PayPal international transfer: All you need to know

PayPal is one of the best known financial technology brands in the world, with services covering ecommerce sales, money transfers, credit and more. In fact, close to 400 million people around the world have PayPal accounts, sending and spending huge volumes of money daily.

It’s certainly a convenient way to shop online or send quick domestic payments - but if you need to send a payment overseas, PayPal isn't necessarily your best option. Specialist services like Wise or OFX are fast and easy to use - and could make your transfer cheaper.

PayPal international money transfer comparison

Sending money with PayPal is very convenient. However, PayPal international transfers don’t work quite like a normal bank transfer, or like a payment arranged through a specialist service. When you send a PayPal international transfer your money will be deposited into the recipient’s PayPal account, rather than into a bank account directly. Your recipient can then decide to spend the funds from their PayPal account, or withdraw it to their normal bank account. Fees may apply depending on the currencies involved.

All that said, the fees you’ll pay when you send money overseas with PayPal do follow a similar pattern to the charges you’ll probably run into with your normal bank. PayPal international transfers come with 2 different fees:

• Transfer fee  - with PayPal this is 5%, subject to minimum and maximum caps

• Exchange rate markup - this can be the highest fee, but it’s often hard to see

In most cases you’ll pay both of these fees when you send money with a traditional bank too - even if you don’t actually see the exchange rate markup split out from the overall costs. Bank international transfers can also involve third party fees when they’re processed through the SWIFT network, pushing up the price even further.

The costs of sending money overseas can often be cheaper if you use a specialist service instead of your regular bank, or a company like PayPal. We’ll walk through the costs of sending an international payment with PayPal one by one in just a moment. First, let’s take a look at a comparison of the costs and delivery times for sending an international transfer with PayPal compared to some specialist providers. Here we’ll use the fees that would apply for an online payment of 1,000 GBP to a friend in France.

*Fees and exchange rates correct at time of research - 15th June 2022

You’ll see the exchange rate being offered by PayPal when you arrange your payment online or in the PayPal app. We’ll take a closer look at the PayPal exchange rate later - but it’s good to know that the PayPal rate will include a markup - a percentage fee added to the mid-market exchange rate. This can be in the region of 3%, which doesn't sound huge, but does mean you’re paying more than you think for your transfer.

Finally, it’s worth noting that your international transfer with PayPal will be deposited into your recipient’s PayPal account. If they then want to withdraw it to a bank account, fees may apply, based on where their PayPal account is registered, the currencies involved, and how they set up the withdrawal.

Compare PayPal with some alternatives, to see if you can get a lower overall fee and a faster delivery time with a specialist money transfer service. Services like Wise use the mid-market exchange rate with no markups, making it far easier to see the true cost of your transfer in advance. Specialist money transfer services are secure and simple to use, and you can usually transact 24/7 online and through mobile apps.

PayPal international transfer fees

Let’s take a look at the fees you might run into when sending money overseas with PayPal UK:

PayPal exchange rate

You can choose the currency you send with PayPal. If you’re sending money in a different currency to the base currency of your PayPal account, currency exchange will be carried out using the PayPal exchange rate.

The PayPal exchange rate will include a markup, which is an extra fee. At the time of research, in the payment set out above from pounds to euros, the markup was around 3%. That’s pretty typical for international payment services and banks.

3% might not seem like a lot, but it soon adds up, and can be far more than the PayPal transfer fee which is capped at just 2.99 GBP.  Here’s how the fee would stack up with a 3% margin used for different transfer values:

• Sending 1,000 GBP - the exchange rate markup adds 30 GBP to the total

• Sending 5,000 GBP - the exchange rate markup adds 150 GBP to the total

• Sending 50,000 GBP - the exchange rate markup adds 1,500 GBP to the total

PayPal’s UK exchange rate margin isn’t published publicly - so you’ll need to log into your account and use the PayPal currency calculator to see the rate offered for your specific transfer.

Here’s a reminder of the total costs - including exchange rate markups - from the providers we looked at earlier. This is what you’ll pay with each if you set up your payment online and send 1,000 GBP to France in euros:

• PayPal: 2.99 GBP transfer fee + exchange rate margin which may be around 3%

• Wise: 4.28 GBP

• OFX: No transfer fee, but exchange rate margin applies

• Western Union: No transfer fee, but exchange rate margin applies

PayPal additional fees

Depending on how you use your PayPal account, you might also hit another couple of fees that are worth knowing about.

Firstly, there’s an inactivity fee which applies if your account has not transacted in the past 12 months - this is the lesser of either 9 GBP or the remaining balance in your account.

And secondly, there could be a charge involved with withdrawing money from PayPal to your bank. If your PayPal account is registered in the UK, you won’t normally pay any fee to withdraw to a sterling denominated linked bank account, as long as there’s no currency conversion involved. However, if you’re withdrawing to a USD account, you’ll pay 3% of the withdrawal amount in fees. Currency conversion costs can also apply if you need to switch currencies from your PayPal balance in order to withdraw them.

If you’re sending a payment with PayPal to someone overseas, it’s worth having them check the PayPal fees for receiving an international payment, and withdrawal to a bank account. PayPal’s fees are set by country or region, so depending on where your recipient is based, they may need to pay a fee to receive the transfer, or get their money out and into their normal bank account.

How long does a PayPal international money transfer take

When you send a payment overseas with PayPal it’ll often be deposited into the recipient’s account pretty much instantly. However, if your recipient then wants to move the funds to their own bank account for more flexibility, this may take a few days, depending on where they’re based.

Here’s a reminder of the delivery times for international transfers from PayPal and a few other providers:

• PayPal: Instant deposit to recipient’s PayPal account - withdrawing to a bank account may take a few days depending on the recipient’s country

• Wise: 85% of payments arrive in 24 hours

• Western Union: Up to 2 days

• OFX: 1 - 2 business days

Pros and cons of transferring money abroad with PayPal

Pros:

• Very easy service to use - just enter the recipient’s email to start

• Huge user base- high chance your recipient already has a PayPal account

• Instant deposit into the recipient’s PayPal account

Cons:

• Exchange rate markup applies which pushes up costs

• Recipient needs a PayPal account to get their money

• Moving funds to a bank account may take time, or come with an extra fee

PayPal is famed for its convenience. However, in many cases, you’ll get a better exchange rate and a lower overall cost when you send a payment internationally, if you choose a specialist service instead.

How to make an international transfer with PayPal

You can send a payment in PayPal using the PayPal app or desktop site. You’ll be able to choose to pay for your transfer with an existing PayPal balance, or your linked bank account or card. Here’s what you’ll need to do:

1. Log into your PayPal account and go to Send & Request

2. Find your recipient in your contacts, or enter their email address, mobile number or name and click Next

3. Tap Sending to a friend

4. Enter the amount, choose the currency and add a payment reference

5. Click Continue

6. Tap Payment Method, check the selected option - and click Change if you want to use a different funding source

7. Review the details and click Send Money Now

What information do you need to make an international transfer with PayPal?

One of the most attractive things about sending a payment with PayPal is its simplicity. There’s no need to find your recipient’s bank details - all you need to do is look them up in your contacts, enter their email address, mobile number or name. Assuming they have a PayPal account already the transfer is deposited in their account almost instantly. And if they don’t have a PayPal account yet, they’ll be notified by email or message that they have money waiting, with a link to set up their own PayPal account to get it.

Transfer limits and available countries

PayPal’s transfer limits will depend on whether your account is verified or unverified, and also the type of account you hold. Unverified account holders have lower limits, including a 1,700 GBP annual receiving limit. To lift these limits you’ll need to verify your account by adding and confirming your bank account and card details.

PayPal international transfers can be made to PayPal account holders in a broad range of currencies and countries. Log into your account to check the available countries based on your account type.

Receiving money from abroad with PayPal

You’ll be able to receive payments from abroad into your PayPal account with no fee, unless there’s currency conversion involved. The sender just needs your email address or phone number to set up the transfer.

Don’t forget that if you’re sent money in a foreign currency and want to convert it to pounds - or whichever currency you need - there will be a currency conversion charge which may be rolled into the exchange rate offered.

Conclusion

PayPal is popular because of its huge range of services, and convenient online and in app user experience. However, when it comes to international transactions, the PayPal exchange rate isn’t usually the best out there. PayPal adds a markup or margin to the rates used, which can push up the costs - often without you even knowing it.

Not all providers add a markup to the exchange rate being used - and this can keep the costs down for customers, as well as making it far easier to see what you’re really paying for your transaction. Wise - for example - can be 6x cheaper than bank international transfers, and for some users, up to 19x cheaper than PayPal, too.

Compare the costs of PayPal international transfers against the fees, rates and delivery times offered by international transfer specialists like Wise to see if you could save.