Paypal vs Payoneer vs Wire Transfer (Fees Compared): Which is the Cheapest Option for Receiving Money from Abroad?

As someone who works online, I need to be very wary of fees associated with different payment services when received money from abroad (countries such as US, UK, AU, Germany, etc.). If you are someone who’s looking to receive money to India from any of the international countries, then read on to find out the most cost-efficient solution to do this. In this post, I will compare the top 3 most common ways to receive money online from abroad to India i.e. Paypal, Payoneer, and Wire Transfer.

PayPal

PayPal

PayPal

PayPal is a giant in the online money processing space that’s been around since 1998 and has quite a good reputation among users. Everyone in my friends’ circle knows about PayPal and would trust their money handling with PayPal. However, PayPal has some of the highest fees for receiving money from abroad. Here are the PayPal fees for receiving money from abroad, as posted on their official site:

Monthly Incoming Funds Fees
Up to $3,000 USD 4.4 % + fixed fee based on the currency
$3,000.01 USD – $10,000 USD 3.9% + fixed fee based on the currency
$10,000.01 USD – $100,000 USD 3.7% + fixed fee based on the currency
$100,000.01 USD and over 3.4 % + fixed fee based on the currency

However, as someone who’s based out of India, I compared the fees I’d been charged for the last 3 payments I received to my PayPal account. Here are the PayPal fees that were incurred in my account:

PayPal Fees for Receiving Money

PayPal Fees for Receiving Money

  • First Payment: 5.88% fees
  • Second Payment: 5.31% fees
  • Third Payment: 5.6% fees

PayPal Fees for Receiving Money from Abroad

The average PayPal Fees per transaction for receiving money from abroad is 5.6%.

Please note that all the payments I’ve received above were in USD currency. Apart from the fees per transaction, although they state that they don’t charge any fees to withdraw money to your local bank account, there are hidden currency conversion fees for withdrawal.

The exchange rate I get from PayPal is always very low as compared to my local bank’s rate if I were to perform the transaction through Wire Transfer. Here are the PayPal exchange rates that I got in October 2020 and September 2020:

  • 1 USD = 70.927 INR
  • 1 USD = 70.5607 INR
  • 1 USD = 70.7091 INR

We’ve noted an average 70.732 PayPal exchange rate for USD to INR during this period.

Xe.com shows the average exchange rate during this period to be around 1 USD = 73.5443 INR. That means, on average, PayPal exchange rate is 3.89% lower than the average market rate.

Payoneer

Payoneer

Payoneer

Payoneer is another well-known money transfer service that was founded in 2005. Its main focus is the B2B payment sector. Payoneer allows its users to perform transactions in 200 countries and in more than 150 local currencies. You can also get virtual bank accounts in USD, EUR, CAD, AUD, JPY, MXN through the platform.

Payoneer Fees for Receiving Money from Abroad

If you are receiving money from another Payoneer customer, then it’s free of cost for these currencies: USD, EUR, GBP and JPY. 1-2% fees may occur for other currencies.

If you are using Payoneer’s Global Payment Service that allows you to have virtual local bank accounts in US, UK, Europe, Japan, Canada, Australia & Mexico; then it’s also free of cost to receive money through Payoneer. Although, in the past, I reckon it was 1% charge for receiving money in USD.

The way Payoneer makes money is through forex/currency conversion; however, that’s not too much as compared to PayPal. Here are the Payoneer exchange rates I got during the period of last 3 months:

  • 1.00 USD = 72.093826 INR (October 2020)
  • 1.00 USD = 71.816772 INR (September 2020)
  • 1.00 USD = 73.318715 INR (August 2020)

We’ve noted an average of 72.40 Payoneer exchange rate for USD to INR. The average market exchange rate during this period was 74.2132, according to Xe.com. That means, on average, Payoneer exchange rate is 2.47% lower than the average market rate.

Wire Transfer

How Does Wire Transfer Work?

How Does Wire Transfer Work?

The costs associated with wire transfers differ from bank to bank, and may also depend on the amount of money you are sending or receiving. If you are receiving money from the US, the banks in US generally charge the sender $30 to $50 for every wire transfer transaction made to someone outside of the United States. So, that fee will probably be deducted from your invoice. On top of that, your local bank may also charge you some amount for receiving wire transfers or inward remittances. If you are receiving money to Indian banks, it should usually be in the 200-300 INR range; sometimes, it might be up to 500-600 INR.

Apart from that, keep in mind that banks also make money out of currency conversion. Some banks have higher exchange rates, and some lower. Here are the exchange rates of a few Indian banks that I currently have information about:

HDFC Bank:

1 USD = 72.97 INR on 27th August 2020 (1.81 % lower than the market close rate on that day)

Axis Bank:

1 USD to INR = 74.41 on 27th April 2020 (2.48% lower than the market close rate on that day).

EUR to INR = 84.59 on 28th July 2020 (4.11% lower than the market close rate on that day).

 

I will try to update this post with more current exchange rate data of Indian banks soon. Keep your eye around for it. Thank you!

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