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PayPal Vs Wise: Which Is Better For Digital Nomads?

PayPal and Wise are two of the most popular online payment methods. But which one is better for your digital nomad business?

Each service has its own advantages and disadvantages including fees, currency exchange rates, and transfer times. We know you want a simple solution that gets money in the bank at the end of each month (or project) no matter where in the world you are.

Let’s dive in and see who comes out on top with Wise vs. PayPal.

Wise Fees vs. PayPal Fees

Wise (formerly TransferWise) has prided itself in offering low cost transfers since its inception. PayPal, on the other hand, has made no such promise. Just how good are Wise’s fees, though? Let’s take a look.

Wise Fees

  • Fixed fee structure for each transaction using Wise (the actual transfer fee will depend on how much currency you’re exchanging or where you’re sending money to).
  • Never charge hidden fees or ask for extra charges at the last minute.
  • Fully transparent about how the fee breaks down and how much it is depending on your payment method.
  • Send money with a rate as low as 0.41% which varies by currency.
  • Send money for free to another Wise user.
  • Hold over 50 currencies in a single account for free at up to €30k. Beyond that amount, there is a small fee of 0.07% charged daily.

You can use Wise to send money around the world with the real exchange rate. That means you can take your ecommerce business virtually anywhere with Wise and it will remain affordable and easy to use.

PayPal Fees

  • 3-4% international transaction fee that changes when there are multiple currencies involved.
  • Some fees appear after the transaction goes through. Either you pay an additional, unknown fee, or the recipient does (if you are the sender).
  • 2.9% + $0.30 fee per transaction when receiving funds from another country, which makes it one of the most expensive options.
  • Less transparent than other money transfer companies when it comes to fees, especially when it comes to foreign exchange rates and how they come into play with your transaction costs.
  • 5% + $0.99-4.99 fee for PayPal transfers from one PayPal account to another.
  • Hold multiple currencies though the process of opening a new currency account is not simple.

There’s a reason PayPal is the biggest provider of international money transfers—it has been around for over 15 years. It also dominates in the U.S., with more than 70 percent of the market share.

But there’s a dark side to its success. Its fees can be up to four times higher than other providers, and it isn’t always transparent about what those fees are.

That’s not to say you shouldn’t use PayPal, but you should first know how much it costs to make sure you’re getting the best deal possible.

Wise Foreign Exchange Rate

Wise’s exchange rate is based on the mid-market rate, which is the real rate banks use when they trade money with each other. This is the same exchange rate you’ll find on Google or Reuters, updated every few seconds during market hours.

It’s the same rate that banks and financial institutions use to trade money between themselves. No markups.

PayPal Forex Rate

PayPal uses their retail exchange rate instead of the mid-market exchange rate, which hides it bigger fees.

PayPal makes their money by charging an extra fee on top of their bad exchange rate for each transaction. They call it a ‘cross border fee’. This fee varies depending on which currency you’re using, but it’s usually around 3% — sometimes more, sometimes less.

Because of PayPal’s poor exchange rate, your recipient gets less than they should. We think this is unfair, so we present them with the real mid-market rate instead. We don’t charge any additional fees on top of that — ever.

Wise vs. PayPal Pros and Cons

If you’re basing your decision solely on fees, Wise is the way to go. But maybe you want more information before you open an account, so let’s look at the pros and cons of each.

Wise Pros

  • Free to open an account.
  • Hold over 50 different currencies in one account.
  • Easily convert currencies you have, transfer new funds, and accept payments in multiple currencies.
  • Full bank details for each currency type with a virtual international bank account.
  • Instant transfers (or up to 2 days).
  • Accept/transfer from credit cards (Visa, MasterCard, etc.), debit cards, ACH, local bank transfer, Apple Pay, Google Pay, and Wise.

When you make an international payment using Wise—either one-off or regularly scheduled—they handle all the hard work on your behalf. They do this by splitting large transfers into smaller ones and sending them through local payment systems around the world.

This means they can avoid the unnecessary costs associated with international transfers, saving you time and money.

Wise is FCA-authorized and regulated in the UK, meaning they have to adhere to strict rules on how they advertise our pricing and services, and how they protect your data when you use their service.

The main attraction is the multi-currency account, though. Easily open, swap, and manage GBP, EUR, USD, and others right from the iOS/Android mobile app or website.

Wise Cons

  • Supports transfers in 59 countries.
  • The more money you have, the more fees stack up.
  • It’s made for consumers first, not businesses.
  • No integrated invoicing tools.
  • No scheduled transfers.

Wise was built as a P2P solution, and that’s where its main focus remains. While it does handle business accounts and consistently offers more for freelancers and businesses, there are still limitations.

However, those limitations might be passable if you don’t perform transfers over €300,000 and you prefer the smallest transaction/exchange rate possible.

PayPal Pros

  • Supports transfers in 200 countries.
  • Has 325 million users.
  • Free to open an account.
  • Invoicing features.
  • Scheduled transfers.

PayPal is a quick, easy and secure, and it’s a payment method your customers are likely to be familiar with.

One of the biggest benefits of using PayPal is that it makes life easier for your customers. They don’t have to manually enter their credit card details every time they buy from you (a process which can be time-consuming and frustrating), and they can feel confident that their payment information is secure.

PayPal Cons

  • High fees.
  • Can put holds on your funds.
  • No multi-currency accounts.
  • Accept payments from PayPal, credit cards, bank accounts, debit cards.
  • Supports 25 currencies.

PayPal is designed for business on top of P2P transfers. It’s offerings for businesses are great, with features that work really well. But that comes at a cost.

PayPal is expensive and the company is known to shut down accounts without notice or freeze funds for months on end (you can see it on their TrustPilot page). And since they don’t offer true multi-currency accounts, is PayPal really a good choice for digital nomads hopping from country to country?

Verdict: Wise…Maybe

On Wise, you pay the fee, not the recipient. On PayPal the recipient pays a fee and so do you. So the money you send on PayPal isn’t the money that person receives. They receive something less.

PayPal has a reputation for being less transparent than other money transfer companies when it comes to fees, especially when it comes to foreign currency conversion fees and how they come into play with your transaction costs. With Wise, you get full transparent fee breakdowns.

But the biggest benefit of all is Wise’s full multi-currency support, where you can accept and transfer funds between currencies at the drop of a hat.

However, PayPal is familiar and designed for businesses (where applicable).

We would prefer Wise. Maybe they don’t have every bell and whistle (yet), but they do have the best exchange rate and an accessible product.

To play it safe, you could always open an account on both services. It’s free to open, and if some clients prefer PayPal, then you always have that option.