PayPal international fees and ways to reduce them

Today, international trade and online shopping rely heavily on payment services, with PayPal leading the way. With 429 million users¹, PayPal plays a major role in handling transactions across the globe every day.

No matter what you do – run an eCommerce store, travel, or help family abroad – you may need to use PayPal for an international transfer. However, these transfers come with processing fees. 

Whether you're a business owner wanting to expand your reach worldwide or sending money to loved ones, it’s important to understand how PayPal's foreign transaction fees work. This can help you manage costs and make better financial decisions down the road.
This article will walk you through everything you need to know about PayPal international fees, including how it sets exchange rates and some killer tips to reduce costs. 

What are PayPal’s international fees?

Believe it or not, PayPal is one of the best digital payments platforms available today. Not only does it operate in over 200 countries² (like the United States and Germany), but it also helps users make transactions in 20+ currencies³, such as the US Dollar and Canadian dollar. 

While the fees to send money on PayPal may seem high, they are essential for the company to operate successfully as a business. 

That being said, you can employ PayPal for international transfers. However, the process can vary slightly based on whether the sender and recipient both have PayPal accounts.

Both options can provide users with relatively quick payment. Let’s explore each further:

Sending money to another PayPal account

So, does PayPal charge a fee to send money internationally? It does! 

Consider the argument:

When you send funds to other PayPal accounts internationally, the following fees may apply:

• Fee: 5% of the transaction amount⁴
• Minimum fee: $0.99
• Maximum fee: $4.99

Remember, this applies only when a user transfers funds through PayPal balance. However, if you send money using a debit card, credit card, or PayPal credit, you’ll be charged an additional funding fee of 2.9% + a fixed fee (depending on the currency). 

These PayPal fees for sending money internationally can add up quickly. Therefore, it’s best to use a PayPal balance or linked bank account – which is generally more cost-effective.

Currency conversion fee

What if you have to send money to other accounts, not PayPal? How much will you need to pay for PayPal international transfer fees?

If you’re sending funds to other international accounts, the online payment system company will convert your currency to “foreign currency” and may charge fees:

• Conversion Fee For USD or CAD: 3.5%
• Conversion Fee For Most Other Currencies: Around 4%
• Additional Conversion Service Fee: 4.5% 

Also, there is no minimum or maximum limit for these conversion fees, which means larger transactions may result in higher fees.

Using Xoom for bank transfers

Xoom is a PayPal-owned service that allows you to send funds directly to a recipient’s bank account. However, international transfers via Xoom are often more costly.

Here are a few charges you may have to pay:

How PayPal sets its exchange rates

Curious to know how the PayPal exchange rate works? PayPal employs a specific process to determine its exchange rates for currency conversions. 

Here’s how it functions:

• Every 12 hours (twice per day), the platform obtains wholesale exchange rate quotes from major banks. These are competitive rates used by large financial institutions for currency trading.
• Once PayPal receives the wholesale rate, it adds a markup percentage to create the retail exchange rate that customers see. This markup ensures PayPal earns a profit on currency conversion services. 

Comparison to mid-market rates

The mid-market rate⁶ – also called the middle rate – is the average of the buy and sell rates from global currency exchanges. 

PayPal’s rates include a substantial markup compared to the mid-market rate, which often leads to high user costs. 

For example, if the middle rate for USD to EUR is 1.10, the giant payment system company may offer a rate of 1.08. This means users will lose some funds on the exchange.

Still confused? If so, consider this:

Let’s say a user sends $1,000 to a recipient in the UK. Here’s how the exchange rate may apply:

The recipient will get 730 GBP instead of 760 GBP – a 30 GBP difference due to PayPal’s markup.

Breaking down the costs

When using PayPal for international transactions, you must understand the different fees and associated costs before going ahead. From fixed fees to currency conversion markups, the expenses can accumulate quickly and influence the total amount obtained by the receiver. 

Let’s break down each element to understand where your funds go and how PayPal determines its charges. 

Fees for PayPal international transactions

Want to know quickly PayPal international transaction fees? The table below will show users how the fees are levied:

Key factors influencing total costs

When calculating the total cost of an international PayPal transfer, consider these factors:

• Home Bank Fees: Your bank may charge additional fees for funding or receiving PayPal transactions.
• Intermediary Bank Fees: For Xoom or direct bank transfers, intermediary banks may deduct fees from the transferred amount.
• Dynamic Currency Conversion (DCC): If you allow PayPal to perform currency conversion at checkout, you’ll pay higher rates. Always opt to pay in the original currency.

How to minimize PayPal’s international fees

You can send money to family, friends, or others in the United States for free⁷, provided you use your PayPal Balance or bank account. However, you need to pay a certain transfer fee for business transactions and international transfers, as we mentioned above. 

The cost can easily add up depending on the frequency and size of international transfers.

Although users can’t avoid PayPal’s fees completely, there are workarounds to reduce the costs.

To help you get the most, here are some actionable tips for how to avoid PayPal fees:

Choose the right payment method

First, select the right mode of payment, as it can make or break your funds. You can significantly lower your fees if you choose a proper funding source, such as the PayPal balance. 

Here are a few ways to do it:

When you link your bank account to PayPal, it lowers fees and provides clearer transaction records, which makes it easier to track spending.

Avoid currency conversion

To minimize costs, send or pay in the recipient’s currency – and avoid currency conversion. 

Make sure to:

Use alternative transfer services

If PayPal’s fees feel too high, explore other money transfer options. Services such as Wise and BOSS Revolution often have lower international transfer fees and more competitive exchange rates.

Here’s a brief overview of each (we’ll discuss each option in detail later in the article):

These alternatives can help save you money, especially for frequent or high-value transfers.

Take advantage of fee-free promotions

PayPal and its subsidiary – Xoom – occasionally offer promotions that waive transaction fees. For example, Xoom sometimes allows fee-free transfers⁸ for amounts between $10 and $1,000. 

However, not everyone may be eligible for the promotional exchange rate offer, so it’s better to check the terms and conditions. 

PayPal fee calculator

A PayPal fee calculator can help users quickly and precisely measure fees for international or domestic transactions. There are numerous third-party tools available that enable you to:

Enter your transaction amount and the recipient’s country.

View the total fees and amount the recipient will receive after deductions.

This calculator is a useful tool, especially for businesses. This is because it helps reduce manual work, minimize human errors, and free up time to focus on bigger, strategic priorities.

Alternatives to PayPal for international payments

PayPal is increasingly popular for international and domestic transfers. However, it may not suit everyone. Luckily, there are various alternative options with great rates, unique features, and services tailored to different needs. 

Here are three top alternatives:

BOSS Revolution

Developed by IDT Corporation, BOSS Revolution is one of the few money transfer services focused on international transactions that deliver. It’s well-known among people who send funds to friends and family overseas. 

Although the payment system has a range of excellent features, the main attraction is its ease of use and accessibility, which often makes it a favorite option for users unfamiliar with international transactions.

Wise

Wise offers quick and affordable international money transfers. Also called TransferWise, the platform was developed to confront conventional banking systems that frequently impose hidden charges and exaggerated exchange rates. 

Currently, Wise helps millions of freelancers, users, and companies worldwide, allowing them to send, receive, and manage money internationally easily.

OFX

Originally called OzForex, OFX10 is a licensed international money transfer service that has operated for over twenty years. It currently operates in more than 170 countries. 

The platform supports both businesses and users who require international money transactions, providing attractive exchange rates and tailored service.

Each platform comes with its strengths, so choose the one that aligns best with your transfer needs and budget. To help you get a better idea, consider the table below:

Bottom line

PayPal is a reliable global payment platform – it’s nearly impossible to beat its convenience. However, the platform’s international fees can quickly add up. 

Take some time to understand its fee structure and exchange rates. This way, you can make financial decisions that help scale your bottom line. 

To minimize costs:

• Use a PayPal balance or linked bank account.
• Avoid unnecessary currency conversions.
• Explore alternatives like BOSS Revolution, Wise, or OFX for more competitive rates.
• The best option depends on your needs, transfer amount, and willingness to explore other services. With careful planning, you can significantly reduce the cost of international money transfers for good. 

Sources: all third party information obtained from applicable website as of January 16, 2025

1. https://www.globaldata.com/data-insights/financial-services/number-of-active-paypal-accounts-global/#:~:text=As%20of%20March%202022%2C%20the,paid%20off%20with%20user%20growth.

2. https://www.paypal.com/sm/webapps/mpp/country-worldwide

3. https://developer.paypal.com/docs/reports/reference/paypal-supported-currencies/

4. https://www.paypal.com/us/digital-wallet/paypal-consumer-fees

5. https://help.xoom.com/s/article/how-much-does-it-cost-to-send-with-xoom?language=en_US

6. https://www.investopedia.com/terms/m/middle-rate.asp

7. https://www.paypal.com/us/cshelp/article/whats-the-difference-between-friends-and-family-or-goods-and-services-payments-help277

8. https://www.xoom.com/legal/xoom-ftf-terms

This article is provided for general information purposes only and is not intended to address every aspect of the matters discussed herein. The information in this article is not intended as specific personal advice. The information in this article does not constitute legal, tax, regulatory or other professional advice from IDT Payment Services, Inc. and its affiliates (collectively, “IDT”), and should not be taken or used as such by any individual. IDT makes no representation, warranty or guaranty, whether express or implied, that the content in this article is current, accurate, or complete. You should obtain professional or other substantive advice before taking, or refraining from, any action on the basis of the information in this article.