If you’re looking to learn how to transfer money from PayPal to a Wise.com account (previously TransferWise), the chances are you’ve started to understand just how much PayPal will charge you in both exchange rates margins and payment fees. To recap that notion, if you have funds in foreign exchange and you want to use PayPal’s international payment function (i.e. exchange currency through them) you’ll pay up to 5% on the transfer and that is not inclusive of any other withdrawal fees.
That is PRECISELY why so many people are seeking for solutions to bypass the PayPal system, as withdrawing money from Paypal to your bank account in foreign exchange is nonsensical. One possible “Hack” is to use Wise, a foreign exchange app that enables customers to open up virtual bank accounts abroad, and withdraw money to those virtual accounts without having to use PayPal’s infamous currency exchange.
(Get virtual bank accounts in multiple currencies that you can connect to PayPal)
PayPal to Wise: Are there Multi-Currency Alternatives?
Before we delve into the technicalities of how to actually set up your bank account as the virtual Wise bank account, it’s important to say that Wise is not 100% unique in its offering. There are a bunch of other payment specialists which offer the same service, as per the below. For more information check out this Revolut review (Wise’s closet competitor).
Multi-Currency Bank accounts available in UK, EU, Poland, Australia, NZ and and USA + Debit Card 💳. Best App 📱.
- Bank accounts available in UK, EU, Poland, Australia, New Zealand and USA but you can hold money in 50+ currencies
- Most recognisable name in money transfers and multi-currency account, serving millions of customers and traded on the London Stock Exchange
- Very transparent about its fees which are generally among the cheapest for both private clients
Best for eCommerce Sellers 🛒: Potentially the Best Rates
- Bank accounts available in UK, France, Germany, USA and Canada, as well as Singapore, China and Japan (recent additions)
- FX Margins are anywhere up to 0.75%, depending on the amount sent, potentially cheaper than competitors like TransferWise (Wise). Payment fees range from £1.50 - £15, depending on the payment type
- Industry Leader in the eCommerce Space, owned by Ant Financial (AliPay). Easy integration with any eCommerce platform, and an Amazon recommended solution for currency exchange
Best for Corporate Foreign Exchange Payments, Hedging, Advanced Functions
- Operating since 1979 - the first commercial foreign exchange space. Specialising in businesses - both large corporations and small businesses. Each business customer with volume of £5,000 is assigned with a dedicated currency dealer, demonstrating a very high level of professionalism and excellent availability
- Virtual IBAN bank accounts available in GBP, EUR and USD - but you can use Moneycorp to hold balances in over 120 currencies
- 98% satisfaction based on online customer review -many customer and business awards
How to Transfer Money from PayPal to Wise?
In this article we will cover:
– A step-by-step guide how to withdraw money from PayPal and transfer it to to TransferWise (Wise)
– Why people would want to transfer money from Paypal to Wise, including a comparison of PayPal vs Wise.com payment fees
– Why you should consider receiving payments direct to your Wise account in the first place
* We have a separate, detailed, Wise (TransferWise) review detailing the companies services, advantages and disadvantages. Before you begin you would need a TransferWise account at Wise.com. Use this link to sign up.
* We have a separate, detailed, how to withdraw money from PayPal to a bank account guide too.
* Finally if you want to learn about PayPal International Payments’ INSANE fees, go here.
How to Transfer from PayPal to Wise / TransferWise Guide
Before you begin (Step 1):
You will have to be registered for a Wise Account (previously known as a “Borderless Account”), and receive your sort code and account number from them.
If you are not sure what is a Wise.com Borderless Account read about Multi-Currency Accounts here.
Below is a recap of the functionalities offered, other than simply receiving money from PayPal in foreign currency to a Wise account:
- Cheap international payments with a clear and transparent rates
- Pay invoices and suppliers, buy inventory, handle an international payroll, in 70 different currencies
- Make up to 1000 payments in one go via a batch CSV file or automate payments via API
- Receive payments from overseas without high recipient or conversion fees – including platforms like Amazon and Stripe
- Hold and convert between 50+ currencies all in one account
- Synch your accounts with Xero, QuickBooks & FreeAgent
- Set up direct debit payments from your Wise USD, GBP, EUR and AUD balance accounts to pay for online subscriptions, bills or taxes
- Add team members to help with reporting and payments via multi-user access
Once you’ve done this the process in order to transfer money from PayPal to a Wise account is just like adding any other bank account, as follows:
Step 2:
On your PayPal Account, Go to Wallet and Click ‘Add Bank Account’
Step 3:
Go to your Wise.com account. Click on the relevant currency under Balances, and you should be able to have a little arrow to show you the relevant bank details.
Step 4: Add your account details on PayPal
Once the next screen appears which suggests setting up a direct debit to the account be sure to select ‘Finish later’ , as Wise borderless accounts are not eligible for Direct Debits. PayPal will then prompt you twice to add direct debit functionality so you can automatically fund payments with your bank account so be sure to click ‘Finish later’ twice.
Step 5: Verification
PayPal will send you a tiny transaction (1p in the UK, 1 cent in the USA) for verification purposes for your bank account. This may take a few days to arrive.
When you have received this verification transaction, login to your Wise.com account and look at incoming payments in the relevant currency.
A unique 4-digit code will appear on the reference field.
Afterwards, insert the 4 digit code back on PayPal on “confirming your bank” screen as follows:
Step 6 (Final):
Voila – your Wise (previously TransferWise) account has been added to PayPal!
*As a side note to instruction 3 we went through the set-up process also agreeing to the direct debit instruction although TransferWise, much like WorldFirst, are quite clear that their digital account solutions are not able to authorise direct debits. The underlying digital accounts themselves in the UK are provided by Barclays so we’re not sure where the direct debit issue lies here. In either way, the way described is the only way to transfer money from a PayPal account to TransferWise.
Why People Want to Transfer Money from PayPal to TransferWise (Wise Money Transfers)
If you’re here, you’re probably interested in either of the below options:
a) paying less for your international currency transfers by getting best currency exchange rates
b) receiving more money as a freelancer/supplier
It is almost always cheaper to use Wise instead of directly withdrawing from PayPal (see why on our Transferwise (Wise) review). Wise launched their Wise Borderless Account solution in 2017 allowing users to hold balances in multiple currencies and both make and receive payments, in most cases with a bank account local to the currency it is in. Such as a pound sterling account in the UK, a euro account in the eurozone and a US dollar account in the US.
PayPal vs Wise: Deep Dive
PayPal
| Wise – Previously, TransferWise
| |
| FX Rates/Fees | Free when you send same currency payments to another UK PayPal user. Otherwise considerably more expensive. | Cheaper across all transfers that require currency exchange and same currency cross border payments. |
| Speed | -Instant PayPal to PayPal transfers. -Withdrawls to your bank account usually processed on the same day. -Xoom international payments can take minutes but some 1-2 days. | -Instant when converting own money through TransferWise borderless account. -14.1% of transfers delivered under 20 seconds. -Can be up to 1-2 day payment duration to some countries. |
| Currency Availability | -Digital Account with 22 currency options. -International payments with xoom to 30 currencies. | -Digital accounts with 18 currency options. -International payments to 53 currencies. |
| Country Availability (User Registration) | Available in over 200 countries/regions. | Available in 39 countries. |
| Annual Transaction Volume | $578bn (US Dollars – across both domestic and international payments). | £48bn – predominantly international payments. |
PayPal vs TransferWise for Same-Currency Fees
Providing you are making or receiving a same currency personal payment within the same country and from your base PayPal balance (such as a GBP to GBP payment to a friend within the UK) then PayPal can prove a cheap solution. In fact this type of payment in the UK is free. The problems start to arise as soon as money is required to cross borders and the payment is for goods or services. We’ll look into the goods and services fee later but the cross border payment fees to the UK are set out as follows by PayPal:
PayPal’s Same Currency Fees
| Sender’s country | Cross Border Fee |
| Northern Europe | 0.5% |
| Europe I | 0.5% |
| US / Canada | 2.0% |
| Europe II | 2.0% |
| Rest of World | 2.0% |
Wise (TransferWise), on the other hand, charge nothing for same currency payments from one borderless account to another and maintain a fixed payment fee for all same currency transactions to external accounts, regardless of whether it is your country’s domestic currency or not. Fixed same currency fees are available but popular currency pricing is as follows; USD 1.13, GBP 0.65, EUR 0.63.
To make a $10,000 same currency payment through PayPal from a UK user to the US it would incur a 2% fee of $200. As your TransferWise USD account is already held in the US then this same transfer to the US would cost $1.13 through Wise. Should you be using a UK based USD account Wise explain that when sending money overseas they’re required to use SWIFT which incurs a higher fee for them and they then charge the customer $3.20 – still way below the 2% PayPal fee.
What’s more, for each country that PayPal operates, they hold specialised T&C’s specific for that country. So if you’re a UK user looking to receive money from a user in the US, Australia or anywhere outside your specified user agreement it’s almost impossible to get an understanding of the payment fees that will be applicable to the sender and how much money you’ll actually end up with.
PayPal vs TransferWise International Payment Fees
A full breakdown on UK registered PayPal payment fees is available here and on our eWallet comparison guide. However, as noted above currency conversion fees are always somewhere between 3-4% and in 9/10 cases either 3.75% or 4%. Wise Borderless Account fees differ slightly to their main payment proposition but are generally between 0.3-0.6%.
For example, a £10,000 payment from GBP to USD would incur a 3.75% charge with PayPal, equating to a whopping £375 cost only through the FX conversion. The same payment with TransferWise incurs an FX cost of £37.97 – almost 90% cheaper. We also really like that instead of having to dig deep into the user agreement, TransferWise provide an easy to use tool named “price change” on their website, for users to quickly calculate their payments costs before sending.
PayPal vs Wise Convert Currencies Between Your Accounts
To convert currencies from one of your PayPal accounts to another the PayPal FX fee is 2.5%. So to convert £10,000 GBP to your USD account it would incur a cost of £250, however with Wise, we can update the pricing tool for inter-account transfers to see this would incur a cost of £36.86. A comparatively cheaper saving with TransferWise vs PayPal when compared to external payments, but overall still significantly cheaper. Providing an insight into the profit margins the two firms are running.
Why You Should Consider Skipping PayPal Altogether (and Transfer Money Directly to your Borderless Wise Account)
Regardless of PayPal currency fees, all payments on PayPal, if you supply a good or service, incur a 3.4% goods or services fee. Consider this; a UK user is looking to be paid for a service directly from a US company in USD. The user would incur a 3.4% goods & services fee + a 2% cross border payment fee. To then transfer that with their PayPal accounts from USD to GBP (which proves cheaper than the sender completing the foreign exchange) it incurs an additional 2.5%. Adding all fees together the user is in all losing 7.9% of the price they quoted their customer!
It’s important to note too that as a user registered with a certain country that PayPal operates you can only withdraw funds to a bank account in that country. Despite being able to hold virtual funds in 22 different currencies, if you’re not looking to send this out via a costly international payment or to other users within PayPal then you will eventually have to convert this back to your primary currency should you wish to withdraw funds. You wouldn’t, for example, be able to set up multiple TransferWise (Wise.com) accounts in different currencies with PayPal. As a UK user you’re only allowed to register UK based GBP accounts.
Even if you know how to transfer money from PayPal to Wise (TransferWise) through the Borderless Account, it doesn’t mean you need to go through this circumvented way to receive funds! In the same scenario we mention above the user could have registered for the Wise (TransferWise) Borderless Account, completely bypassed the goods and services fee and even received an ACH and routing number to provide US customers.
Learn more about receiving payments from abroad on our guide – best way to receiving large amounts from abroad.