Is PayPal the cheapest method to transfer money online?

PaypalogoPaypal : Analysis of Cost , Speed , Hassle and Risk

  • Requirements :
    • Open a USD bank account with RBC, the account should physically exist in the USA, not a shadow US$ account that all Canadian banks provide Here
    • Only RBC have physical US bank account based in the USA , In Canada, this service only provided by RBC but it has a cost of $3.9 monthly  Here
    • Update : even with RBC US based account it was not allowed to link to PayPal anymore, I called customer service and they said they will not allow a Canadian using a US bank account to withdraw money (they can identify by IP address) , with the exception of Canadians living close to a U.S city (like Buffalo, the Rep told me some Canadians living next to US cities sometimes work there too)
  • Limitations  :
    • IF you didn’t have a U.S based physical account the following charges will apply.
    • You can transfer USD funds to your linked Canadian bank account but PayPal will automatically convert it to CAD
    • PayPal’s 2.5% conversion rate sucks





  • Speed (Upload funds) :  Options  to upload funds to PayPal :
    • Bank Wire Transfer: Sending wire from Canadian bank would normally take 2-4 days, Even if someone has U.S$ account based in the states , the transaction will still take 2-4 business days.
    • Credit Card transfer:  Not possible (checked with CS)
  • Speed (Sending to party “B” ) :Instant  (requires person “B” to have a PayPal account + Bank account to transfer funds)
  • Speed (Withdrawal) :  Options to withdraw funds:
    • Wire transfer : 2-4 days
    • Credit Card withdrawal:   Not Possible.


  • Cost (Upload funds) : Options for uploading funds:
    •  Wire Transfer:  Free (PayPal) + Wire Transfer Cost $25 (Canadian Bank) ==> CAD $25
    • Credit -Debit Card: It’s not possible to upload funds using credit or debit card, however, it is possible to transfer funds when you have your card linked, PayPal will withdraw money from your card but charge you 2.9% + US$ 0.3
  • Cost (sending and receiving ) :  6 scenarios:
    • Domestic (US+ Canada) wire to bank : Free
    • Domestic (US+ Canada) PayPal to PayPal: Free
    • Domestic (US+ Canada) Credit Card to PayPal:  2.9% + US$ 0.3 per each transaction
    • International wire to bank:  5% of the payment amount + US$ 0.3 Here
    • International PayPal to PayPal: 0.5% to 2% of the payment amount.
    • International Debit/ Credit Card  to PayPal: 2% to 7% of the payment amount.



  • Cost (Withdrawal) : Withdrawing money to a bank account using wire has no fee (PayPal) + Canadian Bank incoming wire transfer ($20) ==> $20


  • Other Costs:
    • There is a fee of $4 monthly maintenance fee for holding a U.S$ account based in USA with RBC bank (ignore as this option is not possible anymore).
    • Conversion rate: PayPal conversion rate is more expensive than Canadian banks . US$-CAD$ (1.232), US$-CAD$ @ Scotiabank (1.305),US$-CAD$ @ PayPal (1.300). For US$1000 the difference is $20-$25  per transaction. This apply if the person does not have a U.S based bank account .
    • Withdrawing money from PayPal to US$ Bank account in Canada, in this case, PayPal will exchange money to CAD$ first then send it to a Canadian bank which would exchange it back to US$.




  • Hassle (Uploading funds) : Requires making a wire transfer , can be done using the site without going to the bank. Easy
  •  Hassle(receiving -Sending) : Easy
  • Hassle(Withdrawal) : Very complicated,  Money was transferred from someone I sold  a product to, PayPal held the money for more than 15 days.
  • Hassle (Other)  : Opening a U.S$ bank account based in the USA requires the following:
    •  the person to be Canadian (PR) and require approval
    •  will take time (at least one week)
    • Only available at RBC Bank
    • Cost US$3 monthly to maintain account
    • Note : opening USA bank account using RBC USA would not work, as Paypal would recognize the IP address as Canadian and refuse the transaction.



  • Potential:
    • Receiving money is only free if Person “A” : 1- has a US$ bank account 2- located in the USA, and 3- received US$ money with PayPal
    • Sending money is only free if Person “B” who is sending a US$1000 to “A” :  sends a wire from bank linked to his PayPal account , then  sends the money to “A” using PayPal with no fees as long as the transfer is not the result of a sale transaction. (However, your local bank most likely will charge you for wire transfer fee – usually around $20)


  • Risks :
    • N/A
  • Testing Results:
    • Tested several uploads, transfer and withdrawal scenarios.
    • Testing to deposit funds to PayPal from my bank directly failed, it also took more than one week to get a reply.
    • Eventually, money was withdrawn but after being locked by PayPal for a certain amount of days, also the transaction was refused several times saying the transaction didn’t go through and eventually you have to re-add the bank account again.


  • Conclusion:
    • Only free to send and receive if both have PayPal accounts
    • Only can avoid exchange rate fees if both parties have PayPal accounts linked to their  US$ bank account based in USA (Even with RBC US based account it was not allowed to link to PayPal anymore)
    • Although PayPal will not charge for upload and withdrawal from bank, however, all banks will charge withdrawal and upload fee (around $20)
    • High Hassle to open a US$ based account in the USA. Not possible to withdraw money even if the bank was linked.
    • Not instant, as it takes more than 10 days to complete if two persons had set up new bank accounts in US$. Also for first transactions, PayPal will hold the money in the account for a period of more than 15 days.
    • Not possible to link a USA bank account with PayPal account from Canada , after several attempts, this is not possible (several conversations with CS revealed it is not possible)