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Bank Wire Transfers or PayPal Money Transfers- Which Fee is Cheaper?

Sometimes Banks are Cheaper than PayPal

Banks charge three ways in a transfer: Outgoing fee, incoming fee, and (when appropriate) currency exchange fee.

I recently conducted a bank to bank transfer for payment. My customer owed me $800 for engineering services performed. Our entire business relationship is conducted by phone and online. In previous work, I invoiced him using Paypal. For this bill, I asked him to send a bank wire. We agreed that he would subtract the bank fee from the invoice total.

His Texas credit union charged $20 for an outgoing wire transfer. My Bank of America account charged $12 to receive it. My statement identifies the $12 expense as a "processing fee". So, the total bank charges amounted to $32 to send/receive 780 dollars U.S.

Is it cheaper to send $800 by bank wire transfer or by PayPal?

Is it cheaper to send $800 by bank wire transfer or by PayPal?

PayPal Fee to Send $800 vs. Bank Fees

According to their site, accessed June 8, 2013, Paypal charges 2.9% to the receiver plus a flat base charge of 30 cents per transaction. The sender pays nothing. So, if I had invoiced my customer $800 for engineering services, he would have sent $800. I would have received:

$800 - (800 x .029 + .30) = $776.50

I used a bank transfer and received $800 - $20 - $12 = $ 768.00

So, the difference is $8.50 on an 800 dollar transaction, that is more than a full percent, which is significant for anyone doing business. One percent of the gross is much greater than one percent of the net.

How to Use PayPal for Free

You can send money to friends and family for free using PayPal. You can do this one of two ways:

1. Link a bank account to your PayPal account.

2. Send funds from a PayPal balance.

You can establish a balance selling on eBay, or by receiving funds for work performed or as gifts.

Sending money for goods or services still results in a small fee, as calculated in this article.

Bank of America Domestic & International Fees

Bank of America Domestic wire transfer fees:

outgoing: $25

incoming: $12

The $12 processing fee is what I paid. My client sent payment via his credit union, and the fee for him was $20. So, some banks charge less than BofA charges. It is likely other banks charge even more. Fees also differ between international and domestic transfers.

Bank of America International Wire Transfer Fees

International Banking Fees:

These are Bank of America's International Wire Transfer Fees (Nov. 17, 2011)

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Outgoing in U.S. Dollars: $45

Outgoing in foreign currency (FX): $35

Incoming: $16

Note that outgoing in FX is going to cost more than just $35. You will have to pay a conversion fee.

My wife travels to Ukraine each year. I deposit money into her Bank of America account (transfers from one BofA customer to another are free.) She can withdraw up to $300 each day. She pays a flat fee of $5.00 for each transaction plus a standard conversion fee of one percent. So, to send my wife $300, the cost is:

$5 flat non-BofA atm fee + .01 x $300 = 5 + 3 = $8.

When is a Bank Transfer Cheaper than PayPal?

In the example above, a domestic transfer of $800, the banks' fees totaled $32 and PayPal's fee was $23.50, making PayPal the better choice.

When is the bank cheaper?

First, if you transfer from one account to another within the same bank, it is typically free. Another of my clients also has a Bank of America account. He sends me payment by wire transfer. It is completely free.

Second, just do the math. Using the fees from above: $20 to send and $12 to receive, the cost is $32 for a bank transfer. What amount (amt), sent by PayPal equates to a fee of $32?

32.00 = .029(amt) + 0.30

Solving for amt, the result is $1,093.10 to produce the same fee.

So, any fee over $1,093.10 can be paid cheaper using a bank transfer when the total fees are $32. For greater fee amounts, just solve the above equation replacing 32.00 with the sum of fees for your sending and receiving banks.

However, note that a check in the mail can be deposited for free. transferring funds from PayPal to your banking account often produces a delay of two or three days. This is about the same time the United States Postal Service requires to deliver a letter.


Cheapest Wire Fee

Cheaper than PayPal and traditional bank wire fees both is a fairly new Internet transfer system: Xoom. Using Xoom and your bank account, you can transfer $800 to Mexico for just $4.99. The same $800 transfer using a credit or debit card will cost $24.99, however.

Like PayPal, (but totally unlike banks), Xoom has a user friendly fee calculation interface.

It is the same fee to send $800 to the United Kingdom: just $4.99

The maximum amount of money Xoom allows is $2999.00 dollars U.S. Fees for using a bank account are always $4.99, regardless of receiving country. However, the fees for using a credit or debit card vary greatly country by country. Use the Xoom fee calculator to check the country to which you want to send funds.


In November, 2012, I relocated to Europe. To resolve my money transfer issues, I did some more research. This is what I found:

The newest way to send money is POPmoney. This is FREE if both the sender and the receiver use banks which offer POPmoney services. Bank of the West, Rabobank NA, many credit unions, and online Ally bank are some of the hundreds of banks offering POPmoney services.

There is a very nominal fee if one or more parties does not have an account in one of the 1,700+ participating banks. For example, it costs 95 cents to send $300. So, my $800 transfer would have cost less than $3.

Best Way to Send Money Overseas

Sending money internationally can be very inexpensive. Xoom is very cheap. There are other ways to send money overseas, however. To find the best way for you, read this article:

Best Way to Send Money Overseas

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.


Jay on February 18, 2018:

Your article implies that PopMoney can be used for overseas transfers, but everything I'm reading now states this cannot be done. Can you provide some further details? If I use a bank in the US that uses PopMoney, can I send money to a Rabobank account in the Netherlands using PopMoney? Thanks!

BODYLEVIVE from Alabama, USA on January 28, 2017:

Informative, thank you.

charvee on October 10, 2016:

Having read all this, for international transactions, wire transfer via a bank will yield you a higher exchange rate than paypal. So say if bank gives you USD to INR as 67 then Paypal will give you 64.

Man from Modesto (author) from Kiev, Ukraine (formerly Modesto, California) on September 26, 2012:

I didn't know, so I checked. Xoom is accredited by the BBB and they have an A+ rating. Here is the page:

Important note from the BBB page: A company named eSwifter, which may be based in India, is posing as Xoom. Anyone who wants to use Xoom should go their via a link on this page, or by directly typing into a web browser's address line.

G. Diane Nelson Trotter from Fontana on September 26, 2012:

I never head of Xoom. Are they a member of BBB?

Man from Modesto (author) from Kiev, Ukraine (formerly Modesto, California) on August 09, 2012:


Is Paypal safer than a bank transfer? For online transactions, I have had PayPal return my money when an item was not the described item. And, banks are notorious for scheming to collect a "fee". As lawsuits have shown, the fees are often charged through unfair accounting practices.

jprice90 from NJ on August 08, 2012:

I'd rather be safer then cheaper. I use Paypal

Man from Modesto (author) from Kiev, Ukraine (formerly Modesto, California) on July 25, 2012:

Banks are only required to hold (somewhere) 2% of the total amount of their loans. The rest of the money comes via the U.S. government, who "rent" it from the Federal Reserve (a private organization, not actually federal government related).

So, banks charge interest on 98% of a loan they actually do not have. That 98% is backed by the taxpayer.

monicamelendez from Salt Lake City on July 25, 2012:

I think it's pretty ridiculous that any bank charges an incoming fee for a large wire. They charge when they increase their holdings? Seems pretty dumb to me.

Reginald Chan from Malaysia on November 17, 2011:

Hi there!

Good to know on that. Previously I learned the hard way for this as I used to do bank transfer through PayPal. I was charged about Ringgit Malaysia 50 per 400.00 transfer. Nonetheless, this hub is informative for those in America and using those banks above.

Thanks for sharing.

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