Should I use PayPal or an international money transfer provider?

Exchanging of australian and american notes

When it comes to sending money overseas it is easy to fall into the trap of doing a transfer through your bank. However, you’ll probably end up paying more and getting a very low rate if you use a traditional bank.

That’s why people typically use other methods such as online money services to send money overseas. But which one should you use: PayPal or an international money transfer (IMT) service? The answer depends on how much money you are thinking of sending abroad.

Sending money overseas using PayPal

PayPal is widely used with many online retailers, which is handy if you like shopping on international websites. 

You can also link several bank accounts, debit and credit cards to your PayPal account which can also be used to send money to family and friends who have a PayPal account.

It is safe to assume that more people have PayPal accounts than IMT accounts, which might make transferring money abroad to family and friends easier. However, while it might seem more convenient, typically the exchange rates for currencies like AUD to USD are lower compared to some major IMT services. 

On 25 August 2021, the global currency exchange rate was 1 AUD for 0.7251 USD. So if you were to transfer $100 AUD to someone in America, they’d get around  $72.51 USD. At the same time PayPal’s exchange rate was 1 AUD for 0.6980 USD, so for $100 AUD the receiver gets $69.80, which is much lower than the global rate. PayPal also charges an unclear transfer fee which changes depending on how much money you send.

Related: Small international money transfers

While it might seem the most convenient at a glance, when it comes to transferring large sums of money, you may be losing out due to the low conversion rates and expensive fees. But if you’re in a hurry and only sending small amounts of money (a few hundred dollars), PayPal is a quick and secure option -- especially if the person receiving the money also has a PayPal. Their transactions typically are also instantaneous between PayPal users and accounts.

Sending money overseas using an international money transfer provider

With so many IMT service providers out there, it might be a bit intimidating to pick one without running the risk of getting scammed.

When sending money with an IMT provider such as TorFX, OFX or Send, your transaction may take 1-5 business days to reach your family or friend. They are also not ideal for online shopping.

IMTs typically offer better currency exchange rates than PayPal and major banks. If you are sending large sums of money you’ll be getting more bang for your buck.

Related: The best international money transfer providers in 2021

When you are using an IMT you are actually sending money between banks, so your receiver does not need to have an account with the provider you are using. You do need to have the bank account information of whoever you’re sending money to. If you want to send money as a surprise this might be a bit tricky, but once you have your receiver’s information you can send as many surprises as you want.

If you are a business owner and need to send money overseas, IMTs typically are the better option. With their competitive exchange rate and little to no fees, they were practically made to send large amounts of money across borders - whether it be for taxes, bills or other payment purposes. 

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

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* The exchange rates offered by each provider are indicative exchange rates that have either been supplied by each provider or gathered by Mozo. Exchange rates fluctuate constantly and as a consequence the exchange rates listed here may vary to the actual exchange rate you are quoted by a provider. Please ensure you confirm the actual exchange rate with the relevant provider prior to conducting any transaction. These exchange rates are updated every hour.

^See information about the Mozo Experts Choice International Money Transfer Awards

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