail customers to pay directly from their PayPal account.

In this Wealth Rocket article, we’ll compare TransferWise and PayPal, weighting both money sending services against each other to which aims to serve us better.

Table of Contents

TransferWise vs. PayPal: Overview

In this section, we’ll look at both TransferWise and PayPal, focusing specifically on how they work as digital money transfer services.

TransferWise: How it Works

After signing up for a free TransferWise account, you’ll need to add the contact(s) that you’d like to receive money.

While recipients do not need a TransferWise account to receive money, you will need the recipient’s bank account information.

Once you pay the fee up-front, either using a debit or credit card or by transferring the money to TransferWise’s local bank account in your country, TransferWise’s technology gets to work.

TransferWise offers low transfer fees with the real market exchange rate and no mark-up. They also avoid transferring money between different countries.

Instead, you send money to TransferWise’s local bank account in your own country.

They then send the money in the currency account you choose by sending money to your recipient from another local bank account, avoiding international bank fees.

For example, if you send money to a friend in the UK, you’d send your country’s equivalent currency exchange from your bank account to a TransferWise bank account in the UK. TransferWise would then send the British pounds from their other local bank account in the UK to your friend’s bank account.

You can track your transfer status in your TransferWise account, and if you’ve provided your recipient’s e-mail address, TransferWise will notify them when they can expect the money.

PayPal: How it Works

PayPal works slightly differently. Once you sign-up for a free account, sending money is easy. All you’ll need is the recipient’s e-mail address. However, the recipient will require a PayPal account to access the money.

The source of the funds will be from your PayPal balance, your credit card, or money withdrawn directly from your bank account.

You can send money to individuals, businesses, and mass payments to up to 5,000 people with no fees. You can also create invoices and request money from other parties.

PayPal customers can send or request money in up to 24 different currencies.

However, every time you receive money in that currency, it will be shown as a separate balance in the original currency.

You will need to set your primary currency for payments the same way you’d like to set your preferred payment method.

TransferWise vs. PayPal: Fees and Commissions

Nothing in life comes free! Let’s look at how TransferWise and PayPal stack up against each other regarding how much money they charge for sending money.

TransferWise: Fees and Commissions

Fees for sending and receiving money through TransferWise are more transparent. That means no digging around the website to figure out what they’re charging. You don’t even have to log in to your TransferWise account to see them.

All you need to do is enter the details on their homepage and use the TransferWise calculator to see your specific transaction fees before you even make the transfer.

Fees vary depending on where you live, where your recipient lives, and the transfer method, as well as whether you’ll pay direct debit, debit card, credit card, domestic wire transfer, or bill payment.

TransferWise also takes a fee, and they use the real exchange rate (the one you see on Google) with no markup. It’s also guaranteed for 48 hours.

PayPal: Fees and Commissions

PayPal fees are numerous and circumstance-dependent. There is no fee for sending money domestically from either your bank account or your PayPal balance. However, there is a fee of 2.90% when using a credit card, plus a fixed fee, depending on the currency.

If you receive money internationally, the cost is free with all sender fees unless they don’t convert the currency. Then you pay the conversion fee and the markup on the exchange.

As for withdrawals, there is no fee to withdraw money from your PayPal balance and transfer it into your bank account unless you request an instant transfer.

The fee, in that case, is 1% of the transfer amount. In the case of a business account, fees work out differently and deserve a separate article.

 

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TransferWise vs. PayPal: Speed

Since TransferWise and PayPal both require ease of access to function, speed is a top priority for both companies in our digital age.

Let’s look at how TransferWise and PayPal compare when it comes to speed for transfers and deposits.

TransferWise: Speed

TransferWise is faster than PayPal. Its transaction speed being instant 20% of the time and up to a maximum of two days every other time. In practice, the speed a PayPal transaction completes is usually up to two days as well.

PayPal: Speed

The speed of transaction is more guaranteed with PayPal. When you receive money, which instantly appears as part of your PayPal balance when it’s sent to you, you get two choices for transferring it to your bank.

“Standard,” which is one to five business days, or “Instant,” which immediately appears in your account. You also get an e-mail notification when the transfer begins. Transfers within the same country are possible with PayPal, but not with TransferWise.

TransferWise vs. PayPal: Security

Security is important when it comes to digital money. Both PayPal and TransferWise have very high-security standards. Both accounts are password-protected, and while TransferWise may require identity verification, PayPal requires bank account verification.

TransferWise requires two-factor authentication when logging into your account, while PayPal’s website is encrypted and offers white hat hackers financial rewards for finding security vulnerabilities.

TransferWise vs. PayPal: Mobile and Digital Accessibility

As long as you have a computer or a phone, you can access PayPal or TransferWise.

Both money transfer services are available through the web, through a mobile browser on your phone, or their individual mobile apps, both available for IOS and Android.

Your ability to send, receive or transfer money is available using either platform.

Our Final Thoughts

If your priority is transparency, currency options, and a real exchange rate with no mark-up, TransferWise scores the knockout.

But if you want to send money domestically for free or want the ability to pay online conveniently, PayPal wins by decision.

Frequently Asked Questions

TransferWise is better if you’re sending money internationally due to their transparent fee structure, their more competitive exchange rate, and the fact that they support over 50 different currencies.

PayPal may be available in over 200 countries but only supports 25 currencies. As far as the speed of transferring your balance from each platform into your bank account, TransferWise promotes as faster, but PayPal transactions are instant if you’re willing to pay the fee.

The answer to this question depends on the circumstances.

TransferWise does not offer transactions within the same country, but PayPal does as long as the recipient has a PayPal account.

PayPal only supports 25 currencies, while TransferWise supports over 50, so there’s a better chance that TransferWise supports the currency you need.

However, you don’t need to use either option. There are many other money transfer services out there that aren’t detailed above, and you can pick them as well.

Interac e-transfer is only available to send and receive the money within the same banking network.

Even then, if your online bank account doesn’t offer e-transfers or you receive an e-transfer from someone, and you don’t see your bank in the list of available institutions, you’re out of luck.

If you need to send money internationally or in a different currency, Interac e-transfers can’t help you, but PayPal and TransferWise can.

Even if you’re content sending e-transfers within Canada, they must fund from your bank account, but PayPal can send money via your bank account, PayPal balance, or a credit card.

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