7 Things You Need To Know (and Save a Bundle)
- Two Ways
- PayPal International (to PayPal Accounts)
- Xoom owned by PayPal (to Bank Accounts)
- Both convenient but at a relatively high cost
- May work well in certain situations but alternatives can suit needs better
For years I used PayPal almost daily personally and for business, but I had no idea what it cost and how exactly it worked… it just worked.
Question is, are you wasting money in exchange for convenience?
When does PayPal work and are there better options (like Xoom who are owned by PayPal)?
That is exactly what we uncover now!
Disclosure: This post contains affiliate links which as you will see can save you a lot of money and doesn’t cost you any more. For more information, see my disclosures here.
- When PayPal Works and Doesn’t Work
- PayPal International Costs and Fees (Including Hidden Fees)
- How to Set Up Your PayPal-to-PayPal International Payments
- When Xoom Works and Doesn’t Work
- Xoom International Transfer Costs and Fees (Including Hidden fees)
- How to Set Up Your International Payments on Xoom
PayPal makes it easy to transfer money to friends and family in your own country as well as send funds abroad to a PayPal account.
The problem is your recipient then usually needs to transfer those funds to a bank account.
To solve this PayPal owns Xoom (below) to transfer money directly to a bank account.
First let’s dig into PayPal to PayPal transactions.
With the option of dedicated personal and business accounts, PayPal provides easy, convenient ways to send money to your friends and family, overseas employees, pay for things and even support your favourite non-profits.
From a senders perspective, you only need the email address or phone number of the intended receiver to make a payment.
From a receivers perspective, you can also request funds and it is just as easy.
Even if they don’t yet have a PayPal account, it is usually a relatively simple matter for them to set up a PayPal account to retrieve the funds.
PayPal supports transfers from 200 countries to 75 countries worldwide in 25 currencies. Your recipients can withdraw money from their PayPal account or use it to pay for goods and services online.
With over 277 million active account holders making about 7.5 billion transactions every year, PayPal is one of the largest payment companies in the world.
In addition to that, your recipient likely also has a PayPal account (or will soon have one) which by default often means payments often work seamlessly and practically instantaneously.
That does not make PayPal perfect – far from it, according to the current Trustpilot rating of 1.2 stars out of 5 but there is more to this story below.
1.3 For small transfers and payments ($100 – $300 USD)
If you make very occasional small transfers or payments between $100 – $300 USD, PayPal is not the cheapest (not even close) but it is no doubt convenient.
Here is an example of a test we ran sending AUD to CAD. This is an approximation simply to illustrate the Total Costs but other currencies like USD and GBP are similar.
Whilst $5000 is more than most people send, small amounts can add up, and it gives you some idea of what you will pay for the convenience for PayPal especially in comparison to a competing Money Transfer Service.
For larger amounts (especially above $1000 USD) PayPal can end up being very expensive.
This is because of the fixed percentage fee which remains constant in addition to other fees.
For smaller amounts, as we will show you in the next section, there is a range of fees which also add up to be quite hefty.
PayPal’s fee structure is complex and varies based on many factors, but if you want to dig into what you are paying check out our PayPal Fee page.
We always analyse companies services based on their overall ratings on Trustpilot.
Normally we emphasize the five star reviews which usually run at 80% or better and then dig into the negative reviews to try and get a great handle on a service including its weaknesses.
PayPal stands alone with a poor Trustpilot score of 1.2 out of 5.
80% are one star reviews with just 12% at five stars.
The reality is that PayPal can’t be compared directly with other money transfer companies on Trustpilot simply because it is mostly used as a way to pay for things and not international fund transfers.
Their negative reviews are also compounded because many money transfer companies solicit reviews which gives them more chance of being positive while PayPal gets hammered with negative reviews from upset people who have had issues with vendors or products they purchased.
That said, when it comes to transfers, a lot of PayPal’s issues relate to customer service and for this reason alone we recommend other methods of transferring money.
It is not just you.
PayPal’s fee structure is complex and based on the country where you reside and whether you are sending money to family and friends (personal transfers) or for business.
If you want to know exactly what you are paying we have made it easy on our PayPal International Fees page.
For the following countries Personal Transfers are uncovered here:
For other countries, the following fee structure is often quite similar, with the amounts and percentages changing.
Essentially PayPal’s fees for international transfers can usually be broken down into the following.
- (A) A (small) fixed transfer fee
- (B) Another fee (based on the transfer amount)
- (C) Currency conversion fee. This is a 2.5% to 5% margin from the interbank rate.
- (D) Additional charges by your credit or debit card provider (if not from PayPal balance)
Fees Example (Australia to USA)
If you wanted to receive money in the USA, the sender will pay the fees associated with their country.
From Australia, if the sender used a PayPal balance, this removes additional charges that get added if you are using a debit card or credit card. (D)
This leaves (A), (B) and (C) to calculate the total fees.
In this example, we want to send $100. Where (A) = 30c, (B) = 5% and (C) = 4%
Total Fees = (A) + (B) + (C) = $0.30 + 5% + 4% = $9.30 (or 9.3% of the total)
For comparison we compared these fees with TransferWise (review) who show exactly what you pay in fees on their homepage widget – the total fees were $2.69 (or 2.7% of the total).
However because the amount and countries you are transferring are likely to be different, check out the exact fees you will pay using the TransferWise Widget.
Other Fees (D)
If you’re using a debit or credit card to fund your transfer, expect to pay an additional fee (about 2.6% of the amount in my example).
To save the most money and get a suitable service check out the Alternatives section below.
3.1 Signing up
- You can sign up in minutes with your email address and other primary personal information (for example: location, date of birth, etc.) online or by downloading their mobile app.
- Next, they’ll ask you to verify your email. The verification email usually arrives within minutes.
- You may be asked to provide additional verification documents like a bank statement, government issued ID clearly showing your name, etc. for personal accounts and registration, incorporation documents, vendor list, vendor invoices, and bank statements for business accounts.
3.2 Set up payment methods
Log in to your account online and click on “Wallets” to add your payment methods.
You can choose a debit card, credit card, or your own bank account to fund your transfers.
Make sure all payment methods reflect your ownership to prevent any hold ups during the transfer process.
3.3 Setting up your transfer
- You can send money to your family, friends, or vendors by simply entering their PayPal email or registered mobile number. If they don’t have a PayPal account, they’ll receive an email to sign up for one to access their funds.
- But before you set up the transfer, make sure you check the currency exchange rate offered by PayPal – Go to “Wallet” and check under “Balances”
- Select the currency you want to exchange
- Select in the amount you want to send
- Select your payment method (bank transfer, credit card, debit card, or PayPal balance)
- Hit “Send Money Now” if everything looks good
4.1 Fast personal payments from the US, Canada, UK, and Europe countries
Although Xoom is a PayPal company, they only support personal remittance. But the good news is they have a wider base of receiving countries and supported currencies –130 countries and 100+ currencies.
Xoom supports transfers from the US, Canada, UK and Europe (Eurozone and non-Eurozone countries).
4.2 Easy bill payments
Xoom supports bill payments for electricity, phone, water, trash, internet and cable in the following countries: Mexico, Colombia, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Costa Rica and Vietnam.
So whether you need to help out your family in these countries or need to make utilities payments for your properties abroad, Xoom is a great way to do it. Bill payments are also instant in most cases.
4.3 You need cash payouts and home delivery
Recipient doesn’t have a bank account? No problem.
Xoom lets you set up cash payouts in most of the supported receiving countries. And if your recipient is in Vietnam, they can even opt for same-day home delivery. Check out Xoom’s home delivery details here.
As we will see in greater detail in the next section, like PayPal, Xoom is relatively expensive as they charge a mark up on the exchange rate and their fees are based on a lot of other variables.
If you’re based in Australia, New Zealand, or in the Asian countries and want to send money overseas you can’t use Xoom.
Xoom has sending limits that vary according to user level, sending country, and rolling periods. While you can lift these restrictions, this may increase the transfer fees. See “How Xoom Works” here.
Working out the exact fees for Xoom (like PayPal) is not easy as we uncovered in a review and go into a lot more detail.
Xoom’s transfer fees depend on:
- Funding method
- Payout method
- The target currency
- The transfer amount
When you use Xoom they have a quite clear “Show Fees” link highlighted. Clicking this will give you the Transfer Fee and it you look carefully you will see the following message,
“In addition to the transaction fee, Xoom also makes money when it changes your send currency into a different currency.”
Xoom’s transfer fees include a mark up on the exchange rate (which varies according to market conditions).
This fee can be dominant.
To find out exactly what fees they are charging you will need to calculate it yourself by comparing it with the interbank rate offered.
For card-to-bank transfers, you may also pay a fee charged by your card issuer.
Other fees to be aware of include fees charged by banks at either end which can be between $10 and $30 USD.
There may also be transaction fees for bill payments usually $2.99 USD/ $2.99 CAD/ £2.99/ €2.99.
6.1 Signing up
- Sign up for your Xoom account with your email and personal details on their website or by downloading their app
- Activate your account by confirming your details on the confirmation email
6.2 Setting up your funding methods
You can fund your Xoom transfers with a bank account, credit card, debit card, or PayPal (in some countries). Typically, you must use a payment method to conduct a transaction first before you can use it to fund your international transfers.
If you’ve been using PayPal for a while, your linked bank accounts and cards should be available to you for funding your transfer (You’ll be able to check this out in the “My Account” section of your Xoom online or app dashboard).
6.2 Setting up your transfer
- Make sure you have the following information handy: your recipient’s address and phone (as it appears on a government id) and their banking details
- Check out the fees based on target currency, funding method, and pay out method on Xoom’s currency calculator
- Once you’re happy with the fees, enter your transfer details (recipient details, amount, payout method)
- Fund your transfer and hit send
6.3 Paying bills with Xoom
- For bill payments abroad, you need the following information: utility company’s name and the recipient’s name and account number as it appears on the bill (family member’s or yours, depending on whose bill you’re paying)
- Enter the payment details and amount
- Hit send
A few things to remember
- Xoom only supports personal transfers – so any payments made to vendors, non-profits, or for other purposes not in their scope of service is likely to be blocked
- Xoom has sending limits based on user usage levels and countries and you may need to provide additional documentation to increase your limit. Learn more here.
Check out our full review of Xoom here.
PayPal and to a lesser extent Xoom are leaders because of their size and perception of safety. PayPal is very convenient simply because you probably have a PayPal account already or your recipient does.
However both services are relatively expensive and there are other excellent services to consider.
7.1 Top Picks and Comparison
|1.2||200 countries to 75 countries||PayPal to PayPal||No|
|4.4||US, Canada, UK,|
and Europe to
Card-to-bank, PayPal to Bank
|TransferWise||0.4% – 1%||4.7||From and To|
the whole world – Check if your countries are supported here
|OFX||0.4% – 2%||4.3||From US, UK,|
CA, HK, NZ,
SG to pretty much the whole world.
7.2 More Information and Options
TransferWise (below $7000 US) and OFX (above $7000 US) are our top picks but they are limited to transfers to a bank account.
That’s why we also cover some other transfer services that are highly recommended and support cash transfers.
1. TransferWise (Personal and business transfers)
Service highlights: Low, transparent fee structure, transfers at the mid-market rate, personal and business transfers, great customer service and multi-currency wallet. Useful extras include prepaid MasterCard debit card, international bank details in major currencies, ability to transfer money and get paid like a local, access to more currencies with TransferWise Borderless (review).
Service lowlights: Only transfers to bank accounts. Online focus limits awesomeness for larger amounts.
Availability: Available in 59 countries (including the UK, Europe, US, Canada, Australia, and NewZealand) and supports transfers to 60+ countries in 40+ currencies.
Ideal for: Anyone based in the supported sender countries and especially digital nomads, solopreneurs, and freelancers.
Check out our full review of TransferWise here.
2. OFX (Personal and Business transfers for large amounts)
Service highlights: Excellent rates for large transfers (over $7,000 USD) but also a solid performer for smaller transfers, great phone support, keeps transfer costs low and reduces percentage fees you pay as amounts increase. No daily or monthly sending limits.
Service lowlights: Can charge a $15 fee for amounts below $10,000 US but you can get that removed here.
Availability: Available in the US, Canada, UK, Australia, New Zealand, Singapore, and Hong Kong (not available in Europe). OFX supports transfers to 190 countries and 55 currencies.
Ideal for: If you frequently make large transfers for your business or need excellent support for a one-off, extra-large personal transfer, you can’t go wrong with OFX.
Check out our full review of OFX.
3. WorldRemit (Personal and Business transfers)
Service highlights: Wide base of receiving countries, both personal and business transfers, affordable option for smaller amounts ($1000 USD and below), many payout methods (cash pick up, mobile wallet transfers, bank transfers, home delivery in Vietnam).
Service lowlights: Relatively complex fee structure and not as competitive as the best. Some limits on larger amounts.
Availability: Available in 44 countries and supports transfers to 150 countries worldwide.
Ideal for: People based in the UK, US, Europe, Canada, Australia, and New Zealand as well as the Middle East and looking for flexible payout methods for international transfers.
Check out our full review of WorldRemit.
4. Remitly (Personal transfers only)
Service highlights: Designed from the ground up for immigrants. Instant transfers and flexible payout methods including cash pick up.
Service lowlights: Fees can be at the high end compared to other alternatives and can only send from the 16 countries to developing countries.
Availability: Available in 16 developed countries including the UK, US, Canada, Australia, Ireland, Germany, France, Italy, Spain, Austria, Belgium, Finland, Netherlands, Norway, Singapore and Sweden.
They support transfers to 50+ developing countries.
Ideal for: For immigrants based in the 16 sender countries who need easy, fast, and flexible international transfer options to support their families back home.
See our full review of Remitly here.
5. XE (Personal and business transfers for large amounts)
Service highlights: Great rates for large transfers ($1000 USD and above), great support for setting up transfers, minimizes costs with local bank details in most supported sender and receiving countries
Service lowlights: Only transfers to bank accounts. Online focus for smaller amounts, prohibits confidence in large transfers.
Availability: XE has a great presence in Europe as well as the UK, US, Canada, Australia, and NewZealand. They support transfers to 170 countries worldwide in 60+ currencies.
Ideal for: People who want to save big on their large transfers (both personal and business transfers).
Check out our full review of XE here.
6. TorFX (large personal and business transfers)
Service highlights: Great rates for large transfers ($1000 USD and above), set up transfers online or over the phone, assigns a dedicated account manager, great support for large transfers for businesses (including transfer strategies to minimize costs in the long term).
Service lowlights: Focus is premium service and online offering is not as awesome as other top picks here.
Availability: Great presence in UK, Europe, Australia, New Zealand, and Asia (not available in the US).
Ideal for: People who’d rather speak to a human while setting up large personal and business transfers.
Check out our full review of TorFX.
Between PayPal and Xoom, there are lots of ways to fund transactions and for the funds to arrive.
Unfortunately both are usually expensive for international transfers and their complex fee structures make it hard to figure out exactly what is going on.
However, if you want to save on fees and have access to more receiving countries, currencies, pay out methods and useful extras (like a prepaid debit card, multicurrency wallet, transparent fee structure, phone support for your transfers, etc.), there are some recommended alternative services (above).