Should I use PayPal or an international money transfer provider?

When sending money overseas, choosing the right service can potentially save you time and money. PayPal and international money transfer (IMT) providers are two popular options, but they cater to different needs. This guide breaks down their pros, cons, and ideal uses to help you decide which is best for your situation.

PayPal allows users to send and receive money online by linking a bank account, credit card, or debit card. International transfers are simple as you only need the recipient’s email address or mobile number.

Key features of PayPal

• Supports payments in over 200 countries and multiple currencies
• Transfers between PayPal accounts are often instant
• Ideal for small, personal payments and online shopping

However, PayPal's fees and currency exchange rates can make it expensive for large or regular international transfers.

IMT providers specialise in transferring funds across borders, typically offering more competitive exchange rates and fees than PayPal or traditional banks. Providers such as TorFX, OFX, and XE are generally designed for individuals and businesses making frequent or high-value international transfers.

Key features of IMT providers

• Competitive mid-market exchange rates
• Services for both one-off and recurring payments
• Options for direct bank deposits or cash pick-ups in some cases

1. Fees and exchange rates

Paypal’s fees can be quite complicated so it’s best to check their fee structure to find what’s relevant for you. 

Generally, PayPal charges a 5% transfer fee for international payments (minimum $0.99 AUD and capped at $5.99 AUD). If you use your PayPal Balance or an Australian Bank Account linked to your PayPal account to fund the transfer there are no additional fees. 

However, if you use a debit or credit card to fund the transaction you’ll need to pay a funding fee of 2.6% of the portion funded by the card, plus a fixed fee based on currency.

PayPal also charges a fee on top of the base exchange rate for currency conversions. Here's the breakdown:

You’ll incur a 4% fee for:

• Paying for items in a currency different from the listing.
• Refunds processed after 1 day.
• Sending money to friends or family in another currency.
• Using PayPal Payouts with recipients receiving a different currency.

You’ll incur a 3% fee for all other currency conversions. These fees apply automatically whenever PayPal handles a currency conversion.

In contrast, IMT providers typically use the mid-market exchange rate and generally charge low, transparent fees, often around 1% of the transaction amount.

Note: ~ refers to an approximate figure, represented as a percentage.

2. Speed

PayPal offers instant transfers between PayPal accounts but may take 1–3 business days for withdrawals to bank accounts. IMT providers can take 1–5 days depending on the amount, recipient country, and provider.

3. Supported currencies

PayPal supports over 25 currencies but may be better suited for personal payments or online purchases. IMT providers typically support 50+ currencies and are often ideal for direct bank transfers.

4. Use cases

PayPal may be best for quick, low-value transfers or when the recipient already has a PayPal account. IMT providers could be ideal for saving money on large transactions, securing better exchange rates, and managing business transfers.

When comparing PayPal and IMT providers, it’s helpful to understand their strengths and weaknesses. While PayPal offers ease of use and instant transfers for small amounts, IMT providers are designed for cost-effective, large-value transactions. Below is a breakdown of their features.

When it’s time to decide on how you’ll make your international money transfer, it may be sensible to weigh a range of factors like transfer size, speed, and cost. Each option serves distinct purposes, so your choice should depend on your specific needs.

Consider PayPal if:

• You’re sending small amounts to friends or family. PayPal’s simple setup means it may be preferred for casual, low-value transactions.
• The recipient already has a PayPal account, as transfers between accounts are instant and straightforward.
• You need fast, convenient transfers, especially for emergencies or online purchases.

Consider an IMT provider if:

• You’re sending large amounts and want to save on fees. IMT providers tend to offer lower costs and better value for high-value transfers.
• You need the best possible exchange rate, as IMT providers often use the mid-market rate without hefty markups.
• You’re a business owner making frequent or recurring payments overseas. IMT services are designed with businesses in mind, offering multi-currency accounts, bulk payment options, and competitive rates.

By evaluating your priorities — whether it’s speed, cost, or ease of use — you can choose the service that aligns best with your goals, ensuring your money goes further. For more guidance, check out our international money transfer comparison tables or use provider fee calculators to make an informed decision.

If you are interested in learning more about sending or receiving money overseas check out Mozo’s country guides for transferring money internationally.