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Transferwise or Paypal: which is best way to send money?

Transferwise or Paypal: which is best way to send money?
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Is Transferwise safe? How fast is Paypal? Which money transfer service offers the fastest delivery internationally? If you’re looking for ways to get money abroad cheaply, quickly and easily, these are two of the most popular services available – but choosing the right one can be tricky.

Widely available in the UK, both Transferwise and Paypal offer a cheaper way to send money internationally than bank transfers. And both have their advantages and disadvantages, depending on what you’re looking for. 

How do these services work?

Transferwise is a safe way to replace regular bank account transfers for less money. All you need to do is create a free account and wait for account verification, which can take up to three days. Then, every time you want to send money, you just enter your bank details and where you’re sending the money.

With Paypal, you can send money using your bank account but also with a credit card and even your own Paypal balance. Once you create an account and verify it (by adding your bank account, credit card or debit card), you can then send money to anybody, anywhere. The money arrives in the recipient’s PayPal account, not their bank account. This means the receiver needs to have a Paypal account as well.

Winner: It’s a tie. Both are easy to set up and use.

What costs and charges are part of the service?

When it comes to international transfers, your biggest cost is often in the currency exchange rate. As a general rule, bank rates tend to use an exchange rate higher than the mid-market rate (the real market value).

Both Paypal and Transferwise have better exchange rates than banks, so you’re already saving when using these services. Of the two, Transferwise is a safe choice if you want to stick to the mid-market exchange rate. Paypal’s rate is variable but always slightly higher than the market rate.

Always check rates and fees before making a transfer, since these can change at any time.

In general, Transferwise charges two fees for international transfers: a transfer fee of anywhere between 0.33% and 3.56%, plus a fixed fee of around £0.45.

Paypal charges a transfer/cross-border fee of 0.5% plus a fixed fee of £1.75 to £3.50, but it also adds a currency conversion fee of 2.5% to 4%. The amounts and percentages vary depending on where you’re sending the money.

Winner: Transferwise is by far the cheapest option.

Are there limits on how much you can transfer?

To keep Paypal and Transferwise safe, both companies impose limits on how much money you can send at once or even per month or year. The limits also change based on the destination country and other considerations. That said, with Transferwise you can send up to £1 million under the right circumstances.

Paypal limits are more complicated and larger sums are better sent through Xoom, Paypal’s transfer service. If your account isn’t verified, your annual limit is £1,700. Verified accounts anywhere in Europe can send up to £25,000 within 24 hours or £100,000 within 180 days.

Winner: Transferwise is a safe choice if you’re trying for bigger sums. 

Which money transfer service is the fastest?

While choosing a safe service is essential, speed is just as important sometimes.

Paypal offers instant transfers between Paypal accounts. Once sent, the money is available to shop or pay online. If you want that money in your bank account, the transfer can take an additional two to five days.

Transferwise sends money directly into the recipient’s bank account, which usually takes just one to two days. However, there can be additional waiting days depending on the currency exchange and the destination country.

Winner: Paypal if you need immediate access to money for online payments, but Transferwise for transfers to recipients’ accounts.

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