Transferwise vs. Paypal: Which is better for Your Business?

In our ever expanding world there are new ways to transfer money. Whether you are buying something from a store, loaning your best friend a bit of cash, or paying someone for work they have done for you cash, credit cards, and checks are no longer the standard of payment. Checks take too long to clear, sometimes and if you are paying someone overseas they might not be able to accept your check. Credit cards are a great way to pay for things but they have high interest. Cash is great unless you are buying something online or paying someone who is not nearby. 

Fortunately there are other options available to you including Transferwise and Paypal. They each have their own unique advantages and disadvantages. Transferwise and Paypal offer their services to individuals, and small and large businesses. Both offer transfer and deposit options around the world and they do so with competitive rates and fees. Both are international companies that make depositing money around the world simple and easy. You just need a computer, laptop, or phone and you can pretty much instantly send money around the world. Here is a breakdown of Transferwise vs. Paypal. 

Transferwise has fourteen offices worldwide and transfers more than five billion dollars each month. They have seven million customers and claim to have saved their customers $1.5 billion every year. They are available in 59 different countries and are adding more each month. Transferwise was started in 2011 by two friends living in London. They needed to exchange money and were tired of paying the high rates that banks charge. So they started Transferwise to help people transfer money at a low cost. 

Paypal was founded in 1998. They wanted to make international and other transactions quicker and smoother. Paypal has its corporate headquarters in California. Paypal is used by individuals and small businesses for personal and business transactions. Paypal is also used for social innovation by creating a way for people to donate money instantly to different charities around the world. They have partnered with different organizations to help build up communities and small businesses. 

Signing Up

Signing up for both accounts is easy. You just have to provide certain information. PayPal has a few more questions in their original sign up but not many more then when you go to set up your Transferwise account. Signing onto Transferwise just requires an email and password. You can also use Google or Facebook when signing onto Transferwise. Using an online app to transfer money tends to be quick and easy overall. 

Exchange Rates

Knowing the exchange rates of companies can help you decide how you want to pay someone or who you would like to receive money from. The lower the exchange rate, the more money you will see. Most places add a little to the top of the regular exchange rate in order to make more money. It may not seem like a lot of money, but it does add up over time, especially if you are using Transferwise or Paypal as a primary income source. Here is the breakdown of the exchange rates between Transferwise and Paypal. 

Paypal is lower than bank rates. They are slightly higher than the mid market rate. They usually range between 3.5 – 4 percent. 

Transferwise uses the mid market exchange rate. The mid market exchange rate is the real market value of one currency versus another. XE and Google use the mid market exchange rate. This ends up being lower than Paypal and allows your recipient to receive more money. They also provide free rate alerts to their customers.  

It is always important to check the transfer rate before transferring your money. Paypal will list it with each transfer. Transferwise has a calculator on their website that lets you figure out the exchange rate before you even start to transfer your money. 

Fees 

Along with the exchange rates you need to be aware of what fees you will be charged. Different companies offer different rates and fees. Fees can fluctuate in some instances so it is good to do your research to know which company will be best for the transfer you are completing at that moment. 

Paypal fees fluctuate. The amount they will charge depends on your country of origin (where you are sending the money from), the total amount of your transfer, how you are paying your transfer whether it is linked to a bank or credit card, and where you are sending the money. 

Transferwise charges you a fee based on the transfer amount. Where you are sending your money could affect the fee that you are charged. There is a fee table available at Transferwise that will help you figure out how much it will cost to transfer your money. 

It is a good idea again to compare fees before transferring your money. Both have fees and sometimes one is higher than the other. There are too many variables to list which company actually has a lower fee cost. The best thing to do is know where you are sending your money to and from, how you are paying, and how much you will be sending. Once you have this information you can get a good estimate on how much your fees will be for your transfer. 

Security

One thing everyone is concerned about today is security. Bank fraud and credit card fraud are in the news everyday. You want a company that offers you the best security for your transfer. Fortunately both Paypal and Transferwise are very secure when handling your money. 

Both companies take security seriously and follow regulations in every country they are used. Security is one of the number one concerns to both companies. Transferwise offers a two factor authentication system for Google users. The biggest concern with security is actually their customers. You need to be sure you are typing in the correct email address to the person you are paying. It is also good to know who you are paying, as your recipient can be a security risk that you and the companies are unaware of. In order to keep your account secure it is good to change your password regularly and make sure it is a firm password. 

Ease of Use

One thing you want to be sure of is how easy it is to make your transfer. You do not want to spend half an hour trying to transfer your money. Ease of use is important in today’s fast moving world. A few clicks and you should be on your way. Whether you are trying to make a deposit within your country or around the world, ease is one of the important factors when making a decision on which company you will use. Both companies have similar and different options when it comes to payments. You are just a couple of clicks away from paying someone or completing an online order. 

Paypal has website access in numerous languages. You can shop online using your Paypal account, and they offer a one click payment option when shopping online. You can transfer money from a bank account, credit card, or debit card. YOu can only transfer money from Paypal account to Paypal account. Once the money is transferred into a Paypal account it can then be deposited into a bank account. Paypal has Android and iOS options. 

Transferwise also offers website access in numerous languages. They have a Transferwise credit card which you can apply for. You can register with Transferwise through your Facebook or Google account. Their Borderless Account gives you access to many different countries without having to have a bank account in any of them. Transferwise offers both business and personal accounts. You can receive a free debit card attached to  your Transferwise account. You can pay with a personal account, credit card, or debit card and deposit money directly into your recipient’s bank account. Transferwise has Android and iOS options. 

Speed

The amount of time it takes to send and receive money through online apps can make or break a business relationship. You want the fastest and most secure way to make and receive payments. With each company you have the choice to make deposits but where the deposits go is different with each company. You will need to figure out where you want your money to end up before you decide which company you use. Security was mentioned above, now here is a speed comparison. 

Paypal account transactions are instantaneous if you are transferring from one Paypal account to the other. However, if your recipient wants the money in their account they will have to do another transfer which could be from three to five business days. 

Transferwise allows you to transfer the money directly into your recipient’s personal account. This may take one to two business days. The wait depends on the payment method and the currency you select. 

If your recipient wants the money to their personal account as soon as possible then Transferwise is the way to go. They may have to wait to see the money, but they will not have to do any additional transfers. If the recipient wants the money immediately Paypal is the correct choice. The recipient then has the choice of transferring the money or using their Paypal account to spend what they have received. They can also use their Paypal cash back Mastercard to spend the money they have received. 

Social Causes

In today’s world people want to be able to donate to a worthy cause with the click of a button. Paypal is designed to help you send money directly to a charity of your choice. They also have a Money Pools option which offers free secure access to an account that you set up. If you need help funding your college education or want to set up an account for a neighbor who needs some financial help, Money Pools is a great option to consider. There are no fees for transferring to this account if you use your Paypal account or linked bank account. 

Other Means of Accessing Money

Paypal offers a Mastercard credit card and Transferwise offers a Mastercard debit card. Their rates and cash back vary but they could be helpful if you need to charge something quickly. You can use the cards anywhere credit cards are accepted. 

Paypal Mastercard offers points that can be redeemed as they are accrued. You get points for credit card use, gas, restaurants, and Ebay purchases. Their rewards include cash back, travel vouchers, merchandise, and gift cards. You can use your credit card to pay your bills and earn even  more reward points. They offer electronic statements and the card can be set up as your primary payment method. Authorized users can be added to your account to make spending and saving even easier. Identity theft protection and a microchip is included at no extra cost. You will need to apply to obtain a Paypal Mastercard. 

Transferwise offers a mastercard debit card that can be used around the world. The debit card costs a small amout with your Transferwise account. You can withdraw up to $250 per month without worrying about fees. There are no foreign transaction fees or annual fees. You can also connect  your card to Apple Pay and use it wherever you see an Apple Pay symbol. You can instantly freeze or unfreeze your card as needed. You can hold over forty different currencies for free and the card will automatically convert the money for you. 

Both Paypal and Transferwise have great options for people who have a small or large business or for people who want a quick way to transfer and use their money. Paypal has been around longer and therefore has different options. However Transferwise has lower conversions fees. If you are transferring a larger amount of money outside your country you might consider Transferwise.  Whether you choose Paypal or Transferwise will depend on where you are transferring your money from and to and how much money you will be transferring. Paypal has more online shopping opportunities, although Transferwise’s connection to Apple Pay gives Paypal a run for their money. Paypal Mastercard offers rewards that you can recieve after accumulating points while the Transferwise debit card allows you to take out up to $250 per thirty days from any ATM without accruing any fees. 

Both Paypal and Transferwise are easy to set up and use. If you want to deposit directly into an account Transferwise is what you should use. If you want instant access to your deposit, then Paypal is the way to go. Both Transferwise and Paypal offer great security when it comes to your money and as long as you are careful when entering your account information everything should run smoothly and quickly. Both companies have fees that are much lower than banks when it comes to accounts and conversions. Small deposit fees are expected but are nothing compared to the ease of use of both Paypal and Transferwise. 

Whether you are a small or large business or an individual both of these companies will help you speed up your transactions without charging exorbitant fees. You can access your money any time and both companies have apps that allow you to carry your finances with you and access them with a touch of a button. Sending money to a friend has never been easier with Paypal and Transferwise around. 

Paypal has been used around the world to forward social causes and set up ways for people to help one another. Their app can also be used to order food right to your home. Transferwise deposits money directly into your account for ease of withdrawal. You can make your life easier and get paid faster with either Paypal or Transferwise. When it used to take a week or two to receive a paycheck you can now be paid for your work immediately. You can choose to keep your money in your Paypal or Transferwise account and have access to it twenty four hours a day, seven days a week or you can transfer it out to another account. The Transferwise debit card makes it easy for you to use your account to pay for things where debit cards are accepted. And the Paypal credit card offers rewards that can include money back into your Paypal account. There are also Paypal shopping offers available that will save you money when you shop online. 

Paypal is a great to use for intercountry transfers, transferring via email, and shopping online. Transferwise is a great app for avoiding exchange rates on trips abroad, saving on forgeign transfers, and having a multiple currency account.  

Whichever you decide to use, be sure to research each company yourself before committing to either one. Also compare them to other similar online companies and banks. While they are a great addition to the financial world, Paypal and Transferwise will only benefit you if you research them and use them smartly. Take the time to figure out what your financial needs are and then choose a company that is right for you. 


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