Converting and Sending Currency via PayPal - How does it compare?

Find out if PayPal is the best choice for transferring money between different currencies

How to Transfer Money Overseas PayPal

PayPal is a fast and convenient way to transfer money, but in many cases the fees can be very high.


PayPal is a good choice if:

  1. You’re sending money in the same country (not across international borders).

  2. Both you and the recipient have a PayPal account.

  3. You can fund your account via direct debit from your bank account.


PayPal isn’t a good choice if:

  1. You need to fund your account via a debit or credit card.

  2. You’re transferring money internationally.


In these cases, the costs can add up very quickly and will often be between 3% and 7% of the amount you transfer.


The Currency Shop says:

  • If you want speed, convenience, are transferring a small amount and don’t mind paying the fees, PayPal is a reasonable choice.

  • In any other circumstances, you might be better off using the TransferWise Borderless Account


Fee Free Offer

OFX is a trusted partner of The Currency Shop. OFX customers using this link through The Currency Shop will not incur a transfer fee for their international money transfers, regardless of the size of the transaction.

Learn More

Minimum transfer $250. Please note that the receiving bank or intermediary bank may charge fees on transactions.


What we will cover

how to send currency overseas paypalPaypal is one of the world’s most popular ways to buy good and services and send money to friends and organisations. Many people also use PayPal to transfer money to other countries, but it may not always be the best option.


We’ll explore how to use PayPal to send money overseas,recommend when it’s best used and share other options to save you money. We’ll also look into some of the details and fine print you’ll want to be aware of.

  • How PayPal works.

  • PayPal fees - Hitting you in the wallet.

  • Fees - The fine print.

  • Who should use PayPal and why?


How PayPal works

Open an account

Like any other payment platform (and most other online services), you’ll need to open a free account with PayPal before you can use it. You’ll need to add your name, address and some other personal and payment information. As PayPal is one of the most popular and widely-used payment services in the world, it’s highly secure.

Tip: Always check the security of your personal information when you enter details anywhere online. Keeping your data and identity secure is essential.


Get the PayPal address / account of the person you want to send money to

If you want to transfer money, you’ll need the PayPal account of the person or organization where you’re transferring money. This is normally the email address they have associated with the account. If they don’t have an account, they can set one up as well.

Tip: If you send money to someone without a PayPal account, they’ll need to setup an account to retrieve their money. It’s always best to check they have an account before sending any funds to them.


Fund your account

Before you can send money, you’ll need to credit funds to your account. You can do this from your bank (fee free) or by using a debit or credit card (which PayPal does charge fees for.)


Send the money

You can then arrange to send money. You can pay in your local currency and they’ll receive money in their currency, after PayPal have exchanged the funds and deducted their fees.


PayPal fees - Hitting you in the wallet

PayPal makes money in two main ways; through providing an exchange rate slightly below the interbank rate, and by charging you (and possibly the receiver) fees on a transfer.


PayPal exchange rates

PayPal uses what’s called a “retail exchange rate.” This rate is seldom as good as the rate you can get from dedicated currency exchange providers. PayPal themselves say the rate should be compared to an airport currency exchange rate. Unfortunately, airport exchange rates are always higher than you can get elsewhere.

Tip: Always compare exchange rates ; it’s very likely you will find better deals elsewhere.


PayPal fees

  • You might pay a small fee (of 2.4% + $0.30) if: You’re transferring money within the same country and you make the payment from your Australian bank account that is not linked to your Paypal account. This includes debit and credit cards.

  • You will pay a moderate fee (of 0.5% - 3.3%) if: You’re transferring money between countries and you use money from your PayPal account or a direct debit from a bank account linked to your Paypal account.

  • You will pay a higher fee (of 3.9% - 7.4% plus a fixed fee) if: You’re transferring money between countries and you use a debit or credit card to fund your transfer. 

Warning: The fees for sending money internationally (across country borders), especially via a debit or credit card can add up quickly. If you do want to use PayPal, use a direct debit from your bank account to pay whenever possible.


Fees - The fine print

To say PayPal’s Australian fee structure is complicated would be a big understatement. With 23 major headings, over 20 tables and over 8,000 words, it’s not for the faint-hearted. The essential takeaways are that you and / or the person receiving the money can expect to pay anything between 0.5% and 7.5% in fees to transfer money internationally (before taking exchange rates into account).

Because PayPal tends to charge percentages, rather than fixed fees, the more money you transfer, the more you will end up paying in fees.

Tip: Fees vary depending on where the payment is being sent from, the method of payment (bank account/Paypal balance, debit card or credit card) and the payment destination. It’s worth doing some research and comparison to check you’re getting a fair deal.


Example PayPal fees

Here are the fees typically charged by PayPal for international transfers.

  • 0.5% to 3.3% (cross-border transaction fee) for direct debit from a PayPal account or a bank account linked to Paypal

  • 3.9% to 7.4% (cross-border transaction fee) for debit or credit card, PLUS fixed fee (estimated at $0.30 equivalent), PLUS currency conversion.


Example: Sending money from Australia to the US, UK or China

  • 3.9% (cross-border transaction fee) + $0.30 (fixed fee) + currency conversion.

  • $100 payment/transfer = $3.90 + $0.30 + currency conversion.

  • $1,000 payment/transfer = $39.00 + $0.30 + currency conversion.

  • $10,000 payment/transfer = $390.00 + $0.30 + currency conversion.

If sending Australian dollars overseas, you will not be subject to the currency conversion.If your payment is funded by direct debit, the currency conversion fee is significantly reduced, though you will still face the conversion if sending a foreign currency.


Who should use PayPal and why?

It’s best to use PayPal when:

  1. You’re sending money in the same country (not across international borders).

  2. Both you and the recipient have a PayPal account.

  3. You can fund your account via direct debit from your bank account.

This will ensure you keep your fees to a minimum. PayPal is great for transferring money between friends in Australia, or paying for ebay purchases.

As soon as you start to use a debit or credit card to fund your account, or when you want to send money internationally, the fees add up very quickly, and can get prohibitively expensive. Despite this, if you just want to make a quick, convenient payment, you don’t need to transfer large amounts, and you know the recipient’s PayPal account email address, it is fast and convenient.

In almost all other circumstances you will be better off using a dedicated currency provider. They will give you better exchange rates and charge lower fees.


Need some help?

If you want to talk to someone about your situation, call us on 1800 004 930 

We also offer free personalised advice via phone, email or even face-to-face if it all seems a bit overwhelming. Get in contact to arrange a chat with one of our local consultants, you'll be surprised by what's out there. 

So whether you're an importer paying a supplier in a foreign currency, an expat sending money home, or a holidaymaker looking for the best deal on Travel Money, avoid the hassle of shopping around and get in touch today.


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Paul Maplesden is a freelance writer specialising in business, finance and technology