Transferring Money Internationally with PayPal

PayPal is the world’s leading and most popular digital wallet provider.

However, in Australia, PayPal is a relatively small player in the payments ecosystem.

Seeing as PayPal allows customers to transfer money internationally, this review will consider PayPal’s strengths and weaknesses in this domain.

It should also provide you with a clearer idea of when you can, or when you should use PayPal for your unique money transfers needs.

We’ll highlight some client experiences from our analysis of verified reviews, and will consider PayPal’s feasibility for overseas transfers based on cost, convenience, and security.

In short, an overseas transfer to another PayPal user is a fairly slick and easy process, albeit costly.

Pros and Cons of PayPal for International Transfers

Given the abundance of credible and competitive alternatives, we’ll compare PayPal to other payments providers that are amongst the leaders in the market.

Why use PayPal?Why not use PayPal?
Speed – If both the sender and beneficiary are using PayPal, then transfers are effectively instant.Process – Australians can only use PayPal for international transfers if the recipient also has a PayPal account.
Security – PayPal adheres to industry-standard encryption and has extensive measures in place to spot and protect customers from fraudulent transactions.Price – PayPal charges significant fees for overseas transfers and a flat exchange rate markup amongst the highest in the industry.
Simplicity – Paying individuals and merchants is a very seamless process, and you can easily complete your transfer in-app or online.Customer reviews – Verified reviews point to bad customer service and accounts being frozen without explanation.

PayPal screenshot

About PayPal

Originally founded in 1998, PayPal (previously Confinity) started out developing security software for handheld devices. 

Two years later, it merged with online banking company x.com, which was founded by Elon Musk, who was PayPal’s CEO for a short time, before being replaced by Peter Thiel.

E-commerce giant eBay then acquired PayPal in 2002. 

PayPal has been operating in Australia since 2005 and as of today has more than 7 million active consumer accounts in the country.  

When PayPal first emerged on the scene, they were considered a very innovative facilitator of online electronic payments. 

This reputation, in addition to their strong focus on security, allowed them to partner with major companies like Amazon, which played a key part in their worldwide popularity as a payment solution. 

Their payment solutions offer a lot of convenience for merchants, with both in-store and online options that integrate into most major e-commerce platforms. 

As far as overseas transfers, PayPal has never been known for its low international fees or competitive exchange rates. 

Similar to traditional banks, they gain much of their custom for international transfers based on people’s tendency to work with a popular provider. 

Those willing to research alternatives will almost certainly find more competitive offerings. 

In fact, not only are other leading providers more cost effective, they also offer far better service and payments options.  

Can I use PayPal for international payments?

Yes, Australians can make international payments directly through PayPal, providing you are transferring funds to another PayPal user or merchant.

PayPal does not facilitate international transfers to bank accounts, as these types of payments are handled by one of PayPal’s subsidiaries that is not currently available in Australia. 

For those with a requirement to transfer funds to someone without a PayPal account, we highlight some of our recommended providers later in this article.

For those where a ‘PayPal account’ to ‘PayPal account’ is a feasible way to complete their overseas transfer, we’ll consider the associated fees and exchange rate markup. 

How to calculate PayPal overseas fees

 Whilst PayPal is fairly transparent and technically does not charge any hidden fees, their pricing structure is far from simple. 

Paypal international fees vary based on the destination country, how you’re sending the money, and how you’re funding the transfer.

 

For reference, we’ve compared fees with domestic transfers to highlight how the firm is better suited for these types of transactions.

Funding method

Recipient Country

Fees

PayPal balance or linked bank accountAustralia$0
Debit or credit cardAustralia2.6% of transaction amount + $0.30
PayPal balance or linked bank accountAll other countries5% of the transaction ($0.99 min, $5.99 max)
Debit or credit cardAll other countries5% of transaction total ($0.99 min, $5.99 max) + 2.6% of the transaction amount paid using a card + a fixed fee based on currency (roughly equivalent to between $0.30 – $0.40 AUD)

Bear in mind, this table is only applicable to those sending money via PayPal to another PayPal user. 

What are PayPal’s exchange rates? 

PayPal charges a flat rate for the majority of all transactions that include a currency conversion, whether you’re sending money to friends, family, or paying for goods or services.

Currency conversions are calculated at 4% above the mid market rate. 

The only exception to this is personal currency conversions within your own account, which are calculated at 3% above the mid market rate. 

A 4% exchange rate markup is in line with most of Australia’s big five banks but is considered very expensive compared to some of the leading money transfer providers.

All Fees 

Say you’re sending $10,000 AUD to someone in the UK who will receive Pound Sterling. 

If you’re funding the transfer via your PayPal balance or linked bank account, you’ll pay 5% of the transaction total, which would be capped at $5.99 AUD. 

You’ll also pay a currency exchange markup for transferring your Australian Dollars into Pound Sterling. 

This is 4% of the transaction total, which equates to $400 AUD. 

Meaning your total fees and fx markups for your $10,000 AUD to GBP transfer equates to $405.99 AUD.  

What are PayPal’s merchant fees for receiving payments?

Paypal offers fantastic payment solutions for merchants, so you can get going quickly by offering your customers a slick and easy way to pay for your goods or service. 

‘Receiving transaction fees’ vary based on the amount you’re receiving and whether or not your customer is paying via a QR code. 

In light of the pandemic, May 2020 saw PayPal introduce QR code payments, making it easier for customers to pay touch free. 

To help encourage their continued use, PayPal offers a cheaper rate for merchants to receive these types of payments. 

Transaction Type

Rate

Additional percentage-based fee for international commercial transactions

Commercial Transactions2.60% + fixed fee+1.00%
QR Code Transactions – 10.01 AUD and above0.90% + fixed fee+1.00%
QR code Transactions – 10.00 AUD and below1.40% + fixed feeNo fee

The fixed fee varies based on the currency received but totals $0.30 AUD for domestic Australian transactions, typically ranging between the equivalent of $0.30-$0.40 for other currencies. 

QR code payments work for the receiving of domestic and international payments and result in significant savings, particularly for higher value sales. 

Is there a PayPal app?

Yes, there is a PayPal app available on both the App Store and Google Play. 

The app facilitates both domestic and international money transfers (to another PayPal account only ad features a very slcik and simple interface.

 

Is PayPal safe?

Yes, providing you understand how to use PayPal correctly, we consider them to be a safe provider. 

 PayPal Australia is regulated by both ASIC and AUSTRAC.

They are also regulated as a limited ADI and digital wallet provider in Australia. 

PayPal complies with rigorous and diverse regulatory requirements, both domestically and overseas. 

They use bank level encryption including SSL 3.0, and have a number of human and AI procedures in place to help spot and protect its customers from fraud. 

With that said, PayPal did reveal in 2023 that they fell victim to a massive data breach, impacting tens of thousands of accounts. 

Whilst the hackers weren’t able to make transactions on the account, they gained access to  transaction histories, connected card details, and other personal information.

PayPal reacted swiftly to mitigate most of the breach’s potential harm, but the attack served as a sobering reminder that even tech giants are not immune to the threat of cybercrime

PayPal reviews

Despite its popularity, PayPal has an extremely poor online reputation. 

The overwhelming majority of verified PayPal reviews are extremely negative, with roughly 90% rating the firm 1 star out of 5 on TrustPilot. 

As of November 2023, the firm has an average TrustPilot rating of just 1.3 out of 5, based on roughly 27,500 reviews. 

A theme throughout these reviews is the frequent mention of poor customer service.

Many customers detail their struggles in resolving disputes or being able to get a clear explanation from a member of PayPal staff.

There are many reports of customer accounts being frozen or payment transactions being reversed, both without explanation from PayPal.

Clearly, very frustrating.

It doesn’t exactly fill you with confidence to let them handle your money either. 

Seeing as international payments make up only a percentage of PayPal’s services, not all negative reviews relate to overseas transfers. 

Meaning it’s somewhat difficult to directly compare PayPal online reviews with other money transfer providers or currency brokers.

 

Creating a PayPal Account 

 It is free and easy to open a new PayPal account, simply follow these steps. 

Choose your account typeYou’ll need to select either a ‘personal account’ or ‘business account’. 

Confirm your mobile number – Along with your country of residence, you’ll need to provide a mobile number that you can access, so PayPal can confirm you are human.

 This is typically the only form of verification required to open an account, making it one of the quickest account opening processes in the industry. 

Enter some basic personal details – A few more personal details are required, including an email address. 

Accept T&Cs and choose your password – After reviewing and accepting PayPal’s T&Cs, choose a secure password and decide whether to set up multi-step verification. 

With that, your account is active. Simply add funds to your account and you’re good to start trading. 

How to send money abroad with PayPal 

Sending money to another PayPal user is a quick and easy process. 

  • From your dashboard, select ‘Send & Request’
  • Enter the beneficiary’s email address or phone number
  • Choose either ‘Sending to a friend’ or ‘Paying for an item or a Service’
  • Confirm the amount you wish to transfer
  • Review your transfer and click ‘Send money now’ to finalise 

How long does it take PayPal to transfer funds?

Money transfers from one PayPal account to another are most often instant.

Compare PayPal vs alternatives (for overseas transfers) 

PayPal is an ‘e-wallet’, which allows you to keep money in your digital account for a sustained period of time, and easily transfer money from your e-wallet to your bank account. 

There are two other types of providers considered better than PayPal for transferring money to a bank account abroad, online money transfers companies and currency brokers.

Paypal vs Wise 

Wise is an online money transfer company whose multi currency account allows you to send and receive in a number of popular currencies, sometimes avoiding currency exchanges altogether.

By offering a more streamlined solution, Wise has some of the most competitive fees in the market. 

Rather than applying a markup to a customer’s FX exchange, Wise offers all currency conversions at the mid market rate. 

Wise makes its profit by applying a variable fee that is calculated per specific transaction. 

Particularly for lower value transfers, this fee usually equates to less than what is lost in an fx markup from other providers. 

Wise has an extremely slick online platform and app that are easy to use, so are certainly worth your consideration for your international transfer needs.

As an online only solution, the onus is on you to complete all steps of the transfer, which is one of the main reasons Wise is better suited to those sending lower value transfers.

PayPal vs OFX

OFX is a huge Australia-based currency broker with an annual turnover of AU$50 billion, that serves personal customers and has a very comprehensive offering to business customers.

They do not charge any transfer fees for personal customers and offer extremely competitive exchange rates that are much lower than those offered by the ‘big five’ banks or PayPal. 

OFX will assign you a dedicated personal account manager, who will assist you every step of the way and help advise you how to best time your transfer.

Currency brokers also offer useful tools like forward contracts, which can be used to secure a favourable exchange rate for a set period of time in the future. 

When sending large amounts of money abroad, like purchasing a property overseas, unfavourable currency swings can equate to a huge loss and knock you over budget.

They are a currency expert that can answer any questions, help you best time your transfers, and find the most suitable products for your specific needs. 

Having a dedicated expert on hand to assist you, along with a great suite of FX services, makes working with OFX a great choice for larger transfers in excess of $20,000 AUD. 

How much can you save using a PayPal alternative?

The amount you can save will inevitably vary depending on which currency you’re converting your funds to and the total amount you’re sending. 

As an example, for a $20,000 AUD to USD transfer, as of November 2023, you would save $922.96 AUD by completing your transfer with Wise instead of PayPal. 

A huge saving! 

Choosing OFX for the same transfer, would still save you more than $820 AUD compared to using PayPal. 

While Wise offers the slightly better option based solely on cost, choosing OFX would give you access to your own currency expert to guide you through all your international transfers. 

OFX will then get cheaper the more you send.

 

When should you use PayPal for money transfers?

For Australian residents, PayPal has limited scope for transferring money overseas. 

The only instance it would make sense is where there is a high urgency for the recipient to collect their funds, and both you and the beneficiary already have PayPal accounts. 

Even still, by completing your transfer with PayPal, you’ll be subject to paying fees and very poor exchange rate markups. 

Instead, we recommend registering with either an online money transfer provider or currency broker, depending on your personal needs. 

For transfers of $20,000 AUD and under, you’ll likely get the best rate by choosing an app only provider like ‘Wise’.

For everything else, choose one of the leading currency brokers available to Australians like  OFX. 

You’ll experience a balance of great technology, exceptional service, and additional tools to help you save more on your international transfer. 

Our verdict

PayPal is a well established and highly regulated e-wallet provider, with great options for merchants to easily receive payments from customers.

They also offer a slick and seamless service to make payments between two PayPal accounts. 

This can be a great option for domestic transfers, but it’s a very costly method for transferring money overseas. 

For international transfers, we recommend signing up with one of the market leading money transfer companies.

They offer a value-adding proposition that far exceeds PayPal or a traditional bank.

Opening an account with one of these providers is quick and easy.

By doing so, you’ll be able to make better informed and cheaper international money transfers.