How to pay someone with PayPal—and why it's not the best idea for international money transfers

While it’s easy to pay someone via PayPal, it can also be expensive, especially for sending money overseas. This post looks at different payment options.

Xe Consumer

November 18, 2020 5 min read

Woman using PayPal to send money overseas

In this age of unequalled globalization, the world is more interconnected than ever. Technological advancements have made it easier for people and businesses to connect with international clients and partners.

One of the most crucial developments of our time has been the creation and adoption of money transfer services, one of the most widely-used being PayPal.

What is PayPal?

Unlike traditional banks, PayPal offers a fast and easy solution for people to make international payments.

You can use PayPal to send money to people in different countries. The money transfer service is available in more than 200 countries in 25 currencies. You can also use PayPal to reload a cell phone for someone abroad. However, making payments with PayPal isn’t free and there are usually fees attached.

When sending money via PayPal, you pay 0.3%-2% of the transaction amount in fees. So, if you're sending $10,000 USD using your PayPal balance or a linked bank account, the fees may range between $30 USD (minimum) and $200 USD (maximum). It all depends on where the money is headed.

If you send money via debit or credit card, PayPal will charge a lot more. You’ll have to shell out between 3.4% and 3.9% of the total transaction in fees. So, if you're sending $10,000 USD, you’ll pay between $340 USD and $390 USD.

Additionally, if you need to convert the money to a different currency before sending it, PayPal will charge a currency conversion fee of 2.5% to 4%. The fees will be deducted from the transfer amount as the transaction is being processed.

As you can see, it can be expensive to make payments internationally with PayPal, whether or not you have an account. If you want to save some money, use other money transfer services, like Xe. We’ll go into detail about that later.

How to pay someone on PayPal using your account

If you have received a money request or an invoice, you can easily pay it using PayPal. You can also make a payment if you have the recipient’s email address or telephone number. Here’s how to go about it.

  1. Log into your PayPal account and click on “Pay or send money.”

  2. Choose whether you're paying for products or services or sending money to family and friends.

  3. Enter the recipient's details: their email address, mobile number, or name.

  4. Click “Next” then enter the amount.

  5. Confirm the amount and currency then click “Continue.”

  6. Choose how you wish to pay—through your PayPal balance, a credit or debit card, or a linked bank account.

  7. Confirm the payment by clicking the button. PayPal will send you a receipt via email showing that payment has been processed.

How to pay someone on PayPal if you don’t have an account

PayPal makes it easy for you to make payments even if you don't have an account. The business or person can request for the funds in 2 ways: by sending an invoice or a payment request. They can log into their PayPal account and create a customizable, itemized invoice.

Some third-party bookkeeping services also integrate PayPal requests into their invoices. The recipient can also send a payment request directly from their account. Once you receive the invoice or the payment request, here’s what you should do.

  1. Click “Pay now” to pay the recipient immediately. It's worth mentioning that PayPal email requests sometimes get buried in the spam folder or promotions folder. You can ask the sender to let you know after submitting the request.

  2. Enter the details of your debit card or credit card. You’ll be prompted to open a PayPal account to make a payment. If you don’t wish to do so, choose the credit or debit card option and input the details.

  3. Review the payment then click “Confirm.”

  4. PayPal will email you a receipt of your payment.

It should be noted that the fees are higher when you use a credit or a debit card to make a payment than when you use a PayPal account or a linked bank account.

Are there limits when you’re paying someone on PayPal?

Yes, if your account is unverified.

If you haven’t linked a credit card or a debit card, PayPal puts a limit on the amount of money you can send from your account. In most cases, it’s usually $500 USD.

Once you open a PayPal account, you must link your bank account, credit card, or debit card. PayPal can verify an account instantly or in 2-3 days. For instant verification, you have to provide the login details for your financial institution.

Should you use PayPal for international money transfers?

No. Here’s why.

As we mentioned above, to send money internationally via PayPal, you have to pay hefty fees. It’s best to use the service when you're sending money within the U.S. While you can send up to $10,000 USD per transaction using your PayPal account (and $60,000 USD in some cases), these are the fees you’ll have to pay:

  • Making a payment to another PayPal account: 0.3%-2%. The fee depends on where you’re sending the money to.

  • Paying through a credit or a debit card: 3.4%-3.9%. It doesn’t matter whether you fund the transaction partially or
    fully with a card.

  • Currency conversion fee: 2.5% above the base exchange rate. However, the exact fee you’ll pay will depend on the currency. It can be as high as 4%.

  • Paying for goods or services: PayPal doesn’t charge any fees for commercial transactions, unless they involve a currency conversion.

Is there a more affordable option?

Yes, Xe.

While PayPal is globally popular, there are other affordable money transfer services. If you send money internationally on a regular basis and you’d like to save on every transaction, the best choice is Xe.

We offer competitive exchange rates informed by data from the live currency markets, and we don’t charge any hidden fees. You‘ll see exactly how much money will reach the recipient, ensuring that no matter what your reason is for sending money overseas, you will always be able to give as much as possible, and your recipient will be able to get as much as possible.

Signing up is easy and doesn’t take more than 5 minutes. Start sending money today.