Wise vs PayPal: A Detailed Comparison for Canadians

By Arthur Dubois | Published on 15 Aug 2023

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In today’s digital world, sending and receiving money internationally has become easier than ever before. Thanks to financial technology companies like Wise and PayPal, individuals and businesses can effortlessly transfer funds across borders with just a few clicks. But how do these two popular payment platforms compare? In this article, we’ll take a detailed look at Wise and PayPal, examining their features, fees, and customer support to help Canadians make an informed choice.

Understanding Wise and PayPal

Brief Overview of Wise

Wise, formerly known as TransferWise, is a London-based fintech company founded in 2011. With its mission to make international money transfers more transparent and affordable, Wise has built a loyal user base over the years. The platform boasts a network of local bank accounts around the world, allowing users to send and receive money at competitive exchange rates.

Wise has revolutionized the way people transfer money internationally. Traditionally, banks have charged high fees and offered unfavorable exchange rates for cross-border transactions. However, Wise has disrupted this model by eliminating hidden fees and providing customers with the real exchange rate. This transparency has not only saved users money but has also increased trust in the financial industry.

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Brief Overview of PayPal

PayPal, on the other hand, needs no introduction. As one of the pioneers in online payments, PayPal has grown to be a household name worldwide. Established in 1998, the platform started as an alternative to traditional paper methods of transferring money. Today, PayPal offers Canadians a range of services, including international money transfers and secure online payments.

PayPal has played a significant role in the e-commerce industry, enabling millions of individuals and businesses to buy and sell goods and services online. With its user-friendly interface and seamless integration with various online platforms, PayPal has become the go-to payment method for many online shoppers.

Overall, both Wise and PayPal have transformed the way people transfer money and make online payments. With their innovative features, competitive rates, and commitment to security, these platforms have become trusted names in the financial technology industry. With that being said, let’s take a closer look at the details of Wise and PayPal to find out which platform is best for you.

Wise vs Paypal: Conversion Fees

Wise Conversion Fees

Wise offers Canadians a cost-effective solution for currency conversion, boasting rates notably cheaper than those offered by traditional banks. The disparity arises from Wise’s innovative approach to international transfers. Unlike conventional banks that apply hidden fees and unfavorable exchange rates, Wise employs a transparent system. It employs the mid-market exchange rate—essentially the real rate you see on Google or Reuters—without markup, ensuring customers receive the most accurate value for their money. Furthermore, Wise charges a small, upfront, and transparent fee, clearly communicated before the transfer, eliminating the surprise charges prevalent in traditional banking.

At the moment, you can use Wise to convert $1000 to US$738.82, which includes a low fee of $5.47.

PayPal Conversion Fees

PayPal’s currency conversion rates for Canadians are often considered more expensive compared to Wise due to various factors. PayPal adds a significant markup to the exchange rate, which can result in higher overall costs for currency conversion. For a currency conversion of CAD to USD, you’re looking at a markup of 4% plus a fixed conversion fee of C$2.99. Additionally, PayPal’s fee structure can be complex and less transparent, making it challenging for users to accurately estimate the total expenses involved in international transactions.

At the moment, you can use PayPal to convert $1000 to US$709.94, which includes the $2.99 fee for the conversion.

The Winner: Wise

When it comes to currency conversion fees, Wise is the obvious winner. This is a result of Wise being tailored specifically for the purpose of enabling cheap and transparant currency conversions, while PayPal focuses more on facilitating e-commerce solutions. In the example of converting 1000 CAD to USD, you can save US$28.88 by using Wise instead of PayPal.

Wise vs Paypal: Transaction Fees

Wise Transaction Fees

Renowned for its transparency, Wise offers a clear breakdown of fees related to transactions involving domestic currency. When sending $1000 through Wise, the fees are as follows: $40.62 for credit cards, $23.50 for debit cards, $3.67 for direct debit, $2.71 for Interac e-Transfers, $0.66 for Wise transfers between users, and $3.57 for domestic wire transfers.

For international transfers, Wise is one of the best ways to send money abroad from Canada. When sending $1000 to the United States, Wise applies the following charges: $44.26 for credit cards, $28.86 for debit cards, $9.04 for direct debit, $8.09 for Interac e-Transfers, $6 for Wise transfers, and $8.95 for domestic wire transfers.

However, it is important to note that Wise’s transaction fees can differ significantly based on the amount you’re sending. For instance, if you’re doing a domestic transfer of $1000 using a credit card, the fee will be $40.62. But if you’re sending only $100, the fee decreases to $5.52. Prior to making a transfer, it’s crucial to check Wise’s rates to understand the exact amount you’ll be charged.

PayPal Transaction Fees

In certain scenarios, sending personal transactions within the same country through PayPal tends to be more cost-effective compared to using Wise. When sending funds from your PayPal balance or a connected bank account domestically, there are no charges involved. Nevertheless, utilizing a credit or debit card for the transaction results in a fee of 2.9% of the total amount, along with an additional fixed fee of $0.30.

On the other hand, for international personal transactions, using PayPal typically incurs higher costs than for domestic transfers. For instance, when sending money from Canada to the United States using your PayPal balance or a linked bank account, you’ll be required to pay a fixed fee of $2.99. However, if you opt to make the payment using a credit or debit card, the same international transaction will accumulate fees of $2.99 plus 2.9% of the total amount, and an extra fixed fee of $0.30.

The Winner: PayPal

PayPal often proves more cost-effective than Wise for money transfers due to its competitive fees across various transaction sizes. While Wise offers affordability for smaller transfers, PayPal consistently emerges as the more economical choice for both minor and substantial currency exchange transactions across a wider range of transaction methods. However, keep in mind that PayPal is not great for currency conversions, which in the end could result in higher fees compared to Wise when performing international transactions.

Wise vs Paypal: Payment Methods

Wise Payment Methods

Wise offers a range of payment methods that empower users to efficiently use the funds in their Wise account. With Wise, you can make international transfers, pay bills, shop online, and more. One of the standout features is the ability to send money abroad with minimal fees, leveraging Wise’s real exchange rate to ensure transparency and cost-effectiveness. This method proves advantageous for individuals and businesses engaged in global transactions.

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Furthermore, Wise provides a multi-currency account feature, allowing you to hold and manage funds in multiple currencies, which can be especially beneficial for those who frequently deal with foreign currencies. Additionally, the Wise debit card uses the Visa payment infrastructure to extend your spending capabilities, enabling you to shop both online and offline. Overall, Wise empowers users with smart payment methods, enhancing financial flexibility and transparency in an increasingly interconnected world.

PayPal Payment Methods

PayPal, a widely used online payment platform, offers diverse payment methods to cater to users’ preferences. It provides options such as PayPal Balance, which uses funds stored within the account, allowing for swift transactions. Users can also link their credit or debit cards to their PayPal account, enabling seamless payments without revealing card details. Additionally, PayPal offers bank account linking for secure electronic fund transfers. Furthermore, PayPal Credit permits users to make purchases and pay off balances over time, akin to a credit line.

Beyond its role as a facilitator for various payment methods, PayPal itself serves as a payment option on numerous online stores. This ubiquity stems from its established reputation and reliability, allowing customers to make purchases across a wide range of e-commerce platforms with confidence. PayPal’s wide acceptance enhances user convenience by centralizing payments through a single platform. Its multifaceted approach to payment solutions and extensive integration make it an indispensable tool in the modern digital economy, shaping how online transactions are conducted.

The Winner: Wise

Although PayPal is commonly offered as a payment method by numerous online retailers, it can’t match the worldwide accessibility provided by the Visa payment system. With the Wise debit card, you not only have the ability to make payments on nearly any online store, but you can also use it in person to make payments using local currencies in various countries across the globe. Due to these factors, Wise clearly emerges as the top choice in this category.

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Wise vs Paypal: Security Measures

Wise Security Measures

Wise employs a robust set of security measures to ensure the safety and privacy of its users’ financial transactions. It employs cutting-edge encryption protocols, including 256-bit SSL encryption and multi-layered security infrastructure, to safeguard data transmission. Two-factor authentication (2FA) adds an additional layer of protection to user accounts, preventing unauthorized access.

Wise also implements strong internal controls and regular security audits to monitor and strengthen its systems against potential threats. Customer data is stored in secure data centers with restricted physical access and continuous monitoring. Additionally, the company adheres to strict regulatory standards, such as being licensed and supervised by various financial authorities.

In the realm of financial operations, Wise uses segregated bank accounts to hold customers’ funds, ensuring their separation from operational funds and protecting them in the unlikely event of insolvency. With these comprehensive security measures, Wise remains committed to maintaining the trust and confidence of its users by prioritizing the security of their financial transactions and sensitive information.

PayPal Security Measures

PayPal, like Wise, employs a comprehensive array of robust security measures to ensure the safety and protection of its users’ financial transactions and sensitive data. One primary security layer is strong encryption, which safeguards data during transmission and storage. Multi-factor authentication adds an extra level of verification, requiring users to provide additional proof of identity beyond just passwords.

PayPal monitors transactions using advanced fraud detection tools, analyzing patterns and behaviors to detect and prevent suspicious activities. The company also implements continuous system monitoring and employs firewalls and intrusion detection systems to safeguard against unauthorized access. Regular security audits and vulnerability assessments are conducted to identify and address potential weaknesses.

Furthermore, PayPal educates users about best security practices, urging them to use unique and complex passwords, avoid sharing credentials, and be cautious of phishing attempts. In the rapidly evolving landscape of cybersecurity threats, PayPal’s commitment to staying ahead of potential risks through these multifaceted security measures remains paramount.

The Winner: Wise

Although neither PayPal nor Wise function as a bank and therefore aren’t safeguarded by the Canadian Deposit Insurance Corporation (CDIC), they both incorporate various measures to ensure the security of your funds. 

Our preference for Wise as the superior option stems from it being regulated by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and its practice of storing your funds in Peoples Trust Company, a federally regulated Canadian bank.

In addition, Wise allocates a portion of your funds to the U.S. treasury market and gives you a significant share of the interest generated by your funds, which is distributed to your account on a monthly basis. PayPal, who also invests your funds, doesn’t disclose its investment methods and doesn’t distribute any interest earnings accrued from your money. For these reasons, we believe Wise is the more secure choice for Canadians.

Wise vs Paypal: Customer Support

Wise Customer Support

Wise boasts exceptional customer support. Renowned for its user-centric approach, Wise prioritizes prompt and informative assistance. Whether clarifying currency exchange processes, troubleshooting transactions, or addressing account concerns, Wise’s support team exhibits remarkable efficiency and expertise. 

Through various communication channels, including chat and email, users consistently experience attentive and personalized guidance. This dedication to customer satisfaction sets Wise apart, fostering trust and loyalty among its global clientele.

Examining the Trustpilot reviews from Wise customers, it’s evident that Wise places a significant emphasis on their customer support. An impressive 83% of the 193,787 respondents have awarded Wise a 5-star rating, underscoring their exceptional commitment to customer assistance.

PayPal Customer Support

PayPal’s customer support has garnered a reputation for its frustrating shortcomings. Numerous users have reported lengthy wait times, unhelpful automated responses, and difficulty in reaching a live representative. Issues ranging from account freezes to unauthorized transactions often encounter roadblocks in the resolution process. Such experiences have left customers feeling unheard and dissatisfied. 

PayPal’s lackluster support infrastructure has led to a perception of negligence, eroding trust and loyalty among users. The company’s struggle to address these concerns highlights the vital role efficient customer support plays in maintaining a positive brand image and retaining a loyal customer base.

These findings become evident when looking at PayPal’s reviews on Trustpilot, with 87% of 26,332 respondents giving PayPal the lowest possible rating. What more can you say?

The Winner: Wise

PayPal’s customer support has been consistently criticized for its lackluster responsiveness and effectiveness, leaving users frustrated with unresolved issues. In contrast, Wise has gained a reputation for its stellar customer support, marked by timely and helpful assistance. For this reason, the obvious winner for this category is Wise.

Wise vs Paypal: The Final Verdict

In the dynamic landscape of online financial services, Wise emerges as the frontrunner when pitted against PayPal. With superior conversion fees, an array of convenient payment methods, enhanced security measures, and top-notch customer support, Wise takes the lead in this comparison. 

While PayPal may offer competitive transaction fees, Wise’s comprehensive advantages make it the preferred choice for individuals and businesses seeking a streamlined, cost-effective, and customer-centric platform. However, it’s important to note that Wise is not a traditional bank. So if you’re looking for more traditional banking services, be sure to compare Canadian chequing accounts to find one that best suits your needs.

Arthur Dubois is a personal finance writer at Hardbacon. Since relocating to Canada, he has successfully built his credit score from scratch and begun investing in the stock market. In addition to his work at Hardbacon, Arthur has contributed to Metro newspaper and several other publications