PayPal Transfers From the US to Canada: Beware the Fees

Canada is one of the most popular destinations for international money transfers originating from the US. PayPal, with its 300 million customers, is one of the most widely-used transfer platforms globally.

However, while fast and convenient, using PayPal to send money from the US to Canada is an expensive choice due to the hefty exchange rate margins that go along with the service. In this guide, we look at how to send money from the US to Canada with PayPal, what the costs are, and how to find better alternatives.

How to PayPal From the US to Canada

Sending money from the US to Canada with PayPal may be expensive, but it's undoubtedly very convenient. To get the job done, you simply have to log in to your PayPal account and make a transfer to any Canadian PayPal user whose balance is in Canadian dollars. This can be done as follows:

• Log in to your PayPal wallet;
• Click the 'Send & Request' button;
• Enter your recipient's email address, username, or mobile number;
• Specify the 'Sending to a friend' option;
• Enter the amount you'd like to send and choose CAD;
• Click 'Send Money Now'.

Using this method, you will also be able to choose whether to pay by credit card or using your PayPal balance. The latter option will subject your transaction to PayPal's exchange rate fees, while the former option gives you the choice between paying at PayPal's or your card issuer's exchange rates.

PayPal's Fees and Exchange Rates

All things considered, sending money from one PayPal account to another is one of the most expensive ways to transfer into a different currency. This is because of the highly variable, nontransparent fees and exchange rates that you'll be charged.

PayPal's Exchange Rates: US to Canada

In most cases, all fees PayPal will charge you when sending money from the US to Canada will come in the form of the exchange rate margin, the difference between the mid-market exchange rate (i.e. the one you see on Google) and the exchange rate that PayPal offers.

According to PayPal's fee schedule, this fee constitutes a margin that's 3.00% above the mid-market rate. However, according to our own analysis of the exchange rate that PayPal displays on its pricing calculator for USD/CAD transfers compared to the mid-market exchange rate, PayPal's exchange rate margins are actually higher still, in the region of 3.35% of the transfer value. In effect, this means that for every US$1,000 you transfer to Canada, PayPal will convert only around US$966.50 of that amount into Canadian dollars at the true exchange rate.

PayPal's Foreign Transaction Fees: US to Canada

If you're sending money to the PayPal account of somebody else in a different currency, you won't pay any fixed transaction fees over and above the exchange rate margin we explored above.

However, if you're sending money from the US to a business or non-profit in Canada, or if you receive payment using the 'Request Payment' tab, then you'll be subject to a C$0.30 fixed fee in addition to the exchange rate margin. (The exchange rate margin for these types of payments is 4.4% for transfers from the US to Canada.)

Other Fees to Anticipate

If you make a PayPal transfer from US to Canadian dollars using a debit or credit card, you could be charged an exchange rate margin fee by your card issuer. However, PayPal gives users the choice of whether to pay their own exchange rate fees or those of the card issuer. Because currency conversion costs at major card providers can easily be as steep as at PayPal, we recommend choosing PayPal's exchange rates unless you know that your card provider offers you favourable exchange rates.

Finding the Best PayPal Alternatives

To avoid the high fees that come along with making a transfer with PayPal, comparing the market for the most competitive money transfer services out there is one of the best choices at your disposal.

For example, by comparing your options and making a bank transfer from the US to Canada with Wise (the cheapest bank transfer service on 64% of searches on Monito over the past year), your savings compared to PayPal would be in the region of C$40.00 per US$1,000 that you send across. Other services such as Instarem, WorldRemit, and MoneyGram frequently offer highly competitive prices from the US to Canada too.

Run a search on Monito's real-time comparison engine below to compare the market and find the best transfer service out there: