PayPal vs TransferWise: Difference and Comparison

When the internet is advancing every paradigm of our lifestyle, money transfer and overseas transactions are also made possible.

While banks cost a lot of money as well as time for this process, businesses such as PayPal and TransferWise provide the cheapest ways to transact your money.

Key Takeaways

  1. PayPal is a widely-used digital payment platform suitable for online transactions and e-commerce.
  2. TransferWise (now Wise) specializes in international money transfers with competitive exchange rates and low fees.
  3. Users should select the service that best suits their needs and transaction types.

PayPal vs TransferWise

PayPal is a general platform for sending and receiving money, while TransferWise focuses on international transfers with low-cost, transparent exchange rates. While both platforms offer multiple currency support, TransferWise is more cost-effective for international transfers.

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PayPal is an online payment solution launched in 1998 with more than 325 million consumers. With PayPal, users can send and accept money without involving a card or cash.

Services such as creating invoices, donating to a cause, creating a money pool, sending cash or bank deposits, renting a car or purchasing plane and train tickets online can be done fast and securely.

TransferWise has an alternate name, Wise and provides money transfer facilities that are easy, fast and cost-efficient. It was launched in 2011, since then, it has been growing fast.

Due to affordable transaction fees for cross-border transactions, it grew into PayPal’s emerging competitor. It is most probably due to fee transparency, and traditional bank wires are high priced.

Comparison Table

Parameters of ComparisonPayPal TransferWise
UsersPayPal has a huge user base, expanding beyond 325 million users.TransferWise has a considerably smaller user base than PayPal, expanding to more than 10 million users.
International ServiceIt provides its services across 190+ countries.It provides its services across 70+ countries.
Stock ExchangePayPal is on the stock exchangeTransferWise is not on the stock exchange.
Fee TransparencyPayPal does not provide the fee transparencyTransferWise provides fee transparency.
Cost SavingsPayPal does not promote cost savings.TransferWise promotes cost savings.
eCommerce PaymentsPayPal integrates the online eCommerce payments.TransferWise does not integrate online eCommerce payments.
Transaction CardsFor personal use, it provides prepaid cards and for the business purpose it provides debit cards, with extra charges for overseas use, currency conversation, etc.It provides Master cards, and debit cards that can be used overseas, and for currency exchange, without the high cost.

What is PayPal?

In 1998, PayPal was established by Max Levchin, Peter Thiel, and Luke Nosek to make international money transactions safe and cheap. It acquired Honey to offer consumers coupons, to claim rewards.

It not only provides a money transfer service, but it also provides many aligned services. Signing up for PayPal is easy and costs nothing.

After signing up, everyone automatically gets a PayPal Purchase Protection Plan, which refunds the money for failed transactions.

Here, everyone is given an option to make a personal or business account. Anyone can have more than one account to keep separate transactions. The further process of setting up an account will be guided as per the website.

You will be asked for your phone number, some personal details, and to set the password. To create a business account, you have to fill in additional information, such as the name of the business and the category of the business.

They have an easy to handle interface; hence it is easy to navigate through the website. The dashboard or home page is designed in such a way it shows your balance, recent activities, contacts, etc.

paypal business

What is TransferWise?

TransferWise is also known as Wise. It was founded by Taavet Hinrikus and Kristo Cayman in 2011 to make money transfers easy and fast at a low cost.

They own 14 offices with more than 24000 staff members. They rebranded the company name from TransferWise to Wise. 

They have around 10 million active consumers, which makes more than ₤4.5 billion transactions each month.

They provide their services to more than 70 countries of international transactions with mid-market exchange rates and transparent fees.

Anyone who opens an account on the Wise is given two choices, personal or business account. Anyone can have more than one account on Wise.

For a successful transaction, the sender needs a Wise account, but the receiver does not necessarily need to have a Wise account.

The website interface is made user-friendly, and it is easy to navigate through it.

Their home page or dashboard is designed to show options like send money, receive money and get a debit card, but you can see the recipients list as well.

You need to set up the banking information to be able to receive or send money to your bank account.

transferwise

Main Differences Between PayPal and TransferWise

  1. PayPal has a huge user base, more than 325 million users. TransferWise has a relatively small user base of around 10 million users.
  2. Both of them operate internationally, but TransferWise operates in more than 70 countries. While PayPal operates in 190+ countries.
  3. PayPal is on the stock exchange, but TransferWise is not on the stock exchange.
  4. TransferWise has fee transparency and cost savings, but PayPal does not.
  5. PayPal has a service that integrates eCommerce payments, but Transferwise does not.
  6. TransferWise provides Master cards and Debit cards for international use, without any extra charge. PayPal also provides prepaid cards for personal use and Debit cards for business use but charges additional fees for abroad use, currency exchange, etc.
References
  1. https://www.researchgate.net/profile/Simon-Grima/publication/323114264_The_Payment_Services_Directive_2_and_Competitiveness_The_Perspective_of_European_Fintech_Companies/links/5a80645aaca272a73769d406/The-Payment-Services-Directive-2-and-Competitiveness-The-Perspective-of-European-Fintech-Companies.pdf 
  2. https://uis.brage.unit.no/uis-xmlui/handle/11250/2587148 

Last Updated : 13 July, 2023

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