Guide to using PayPal for international money transfers

Learn what fees are involved when using PayPal to send money internationally or pay overseas suppliers.

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Yes, you can use PayPal to send money internationally or to pay overseas suppliers, but it's not necessarily the best option. In this guide we take a close look at PayPal and its fees and compare these to alternative money transfer options for businesses and for people selling products and services online. Plus, you can compare money transfer services and dedicated accounts for online sellers.

What is PayPal?

PayPal is the most recognised digital-payment brand in the world. It offers a quick, hassle-free way to send and receive money online using an email address and your credit or debit card. It processes over nine million payments every day, trading across more than 200 markets in 100 currencies. Australians love using PayPal too, with over five million active Aussie accounts opening up since 2005.

Advantages of using PayPal to send money internationally or pay overseas suppliers

  • Security. PayPal securely encrypts your financial information.
  • Flexibility. You have the ability to link all your cards and bank accounts and then choose which one to use at checkout.
  • User friendly. You can check out with one click on your computer, mobile or app. It’s great for people on-the-go.
  • Buyer protection. You can get a refund, including return shipping costs, if something goes wrong.
  • Software Integration. PayPal syncs in well with accounting software such as the popular XERO, so you can send invoices with absolute ease.
  • Free within Australia. You can send money and make purchases within Australia absolutely free.

While PayPal looks to be a quick and easy way to transfer money and has great features, further inspection of their fine print shows that fees can be very high, especially for those who need to send large amounts of money overseas regularly. First, let’s take a closer look at the types of PayPal accounts available and what exactly those fees are.

PayPal personal vs PayPal business accounts

PayPal charges different fees depending on the nature of the transaction. These fees aren’t very transparent on the PayPal website, and yet they can often be between 3% and 7% of the amount you transfer (more on fees below).

Firstly, take a look at the different types of PayPal accounts you can get to justify whether a PayPal business account is for you.

PayPal account types:

1. PayPal personal account:

  • There are no fees when buying goods within Australia.
  • This account is best for individuals who shop and pay online.
  • It’s best for those sending money to or receiving money from friends and family.

2. PayPal business account:

  • PayPal charges set rates based on your sales volume.
  • If you have multiple businesses, you can have a PayPal business account for each business providing each business is registered and has its own email, bank account and credit card.
  • This account is best for merchants who operate under a company or group name.
  • Your customers won’t need a PayPal account to purchase from you since they can pay as a guest.
  • PayPal offers additional features, such as allowing up to 200 employees limited access to your account and a customer service email alias so customer issues can be routed for faster follow-ups.

3. PayPal premier account:

  • This account is best for casual sellers or non-businesses who wish to receive payment online and who also make online purchases.
  • You cannot display a business name or business logo graphic with a premiere account. Customers would only see your email address on the PayPal checkout screens.

PayPal allows users to have two accounts under the same email, bank account and credit card, giving you the convenience of keeping your personal PayPal account while also opening up either a business PayPal account or a premier PayPal account.

Read our review of PayPal for international money transfers

PayPal business fees

When it comes to fees, PayPal’s fine print is rather complicated. While creating a PayPal business account is free (and there are no withdrawal or cancellation fees or locked-in contracts), PayPal does charge set rates based on a business’s sales volume.

When sending money overseas, the sender does not incur any cost, but the recipient is slugged with a fee of up to 4.6% plus another fixed fee. This is in addition to any exchange rates and associated fees that PayPal applies. The fixed fee for a commercial transaction is AUD$0.30 while the exchange rate is the market rate plus 4% for most currencies.

In addition, these fees can rise even higher as a result of the selected payment method (eg, if payment was with a debit card or credit card rather than a bank account or PayPal balance) and the payment destination (ie, country recipient).

1. Cross-border transaction fee

PayPal charges a fee for transactions outside of Australia and PayPal determines the amount of this fee based on the country recipient. The fee is up to 3.3% for money sent from your PayPal balance or linked bank account and up to 5.2% for a transaction using a debit or credit card. There is also a fixed fee of AUD$0.30.

2. Foreign exchange fee (currency conversion)

If you are receiving or sending money overseas in currencies other than Australian dollars, then PayPal will charge you a currency conversion fee based on their retail exchange rate. At checkout, you have the option to compare PayPal’s currency exchange rate to your card provider’s currency conversion rate. If you’re with American Express, they will convert it for you.

  • To US or Canadian dollars. PayPal’s rate is 3.5% above the exchange rate.
  • To all other currencies. PayPal’s rate is 4% above the exchange rate.
  • Within your PayPal account (not as part of a purchase) to any currency. PayPal’s rate is 2.5% above the exchange rate.

For business merchants accepting and sending money to international receivers, your monthly sales volumes determine the above fees.

  • Up to $2,500 monthly sales (no application required): 3.6% plus a fixed fee
  • $2,500.01-$5,000 monthly sales: 3.2% plus a fixed fee
  • $5,000.01-$15,000 monthly sales: 3.0% plus a fixed fee
  • $15,000.01-$150,000 monthly sales: 2.5% plus a fixed fee
  • Over $150,000 monthly sales (excluding Website Payments Pro – Hosted Solution): 2.1% plus a fixed fee

PayPal business fee examples

Let's look at a fictional example

Typically, we would expect PayPal to charge the following for a commercial currency transfer between Australia and Germany.

Fee summary:

  • A 3.3% cross-border transaction fee for a direct debit from a PayPal account or a bank account linked to PayPal
  • AUD$0.30 fixed fee
  • A currency conversion rate 4% above the exchange rate, assuming you do not frequently conduct large transactions and are using a credit card

Example 1:

Transfer value$100
Cross-border transaction fee+ $5.20
Fixed fee+ $0.30
Currency conversion feeCurrency exchange rate + 4%
Total cost$105.50 + currency exchange costs
Out of pocket$5.50 + currency exchange costs

Example 2:

Transfer value$10,000
Cross-border transaction fee+ $520
Fixed fee+ $0.30
Currency conversion feeCurrency exchange rate + 4%
Total cost$10,520.30 + currency exchange costs
Out of pocket$520.30 + currency exchange costs

How to send money overseas using PayPal

Want to learn how to send money online with PayPal? Luckily, it’s simpler and easier to understand than their fees! You can send money to almost anyone, 24/7, from either the PayPal website or downloading the PayPal App for more on-the-go convenience.

To get started, all you need is a bank account or debit/credit card that is linked (and verified) to your PayPal account. You also need to know the recipient’s email address (or their mobile number) to start sending money. If the recipient doesn’t have a PayPal account, PayPal will send them a link to sign up so they can access the money.

Here are the detailed steps on how it works:

Step 1. Open a PayPal account. It is free to open up any type of PayPal account.

Step 2. Verify your email address.

Step 3. Add your bank account or debit/credit card.

Step 4. To verify your PayPal account, PayPal will transfer a small amount into your bank account.

Step 5. Verify the account.

Step 6. Once verified, upload funds.

Step 7. Click on “Send Payment” once funds are available and enter the recipient’s email address or mobile phone number.

Step 8. The recipient will receive the money into their PayPal account or will receive a link to sign up to PayPal in order to withdraw funds to their bank account.

With their mobile-friendliness and security, you can send money from the comfort of your own home or wherever there is an Internet connection. This certainly beats waiting in line at the bank to send money or being put on hold over the phone for an hour.

However, keep in mind that PayPal’s fees are not very transparent. They do add up if you regularly send large amounts of money overseas and require it to be converted into multiple currencies.

Rest assured, there are other online money transfer services out there (besides PayPal) that offer similar processes with better exchange rates and lower fees.

Summary: Is PayPal great for business?

PayPal is a great choice for transferring small amounts money between family and friends in Australia, or even shopping online. You can keep fees to a minimum if you fund your account via direct debit from your bank account and if both the sender and recipient have a PayPal account.

Now let’s look at it from a business perspective.

For individuals and small to medium enterprises that just want to make a quick payment overseas to a recipient’s PayPal account (and don’t mind paying the fees) then PayPal could be a reasonable option:

  • PayPal integrates well with accounting software XERO, which enables you to send customisable online invoices.
  • If you are an eBay business, you can attract more buyers with PayPal as your preferred payment option.
  • Flexible business loans with PayPal Working Capital can give you funding in minutes.

You can read more about how PayPal is a growing SME lending competitor.

If you have a business that needs to regularly transfer large amounts of money overseas or expects a turnover of millions (and in multiple currencies), you will be better off using a dedicated international money transfer provider.

Unlike PayPal’s varied fee spikes, a dedicated provider will offer better competitive deals on exchange rates and usually charge lower fees.

PayPal alternatives to send money overseas

There are plenty of foreign exchange businesses available online that let you send money overseas in minutes and have lower rates than PayPal.

OFX is currently offering exclusive exchange rates and a $0 transfer fee on all transfers.

Free international money transfer calculator

Need to send money overseas? Make an informed decision before committing. Do your research and compare to ensure you’re getting a fair deal.

Compare your international money transfer options side by side with our free calculator below.

Min. Transfer Amount Transfer Speed Online Transfer Fee Rate Amount Received Description CTA Details
GBP 0 1 - 2 days AUD 0.00 0.743 USD
New customers use code AZIMO50 to get GBP 5 off when you transfer GBP 50+. Valid till 31 October 2021. T&Cs apply.
Azimo sends money directly to a bank account or over 280,000 cash pick-up points. It also has fast transfers to 50+ countries.
Go to site Show details
AUD 2,000 1 day AUD 0.00 0.746 USD
TorFX guarantees to match any competitor's exchange rate. Conditions apply.
TorFX sends money overseas in 30+ currencies, with competitive rates for transfer amounts over $2,000.
Go to site Show details
AUD 1 Within an hour AUD 0.00 0.745 USD
New customers get their first transaction for free with code FIRSTFREE. T&Cs apply.
Send money in minutes at competitive exchange rates with this Australian money transfer service.
Go to site Show details
AUD 250 1 - 2 days AUD 0.00 0.746 USD
$0 transfer fees for Finder customers.
OFX has no maximum limit transfers, with competitive exchange rates for 45+ currencies.
Go to site Show details
AUD 2,000 1 day AUD 0.00 0.746 USD
Send guarantees to match any competitor’s exchange rate. T&Cs apply.
Send provides fee-free transfers via its 24/7 multi-currency payments platform with real-time quotes.
Go to site Show details
AUD 1 Same day AUD 0.00 0.745 USD
XE has fast transfers with low fees and a range of foreign currency tools. Go to site Show details
AUD 1 Same day AUD 3.99 0.74 USD
Use promo code 3FREE to send your first 3 transfers with no fee. Conditions apply.
WorldRemit sends money to 110+ countries for bank-to-bank deposits, cash pick-ups or mobile top-ups.
Go to site Show details
AUD 1 1 - 2 days AUD 45.00 0.746 USD
Wise uses the mid-market rate and transparent fees to help you send money in 50+ currencies. Go to site Show details
AUD 200 1 - 2 days AUD 50.00 0.748 USD
Exclusive: New customers sending over 500 AUD from Australia use code FINDER50 to get 50 AUD off. Pay zero fees on your first transaction. Valid till 31 December 2021. T&Cs apply.
Instarem offers simple transfers with a flat 0.5% transfer fee for most transfers.
Go to site Show details
AUD 1 1 day AUD 52.00 0.745 USD
Pay no fees on your first two transfers, up to $3,000.
SingX offers the real exchange rate every time you make a transfer and can help you send money across the world.
Go to site Show details
AUD 10 Within an hour AUD 2.99 0.74 USD
Special offers like free transfers and better exchange rates available for new customers.
Remitly has quick, affordable transfers around the world, with both express and economy options.
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AUD 5 1 - 2 days EUR 3.00 0.746 USD
Special offer: Zero fees on your first 10 transfers.
CurrencyFair has bank-beating exchange rates and fast transfer times on 15+ popular currencies.
Go to site Show details

Compare up to 4 providers

Disclaimer: Exchange rates change often. Confirm the total cost with the provider before transferring money.
Our review of PayPal's online seller product

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