Now that everybody knows Paypal it would seem fair that Paypal would be free. Moreover we would assume that if so many people are currently using it should be because Paypal does not cost too much. The answer is far different. Even though they recently bought Xoom for almost 1 billion dollars, Paypal is one of the most expensive financial money transfer service in the world. The reason why people are using it is because it’s convenient and many times there is no other choice. No choice means huge cost. Too often. Let’s see why.

Paypal recently acquired Xoom and should be able to offer the best exchange rates in the market

Even though Paypal recently acquired Xoom Paypal does not offer the best exchange rates?


Paypal’s fees are like this:

  1. Processing fees: around 3.5%
  2. Variable exchange rate hidden fees: around 3.5%
  3. Total fees: around 7% of the amount sent


Xoom’s fees are like this:

  1. Processing fees: around 2%
  2. Variable hidden fees: up to 5%, depending on the country you send money to


With 2 systems which now are the same, and with both having huge costs you can’t expect to have a cost-effective one as a result. So sad.


Paypal does not offer the best exchange rates because there are many hidden fees

Why are there so many hidden fees when we use Paypal? The answer is simple. Let’s take a look at Airbnb, Amazon or Uber when you pay with a foreign credit/debit card: the exchange rates provided are not the best. Those services take up to 10% hidden fees on the exchange rates. Why? Because credit/debit card processors are taking 3%, and the services are adding costs for handling everything. Let’s imagine they would charge an administrative fee? In this case we would refuse and we would consider it not fair. So they charge hidden fees. Almost nobody knows about them… Paypal is the same as AIrbnb, Uber and Amazon, the service is not specialized in the best exchange rates so it adds exchange rates hidden fees. That’s it.




Paypal acquired Xoom but it doesn’t change anything about their costs because both services have always been expensive. People living abroad and paying expenses abroad don’t realize there are so many fees because they are hidden.

Published by enyjzklr

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