PayPal vs. US banks for international transfers

PayPal and bank transfers can get your money where it needs to go. By comparing fees, rates and speeds, we look at which is quicker and can save you money.

	PayPal	US banks
Fees	Varies by transfer	From $25 to $85 or more
Exchange rates	Mid-market rate plus 2.5% margin	More than the mid-market rate plus margin
Speed	Minutes to 1 day	Varies by bank
Max Transfer Amount	Maximum $10,000 per transfer	Varies by bank
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Quick verdict

Lower fees:
PayPal

Exchange rates:
PayPal

Fast transfers:
PayPal

How they work?

Both PayPal and your major US bank can send your money next door or around the world online.

PayPal

To transfer money through PayPal, you’ll need to create a free PayPal account. You then send a transfer to your recipient’s PayPal account, funding it with your PayPal balance, bank account, credit or debit card or PayPal Credit. After your recipient receives the money, they can either keep the funds in their PayPal account or withdraw the money to their bank account.

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Bank transfers

Bank wire transfers are a quick, efficient way to move your money from one bank account holder to another through existing banking networks. While in the past you had to visit a bank branch to initiate a money transfer, these days most banks allow you to initiate transfers online and by phone as well. However, delivery options are typically limited to bank account deposits, usually within a few days.

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Who offers lower fees?

PayPal

How much it costs depends on how much money you send, where you send it and how you pay for the transfer.

When you pay for an international transfer using your PayPal balance or linked bank account, you’ll pay a fee between $0.99 to $4.99 — the fee is waived if you’re sending to the US.

When you pay with a credit or debit card or PayPal Credit, PayPal charges a fee of 2.9% of the transaction amount, a fixed fee based on currency and a fee ranging from $0.99 to $4.99 depending on how much is sent.

Bank transfers

While most major US banks offer free bank-to-bank domestic transfers (or waive fees for specific account levels), they’re typically your most expensive option when sending money internationally.

Banks charge higher fees — anywhere from $25 to $85 or more, depending on the details of your transfer — and a bigger variety of fees: incoming, outgoing and other fees. On top of high fees, they offer weaker exchange rates than money transfer specialists. They also offer fewer options for your recipient, typically requiring they have a bank account in which to receive your cash.

Winner: Paypal

While bank transfer fees vary, for most transfer amounts it’s unlikely they’ll be lower than the competitive prices offered by PayPal.

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Compare other transfer services

Who offers better exchange rates?

The exchange rates for both PayPal and bank transfers depend on the mid-market rate on the particular day. Here’s what we know about PayPal and bank transfer exchange rates.

PayPal

To calculate the exchange rate it offers to customers, PayPal takes the mid-market rate it gets from its bank and adds a 2.5% margin. PayPal updates this rate twice a day.

For example, for a transfer in euros (EUR):

• If the mid-market rate is 1 USD = 0.96 EUR
• PayPal’s exchange rate might be 1 USD = 0.94 EUR

Bank transfers

Nearly all banks skew the mid-market exchange rate for a profit, but you’ll typically pay higher margins than you’ll find with PayPal.

Using the example of a transfer to euros (EUR):

• If the mid-market rate is 1 USD = 0.96 EUR
• Your bank’s exchange rate might be 1 USD = 0.86 EUR

Winner: PayPal

Here again, PayPal’s exchange rates are typically more competitive than those offered by your local bank.

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Case study: Sending $1,000 to Germany

Mika wants to help out her sister in Berlin; she has had a new baby girl. While Mika’s comfortable with the idea of running down to her local bank branch, she also has a PayPal account and thought she’d explore whether it’s an option.

Here’s what Mika would pay for a bank transfer with PayPal and her local bank.

	PayPal	Major US bank
Exchange rate	1 USD = 0.94 EUR	1 USD = 0.86 EUR
Transfer fee	$4.99	$40
Transfer speed	1–2 business days	2 business days
Transfer options	Bank transfer	Bank transfer
Total euros received	935 EUR	860 EUR

Visiting her local bank, Mika learns that her bank offers a weaker exchange rate and a stiffer transaction fee than PayPal does. Not only will Mika save $20 on the transfer fee by going with PayPal, but her sister will also receive 75 more euros to spend on Mika’s new niece — and possibly a day sooner.

Who’s faster?

PayPal

Money transfers with PayPal are speedy. If you’re transferring between PayPal accounts, funds are available immediately. If you withdraw money from your PayPal account into a bank account, you can expect the funds to get there within the next business day.

Bank transfers

Most banks offer international money transfers that will arrive within two business days, but your transfer speed will depend on your specific bank and type of account.

Winner: PayPal

Even though both PayPal and bank transfers can get your money where it needs to go pretty quickly, PayPal edges out the competition with instant transfer options between PayPal accounts

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Who offers more options?

	Payment methods	Minimum and maximum transfers	Delivery methods	Transfer speeds	Countries
PayPal	Bank transfer, credit or debit card, PayPal Credit	Varies by country (about $0.02); $10,000 per transaction	PayPal transfer, bank transfer	From minutes to next business day	190+ countries
Bank transfer	Online, in person, app (when available)	Varies by bank	Bank transfer	Typically within two business days	190+ countries

Bottom line

Although much of the comparison between PayPal and bank transfers can vary depending on your bank account, PayPal tends to come out on top thanks to lower transfer fees, stronger rates and faster service.

Ultimately, you’ll want to compare your options to find the service that best fits your individual needs.

Frequently asked questions

• Can I initiate a domestic money transfer through my bank?

  Yes, most banks that offer international money transfer services will also offer domestic options.

• How do I sign up for PayPal?

  Visit its site and click “Sign Up” at the top of the page. PayPal will guide you through the quick and easy sign-up process.

• How safe is a money transfer?

  When processed through a reputable bank or company, your funds are safely tracked until in the hands of your recipient. And if you’re sending money internationally, federal protections are in place that require banks, credit unions and money transfer companies to, for example, disclose all fees up-front and give you 30 minutes to cancel a transfer, assuming it hasn’t yet been picked up or deposited.