PayPal fees and exchange rate: Costs of sending money overseas with PayPal Canada

Diane Rekker

There are lots of different options out there if you’re looking to send money to friends or family abroad. You can send money direct from your bank account using a bank transfer, try a digital payment provider you already use, such as PayPal, or choose a specialist in international money transfers, like Wise. The costs to send money vary widely between these options, so doing a bit of research in advance is the best way to make sure you’re not paying too much for your cross-border transfer.

This overview will cover all you need to know about:

What are alternatives to PayPal?

It makes sense to check out whether PayPal is your cheapest and most convenient option for sending money to friends and family overseas. You can compare the process and prices against your regular bank, and other alternative providers.

Working with your regular bank may have the benefit of familiarity, but it’s not always the quickest or most convenient choice - in fact some banks still require you to visit a branch in person to arrange a transfer.

To arrange a simple online payment to a friend overseas, you might find you’re better off with a modern alternative to traditional banks, such as Wise.

How does an international money transfer with Wise compare to one with PayPal? Let’s look at an example of sending CA$1.000 to the US, to be received in US$.

Charges PayPal Wise
Fee for payment method
  • PayPal balance or bank account CA$2.99
  • Credit or debit card CA$2.99 + fixed fee of 0.30 US$
Fee overview
  • Direct Debit CA$2.85
  • Domestic wire CA$5.50
  • Bill Payment CA$ 5.50
  • Debit card CA$17.68
  • Credit card CA$22.48
  • Fixed fee of CA$9.03 for all payment methods
Currency conversion fee
  • CA$35 (3.5% of the amount)
  • None
Exchange rate
  • Wholesale rate + 2.5% markup
  • Mid-market exchange rate
  • Check out Wise, and the Wise multi-currency borderless account to get safe, quick international payments for a low fee.

    How can you send money abroad with PayPal, from Canada?

    Before we dive into using PayPal to make international transfers, it’s worth knowing that the fees and features you can access with PayPal will depend on whether you have a personal or business account. This guide will focus on making international payments from personal PayPal accounts, so if you’re looking to send money for your business, you’ll need to review the business account fees over on the PayPal website¹.

    With a PayPal personal account, sending money overseas is fairly simple. You’ll need to take a few steps in order to create a payment².

    This is how you can send money abroad through PayPal:

    • Log into your account and click the send and request button
    • Choose between send to a friend or *pay for a service *
    • Enter the email address or mobile phone number of the recipient
    • Confirm how much you want to send and check if the currency if correct
    • Choose how you want to fund the transfer - PayPal balance, linked bank account, or a card. There are different fees based on the payment method selected
    • Review all the details of your transfer before you confirm it

    Your recipient will receive an email notifying them that they have a payment waiting. If they have a PayPal account already, the money will be deposited there. If they don’t have an account with PayPal yet, they’ll have to open one to access the funds you’ve sent.

    How can you fund your international PayPal transfer?

    You can link different payment methods to your PayPal account, and then select the one you want to use for your transfer. Choose from using your PayPal balance, your linked bank account, or a Visa, Mastercard or American Express credit or debit card³.

    Usually, one payment method will be nominated as your preferred option, and this will be automatically selected by PayPal when you set up the transfer⁴. Alter this within your account by simply selecting a different linked method of funding the payment when you review the payment.

    It’s worth knowing that the fees you pay for an overseas transfer with PayPal can vary depending on the funding method you choose. You can find more information on that in the table below.

    What are the PayPal international money transfer fees?

    Using PayPal to send money to friends and family abroad is convenient, but there are fees you need to think about. The charging structure is relatively complex, and varies according to the payment type and destination country. Make sure you understand the range of fees you’ll face before you go ahead.

    This are the PayPal fees when you want to send money abroad from Canada:

    Transfer details Payment funding method PayPal Canada fee
    Sending money to friends and family in the US or selected countries in Europe. PayPal balance or linked bank account CA$2.99 or currency equivalent + 2.5% exchange rate markup + 3.5% - 4% currency conversion fee
    Sending money to friends and family in the US or selected countries in Europe. Credit or debit card CA$2.99 or currency equivalent + 2.9% + fixed fee based on the currency + 2.5% exchange rate markup + 3.5%-4% currency conversion fee
    Sending money to friends and family elsewhere in the world. PayPal balance or linked bank account CA$4.99 or currency equivalent + 2.5% exchange rate markup + 4% currency conversion fee
    Sending money to friends and family elsewhere in the world. Credit or debit card CA$4.99 or currency equivalent + 2.9% + fixed fee based on the currency + 2.5% exchange rate markup + 4% currency conversion fee

    Source ⁵ and ⁶

    PayPal fixed fees

    If you pay for your transfer using a card, you’ll have to pay a fixed fee depending on the currency. These fees can be found on the fees section of the PayPal website. To give an idea of the cost, the fixed fee would be EUR0.35 for a transfer in euros, or AU$0.30 if you’re sending in Australian dollars⁶.

    You’ll also pay a currency conversion fee⁶ if the payment is to be received in a currency other than Canadian dollars, and may find that a markup has been added onto the exchange rate offered for conversion⁵.

    What is the PayPal exchange rate when you transfer money abroad?

    The exchange rate that PayPal uses to convert your money to the currency of the recipient, is a rate they call the “retail foreign exchange rate”. But what does this mean for the exchange rate you’ll get? They explain it like this⁵:

    We receive a wholesale rate quote from our bank twice a day and add 2.5% to determine the retail foreign exchange rate to apply to transactions that involve a currency conversion.

    As the name suggests, this is not the same rate as the mid-market exchange rate. They get the mid-market rate, or wholesale rate, from their bank and add a markup of 2.5% to it. This marked up rate will be the rate that they will use to convert your money. Although most banks and providers do this, and PayPal is at least transparent about how much their markup is, you’re still paying extra costs on your international money transfer.

    Before you hit the confirm button, when making your international transfer, compare the fees, exchange rate and the amount your recipient will ultimately get to different providers, to make sure you get the best deal. Not all international payment providers add a markup to the exchange rate they use. Wise, for example, offer international payments using the mid-market exchange rate, which is the same exchange rate you’ll find on Google. You then pay a transparent fee for the service, which makes it much easier to understand and compare the costs involved.

    You can arrange a one off Wise payment, or open an online borderless multi-currency account for ease. With a borderless account you can hold over 40 currencies, and send payments all over the world and even receive payments like a local in USD, GBP, EUR, AUD, NZD and PLN. Transfers use the Google exchange rate, with a straightforward fee schedule to make it easy to compare the service with other providers. And because Wise is FINTRAC regulated and uses the same security technology as leading banks, you know your money is safe - no matter what currency you’re holding it in.

    Before you choose the best way to arrange your overseas payment, it’s well worth spending some time looking at different providers. Compare the service for convenience and cost, to make sure you’re getting the best deal out there.

    Sign up with Wise, and start saving on your international money transfers!

    Sources used for this article:
    1.PayPal FAQ page - What is the difference between personal and business accounts
    2.PayPal FAQ page - How do I send money?
    3.PayPal FAQ page - What credit or debit cards can I use with PayPal?
    4.PayPal FAQ page - How are my payments funded?
    5.PayPal FAQ page - Where can I find PayPal's currency exchange rates?
    6.PayPal fees page
    *All sources checked on Dec 5, 2019

    This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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