Wise vs PayPal: what sending money across borders really costs

At a glance

How each one prices a cross-border payment

Wise shows a single upfront fee and converts at the mid-market rate, the rate you see on financial news sites. The fee depends on the currency route: Wise’s UK pricing page quotes from 0.24%, the US page from 0.23% and the German page from 0.2%. Paying in by debit card costs more than paying by bank transfer.

PayPal stacks two charges. The first is an international fee when you send a personal payment to someone in another country: 5% of the amount, with a minimum and maximum set per region. The second is a currency conversion fee when the money has to change currency. PayPal’s US consumer fee page sets this at 4.00% for paying in another currency or sending to friends and family in another currency. The UK and German consumer fee pages we checked do not state a percentage for personal conversions; they refer to the user agreement. PayPal shows the converted amount before you confirm, so compare it with the mid-market rate.

Worked examples

1. A US sender pays $1,000 to a friend in Europe, received in euros

Wise figures from its price calculator on our check date (rates move daily). PayPal figures from its US consumer fee page.

2. A UK sender pays £1,000 to family in Spain

Wise: £3.81 by bank transfer (£0.52 fixed plus £3.29 variable), or £3.69 from a Wise balance, with euros delivered at the mid-market rate.

PayPal (UK): the international fee is 5% capped at £2.99, so £2.99. If the money is converted from pounds to euros, a conversion fee applies on top; the UK consumer fee page does not publish the rate. With a cap of £2.99 against Wise’s £3.81, PayPal is only cheaper if its conversion costs you less than about £0.82 on £1,000, under 0.1%. Check the converted amount PayPal shows before you confirm.

3. A US user pays a friend $200 at home

PayPal (US): free when paid from your PayPal balance, the PayPal Debit Card or a linked bank account. Paid by credit or debit card, it costs 2.90% plus $0.30, so $6.10.

Wise is not built for this. It moves money between bank accounts and currencies, so for a domestic payment in dollars PayPal (funded by bank or balance) is the simpler free option.

4. Moving money out to your bank

PayPal: a standard withdrawal to your bank account is free in the UK, Germany and the US when no conversion is involved. In the US, an instant transfer costs 1.75% (minimum $0.25, maximum $25); in Germany, withdrawing to a card costs 1% (minimum €0.25, maximum €10).

Wise: money in your Wise balance can be sent to your own bank like any transfer, with the fee shown upfront. Holding money in Wise has no monthly fee.

Multi-currency features

Wise is a multi-currency account first. You can hold more than 40 currencies and get local account details in AUD, CAD, EUR, GBP, HKD, HUF, NZD, SGD and USD (USD details are not available everywhere). Receiving domestic payments into those details is free except USD wires ($6.11); SWIFT payments in cost 6.11 USD, 2.16 GBP or 2.39 EUR. The Wise debit card spends any currency you hold for free and converts other currencies at its usual fee, with £250 / €250 / $250 of free ATM withdrawals a month.

PayPal is strongest at what Wise does not do: paying online merchants that accept PayPal and paying people who only have a PayPal account. For receiving money from abroad into a balance you control in several currencies, Wise is the better-built tool.

Availability and protection

Wise operates through Wise Payments Limited in the UK (an FCA-authorised e-money institution, FRN 900507), Wise Europe SA in the EU (a payment institution supervised by the National Bank of Belgium) and Wise US Inc. in the US (registered with FinCEN). Customer money is safeguarded, which is not the same as bank deposit insurance: Wise balances are not covered by the FSCS, the Belgian deposit guarantee or direct FDIC insurance.

PayPal is available to personal users in the UK, across the EU and in the US with country-specific fee schedules, which is why its minimum and maximum fees differ by region. Its fee pages do not cover deposit protection; check PayPal’s user agreement for your country.

How to keep cross-border costs down

• Fund Wise transfers by bank transfer, not by card. On our check date, sending £1,000 to euros cost £3.81 by bank transfer and £6.96 by debit card.
• With PayPal, any payment that involves a currency conversion carries PayPal’s conversion fee on top of the international fee (4.00% for US personal payments sent in another currency). Check the converted amount on the confirmation screen.
• Use PayPal’s standard withdrawal to your bank, which is free without conversion, rather than a US instant transfer at 1.75%.
• Avoid card-funded personal payments in the US (2.90% plus $0.30); link a bank account instead.
• If you are paid in foreign currencies regularly, hold the money in that currency in Wise and spend it with the Wise card, which is free for currencies you hold, instead of converting every payment as it arrives.
• Before confirming any international payment, compare the amount the recipient will get with the mid-market rate. That one number shows the full cost, fees and exchange margin together.

The pattern is consistent across the UK, the eurozone and the US: PayPal’s international fee is capped and can look cheap, but the conversion is where most of the cost sits. Wise builds its fee around the conversion and shows it in full before you pay.

More in-depth comparisons

• Wise — full review
• PayPal — full review
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