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Why you shouldn't use PayPal for international money transfers

While PayPal is great to send money to friends living in your country, it's usually expensive to use PayPal for your international transfers. PayPal takes a hefty margin on the exchange rates, which means you can save a lot of money by using alternatives to PayPal. We'll explain you how Paypal makes a lot money when you send money abroad, but also how to find cheaper alternatives.

    Our review of PayPal for international money transfers

    Last updated January 21, 2019
    Written by Pascal Briod

    People often ask us if PayPal work internationally and if it is a good service to send money abroad. While PayPal is great to send money to friends living in your country and works internationally, our in-depth review of PayPal shows that it’s generally not a good idea to use PayPal for your international transfers involving a currency exchange.

    Of course, PayPal does has some advantages. With over 250 million active account holders globally and over 7.5 billion transactions every year representing a total volume of over $450 billion, it’s the largest online payment company in the world. Chances are, you and your recipient already own a PayPal account, and using PayPal for your international transfers should therefore be easy and convenient.

    With PayPal, you can send money from over 200 countries to PayPal accounts in over 75 countries and in 25 currencies. Your recipient can then use their PayPal balance to withdraw funds to their bank account, or to pay for goods and service online.

    Zero fees for domestic payments

    You might be used to zero fees when you transfer money with PayPal. Indeed, it is free to use PayPal for a domestic payment, i.e. when you and your beneficiary are in the same country, without a currency conversion (unless you pay with a credit card or debit card). This is great if you want to send money to friends or pay for goods and services from a local merchant for example.

    High fees and exchange rates markups for foreign transactions

    However, PayPal charges fees for international payments. In addition to a high percentage fee and an additional fixed fee if you don’t pay directly from your PayPal balance (e.g. you use your credit card or debit card for example), you also lose a lot of money in the currency conversion. Each time you convert money between balances in different currencies in your own account, PayPal takes a hefty margin on the exchange rate. Indeed, the total cost of a cross-border personal payment with a currency conversion with PayPal is at least 2.5% of the transaction amount, including both payment and currency conversion fees. Depending on the currency, you will often pay much more than this, and in the most extreme cases you could incur a total cost of close to 10%! This margin will be even bigger if the currency conversion happens during the transfer.

    Alternate options and more information

    If you’re now thinking you need to find another solution for your next money transfer, we’ve got you covered. By using our real-time comparison tool, you can compare money transfer providers available for your transfer, in order to save on fees and get much better exchange rates than those offered by PayPal.

    Since much cheaper services are almost always available, we recommend you always compare all your options. If you decide to make a money transfer with PayPal nonetheless, read on and learn more in our “PayPal Exchange Rate & Fees” section to find out how to save on costs.


    What we like about PayPal

    • Credibility: PayPal is the largest internet payment company in the world

    • Widely available and convenient

    • With over 250 million active account holders globally, many people already have PayPal accounts and are already familiar and comfortable with using PayPal's services

    What we dislike about PayPal

    • Total cost of a cross-border transfer with a currency exchange is at least 2.5%

    • In most extreme cases, you could lose close to 10% of the amount you transfer

    • Lack of transparency about exchange rates

    • Extremely poor Trustpilot reviews

    Better alternatives to PayPal for your next international money transfer

    • Compare Paypal's exchange rate and international money transfer transfer fees

      Paypal is a very expansive way to send money internationally in comparison to specific online money transfer services due to a big markup on exchange rates. Compare your options below

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    How to make an international money transfer with PayPal

    Log into your PayPal account

    Got to www.paypal.com and log into your account.

    Select the right service

    Click on “Send & Request” at the top of the page. Enter the mobile number or email address of the recipient. If your recipient doesn’t have a PayPal account yet, enter their email address and they will be invited to open a PayPal account to receive the funds.

    Set up your transfer

    Enter the amount you wish to send, which currency to send the money in. Select "Sending to a friend" (if sending within the same country) or "Send to friends abroad" and how you want to pay (PayPal balance, linked bank account, or debit/credit card).

    Let PayPal do the rest

    Review the details (and check PayPal’s exchange rate if your payment includes a currency conversion). If everything looks good, click “Send Money Now”.

    Paypal International Fees & Exchange Rates

    Paypal International Fees & Exchange Rates 1.5/10


    PayPal is rarely the cheapest option

    This indicator is based on the percentage of searches on Monito for which %PSP% is the cheapest provider


    PayPal is generally not the most competitive option

    This indicator is based on the percentage of comparisons on Monito in which %PSP% offers a competitive pricing (taking into account the pay-in and pay-out options as well as the amount).


    PayPal doesn't offer special promotions to Monito users


    Monito can access real-time pricing information from PayPal


    The points above are added to calculate the "Paypal International Fees & Exchange Rates" score of PayPal, who scores 1.5 points on a maximum of 10 points.

    PayPal fees

    For personal payments to friends or family members, PayPal charges a fee if the payment is international, i.e. if the PayPal accounts of the sender and the recipient are in different countries. Domestic personal payments generally carry no fees, unless you pay with a credit card or debit card.

    The fee for international personal payments depends on the payment method, the country of the sender, and the country of the recipient. The fee is calculated as a percentage of the payment amount, plus a fixed fee for payments funded by a debit or credit card.

    The personal payments fee is much lower for payments made from your PayPal balance (or linked bank account) than with every other payment method (e.g. debit or credit card). Therefore, if your payment isn’t urgent, it’s much cheaper to add funds to your PayPal account through a bank transfer to pay for your transaction, or to use your linked bank account (this can also give you a much better exchange rate; see more details in the “PayPal exchange rates” section).

    PayPal generally does not charge fees for adding or withdrawing funds to or from your PayPal account, so you and your recipient should not have to pay any other fees.

    PayPal fees calculator

    As you can see, calculating PayPal’s fees for an international personal payment can be quite complex. If you’re looking for a PayPal fees calculator, look no further. You can calculate PayPal’s fees and compare them to all other money transfer services here.

    PayPal exchange rate

    The exchange rate which PayPal applies to personal payments is calculated based on PayPal’s wholesale exchange rate. PayPal’s exchange rate for personal payments includes a 2.5% to 4.5% margin subtracted from the wholesale rate, depending on the sender’s country and the receiving currency.

    PayPal usually applies different exchange rates for the conversion of balances in different currencies (a “balance transfer conversion”) than for the conversion of currency during a personal payment (a “payment transfer conversion”). What is the difference between the two?

    • In a balance transfer conversion, you first must hold a balance in one currency, which you convert into a balance in another currency.
    • In a payment transfer conversion, you convert your currency into another currency while making a personal payment. The currency you are converting into is entirely sent to your recipient, you will not hold a balance of the new currency after a payment conversion.

    If you use any other payment method than your balance in the receiving currency, PayPal will automatically make a payment conversion. Exchange rates for balance conversions are nearly always much better than those for payment conversions. So it’s best to load money on your PayPal account (which also attracts less fees as explained in the “PayPal fees” section) and make a balance conversion and then use that balance to fund your transaction. This will give you the best exchange rate (and the lowest fees).

    Ease of Use

    Ease of Use 6.5/10


    Very few Monito users going to PayPal end up making a transfer with them


    PayPal's homepage is clear and very easy to understand


    It's very easy to open an account with PayPal


    Setting up your transfer is quick and easy


    It's easy to sign up and make a transfer both on mobile and desktop


    The points above are added to calculate the "Ease of Use" score of PayPal, who scores 6.5 points on a maximum of 10 points.

    Credibility & Security

    Credibility & Security 8.5/10


    PayPal is fully licensed and authorized


    PayPal has a good number of positive customer reviews


    A very large number of customers already trust PayPal


    PayPal employs a very large number of employees


    PayPal has already transferred at least 5 billion USD for their customers


    PayPal has been mentioned in countless recognized media outlets


    PayPal isn't part of Monito's network of trusted partners


    PayPal is a long-established company


    PayPal had insignificant legal issues in the past year (0.5)

    The points above are added to calculate the "Credibility & Security" score of PayPal, who scores 8.5 points on a maximum of 10 points.

    PayPal is one of the largest independent, publicly traded, consumer financial technology companies in the world. Headquartered in San Jose, California, the company was founded in 1988 and now employs more than 18’000 employees globally. PayPal is listed on the Nasdaq Stock Market under the ticker symbol PYPL, and has a current market capitalization of approximately US$96 billion.

    PayPal’s brand is recognized worldwide for its convenience, security, and global availability. Globally, they have over 250 million active account holders More than US$450 billion have been transacted using PayPal.

    PayPal offers its service worldwide, which requires the company to be registered, authorized and/or licensed in many jurisdictions. In the US, Paypal is licensed as a money transmitter in all 50 states. In the European Union, PayPal is licensed as a bank in Luxembourg. Thanks to EU regulations, PayPal can “passport” this license and operate in other countries throughout the EU. PayPal also holds local entities in Australia, Brazil, Canada, Hong Kong, Mexico and Russia. In every other country, PayPal provides its service through PayPal Pte. Ltd., a Singaporean company.

    Clients’ funds are held in pooled accounts which are segregated from PayPal’s own accounts. The funds are never used by PayPal for its own expenses, and are not voluntarily paid to creditors in case of a bankruptcy.

    PayPal’s dedicated security team monitors every transaction 24/7 to identify theft, and prevent fraud and email phishing tactics. All transactions and private information are secured with state of the art encryption and security measures.

    So, can you trust PayPal with your money? Yes, definitely. PayPal is a leading financial institution with a worldwide recognized brand, duly regulated, with pioneering technology and millions of customers. We have to note that some customers, mostly merchants, have expressed complaints that PayPal was holding their funds for some time for security and compliance reasons, but it doesn’t seem to concern individuals making international money transfers.

    Service & Coverage

    Service & Coverage 8/10


    PayPal allows you to send money from a lot of different countries


    PayPal allows you to send money to an average number of countries


    PayPal is available in many different languages


    It is possible to pay for your transfer by local bank transfer


    It is possible to pay for your transfer by credit/debit card


    PayPal offers additional pay-in options


    It is possible to send the money to your recipient's bank account


    PayPal doesn't offer a cash pick-up service


    The money can be sent to a mobile phone (airtime top-up or mobile wallet)


    PayPal has a bill payment service


    PayPal offers additional banking features


    PayPal doesn’t offer a multi-currency debit card


    PayPal doesn't offer guaranteed exchange rates


    It is not possible to set up repeating transfers / standing orders


    There is no minimum amount (or very low)


    There is no maximum amount (or very high)


    The points above are added to calculate the "Service & Coverage" score of PayPal, who scores 8 points on a maximum of 10 points.

    Customer satisfaction

    Customer satisfaction 3.3/10


    PayPal has a low percentage of excellent customer reviews


    PayPal has a high percentage of negative customer reviews


    PayPal has a good number of positive customer reviews


    The points above are added to calculate the "Customer satisfaction" score of PayPal, who scores 3.3 points on a maximum of 10 points.

    PayPal has very poor reviews on Trustpilot, with a rating of 1 star out of 5. Over 65% of the over 5,200 customers reviewing PayPal.com (the US site, which contain the largest number of reviews) who have given their feedback gave them a poor, 1-star review. However, the reviews on Trustpilot often confuse all of PayPal services and divide the reviews by individual countries--so all reviews might not reflect the opinion of people using PayPal’s specific personal payments service. Still, the majority of PayPal's individual county pages for payment services have one star, and none have a 4 or 5 star rating (again, out of 5). We also see that nobody from PayPal's customer service team has responded to negative reviews not responded in an effort to help customers solve their issues.

    Note: PayPal does not appear to be inviting its users to share their experience with TrustPilot which could explain part of the reason for the high proportion of bad ratings.


    • Trustworthy and secure


    • Extremely poor customer service
    • Blocked and locked accounts and few options to resolve the issues
    • High fees and bad exchange rates

    Customer support

    Customer support 7.3/10


    The FAQ and help center of PayPal are easy to understand


    PayPal doesn't has any live chat


    PayPal offers email support (even to noncustomers)


    PayPal offers phone support (even to noncustomers)


    It's very easy to get in contact with PayPal


    The FAQ and help center are translated in all languages


    Monito cannot contact PayPal on behalf of our users


    The points above are added to calculate the "Customer support" score of PayPal, who scores 7.3 points on a maximum of 10 points.


    Transparency 2.8/10


    The exchange rate margin makes up most of the total cost of your transfer


    It's quite straightforward to understand the fees of PayPal


    PayPal’s exchange rate margin is not properly disclosed


    A real-time quote can’t be obtained without registering


    PayPal applies the same fees and exchange rates to all customers


    It's very difficult for Monito to access the pricing information of PayPal


    The points above are added to calculate the "Transparency" score of PayPal, who scores 2.8 points on a maximum of 10 points.

    • Mobile apps

      PayPal’s mobile app is available for Apple iOS and Google Android. The PayPal app allows you to view your balance and account activity, add and withdraw money, and send and request money. The app is highly rated across both app stores, with a 4.9/5 rating on the Apple App Store and a 4.4/5 on the Google Play Store.

      You can't convert your balance between different currencies in the PayPal app--if you send money through the app in a currency for which you do not hold a (sufficient) balance, you will be forced to make a payment transfer conversion which is more expensive than a balance transfer conversion (as explained in the “PayPal exchange rates” section). So if you frequently use that PayPal mobile app to send money, it is best to make a balance conversion on the PayPal website before making your transfer from the mobile app.

    Additional services

    PayPal offers many services in addition to personal payments to friends and family. In fact, PayPal’s main and original territory is e-commerce. PayPal is now a group of several different companies offering various payment-related services.

    Commercial payments

    PayPal is one of the most widely accepted methods to pay merchants for goods and services online. PayPal can also be used on mobile applications and at offline retail locations (through the “PayPal Here” service, available in the US, UK, Hong Kong, Australia and Japan).

    PayPal Preferred Payment Methods for Commercial Purchases

    If you are paying for goods and services, you may authorize a seller to use your PayPal account. You may also use PayPal to pay for goods or services online or in-store. As an example, you can designate a preferred payment method for a monthly subscription service or for an online purchase. But even if you set up a preferred payment method, PayPal will first use your PayPal balance to fund the transaction. If there is no money in your PayPal balance, or if the balance does not cover the total amount due, then your preferred payment will be used. After that, there is a sequence to what payment source is used. In other words, if a payment methods are not available in your account (or are only partially sufficient for your transfer amount), PayPal will automatically use the next available method in the list to fund the transaction (or its remainder).

    Note: Not all payment methods are available in every country. More importantly, the payment method can also significantly influence the cost of your transaction, as certain payment methods attract additional fees and/or more expensive currency conversions. The cheapest solution is usually to add funds to your PayPal account, convert your balance into the receiving currency, and then use this balance to fund your payment. See the section on “PayPal Exchange Rate & Fees” for more information on this topic.

    Sources used by PayPal to fund a commercial transaction are the following, in order:

    1. Your PayPal balance in the receiving currency
    2. Your PayPal balance in another currency
    3. Your preferred payment method (this will only be used first if you have a zero PayPal balance)
    4. (A bank transfer from your linked bank account)*
    5. (A PayPal-branded credit card )*
    6. Your debit card
    7. Your credit card

    * Only available in a some countries

    PayPal Buyer Protection Program

    Another key value proposition is the PayPal Buyer Protection Program, which completely insures consumers against the risk of unauthorized charges to their account, as well as damaged and incorrect orders, or orders which are never delivered. Consumer’s financial information is also never shared with merchants, which protects consumers’ privacy.

    For merchants, the advantage of using PayPal is that it is a payment system used and trusted by millions of consumers worldwide, allowing them to cater to a wider variety of consumers and needs. While accepting payments through PayPal can be costly for merchants, PayPal’s end-to-end solution takes care of everything and provides an instant access to funds. Merchants are also protected against fraudulent or abusive claims.


    Xoom, founded in 2001 as one of the first digital remittance providers in the world, was acquired by PayPal in 2015. The service allows migrants in the United States to send money, pay bills and reload prepaid phones. For more information, read our review of Xoom.

    The story behind PayPal

    PayPal was founded by legendary entrepreneurs Elon Musk, Peter Thiel, Max Levchin, Luke Nosek, and Jack Selby in 1998 in San Jose, California. PayPal was launched as an e-wallet service allowing merchants to process payments, and individuals to send money to one another. Shortly after the company’s IPO on the Nasdaq Stock Market in 2002, PayPal was acquired by eBay, as it was the payment method used by most of eBay users. PayPal grew exponentially inside eBay, generating up to 40% of eBay’s revenue. At that point, it was time to separate the two companies and for PayPal to become independent again. The spin-off of PayPal was completed on July 2015, the same month the company announced it was acquiring the digital money transfer company Xoom.

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