Should You Send Money to Canada Through PayPal?
When it comes to sending money to our neighbors in the north, convenience is key, and what could be more convenient than PayPal? The transfer platform is one of the largest in the world and with over 300 million customers. Unfortunately, if you look deeper into the costs, you may discover that PayPal isn’t the best fit for your remittance. Our helpful guide will break down the costs of using peer-to-peer apps, such as PayPal, and help you find an alternative option for US-to-Canada remittances.
The Cost of Sending Money to Canada Through PayPal vs. Apps
While there are myriad options for users in America to send cash to their friends and family across states, in most cases these don’t work for international remittances. With CashApp, Venmo, and Zelle not working on cross-border transactions, it may seem like PayPal is the best bet.
This isn’t usually the case at all, and we’ll start by looking at the costs to see why. There are four main charges you’ll encounter when using PayPal.
Exchange Rate Margin
The exchange rate margin is the difference between the mid-market rate (also known as the interbank rate) and the exchange rate charged by PayPal. PayPal’s exchange rate margins change all the time in line with fluctuations in the market but are often a little on the high side with the current exchange rate (Sep 20, 2022) at 3.90% above the interbank rate.
An alternative is to use a money transfer company like WorldRemit which has a current exchange rate margin of 2.30% over the interbank rate.
Transaction Fees
If you use PayPal to send money to friends and family in Canada, you will have to pay transaction fees on your remittance. These range from 99c to the maximum international fee of USD 4.99 USD. These fees might look manageable on their own, but PayPal also charges a standard 5.00% of the total transaction cost as a fee.
Finally, your recipient will be charged a fixed fee of 30c (CAD) which applies to all transfers made in Canadian dollars. This means that a USD 1,000 remittance could be subject to up to USD 55.22 in transaction fees.
Most money transfer companies charge fees, but when you compare PayPal’s USD 55.22 to WorldRemit’s fee of USD 2.99 for the same transaction, it’s hard to justify the convenience of the transaction. It pays to shop around, so why not look at our helpful comparison rate table to see the current best rate for your transaction.
Credit Card Fees
Your credit card company will also charge a percentage of the fee for an international transaction. You’ll need to check your terms and conditions to find out the specific amount, but PayPal charges a standard 2.90% on international credit card transactions.
At the checkout, you’ll be asked to confirm if you wish to pay the 2.90% levied by PayPal or the transaction fees charged by your bank. In almost all cases, and unless you have a specific travel credit card it is cheaper to opt for PayPal’s fees.
Withdrawal Fee
Once your recipient has received your transaction that sadly isn’t the end of the fees. While most money transfer companies offer the advantage of paying straight into a bank account, if your remittance is sent to a PayPal account, your family member will be charged an additional 2.50% of the transaction once they withdraw it into a bank.
To give a brief overview, this is the total amount you should expect to receive on a USD 1,000 USD-CAD transaction with PayPal vs. one for the same amount using WorldRemit.
| Provider | Amount (CAD) |
| PayPal | 1,183.36 |
| WorldRemit | 1,299.60 |
Sending Money to Canada through PayPal Pros and Cons
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Cons
Sending Money to Canada through WorldRemit Pros and Cons
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Cons
The Speed of Sending from the USA to Canada
When using PayPal to send money from the USA to Canada, your payment should appear instantly. However, PayPal transfers into a bank account can take anywhere from 1-5 business days with the majority between the US and Canada appearing the next business day.
Which is the best provider?
Whilst PayPal has built a name for itself in both Canada and the United States, our guide shows that it isn’t the best option when it comes to international transfers. The high exchange rate margins in addition to the multiple transaction fees soon make the cost of that quick transfer to a family member stack up. There are several different money transfer companies set up with the mission of getting you a better deal on your remittance, such as WorldRemit which enables your friends and family members in Canada to receive a higher cut of the money you’re sending them. If you need to send a remittance to Canada quickly why not also look at our guide on the fastest way to send money?
