Freelancers often rely on online payment platforms to receive payments from clients worldwide. Two of the most popular platforms are Wise and PayPal. While both offer valuable services, there are clear differences in features, fees, and ease of use that could make one a better choice for freelancers depending on their needs. This guide will dive into a detailed comparison between Wise and PayPal to help freelancers make the right decision for their business.
What are Wise and PayPal?
Wise, formerly known as TransferWise, was built to make sending money internationally cheap and straightforward. People love it because it gives you the real exchange rate without any sneaky fees or markups. It’s perfect for freelancers who deal with clients from all over the world since you can send and receive payments in different currencies without a hassle.
PayPal, on the flip side, has been around forever and is super well-known. It’s easy to use—just share your email to get paid—but while it works in a ton of countries and currencies, PayPal gets a lot of heat for its high fees, especially when it comes to international payments.
Features Freelancers Must Consider When Choosing Between Wise vs PayPal
When deciding between Wise or PayPal, freelancers need to evaluate certain features that can impact how easily and affordably they can manage payments.
Fees
Fees are one of the most important aspects to consider. Wise generally offers lower fees for international payments, with charges as low as 0.35%-1% depending on the transaction. PayPal’s fees, especially for cross-border payments, can be much higher—around 3.4% plus a fixed fee.
Exchange Rates
Wise uses the mid-market exchange rate for its currency conversions. This is the real rate with no added markup. In contrast, PayPal adds a markup of around 2.5%-4%, which makes it more expensive when freelancers receive payments in foreign currencies.
Transfer Speed
Wise typically transfers funds to local bank accounts within 1-2 business days. PayPal is faster when sending money to another PayPal account, but transfers to bank accounts can take 3-5 business days, depending on the country.
Security
Both Wise and PayPal are known for being highly secure, using two-factor authentication and encryption to keep your transactions safe. However, Wise stands out for its clear and transparent policies, which many users appreciate. PayPal, on the other hand, sometimes gets complaints about account freezes or fund holds, which can be frustrating for users.
Integrations
PayPal offers better integration with online shopping platforms and invoicing systems, making it a convenient option for freelancers who also run online stores. Wise, meanwhile, is more streamlined for currency management and cost-effective international transfers.
Main Differences: Wise vs PayPal
Although both platforms have similarities, their differences are what really matter when it comes to deciding which one is better for a freelancer’s specific needs. Below, we’ll break down the key distinctions between the two platforms.
Fees
One of the biggest differences between Wise and PayPal is how they handle fees. Wise is all about low, transparent fees for international transfers, usually ranging from 0.35% to 1%. They clearly show these fees before you complete a transfer, so freelancers know exactly what to expect.
On the flip side, PayPal tends to have higher fees, often hitting 3.4% for international payments, plus a fixed fee that varies by currency. To make matters worse, PayPal adds a markup on the exchange rate, which can really bump up the cost for freelancers receiving payments in foreign currencies.
Ease of Use
PayPal is super easy to use. Freelancers can get paid just by sharing their email address, and many are already familiar with how it works since they have accounts. Wise is also user-friendly, but it’s more focused on freelancers who deal with international payments. It’s known for being simple to set up, and freelancers can receive funds directly into their local bank accounts without having to convert currencies unnecessarily.
Features
Wise offers borderless accounts, which allow freelancers to hold and manage multiple currencies in one place. This can be a significant advantage for those who deal with clients from various countries. PayPal offers a wider range of services, including invoicing, subscriptions, and the ability to make purchases online. It also offers PayPal Credit, which allows freelancers to manage their finances more flexibly.
Integrations
When it comes to integrations, PayPal shines. It connects easily with major eCommerce platforms like Shopify, WooCommerce, and BigCommerce, making it ideal for freelancers who sell products online. Wise is more limited in this regard, though it integrates well with major accounting software, such as Xero and QuickBooks, which is useful for freelancers focused on financial management.
Exchange Rates
One of the best things about Wise is that it uses the mid-market exchange rate, which is the fairest rate out there. This means there’s no markup on currency conversions, making it a lot more affordable. On the other hand, PayPal adds a markup of 2.5% to 4% on top of the exchange rate, which makes it less cost-effective for freelancers dealing with international clients.
Wise or PayPal?
When choosing between Wise and PayPal, it really comes down to what a freelancer needs. If your main focus is on international payments and saving money on fees and exchange rates, Wise is usually the better choice. It’s designed for affordable transfers and is clear about its pricing, which freelancers working with clients in different countries will really appreciate.
On the other hand, if you want a platform that offers more than just payments, PayPal could be a better fit. It has a wide range of services, like invoicing and integration with online stores, making it great for freelancers who need more options for managing their payments.