Wise vs PayPal
Wise Key Features
- Offers low rates
- Well known brand
PayPal Key Features
- Security and fraud protection
The main difference between Wise and Paypal is that Paypal adds a markup of around 3.5 – 4% on top of the mid-market rate, depending on the currency while Wise adds no markups on the mid-market rate.
When you’re looking for the best way to send money abroad, it can be difficult to work out exactly what money transfer provider is best for you.
Wise and PayPal are both leaders in the money transfers space, but can PayPal’s less specialized currency conversion service match Wise? In this Wise vs PayPal comparison, we’ll compare both operators’ fees, exchange rates, transfer times, and more to help you decide if either of these companies is right for you.
At a Glance
- About Wise and PayPal
- Which brand has lower fees?
- Which brand offers better exchange rates?
- Which brand covers more locations?
- Which is faster?
- Which brand offers more transfer & payment options?
- What do users have to say about each brand?
- What brand offers better ease of use, accessibility & security?
- Additional features
- Case study: sending a variety of amounts between the UK (GDP) and Australia (AUD).
About Wise and PayPal
Wise, formerly TransferWise, was founded in 2011 by Kristo Käärmann and Taavet Hinrikus, two Estonian ex-pats who realised how much money they were losing by sending money internationally with traditional banks. The company has grown rapidly in its almost 10 years of operating, expanding to a customer base of over 8 million users worldwide.
Wise is driven by a mission to provide more transparency in the international transfers space, promising to always clearly set out their fee structure and to offer transfers at the mid-market rate – a feature that makes this company really stand out.
PayPal was founded in 1998 by entrepreneurs Elon Musk, Max Levchin, Peter Thiel, Luke Nosek, and Jack Selby. It was initially launched as an e-wallet service and was later acquired by eBay in 2002 before becoming independent again in 2015.
PayPal describes itself as a “safer, simpler, smarter way to send and receive money online”. It’s free to sign up to – all you need is an email address – and you can link your card or bank account for a more convenient way to pay when you shop online. In 2015, PayPal acquired the digital money transfer company, Xoom.
Quick summary: Wise wins
PayPal is an excellent service for making online payments and sending money between family and friends within the same currency. However, when it comes to sending funds between currencies, Wise offers a more specialist service that enables it to charge lower fees, more favourable exchange rates, and get your money to your recipient in less time.
Which brand has lower fees?
Wise’s fees vary depending on:
The amount you are sending
Your payment method
Where you are sending the money from
Whether you opt for a fast transfer (higher fees) or a low-cost transfer (potentially longer transfer times).
The company’s fees are made up of a small percentage of the transfer amount plus a small fixed fee which can vary depending on whether you opt for a fast or a low-cost transfer.
PayPal charges fees for sending your money internationally, as well as for converting the currency (which we’ll cover in the next section). PayPal refers to its fees as a “cross-border personal transaction fee”, and this fee depends on the transaction amount as well as the country you are sending to.
For the US, Canada, and Europe, PayPal will charge £0.99 for transactions under £49.99, £1.99 for transactions between £50 or over. For the rest of the world, the fees are £0.99 for anything £49.99 and under, £1.99 for transactions between £50 – £99.99, and £3.99 for transactions £100 or more.
Between PayPal vs Wise, PayPal may have more favourable fees than Wise in some cases (and the other way around), fees rarely give us the whole picture. Exchange rate margins can massively increase the overall charge for your transfer, while other variables such as the sum you are sending, the destination, and your payment method can all come into play here.
Which brand offers better exchange rates?
Wise adds no markups on the mid-market rate, promising to always transfer your money at the existing interbank exchange rate with the ability to lock-in the rate for up to 48 hours for some transfers.
This is a feature that makes Wise extremely popular, providing a transparent breakdown of the fees you can expect when sending your money with them with the assurance that you’re always getting a fair exchange rate.
PayPal is relatively upfront about its currency conversion fees (i.e. how much of a percentage it charges on top of the mid-market rate). You can typically expect to receive an exchange rate margin between 3.5 – 4%, depending on the currency.
For example, sending from GDP to AUD would have a mark up of 4%, while converting GDP to USD would have a margin of 3.75%. Compared to other money transfer providers, this is an uncompetitive exchange rate.
PayPal simply cannot compete with Wise when it comes to exchange rates. Compared to many money transfer providers, PayPal’s rates are already unfavourable – but add in the fact that Wise adds zero fees onto the mid-market rate, and we have a clear winner here when comparing Wise vs PayPal.
Which brand covers more locations?
Wise supports transfers to 59 countries in over 50 currencies, including the vast majority of Europe, the United States, India, Brazil, Australia, and Canada.
PayPal is available in more than 200 countries, but they only support 25 currencies at the moment.
While PayPal has a huge platform with reach to hundreds of countries, the currencies it offers conversions to are relatively limited compared to Wise.
Which is faster?
Wise’s transfer times can take anywhere from minutes to up to 2 working business days. The company provides the option to choose between ‘fast and easy’ transfers, which have higher costs but near-instant transfer times, and ‘low-cost’ transfers which have lower fees but may take slightly longer to be processed
If you already have money available in your PayPal account and the person you are sending to has a PayPal account already, you should be able to initiate a transfer instantly. However, if you need to request for the person you are sending the funds to create an account or need to first withdraw your funds from your bank account, the transfer can take between 3 – 5 days.
Comparing PayPal vs Wise, PayPal can be an effective way to send money instantly if both you and the recipient are regular users and have accounts already set up. However, if you are sending smaller sums and happy to pay slightly higher fees for an instant transfer, Wise is also a good option.
Which brand offers more transfer & payment options?
Wise’s payment options include:
Apple and Google Pay
The most popular payout option is for funds to be sent directly to your recipient’s bank account.
PayPal’s payment options include paying by:
You can select for your recipient to receive the funds either by bank transfer or by PayPal account transfer.
Between Wise vs PayPal, both providers have a number of options for paying for your transfer, which is convenient since fees will often vary depending on what payment option you select. It should be noted that both companies are fairly limited in terms of payout options – neither offers cash pickups which can be a key factor for many people sending money abroad.
What do users have to say about each brand?
Wise has over 95,000 reviews on Trustpilot and a total ‘Excellent’ rating of 4.6 out of 5. The positive reviews most frequently praise how easy and convenient the platform is to us, transparent fee and exchange rate structures, and the speed in which transfers can be processed.
In terms of cons, Wise becomes less competitive the larger the sum you are looking to provide, so it’s worth considering other operators if you’ll be sending large amounts on a regular basis. Furthermore, some customers struggle with the digital focus provider’s platform is built on, with cash pickups and agent locations a big appeal for many.
PayPal receives overwhelmingly bad reviews from customers on Trustpilot, with a ‘Bad’ rating of 1.3 out of 5. It’s worth bearing in mind that these reviews are not just aimed towards PayPal’s services as an international transfer provider, but directed towards the providers’s service as a whole.
Amongst the negative reviews, users frequently refer to unfair charges, funds being paused or lost, and poor customer service.
Wise is a popular transfer service and has positive reviews to back up the quality of service it provides. It should be noted, however, that PayPal’s user reviews cannot be completely relied upon as there is no way to separate reviews for the company’s transfer services from the rest of the services they provide.
What brand offers better ease of use, accessibility & security?
Wise supports 12 languages on its website and has a free app available on both iOS and Android. The app is highly rated on both app stores and receives positive reviews for its user-friendly interface to make transfers on the go.
In terms of customer support, the platform does provide assistance via live chat, email, and phone, although some users find these options difficult to access on the platform.
Wise has a 2-factor authentication system that sends the user a code to verify a transaction before proceeding in order to protect your account. In some cases, the provider will also require further identification to verify your account – this may include uploading a photo of your ID, proof of address, or a photo of you holding your ID for verification purposes.
PayPal is accessible to a wide range of countries, supporting 17 different languages. The app is available on both iOS and Android, allowing you to view your balance, add and withdraw money, and send money. The app receives good reviews for its convenience and ease of use.
PayPal has a large help centre on its website as well as a community forum designed to address and solve any problems that users may have. In addition, you can also contact customer service via a messaging function on the website.
PayPal uses advanced encryption technology in order to protect every transaction it processes. It also has security questions in place that you can use if you forget or lose your password, although you can also contact customer service to regain access to your account.
Between PayPal vs Wise, both providers are industry giants in their own right, and therefore have several layers of security and user protection in place to keep your money and accounts safe.
As well as international money transfers, Wise has expanded to offer a multi-currency account to their users. Similarly to virtual bank accounts, the account enables users to be paid in over 50 currencies, avoiding unfair exchange rates and fees from local banks, and also comes with its own debit Mastercard which has fee-free ATM withdrawals up to £200.
In addition to payments for friends and family, PayPal’s main territory is in e-commerce. It is most widely used as a method to pay merchants for goods online – to do this, you can authorize a seller to use your PayPal account, or designate a monthly payment for a subscription service.
Case study: sending a variety of amounts between the UK (GDP) and Australia (AUD).
Sending £200 withWise would give you a conversion rate of 1 GBP = 1.81336 AUD (at the time of writing). This transfer would incur a fee of £1.56, with the recipient receiving a total of $359.84.
You would get the same mid-market rate with this transfer, and incur a fee of £3.76 for a low-cost transfer taking around 1 working day. The recipient would receive a total of $1,805.76.
Sending this sum would incur a fee of £70.02 for a low-cost transfer, which would take around 1 working day. The recipient would receive a total of $36,151.7.
PayPal is less transparent about its fees when setting up a currency conversion. At the time of writing, sending this sum would have a conversion rate: 1 GBP = 1.7216 AUD. In total, the recipient would receive $344.33.
PayPal would give you the same exchange rate for this transfer, but again, the exact fees are not made clear. Your recipient would get a total of $1,721.64.
When sending this sum with PayPal, the recipient would get $34,432.71. This transfer would take between 3 – 5 working days.
From this Wise vs PayPal case study, we can clearly see that Wise has more favourable fees and exchange rates than PayPal. In every case, the recipient receives far more of your money with Wise – with a difference of almost $2,000 in the case of the larger sum. Additionally, Wise estimates your transfer would take between 1 – 2 working days, whereas PayPal could take up to 5.
While PayPal is undoubtedly a well-established and popular service for sending money domestically and making payments online, it’s clear that when it comes to transferring money between currencies, a specialist provider such as Wise can’t be matched.
Wise is superior here in terms of fees, exchange rate margins, transfer times, and user reviews, delivering your money internationally faster and for less.