At Time Doctor, we have a lot of customers who have employees/freelancers in other countries. One of the things we’re trying to do is to help our customers to find the lowest cost method to transfer money to those employees.
PayPal is one of the easiest ways to transfer money, but it’s often not the cheapest.
How much does it cost to send money via PayPal?
The cheapest legitimate transfer method on PayPal is “Mass Pay”.
This is an easy way to pay several people at once by uploading a CSV spreadsheet of all the payment amounts. The cost is usually 2% to a maximum of $20 for offshore payments. The maximum fee can vary based on the sending & receiving countries. You can see the fees for your countries using the form on the right side of this page. If you send payments on PayPal without using Mass Pay then the cost will be higher, at around 4%.
Also remember that for global payments PayPal also charges a currency conversion fee which is actually a hidden fee, but it often comes out to around 2.5%, and is a cost on top PayPal’s stated 2% fee.
There may also be some fees charged to your employees by their local banks when they withdraw the payments you’ve sent them.
So the total cost? Let’s look at an example: If you send $1,000 from the US to one employee in the Philippines,PayPal will charge 2% ($20), plus an extra approximately 2.5% ($25) for the currency conversion, so the total cost will be 4.5% ($45)
The reason I said the cheapest “legitimate” method of sending money via PayPal is that some people will pay employees through PayPal, but claim that they’re transferring the money to a friend or relative. In this case 2% or 4% fee is waived, however the hidden currency conversion fee is still there. This is against the PayPal terms of service and I imagine would be problematic when sending larger amounts of money.
Declaring that your transfer was to a friend or relative may also get you into hot water with your own tax authorities when you try to claim it as a business expense. We suggest always being honest & following the terms of service.
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