PayPal vs bank transfers in the UK: which is cheaper?

Need to send money? These days, there are many different options available. You can use your bank, a money app or an online transfer service, with lots of providers to choose from here in the UK.

The online payment service PayPal is one of the most popular options for sending money both within the UK and internationally. But how does it compare to using your bank?

Find out here in this helpful guide, where we’ll be comparing PayPal vs. bank transfers on fees, exchange rates, transfer times, limits and more.

We’ll also show you an alternative that could be a better fit for your money transfer needs – the Wise account from the money services provider Wise. You can send money worldwide with Wise for low fees and great exchange rates.

Please see the Terms of Use for your region or visit Wise fees & pricing for the most up-to-date information on pricing and fees.

Pros and cons for sending money with PayPal

As with any money transfer service, PayPal has both its upsides and downsides. Let’s run through a few pros and cons to consider.

Pros:

• Fast if not instant transfer speeds
• Fully secure payments¹
• Free for domestic (UK) personal payments, such as to friends and family¹
• Can send through the handy PayPal mobile app
• Easy to open an account

Cons:

• High fees for international payments and currency conversions
• The recipient needs to open a PayPal account to receive the payment. Although PayPal also works with Xoom to offer international transfers to recipients without an account¹
• PayPal is a popular target for scammers and fraudsters, so you’ll need to be careful who you’re sending money to

📚 Read more: How to pay someone on PayPal in the UK?

Pros and cons for using bank transfers

Now, let’s give bank transfers the same treatment. Here are a few of the pros and cons of sending money via this method.

Pros:

• Fully secure
• Free for UK transfers
• Fast UK payments - many arrive within a couple of hours.
• Most banks have mobile banking apps for sending money on the move.
• Choice to send via online or mobile banking, phone or in-branch.

Cons:

• Your recipient must have a bank account
• Slower than other methods for international transfers
• Fees can be high for international payments, although some banks are better than others for sending money.
• Can be slow or difficult to get your money back if you send to the wrong person or make a mistake entering bank details.

📚 Read more: What bank details are needed for an international bank transfer from the UK?

PayPal vs. bank transfers – the comparison

Here’s your at-a-glance look at all the key comparison points between PayPal and bank transfers for sending money, so that you can choose the right option for you:

	PayPal	Bank transfers
Availability	All users (age 18+) Send payments worldwide	All users (age 18+) Send payments worldwide
Fees - UK payments	Free for personal payments¹	- Free for standard transfers - Fee for CHAPS same-day transfers (approx. £25³)
Fees - international payments	5% fee for international payments¹	- Varies by bank, but usually around £10²-£20.³ - EUR payments to EU (SEPA) are usually free
Exchange rate	3% currency conversion margin above the mid-market rate¹	Varies by bank, but likely to include margin above the mid-market rate
Transfer time	Within 2 working days (often within minutes)⁴	- Varies by bank - UK payments - within 1 working day⁵ - International payments - 1-5 working days⁶
Transfer limits	Users have personal sending limits - check in account	Varies by bank, usually between £10,000 and £50,000⁵

Is it cheaper to send money with PayPal or a bank transfer?

The cheapest option for sending money all depends on who you bank with, as well as where you’re sending to (and in which currency).

But as an illustration, let’s run through a quick hypothetical example for making an international payment. Imagine you want to send £500 to a friend in Australia.

Here’s how much it’ll cost you using PayPal, a bank (we’ve used a couple of examples here) and an alternative such as Wise when paying in via a bank transfer.

We’ve included the exchange rate for each, which will add to the total cost if the provider adds its own margin to the mid-market exchange rate. It’s really important to factor this in for international payments, as it makes a big difference to the overall cost.

Provider	Transfer fee	Exchange rate	Total fee
PayPal⁷	£2.99	1.83139 - adding £18.76 to cost	£21.75
Barclays⁷	£0	1.85116 - adding £13.69 to fee	£13.69
Halifax⁷	£9.50	1.83594 - adding £17.24 to cost	£26.84
Wise⁷	£4.39	1.90326 - mid-market rate, adding £0 to cost	£4.39

*Fees and rates correct as of 20/11/23 (12.45pm)

Wise – An alternative to PayPal and banks

If you want to send money quickly, conveniently and affordably, Wise is the ideal alternative.

You can send money worldwide with Wise, including within the UK. Take your pick from 50+ currencies, and send to 160+ countries. There’s only a small, transparent transfer fee to pay, and absolutely no hidden fees.

Best of all, you’ll always get the mid-market exchange rate with no margin added on top. This could save you a bundle, especially on international payments and compared to using your bank.

All payments with Wise are fast, secure and fully trackable online or using the handy Wise app.

Please see the Terms of Use for your region or visit Wise fees & pricing for the most up-to-date information on pricing and fees.

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And there you have it - a helpful comparison of PayPal vs. bank transfers in the UK, looking at everything from fees to transfer times.

It’s completely up to you which one you choose though. It may well depend on the transfer type and how much your bank charges for international payments.

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Sources used for this article:

1. PayPal - Send Money
2. The Co-operative Bank - International Payment charges
3. Lloyds Bank - Money Transfers
4. PayPal - User Agreement
5. Money Helper - How to make a bank transfer
6. GoCardless - How long do international bank transfers take?
7. Wise - Send money

Sources checked on 20-Nov-2023.