PayPal vs.Transferwise: main features and differences
June 11, 2019
by Lusine Mirzoyan
In the 21st century of high-tech developments and digital currencies, banks must think twice before setting their transfer fees. Today almost everyone uses PayPal and Transferwise for local and international transfers. What are the main differences between these two methods? Which one to prefer and why? We will try to find the answers in this article.
Paypal international fees
Once PayPal became a revolutionary technological solution with no alternatives on the market. It allowed us to transfer and receive money fast and safe. The platform is being used widely not only on the personal but also business level worldwide. However, PayPal international fees are not low at all. When it comes to working as a freelancer, the last thing you want to do is losing money because of transaction fees. Paypal charges a commission during international transfers. In addition to a high percentage and fixed commission rates, you are losing a lot of money during currency conversion. In average, you will be charged around 2.5 % while trying to make a cross-border transaction in foreign currency from your personal account. Depending on the currency and amount, the commission will vary.
Transferwise: a cheaper alternative to PayPal
Transferwise offers very competitive rates in comparison with PayPal and banks. The reason is that this platform uses an innovative P2P (Peer to Peer) model, thank to which the money can be sent and received without crossing borders. This way all banking fees are bypassed by Transferwise. Besides, you can see exactly what you are paying through each step of your transaction. There are no hidden fees whatsoever. Transferwise applies mid-market rates to your transfers abroad. Those are the rates banks use themselves for transactions between them. Needless to say, they are the best possible rates.
Creating an account in Transferwise
Signing up in Transferwise is extremely easy. All you need is to insert an email and the password. There is also an option to sign up via google account or Facebook. As soon as your email is confirmed, the account will be created. However, due to anti-money laundering requirements and regulations, you will need to provide some more information before you can start performing transactions. The obligatory documents include a passport/ID and a proof of residential address. Basically, the procedure is very similar to the account opening procedure on PayPal. If 3 of your friends join via your personal invite link to Transferwise, you will get 60 EUR on your account.
Transferwise offers a mobile app, which enables you to perform money transactions on the go. Users get access to the history of payments and can repeat it by the click of one button. It is very convenient if you have constant monthly payments. Recently a useful tool such as Apple Pay was added along with a function to use a camera for inserting info of your debit card instead of putting it manually.
To conclude, Transferwise is a cheaper option for money transfer overseas in comparison with PayPal. However, PayPal is still more popular and people tend to trust it more. Both platforms have pros and cons and the decision of using one or another should be influenced by many factors, including the purpose of the payment, currency, destination, method, etc.