Less than a decade ago, Paypal pretty much had a monopoly as the online world’s default money transfer service. Fast forward to 2022 though, and the fin-tech boom has now spawned countless contenders who are fast on the way to dethroning it. In this article we will look at why customers are fast ditching Paypal in preference of Wise, and how to handle Paypal account to wise account transfers.
The Rise and Fall of Paypal
Founded way back in 1998 at the peak of the original dot.com bubble, Paypal went on to become one of the most successful online companies in the world and when sold in 2002 turned one of its founders, Elon Musk, into the world’s richest and perhaps most insanely ambitious man. Today the company services 300 million accounts worldwide and still handles over $900 billion worth of transactions each year.
There is no denying that Paypal earned its place as a household name. It revolutionised the way we send and receive money and its acquisition by eBay back in 2002 enabled the online marketplaces meteoric rise.
But, in 2022 the shine has long faded and the cracks are showing. Paypal takes a 4% transaction fee of every payment it handles; over a lifetime of eBay trading, that adds up to a very serious amount of money. Furthermore, anybody who has used Paypal to handle international payments into foreign currencies will tell you that the company frequently uses unfavourable exchange rates and often levies handling fees on top. Finally, neither the browser nor app interfaces appear to have had a proper update in some time and the tech is simply less impressive than most of its rivals.
So it is little wonder that users are fast forsaking Paypal and finding other ways to execute digital money transfers. The most notable user to cut ties with Paypal, was of course onetime owner eBay who phased out the Paypal platform’s use in 2021 and no longer allows customers to send or receive payment via the Paypal platform!
The Rise of Wise
One of the big beneficiaries of Paypal’s falling market share is Wise (formerly Transferise). The London-based fin-tech start-up began life in 20xx as a low-cost, fast way to send money abroad and has since risen to become one of the most widely renowned platforms for freelancers, online traders and regular travellers who need to send, receive and spend money internationally. Wise offers low fee currency tranderas, offers decent exchange rates and allows customers to hold multiple currency account balances.
Wise is one to watch. It currently has 10 million customers and whilst this pales next top Paypals 300 million, their numbers are growing whereas Paypals are decreasing.
Stuck With Paypal?
However, sometimes we still have to reply on Paypal. For example, perhaps you are a freelancer and deal with clients who still prefer to use Paypal or maybe you are sending or receiving money from a relative and they have not yet embraced Wise (give them time!).
If you receive money in a foreign currency into your Paypal account and then transfer it to your main bank account, you will be stung by the bad exchange rates and high fees that Paypal applies. In order to circumvent these unreasonable and uncompetitive fees, one option is to withdraw it from Paypal into your multi-currency Wise account.
Whilst online banking type platforms are supposed to make managing and money easier, the process for connecting Paypal to Wise is not quite as straightforward as it should be (I already said Paypals interface is dated!). That is why we have prepared this walk-through guide for transferring from Paypal to Wise.
Step 1 – Get Wise
The first step is to sign up for and open a Wise (formerly Transferwise) borderless account. You can do this quickly and easily by either accessing the Wise site on your browser or by downloading their app. It takes a few minutes to get started and the account will be open as soon as you verify your identity (this actually took me a few attempts owing to a dodgy iPhone camera).
The good news is that Wise is able to offer accounts to customers in most countries. There are however a handful of exceptions mostly consisting of sanctioned countries such as Iran.
Step 2 – Open a Currency Balance
One of the big advantages of having a Wise account is that it allows you to hold multiple different balances in different currencies (I think of them as “pots”). Whilst your default currency will be the one of your country of residence, you can open a secondary or tertiary balance in a whole host of different, foreign currencies.
If you spent a lot of time in Thailand, then perhaps you could open a Bhat balance or if you get paid by clients in USD, then why not open a USD balance?
Step 3 – Login To Paypal
We now need to go to Paypal so just log in to your account. Personally, I advise doing this through a browser on a laptop rather than on a phone.
Step 4 – Go To Wallet
Inside the Paypal interface, go to “Wallet” (it should be at the top of the screen, to the mid right). You then select the option to link a new account/balance. Paypal does not show Wise or Transferwise as one of the clickable options so you will need to enter all of the details manually.
Step 5 – Ignore Direct Debits
Paypal may try to prompt you to select the option for setting up Direct Debits. As Wise does not support Direct Debits at this time, you need to ignore this step. You may have to hit ignore multiple times.
Step 6 – Enter Your Account Details
You can find your Wise account details either inside the Wise app or by logging into the website. Remember that each of your balances (or pots) will have different sort codes and account numbers so be careful to connect the right one.
Step 7 – Verify Your Account
Before this process is complete, you need to verify the account. Paypal will send you a small balance (such as $0.01) to your Wise account along with a 4 digit reference code. Once the money arrives in your Wise account (it can take minutes or days) make a note of the code, log back into your Paypal and ‘Wallet’ and resume the ‘confirming your bank’ process. Once done your account should not be verified, linked and ready for withdrawals.
Oh, and whilst it might be tempting to go nuts and spend the $0.01 Paypal sent you on fine Champagne, they will recall this amount at a later stage so be sure to hold onto it.
And there we have it. In 7 relatively easy to follow steps you too can connect your Wise to your Paypal and begin moving monies between the two. We do hope you found this post helpful and that it helps you save a few bucks.