June 18, 2024
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A fierce battle is occurring in the lucrative consumer foreign exchange (forex) market. Traditionally, banks got our patronage while competing with money transfer services, such as Western Union and MoneyGram. In the past few years, the landscape has changed significantly with the rise of financial technology companies (fintechs) seeking to disrupt the traditional ways of sending, receiving, holding, and spending money. Alongside money transfer services, we’ll review what Wise, PayPal, Xoom (a PayPal company), and Revolut offer individuals.
FinTechs
FinTechs leverage the internet and technology to create innovative cost-saving solutions. They also focus on keeping overhead costs low to pass savings on to customers. While banks continue to offer terrible exchange rates wrapped in high/hidden fees, some fintechs exchange at interbank/spot rates and charge less than 1 percent or nothing.
At least a dozen online money transfer companies offer money transfer and currency conversion services, with some focused only on remittance. For example, Remitly enables transfers from the United States to the Philippines, India, Mexico, Colombia, Ecuador, Guatemala, Honduras, Nicaragua, Perú, and El Salvador. However, residents of those countries can’t send money to individuals in the United States.
A short list of money transfer fintechs includes Azimo, bunq, CurrencyFair, PaySend, TransferGo, and WorldRemit. Monzo, N26, bunq, and many other challenger bank apps partner with Wise to run their money transfer operations.
Money Transfer Apps
Although Azimo charges low fees, it doesn’t appeal to me because its exchange rates are uncompetitive. Furthermore, the pool of countries where I can send money is shallow and excludes the United States. For instance, when setting up my profile, I can only select from a handful of European countries. Therefore, Azimo is a small regional player in Europe and doesn’t offer me enough services and features to manage my money.
On the other hand, Wise, PayPal, and Revolut offer complete financial apps for global citizens, remote workers, freelancers, digital nomads, and frequent travelers. All three provide various products and services, including money transfers, multi-currency accounts, and prepaid debit cards.
Wise Overview
Wise is on a mission to make a positive, irreversible change in finance. Built by and for people who live global lives, Wise makes sending money abroad fair, accessible, and up to eight times cheaper than traditional banks and money transfer companies.
Wise focuses on helping people on every continent live, travel, and work internationally. It wants to support a financial experience without borders for fast, convenient, and transparent transactions.
Wise is available on Apple and Google Play app stores and offers a web app. It has an “Excellent” rating on Trustpilot.
- Budgeting and analytics
- Currency exchange
- Current account
- Expense management
- International bank account details
- Investment account
- Money transfers
- Multi-currency account
- Online payment
- Prepaid debit card
- Business account
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PayPal Overview
PayPal is a global online payment platform that supports online money transfers, shopping, and various financial activities. Its mission is to democratize financial services for all citizens, not just the affluent.
PayPal empowers people and businesses to join and thrive in the global economy. Available in more than 200 markets worldwide, the PayPal platform, including Braintree, Venmo, and Xoom, enables consumers and merchants to receive money, withdraw funds, and hold balances in multiple currencies.
PayPal is available on Apple and Google Play app stores and offers a web app. It has a “Bad” rating on Trustpilot. PayPal’s services and products include:
- Buy now, pay later
- Credit
- Cryptocurrency account
- Currency exchange
- Current account
- Expense management
- Fundraising
- Insurance
- Interest-bearing account
- Donation transfer
- Money transfers
- Multi-currency account
- Online payment
- Prepaid debit card
- Purchase protection
- Reward programs
- Business account
Revolut Overview
Revolut is trying to provide one app for everything related to money. For individuals and businesses, Revolut is the only banking alternative designed for a worldwide lifestyle. It offers free and premium products and services at affordable monthly prices. Revolut operates as a bank in some European countries.
Revolut focuses on today’s hyper-connected world by being a progressive financial partner. It wants to adapt to your needs, give you control, and continuously push you into new and exciting spaces. It welcomes customers to a world of better money management.
Revolut is available in the Apple and Google Play app stores. It has a “Great” rating on Trustpilot.
- Banking
- Budgeting and analytics
- Credit
- Cryptocurrency account
- Currency exchange
- Current account
- Expense management
- Insurance
- International bank account details
- Interest-bearing account
- Investment account
- Money transfers
- Multi-currency account
- Online payment
- Open banking
- Perks, discounts, and cashback
- Personal loans
- Prepaid debit card
- Purchase protection
- Salary advance
- Teen account
- Business account
Money Transfers
Single-Currency Transactions
- Wise offers single-currency transfers at a low cost.
- PayPal offers single-currency transfers. No fee is applied when users send and receive money in the same currency. Customers can send cash in the same currency through PayPal and Venmo (within the U.S. only).
- Revolut offers single-currency transfers at no extra cost.
Currency Exchange Transactions
Regarding foreign exchange transactions, there are a few items to consider:
- The exchange rate: The best exchange rate is the real-time or mid-market rate. I call it the “Google rate” because Google showcases real-time rates between two currencies in its search results. Most money transfer providers quote non-real-time rates to profit from bid-ask spreads. For example, if real-time rates are 1.31/1.32, a dealer might quote 1.28/1.35. The dealer would buy at 1.28 and sell at 1.35.
- The cost to convert currencies: Companies quote a percentage or fixed fee to convert currencies, such as $3.99 or 1% of the total amount exchanged.
- Funding methods: Funding may include bank transfer, debit card, credit card, or cash for in-person transfers.
- Ways to send money: Ways to send money might include in-person, phone, online, and app.
- Ways to receive/collect money: Ways to accept money might include a bank account, online money account, and cash pickup.
- Processing times: Processing times vary depending on how a transfer is funded, sent, and received. The process can take minutes to a few business days for online transfers.
- Transparency refers to a company’s openness regarding exchange rates, fees, and processing times. For example, the company provides a transfer calculator/transaction estimator and does not force users to create an account or submit payment before they receive transaction details.
- Tracking and status: Tracking methods might include SMS/mobile notification, email notification, account activity/status, and customer support.
- Available currencies: Currencies matter to the point that the money you need is supported.
Wise uses mid-market rates and charges a combination of percentage and fixed fees. Usually, percentage fees range from 0.3 to 2 percent, depending on the payment method, transfer amount, and currency selection. Funding methods include bank transfers, debit cards, and credit cards. Users can send money through its website and app. Recipients can receive money in their bank accounts and Wise multi-currency accounts. Regarding transparency, Wise has an exchange rate and fee calculator on its homepage.
PayPal doesn’t transact at mid-market rates. They state, “We receive a wholesale rate quote from our bank twice a day.” It charges a currency conversion fee of 2.5 to 3.5 percent. Funding methods include PayPal balance, bank transfer, debit card, credit card, and PayPal Credit. Users can send money through their website and app. Recipients must have PayPal accounts to receive money. Regarding transparency, processing details are everywhere, for example, on PayPal’s fees page and user agreement. Also, customers learn of transaction outcomes right before clicking submit.
Xoom doesn’t use mid-market rates. They say,
If your transaction involves converting your payment currency into a different currency, we will display our exchange rate to you. Our exchange rate includes a currency conversion spread. All currencies will be converted at the exchange rate displayed at the time of the transaction. Xoom’s exchange rates change regularly based on financial markets or the rates provided by Xoom’s local partners.
Xoom charges a fixed fee, which may be waived depending on the payment method, transfer amount, currency selection, and receiving option. Funding methods include bank transfers, debit cards, and credit cards. Users can send money through Xoom’s website and app. Recipients can receive money in three ways: cash pickup, bank deposit, or home delivery. Xoom provides fee and exchange rate calculators on its “Fees and Exchange Rates” page.
Revolut uses mid-market rates but states,
We use the real exchange rate for foreign exchange (FX), and for most currencies, don’t add any markup to it, outside of a small markup on the weekends.
The “real” rate can mean different things (it has different names, like the “interbank” rate). Here at Revolut, the real exchange rate means the buy and sell rates we have determined based on the foreign exchange market data feeds that we get from a range of different independent sources.
Fees may apply when exchanging currencies with Revolut. Funding methods include bank transfers, debit cards, and credit cards. Users can send money through its website and app. Recipients can receive money in their bank accounts and Revolut’s current accounts.
Recap
PayPal and Xoom use mid-market rates, and their fees are higher than other providers. Revolut and Wise exchange at mid-market rates and charge small fees.
| Company | Mid-market rates | Fees | Transparency |
| PayPal | High | Poor | |
| Xoom | High | Excellent | |
| Revolut | ✔ | Low | Satisfactory |
| Wise | ✔ | Low | Excellent |
Try the real-time Wise calculator below.
Multi-Currency Accounts
A current bank account allows you to conduct everyday financial activities such as deposits, withdrawals, bill payments, and recurring payments. A current account typically doesn’t attract interest but may receive it if it maintains a minimum amount set forth by the bank, for example, £25,000.
Wise offers a current account that allows users to deposit, withdraw, send, receive, and request funds. Users can pay for goods and services online and hold/convert multiple currencies. They can also get international bank account details for the UK, US, EU, Australia, and New Zealand.
PayPal offers a current account, allowing users to deposit, withdraw, send, receive, and request funds. Users can pay for goods and services online, bills, and hold/convert multiple currencies. Xoom doesn’t offer a current account.
Revolut offers a current account, allowing users to deposit, withdraw, send, receive, and request funds. Users can pay for goods and services online and hold/convert multiple currencies. Users can get international bank account numbers (IBANs) for the UK and EU.
Prepaid Debit Cards
Wise, PayPal, and Revolut have prepaid debit cards in select countries. Xoom doesn’t offer cards.
When comparing prepaid debit cards, consider the following:
- The features and benefits
- Delivery cost, card purchase, secondary cardholder, and replacement fees and options
- Monthly fees
- Transaction, purchase, withdrawal, and ATM fees
- Daily and monthly transaction limits
- Funding fees and options to reload, deposit, transfer, and top-up
- Card issuer and operator (the company behind the card, like Mastercard or Visa)
- Rewards and perks
- Exchange rate and currency conversion fees
- Card policies and limitations
Recommendation
Wise, PayPal, and Revolut offer more than many established money transfer companies and some traditional banks. They are responding to technological changes and building super financial apps. Although all three companies have strengths and weaknesses, they can fully support your financial objectives no matter where you are. However, I must stress that you’ll want to avoid using PayPal and Xoom for money transfers because of their egregious exchange rates and fees. It turns my stomach to think how much people lose through their services. For those reasons, I recommend Wise and Revolut for international money transfers.
