What is PayPal and how does it work in Canada? (2023)

PayPal is a digital payment system that allows users to send and receive money between friends and family, online.It also allows you to make online purchases from businesses. PayPal’s international usage makes it one of the most popular online payment systems available.

Wise is a similar system to PayPal, designed to be easy and intuitive. This allows users to send money quickly and easily with minimal effort. But more on that later.

Table of Contents
How Does PayPal Work in Canada? How to set up and use PayPal in Canada How Long Do PayPal Transfers Take? Alternatives to PayPal in Canada Frequently Asked Questions about using PayPal in Canada

How Does PayPal Work in Canada?

You must have a Canadian bank account linked to your PayPal¹ account. You can also use PayPal with a credit or debit card associated with your PayPal account.

Once this is done, you can send money from your bank directly into someone else's PayPal wallet or receive payments into yours. You can also make purchases at participating stores with this method.

While sending money, PayPal deducts the amount from your bank account and transfers it to the recipient’s PayPal wallet. When someone sends you money, you can transfer these funds to the bank account associated with your PayPal account.

How Does PayPal Work When Buying Online?

When you buy something online, PayPal allows you to pay without having to enter your credit card information. In this case, PayPal is used as a payment method and uses the funds in your wallet or linked bank account.

You can then log into your PayPal account and approve the transaction before completion. The approval process gives buyers more security since your sensitive financial information remains undisclosed.

Where Can I Use PayPal in Canada?

Many businesses in Canada accept PayPal as a payment method, including major retailers such as Walmart and Amazon. You can also use PayPal to purchase products from international websites, such as eBay and Alibaba.

In addition to shopping online, you can also use PayPal for making person-to-person payments or sending money internationally. If you want to send money abroad, all you need is the recipient’s email address associated with their PayPal account.

What Are the Fees for Using PayPal?

PayPal fees differ depending on the type of transaction you are making, and whether you are a merchant or a consumer.

Consumer Fees for Types of Transactions²

Nature of Transaction	Fees
Online or In-Store	No Fee²
Domestic Personal via PayPal Balance or Bank Account	No Fee²
Domestic Personal via Card	2.90% + 0.30 CAD²
Europe or the U.S. via PayPal Balance or Bank Account	2.99 CAD²
Europe or the U.S. via Card	3.29 CAD + 2.90%²
Non-Europe or U.S. via PayPal Balance or Bank Account	4.99 CAD²
Non-Europe or U.S. via Card	5.29 CAD + 2.90%²

There is no charge for receiving payments unless a currency conversion is involved.

Merchant Fees for Types of Received Transactions

Nature of Transaction	Fees
Domestic Commercial Transactions	2.90% + 0.30 CAD³
U.S. Commercial Transactions	0.80%³
Non-U.S. Commercial Transactions	1.00%³
Domestic PayPal Transactions via Advanced Credit and Debit Card	2.70% + 0.30 CAD³
International PayPal Transactions via Advanced Credit and Debit Card	2.70% + 0.30 CAD³
Receiving Canada or U.S. Micropayments	5.00% + 0.05 CAD/USD³
Receiving Non-Canada or U.S. Micropayments	6.00% + fixed fee (depends on country)³

Inactivity Fees

As of November 20th, 2021, PayPal issues an inactivity fee⁴ of 20 CAD annually for accounts that have been inactive for twelve months.

Send money with Wise using low fees at a mid-market rate

Scared of the international fees listed above? Wise can help with personal and business related transactions. Wise is on a mission to make money transfer convenient, transparent and eventually free. This way, you know what you pay when you send money.

What’s more, Wise converts currencies at the mid-market rate. This is the same rate you’ll see online while checking currency conversions.

A Quick Example of an International Money Transfer

Imagine that you were to send 1000 CAD to a friend or family member in the UK. Here’s what the transfer costs would look like:

These savings are easy to get, too, as it costs nothing to open a personal account with Wise and start saving on fees. What’s more, you can read all about using Wise and PayPal together here.

Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information.

How to set up and use PayPal in Canada

Let's take a look at how you can set up and use PayPal for your transactions.

How to Set Up A PayPal Account

For personal use

Consumers in Canada can set up a PayPal account to use for online purchases and money transfers. To create an account, you'll need to provide your

• Email address
• Name
• Address
• Phone number

You will also need to link a credit or debit card or bank account so you have funds available for transactions.

For Businesses

Canadian businesses use PayPal to accept payments from customers. You will need to have a business account set up with PayPal, which includes providing additional information such as

• Business name
• Type of business
• Address
• Phone number
• Tax identification number

Once you are approved for the account, you'll be able to begin accepting payments from customers through PayPal or other payment methods such as credit or debit cards.

How to Send Money With PayPal

To send someone money with PayPal, all you have to do is

1. Enter your email address or mobile number.
2. Choose the amount of money you want to send
3. Add any notes or references you’d like to include.

Once that's done, just hit “Send Payment” and the money will be securely transferred instantly.

Here are some use cases to be aware of:

PayPal Balance

You can also send money with your PayPal balance. Select “PayPal balance” as the payment source when sending a payment and the payment comes from your PayPal balance. You can add funds to your PayPal account if needed.

Credit/Debit Card

You could connect your credit or debit card to the PayPal account used to make payments. Connecting your card is an easy way to send money on the go without worrying about carrying cash.

Bank Account

If you want to link your PayPal account with a bank account, you just have to provide your banking information when prompted. Once set up, you can transfer money from your bank into PayPal or vice versa.

International Transactions

PayPal also makes it easy to send money internationally. To do this, you'll need to go to Send and Request. After this,

1. Enter the recipient’s email address or phone number.
2. Enter the amount to be sent.
3. Confirm the payment type and choose how to pay.
4. Review your transaction and hit Send Payment Now.

PayPal will take care of converting currencies and there are limited extra fees. If decreasing those extra fees even more sounds good, Wise is always a great option.

How to Make Online Purchases with PayPal

1. Visit the website of the chosen online retailer and locate the desired item.
2. Add it to the shopping cart, then proceed to checkout.
3. Select PayPal as a payment option and log into a PayPal account when prompted.
4. Confirm the details and click “Pay Now” – that’s it! The purchase will be securely processed instantly without using a debit or credit card.

How to Cancel a PayPal Transaction

If you’ve paid using PayPal and need to cancel it, all you have to do is head over to your PayPal account, locate the transaction in question, select ‘Cancel Payment’, and follow the instructions.

How to Receive Money on PayPal

For those wondering how to use PayPal to receive money, you can link your bank account or credit card to transfer funds from it. Once you have those linked, you can receive money from anyone with a PayPal account.

You simply need to enter your email address, and you will be prompted to pay. The funds are sent directly into your PayPal account, which can then be transferred over to the linked bank account or the credit card of your choice.

Request Money Feature

All you need for the ‘Request Money” feature is the recipient’s email address and then you can quickly send a payment request through PayPal. The recipient will then be prompted to pay the requested sum, making it easy for both parties to handle payments efficiently.

How to Add Money to Your Own PayPal Account

If you wish to add money to your own PayPal account, you can do so by linking your bank account or credit card. Once those are linked, simply select ‘Add Money’ from the main menu and enter the amount that you would like to add. The funds will then be transferred into your PayPal balance.

How Long Do PayPal Transfers Take?

Depending on which type of payment method you choose for the transaction, transfers can take a few minutes or several days to complete. Here’s a detailed table of what each timeline looks like:

Type of Transfer	Duration
Transferring to External Platforms (Bank Transfers, Wise, etc.)	1-3 Days⁵
Receiving Money on PayPal	Instantly⁶
Receiving Money via Bank Transfer to PayPal	3-5 Business Days⁷
Receiving a Refund	Up to 30 Days (depending on the method used)⁸

Alternatives to PayPal in Canada

There are many PayPal alternatives globally, but unfortunately, some, like Venmo, are only found in the U.S. or other countries. Here are some of the PayPal alternatives available in Canada:

Wise

Wise is an online money transfer service that allows individual and business account users to send and receive payments in over 40 countries. It offers low fees, fast transfers, and mid market rates - which is the rate you’d see online for comparing currency values.

Wise can be used for professional as well as personal financial transactions. What’s more, you can order a Wise card and pay on the go with the digital card on your phone. This card can be used for online as well as in-store purchases.

Payoneer

Payoneer is a payment processor that allows users to send, receive and manage their money internationally. It offers low fees for online payments and transfers, making it a great option for Canadian businesses to make international payments.

Remitly

Remitly is a money transfer service that allows individuals and businesses to send money from Canada to other countries.

Frequently Asked Questions about using PayPal in Canada

How Do I Contact PayPal Customer Service in Canada?

If you have any questions or concerns about your PayPal account, you can contact PayPal Canada by calling or using chat services on their website’s Customer Service Help Centre⁹. You can also take a look at the PayPal Community or Resolution Center for help.

Is PayPal Safe?

PayPal's servers store an encryption system that protects all payments and financial information. Also, the step of approving each transaction ensures that the money leaving your account is something you authorize. These are among PayPal's initiatives to make their online transactions secure.

Which Stores in Canada Accept PayPal?

Many major retailers, including Walmart, Target, and Best Buy, offer PayPal as a payment option. You can also use PayPal to pay for goods and services online from Canadian websites.

Is PayPal Free in Canada?

PayPal is free to use in Canada for domestic transfers and payments. You do not need to pay any fees when you make a payment or receive money through PayPal. However, there are fees associated with certain transactions, such as currency conversion and international payments.

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Sources:

1. PayPal Canada Home Page
2. PayPal Consumer Fees
3. PayPal Merchant Fees Menu
4. PayPal Canada Inactivity Fee Update
5. PayPal Help Center: How Do I Get Money Out of My PayPal Account?
6. PayPal Help Center: How Do I Receive Money Through PayPal?
7. PayPal Help Center: How Long Does It Take To Add Money From My Bank?
8. PayPal Help Center: Where is my Refund?
9. PayPal Canada Customer Service Help Centre