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TransferWise vs PayPal

TransferWise vs PayPal. Which one is the best for you and your needs, and which is the most affordable option if you need to send or receive money internationally? Check out our analysis and the pros and cons of each money transfer company!

    Our recommendation: avoid PayPal and opt for TransferWise

    Last updated January 2, 2019
    Written by Pascal Briod

    TransferWise is an online service that specializes in helping you send money between two different currencies. They charge very competitive fees and what is truly unique about is TransferWise does not take any margin on the exchange rate.

    PayPal is fine for domestic transfers within one country and remains a great solution for many use cases, to make online payments or send money to friends, as long as you send in the same currency. But if you're sending money across borders and currencies, it's generally not a good idea to use PayPal for international money transfers because it gets very expensive. As soon as a currency conversion is involved, a large portion of your transfer costs are hidden in the hefty margin PayPal takes.

    Our recommendation is to avoid PayPal and opt for TransferWise (or one of the many other international money transfer services we compare on Monito) for international money transfers. Here's why.

    Compare TransferWise, Paypal and 100+ international money transfer services

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    TransferWise VS PayPal

    TransferWise wins the comparison with a score of 9.2/10 versus 5.2/10 for PayPal.


    Monito score 9.2/10


    What we like about TransferWise

    • You get the true mid-market rate

    • Low and transparent transfer fees

    • Fantastic user experience

    • Exceptional customer reviews on Trustpilot

    What we dislike about TransferWise

    • You can only send to a bank account

    Monito score 5.2/10


    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

    Detailed breakdown of our comparison between TransferWise & Paypal

    Fees & Exchange Rates

    With a score of 8.8/10, TransferWise has a more competitive pricing than PayPal.

    Ease of Use

    TransferWise received a better score (9/10) than PayPal in our "ease of use" evaluation

    Credibility & Security

    TransferWise scores 9.4/10 against 8.5/10 for PayPal for our credibility & security criteria

    Service & Coverage

    PayPal's coverage and diversity of services isn't as good as TransferWise's who get a score of 8.5/10.

    Customer satisfaction

    TransferWise has a higher number of positive customer reviews than PayPal

    Customer support

    We rated TransferWise's customer support at 9.5/10, better than PayPal's 7.3/10 score.


    TransferWise wins the "transparency" competition with a score of 10/10

    Fees & Exchange Rates - How TransferWise and PayPal compare

    TransferWise works like this: you pay for your transfer from your bank account, debit or credit card and send funds directly to the recipients bank account. Options vary according to the corridor; in other words, it depends on where you are sending money from and to. For example, if you are transferring money from the US to the UK you also have the option to pay from your bank account via ACH (Automated Clearing House), from various countries in Europe you can make a SOFORT transfer. The fees and exchange rates are transparent, and they are clearly indicated on the website when you make the transfer. TransferWise does the fee calculations for you and warns you when there may be a local bank fee (which they cannot control).

    PayPal works like this: you pay for your transfer with money from your bank account, debit or credit card, or you PayPal balance or PayPal credit and send the funds to the recipient's PayPal account. The receiver can either withdraw the funds an place in their own bank account, or leave the money where it is in their PayPal account (which they could then use to make other payments). The fees and exchange rates are NOT clear and transparent--you have to hunt for them in the FAQs and even if you find the fees, you have to do all the calculations yourself and you never really know what the exchange rate will be.


    TransferWise charges a percentage of your total transfer amount, which equals roughly 0.6%- 1% of the transfer fees, depending on the currency combination. There's no transaction fee if you pay via a traditional bank transfer. If you pay via ACH there is a 0.15% fee, or by debit or credit card there's generally a 0.3% to 2% fee. It's variable because, according to TransferWise's website, "most banks charge an additional fee. These processing fees vary depending on the kind of card you use and where it was issued."

    With PayPal, in the United States, fees are zero if you send money from your PayPal account or your bank account, but fees rise to 2.9% of your transfer if you pay with you debit or credit card or with PayPal credit.

    If you are sending from the US to another country, fees vary depending on the destination and amount but run anywhere from $0.99-$4.99 per transaction if you send money from your PayPal balance or your bank account. Pay with you credit card, debit card or PayPal Credit and they slap on another fee of 2.9% of the total transaction amount PLUS plus a fixed fee based on currency. For example, if you are sending money to Mexico they'll charge an addition 4 Mexican Pesos, and if you are transferring funds to the Philippine you'll be charged an additional 15 Philippine Pesos. Yeah. There are so many fees, it's hard to keep up with all of them. And then there's the exchange rate.

    TransferWise is the winner here. Their fees are clear, transparent and you know exactly how much you are paying.

    Exchange rates

    TransferWise's exchange rate is based on the standard, mid-market rate. This means that unlike other money transfer providers, they do not add a margin on top of that rate.

    PayPal's exchange rate is based on the rate they get from their bank (versus the standard mid-market exchange rate) and they add a 2.5% margin on top of that. It is impossible to know what their bank rate is, but bank exchange rates are notorious for being poor--in other words, they are generally bad for the customer and good for the bank (due to a hefty margin).

    TransferWise fees and exchange rates are far more competitive than those offer by PayPal.

    TransferWise fees and exchange rates are far more competitive than those offer by PayPal

    The TransferWise borderless account versus Paypal - as a business or individual

    The TransferWise Borderless Account

    For individuals

    The borderless account for individuals enables you to convert money (at the standard, mid-market rate), keep money in over 30 currencies and send money to over 50 countries. You also get five accounts in five currencies:

    • A UK account in Pound Sterling (inc. account number & BSB code)
    • An Australian account in Australian Dollars (inc. account number and sort code)
    • A European account in Euros (inc. German IBAN and a SWIFT/BIC)
    • A US account in US Dollars (inc. account number and routing number)
    • A New Zealand account in NZ Dollars (inc. account number)

    Debits cards & Fees:

    Borderless account holders in most of the EEA and the UK can also obtain a TransferWise Mastercard debit card, and TransfewrWise has plans to add more countries (including the US). Card prices vary according to country but they are generally reasonable (and transparent). For example, spending in currencies in your account is free and for account holders in the UK, you can withdraw up to £200 per 30 days for free. After that, you'll incur a 2% fee for ATM withdrawals. If you convert a currency using your card, the fee will be between 0.35% and 2%. All fees are prominently displayed on their site.

    For businesses

    In order to set up a business account, you need to have an individual account first. After that, you will need to verify your business. The verification process depends on your business type and the country you run your business from. For example, there may be different requirements if you are a freelancer in Australia, a charity in the UK or an LLC in the United States.
    Once your account is set up, you can multi-currency account to send and receive money in over 40 currencies across 70 countries, pay international invoices and handle payroll for employees abroad and pay internatuonal vendors using the standard mid-market exchange rate. You can also invoice your clients in their own currency and receive money with zero fees. TransferWise also claims to be "up to 14 times cheaper than PayPal."

    Here's an example of a cost breakdown in Pound Sterling from TransferWise's website.

    PayPal accounts & cards

    Paypal does not really offer something entirely comparable to TransferWise's Borderless account, but the closest comparison is with their cards and digital credit options.

    Debit, credits cards & fees

    Customers can apply for a PayPal Cash Mastercard, a debit card that links directly from your PayPal balance or a PayPal prepaid mastercard (you can transfer money directly from your PayPal balance to this card). They also offer two credits cards and a digital credit line. The fees for these cards are all over the place, though, and at the time of writing we had to hunt hard on PayPal's site to locate their fees , which is a clear indication of how badly PayPal stacks up in the transparency arena. Here are a few examples of fees you incure the with PayPal Cash Mastercard (their debit card). In the US, domestic ATM withdrawals incur zero fees at Moneypass ATMs, which is a specific network of ATMs. Withdrawals from all other ATMs will charge you US $2.50 per transaction. Want to use the debit card outside the US? According to PayPal's T&Cs, they will charge you "$2.50 per withdrawal from a non-U.S. ATM or 2.5% of the purchase amount, from a non-U.S. merchant or use at a non-U.S. ATM. This fee will apply even if the transaction does not require a currency conversion." When there is a currency conversion involved, then you will again get a raw deal because the exchange rate PayPal gives you incurs a hefty margin (again, it all goes back to the fact that PayPal is not an affordable option for international money transfers).

    PayPal for business

    Setting up an account varies according to the country you are in. If you're located in the US, you have the option of setting up a variety of business accounts depending on your needs--for example, you can enable customers to pay directly on your website via PayPal. There are optuon to accept debit and credit cards using PayPal Checkout as well as Venmo (just keep in mind that Venmo does not work for international payments). There are no startup or monthly costs, but there are a variety of transaction fees which match the PayPal transaction fees we mention above. In other words, say you sell a service or a product and a customer buys the product. Within the U.S., the customer is charged a 2.9% transaction fee plus a fixed fee based on the currency. Outside of the U.S. the fee jumps to 4.4% plus the fixed ciurrency-specific fee. You can also send an invoice at no charge, but when you customer pays the invoice, they will be charged the same fees previously mentioned, in addition to losing an exorbitant amount due to PayPal's bad exchange rate.

    Key takeaways:

    • For businesses, PayPal makes it easy to set up a payment system on your website, but your customers will get charged hefty fees--fees are particularly high if you have international customers.
      Both offer the option to send international invoices, but PayPal's fee structure equals high fees. TransferWise enables you to invoice your clients in their currency and receive money with no fees.
    • PayPal's exchanges rates are terrible (and unfair), and impossible to predict. TransferWise's exchange rates always match the standard mid-market rate (in other words, a fair exchange rate).
    • TransferWise's borderless account is flexible, clear and internationally-focused offering good exchange rates, whereas PayPal's debit cards, credit cards and digital credit is a online solution that incurs high fees for each transaction and bad exchange rates.

    Monito recommend TransferWise over PayPal

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