Should You Send Money to The Philippines Through PayPal?
When it comes to sending money to the Philippines, it’s no wonder that for many people convenience is key. PayPal is well-known around the world for its quick and efficient ways of sending money to users in seconds and with 300 million customers globally it is arguably the most used money transfer program worldwide. Unfortunately, whilst it is convenient and easy to use, it may not always be the best bet for transferring money to friends and family in the Philippines. Our helpful guide will break down the costs of using this platform and look at the alternative options for US-to-Philippine remittances.
The Cost of Sending Money to the Philippines Through PayPal vs. Apps
While convenience is important, the main thing to look at when sending money to the Philippines is the cost. When making your transfer through PayPal there are four main charges.
Exchange Rate Margin
This is best explained as 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 daily but tend to be quite high, with the current exchange rate (Sep 20, 2022) at 3.95%.
WorldRemit’s current exchange rate margin on USD/PHP transactions is 3.18% over the interbank rate. If you were to compare the two services on exchange rates alone when sending USD 1,000 you would receive PHP 55,836 with WorldRemit and USD 55,420 with PayPal.
When sending money between the US and the Philippines you will also pay transaction fees on your remittance. PayPal’s transaction fees range from 99c to the maximum international fee of USD 4.99 and unfortunately, it isn’t always made clear which fee you’ll be charged. Whilst these fees look manageable and are in line with WorldRemit which charge between USD 1.99 and 3.99 on USD/PHP remittances, PayPal also charges 5.00% of the total transaction cost as a fee.
Finally, your recipient will be charged a fixed fee of PHP 15 which applies to all transfers made in Philippine pesos. All of this soon adds up and means that your USD 1,000 transfer could be subject to up to USD 55 in transaction fees.
While it is not unusual for money transfer companies to charge fees, PayPal’s on the high end of the scale compared to most money transfer companies. We’ve looked at WorldRemit which has a maximum charge of USD 3.99 on the same route, but there is also Remitly which charges USD 5.00.
Credit Card Fees
As well as the transaction fees, you will be charged an additional 2.90% if you use a credit card to fund your remittance.
You may be charged a higher fee depending on the terms and conditions of your credit card company, but in most cases, PayPal will ask you to confirm if you would prefer to pay the PayPal transaction fees or those levied by your bank, and in almost all cases it is cheaper to choose PayPal’s fees.
Unfortunately, PayPal is not as convenient as it first seemed, and whilst most remittance companies pay directly into a bank account, your remittance will be first sent to your recipient's PayPal account. Should they wish to withdraw these funds into their bank account they will be charged an additional 2.50%.
To give a brief overview, this is the total amount you should expect to receive on a USD 1,000 USD-PHP transaction with PayPal vs. one for the same amount using WorldRemit.
Sending Money to the Philippines through PayPal Pros and Cons
Sending Money to the Philippines through WorldRemit Pros and Cons
The Speed of Sending from the USA to the Philippines
When sending money through PayPal from the USA to the Philippines, 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 the Philippines appearing within 1-2 business days. Times can vary based on any public holidays in either country or the bank accounts used to make and receive the remittance.
Which is the Best Provider?
Whilst PayPal is well-loved in both the US and the Philippines, our guide shows that when it comes to international transfers it is not the best option. The exchange rate margins are higher than most money transfer companies on the market and when you add these onto the extortionate transaction fees the cost of your transfer soon stacks up. PayPal may score points for convenience but if you shop around, you’ll see that there are far better options out there, such as WorldRemit, which provides your friends and family in the Philippines with a higher cut of the overall remittance.