Wise vs PayPal: How Do They Differ

wise vs paypal

Wise vs PayPal, which would you say is better for doing business? Both offer cheaper money transfers compared to banks.

But which is the best choice when sending money?

Let us look at comparative details between Wise vs PayPal.

  • You can open personal and business accounts with Wise and PayPal.
  • Wise has MUCH lower and more transparent fees compared to PayPal.
  • With Wise you can local account details in 10 countries, including the USA, UK, Australia, and more.
  • Both are free to sign up and easy to use.
  • PayPal is available in 200+ countries, with Wise operating in 70+ countries.
  • Unlike Wise, PayPal integrates eCommerce Online Payments.
  • PayPal offers debit cards for business purposes and prepaid cards for personal use. On the other hand, Wise has a Master card Debit Card that’s free.

Both Wise and PayPal are leaders in terms of money transfer services. But how did they get here?

Read on.

Why You Should Choose Wise

I believe you should choose Wise based on these reasons.

  • It is Inexpensive and Transparent

Wise money transfer charges include the amount incurred when sending money and little profit to run the company. This is why they are 8x cheaper than banks and 15x than PayPal.

Compared to PayPal, Wise has fair exchange rates. In addition, you get to view all fees upfront before making any money transfers. The brand recognizes that it is unfair for consumers to undergo markups or hidden costs.

It is good that its founders suffered expensive hidden charges and saw the need to stop the trend.

  • Local bank details in 10 countries
  • After your Wise account is approved, you can instantly get local bank details in 10 countries:

    • USA
    • Euro
    • UK
    • Australia
    • New Zealand
    • Singapore
    • Romania
    • Canada
    • Hungary
    • Turkey

    Having these bank details equals having a local bank account with extremely low Wise fees.

    • Easy Money Transfers

    Wise ensures that global money transfers are stress-free. The company has designed an app and website to help users manage their money during transition. In addition, Wise has a dedicated team that works to keep the money transfer process watertight.

    • It is Fast

    Opening an account with Wise is easy and free. Once your account is verified, you can start online transactions immediately.

    Why You Should Choose PayPal

    There are benefits to using PayPal. Here are a few.

    • Secure

    PayPal understands the importance of security, particularly in online marketing. For this reason, they do not disclose your financial information. 

    Any time you make a payment, PayPal does not send your bank account or credit card number to the recipient. Instead, this sensitive data is stored on encrypted servers.

    • Fast Money Transfers

    Money transfers with PayPal are quick. It takes less than 30 minutes with PayPal Instant Transfers. This, however, does not include transfers made on weekends, holidays, and later than 7 p.m. Eastern time.

    • Easy to Use

    PayPal is easy to use and user-friendly. It will only take you minutes to set up the account. The process is simple and manageable as it demands a valid email account to link it to your bank account.

    Besides, if you transfer money to a registered PayPal account, all you need is their email address. Unlike Wise, you do not need to ask the recipient for their bank details.

    • Mobile-Friendly App

    The PayPal app is convenient and user-friendly, too. It allows you to send and receive money anywhere, any time.

    My Recommendation

    Wise and PayPal are great platforms to send money internationally. However, I recommend PayPal if you need same-country bank transfers without converting currency.

    Wise, on the other hand, is best for international money transfers. It charges way less than PayPal, and its fees are discussed upfront.

    Wise Company History

    Wise, previously known as TransferWise, began in January 2011. This London-based financial money transfer was founded by Taavet Hinrikus and Kristo Karmann, both from Estonia.

    The pair lived and worked in London and had to send money back home. Taavet worked for Skype, while Kristo was an employee at Deloitte. Sadly, the banks charged expensive transfer fees, and their exchange rates were terrible.

    This prompted them to find a solution to the high banking costs in global money transfers. Kristo would get paid in pounds but needed euros to pay his mortgage. Taavet, on the other hand, received euros as payment.

    So, they started looking for a fair midmarket rate. Then the friends would transfer their currencies. Taavet cashed his euros in Kristo’s account while Kristo put his pounds in Taavet’s account. By doing so, they did not pay exchange rates, and they had the currency they wanted without hassles.

    This is where the business idea materialized. Taavet and Kristo thought of other people going through the same hurdle in global money transfers and decided to create TransferWise. They built a team to help find the best solution in international money transfers.

    Within its first year of establishment, Wise had amounted to 10 million Euros through transactions. Since then, it has earned different recognitions. In May 2015, the service was number 8 on CNBC’s Disruptor list, and three months later, it was recognized as a World Economic Forum Tech Pioneer.

    As of February 2021, the company was no longer TransferWise but Wise. Despite the name change, the brand still offers cheap, transparent, and fast money transfers internationally. It serves over 10 million people who move up to 7 billion Euros every month.

    Today, a Wise account can hold over 55 currencies in balance. The brand has partnered with Bolt, Monzo, GoCardless, and banks and companies for better international banking.

    How Wise Works

    Wise is easy to set up and use. Here are the steps involved.

    • Step 1: Create an Account

    Here is the good news. Creating a Wise account is free. Besides, the recipient does not need to have a Wise account for the money transfer.

    When signing up, you can register as an individual or a business. Verification takes 1-3 days, depending on your country.

    • Step 2: Key in Recipient’s Details

    Once your account has been verified, provide your recipient’s bank details. Remember, they do not need to have a Wise account for this to work.

    • Step 3: Pay for the Transfer

    Next, pay for the money transfer using a credit card, debit card, or local bank transfer. Credit cards deliver instant money to Wise, but you may incur additional fees. Debit cards are convenient and do not contain added fees. Unfortunately, it may take 1-3 days to process the transfer.

    On the other hand, using a local wire transfer is excellent and fast when making transfers of more than $10,000. But for this, your local bank may charge you a fee.

    • Step 4: Smart Technology Money Transfer

    After completing step 3 above, Wise uses its innovative technology to transfer the money. More details are discussed further in the article.

    Features of Wise

    Here are the features of Wise.

    • Transparent Money Transfers

    Since its establishment, Wise’s goal has been to provide instant, transparent, and convenient money transfer without borders. This is why, about a decade later, the brand’s rates are inexpensive and transparent.

    • Wise Debit Card

    Wise offers a borderless account that comes with a debit card. With it, you get zero transaction fees and low conversion fees. What’s more, you can use it anywhere in the world at the current exchange rate.

    The debit card is available in the UK, USA, Europe, Australia, Singapore, New Zealand, Japan, and Singapore. It is perfect for frequent travelers, ex-pats, and growing businesses since it has zero monthly charges.

    • Wise API Integration

    Wise API integration helps all kinds of businesses save millions of money every year. It offers endless opportunities such as automating payments, managing finances, and integrating your business tools.

    The platform also allows bank integration which allows transparent pricing and reduces operational costs across borders.

    Should you choose to join the Wise affiliates program, the API provides you with real-time mid-market exchange rates for all currency routes.

    You can also use the Wise API Integration to receive money or for open banking.

    • Wise Transfer Calculator

    Wise operates on three principles: transparency, low-cost, and adjusting ‘premium’ to become the ‘standard normal.’ For this reason, the brand is transparent about its fees. It openly displays how much you will be charged before you send money. The transfer calculator delivers transparency to users, unlike PayPal.

    • Smart Technology

    Unlike the traditional banking system, the company does not move money across borders. Instead, it uses smart technology to link its bank accounts around the world.

    To help you understand better, assume you need to send money from the US to the UK, right? Your currency is USD, but your recipient needs GPD.

    So, you deposit the money in your Wise account and fill in the recipient’s bank details. Then, Wise does not transfer the funds from the US to the UK. 

    On the contrary, the brand uses its resources in the UK to pay your recipient. And here is the catch, Wise will deliver your payment in GBP. How cool is that?

    This is why Wise is 8x cheaper than traditional banking systems.

    • Wise Mobile App

    For convenience, Wise has developed a mobile app. It makes quick and fast money transfers. In addition, the app allows users to monitor the status of the transfer, send verification documents, and make payments.

    The Wise App is compatible with IOS and Android devices.

    PayPal Company History

    Have you ever heard of the Company name Confinity? Well, that was PayPal’s brand name when it started in 1998. It rebranded to PayPal in 2000.

    The company was founded by Peter Thiel and Max Levchin, two technology entrepreneurs. Their goal was to establish a low-cost company that would make digital payments between consumers and businesses effortless.

    Peter and Max merged Confinity with X.com in 2000 to become PayPal. The brand started at a time when the internet was making advancements in the banking and payment sectors. 

    But it was not all easy. The founders had to find a way to build trust with their clients as they needed their emails and banking information during transactions.

    With time, online merchants and small businesses started to sign up. In return, PayPal offered them fast and inexpensive payments. In just three years, the company had made more than $3 billion payments.

    In 2002, eBay acquired PayPal for $1.5 billion to elevate online payment services and digital marketing. By 2006, PayPal had more than 100 million end-user accounts.

    During the same year, it launched PayPal Mobile, which allowed users to make payments via their smartphones.

    The brand has had tremendous achievements over the years. One such development is acquiring Braintree Systems, a company that owned Venmo in 2013.

    In 2014, there was a company restructuring, and PayPal split from eBay. Today, it is a single publicly traded brand with a revenue of $21.45 billion. It is available in over 200 countries and serves 360+ million users.

    How PayPal Works

    PayPal is a convenient platform to send and receive money online. Here is how it works.

    • Step 1: Create an Account

    The first step is to create a PayPal account. Here you have two options, open a personal or a business account.

    Then fill in your details or your company details and agree to the E-Communication Delivery Policy. This process is free.

    • Step 2: Complete the Set-Up

    Next, link your email address to your bank account to set up payment options. The procedure is straightforward.

    • Step 3: Get on with It

    Once your PayPal account is set up, you can send money or receive money from friends, get paid by clients who also own a PayPal account.

    Features of PayPal

    Here are five features of PayPal.

    • Xoom Service

    PayPal offers Xoom service to send money abroad while saving money transfer fees. With it, you can pay international bills, deposit to a recipient’s bank account or send cash for pick-up. Like Wise, Xoom has transparent, upfront pricing.

    It is worth noting that you have to create a Xoom account. Once you’ve done this, link it to your PayPal account.

    • One-Touch

    Do you hate logging in to your PayPal account every time you want to send or receive money? One-Touch covers that. Once you activate this feature, your devices stay logged into PayPal.

    • Bill Me Later

    Don’t have enough money to make a transaction? With Bill Me Later, you can make a purchase even when your account has insufficient funds. This feature, however, is only available in the United States.

    • Multiple Currencies

    Another feature present with PayPal is it supports multiple currencies from different countries. In addition, it features an automated currency conversion process that eliminates bank conversion fees during withdrawal.

    • PayPal Checkout

    This feature mainly targets consumers with eCommerce websites. It is not only a safe and secure payment plan, but it also boosts online conversions.  It is free, and it allows over 100 currencies.

    Other PayPal add-ons to look into include PayPal Marketplaces and PayPal here.

    What To Consider When Choosing Between Wise and PayPal

    Before you settle for either, consider these pointers.

    1. Rates

    You need to gauge how much you want to spend when sending money. Wise fees for international transfers are much cheaper than PayPal. 

    This is because it does not move money across borders. Instead, it utilizes its local accounts in the recipient’s region to make payments and gives the actual mid-market rate.

    1. Transparency

    Additionally, Wise does not include hidden fees in exchange rate margins. Over 70% of PayPal’s charges are hidden from consumers.

    1. Type of Transfers

    If you are looking for a convenient mode for local and international transfers, well, PayPal is the way to go. Wise does not make domestic transfers.

    1. Account Type

    Both wise and PayPal have personal and business accounts. Therefore, it comes down to your preference.

    1. Availability

    Currently, PayPal is available in over 200 countries with over 305 million active users. Wise is only available in 70+ countries with 8 million customers. This means that PayPal is present in more countries and regions.

    1. Versatility

    PayPal is more than a money transfer service. It integrates eCommerce online payments for use with businesses. It gives customers a more comprehensive range of secure payment options while allowing companies to sell more.

    Other Alternatives to Wise and PayPal

    Well, there are other international money transfer services apart from Wise and PayPal. Here are three alternatives; Venmo, Skrill, and Cash App.

    When you request money with Venmo, you incur zero transaction fees. But how does the company make a profit? It charges you when making instant transfers or sending money through a credit card.

    Skrill is another platform where you can easily send money. Consumers love it because it does not include foreign transaction fees when sending money from the United States. But here is the twist, the Skrill account must remain active, or you risk paying a $5 inactivity fee.

    On the other hand, Cash App is excellent for money transfers and making online purchases. It works like PayPal and Venmo since you have to link a bank account to the Cash app.

    Summary

    After reading this comprehensive guide, would you choose Wise or PayPal when doing business? Well, each service has a lot to offer, and it’s up to you to choose.

    Having said that, Wise stands out as the best option for international money transfers. It is inexpensive, fast, transparent, and easy to use.

    PayPal meets consumers’ expectations in terms of availability and versatility. Besides, it is more than a money transfer service.

    Related Questions

    • Is Wise Safe?

    Yes, Wise is safe. It uses encryption, passwords when transferring money, 2FA for logins, and 3DS for card payments. They prioritize safety and have an in-house team to monitor fraud, secure your money and data.

    • Why is Wise Cheaper?

    Wise does not move money across borders. On the contrary, it links its accounts in the recipient’s country to make payments.