PayPal Transfers From the US to Mexico: Beware the Hidden Fees

Mexico is one of the most popular destinations for international money transfers originating from the US and 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 Mexico is an expensive choice due to the hefty exchange rate margins that go along with the service. This guide looks at how to send money from the US to Mexico with PayPal, what the costs are, and how to find better alternatives.

How to PayPal From the US to Mexico

Although expensive, sending money from the US to Mexico with PayPal is remarkably easy. All you need to do to get the job done is log in to your PayPal account and make a transfer to a Mexican PayPal user whose balance is in Mexican pesos. More specifically, you'll need to do the following:

1. Log in to your PayPal wallet;
2. Click the 'Send & Request' button;
3. Enter your recipient's email address, username, or mobile number;
4. Specify the 'Sending to a friend' option;
5. Enter the amount you'd like to send and choose MXN;
6. 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 will allow you to choose between PayPal's exchange rates and your card issuer's exchange rates.

PayPal's Fees and Exchange Rates

All things considered, sending money from one PayPal account to another is among the most expensive ways to transfer to a different currency. This is because of the highly variable, nontransparent fees and exchange rates that you'll be charged. If you'd like to take a deep dive into PayPal's fees, you can check out our guide here, but we've summarised the main ones below:

PayPal US to Mexico Exchange Rates

In most cases, all fees PayPal will charge you when sending money from the US to Mexico 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% above the mid-market rate. However, according to our own analysis of the exchange rate that PayPal displays on its pricing calculator for USD/MXN transfers compared to the mid-market exchange rate, PayPal's exchange rate margins are actually higher still, in the region of 3.45% of the transfer value. In effect, this means that for every USD 1,000 you transfer to Mexico, PayPal will convert only around USD 965.50 of that amount into Mexican pesos at the true exchange rate.

PayPal US to Mexico Foreign Transaction Fees

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, there is one exception. If you're sending money from the US to a business or non-profit in Mexico or receiving payment using the 'Request Payment' tab, you'll be subject to a MXN 4 fixed fee in addition to an even higher exchange rate margin.

Other Fees to Anticipate

If you make a PayPal transfer from US dollars to Mexican pesos using a debit or credit card, you could be charged an exchange rate margin fee by your bank or card company. Luckily, PayPal gives users the choice of whether to pay their own exchange rate fees or those of the card issuer. In these cases, we recommend letting your bank or card handle the transaction, as it'll probably be cheaper than PayPal.

Take a look at our guide to dodging bad PayPal exchange rates when checking out of an online store to learn more.

Finding the Best PayPal Alternatives

To avoid the high fees that come along with making a transfer with PayPal, we recommend comparing the market to find the best-priced money transfer service to suit your needs.

By comparing your options and making a bank transfer from the US to Mexico with Remitly, for example, (which was the cheapest bank transfer service on 54% of searches on Monito over the past year), your savings compared to PayPal would be in the region of MXN 900 per USD 1,000 that you send across the border. It's for this reason that we particularly recommend Remitly as the best alternative to PayPal for transfers to Mexico, as it also provides a fast and easy way to send money online to bank accounts, mobile wallets, or cash pick-up locations.

Other services such as Instarem, Skrill, WorldRemit, Wise, and MoneyGram frequently offer highly competitive prices from the US to Mexico too.

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