PayPal vs Wise: Exchange Rates, Fees & Real Cost Explained
If you’re comparing Wise vs PayPal, you probably want one thing:
Which one costs me less?
Both are FCA regulated. Both move money internationally. Both are trusted names.
But they are not built the same, and they are not priced the same.
The difference isn’t small either.
Let’s break it down properly. You can also try my calculator to see what the difference really is.
Wise vs PayPal: quick answer
Choose Wise if you want:
• The real mid-market exchange rate
• Lower currency conversion fees
• A multi-currency account
• A debit card for travel
• Clear, transparent pricing
Choose PayPal if you want:
• Easy online checkout payments
• Marketplace buying and selling
• Built-in buyer protection cover
• PayPal+ loyalty rewards points
• Everything inside one platform
Main features:
Feature | Wise | PayPal (UK) |
|---|---|---|
Main focus | International transfers & currency | Online shopping & ecosystem |
Exchange rate | Mid-market (real rate) | Retail rate (~3.5–4% markup) |
Conversion cost | From ~0.43% | ~4–5% effective cost |
Debit card (UK) | Yes (£5 one-off fee) | Yes (Free) |
Loyalty scheme | No | Yes (PayPal+ Points) |
Currencies supported | 40+ | 25 |
Inactivity fee | No | Yes (up to £9 after 12 months) |
Business account | Yes | Yes |
Safety and protection: is your money safe?
Safety verdict: Draw
Neither Wise nor PayPal are banks, so neither is covered by FSCS.
Instead, both operate as FCA-regulated Electronic Money Institutions. Customer funds must be safeguarded in ring-fenced accounts separate from company money.
Wise publicly states it holds UK funds with major institutions like Barclays and JPMorgan. PayPal safeguards funds too, though it’s less specific about banking partners.
For transactions, both are considered safe.
Personally, I wouldn’t store large balances in either long-term. They’re tools for movement, not savings accounts.
Exchange rates: this is where the real cost sits
Exchange rate verdict: Wise
Wise uses the mid-market rate — the rate you see on Google.
PayPal applies a markup to the exchange rate, typically around 3.5–4%. Sometimes slightly more depending on transaction type.
You won’t see it labelled clearly as a “fee”.
It’s built into the rate.
That’s why PayPal feels cheap — but often isn’t.
Fees: which is actually cheaper?
Fee verdict: Wise (by a distance)
Wise charges a small transparent conversion fee — often around 0.43–0.5% for GBP to USD (varies by currency).
PayPal’s effective cost, once exchange rate markup is included, often works out around 4–5%.
On £1,000 converted:
Wise might cost around £4–£5.
PayPal could effectively cost £40–£50 in lost exchange value.
That’s not marginal.
That’s meaningful.
Real example: sending £1,000 to USD
Wise
Exchange rate: 1.23360
Fee: £4.43
Amount received: $1,228.14
PayPal
Effective rate (after markup): 1.18130
Fee: £2.99
Amount received: $1,177.77
Difference: roughly $50.
That’s one transfer.
If you’re paid monthly from overseas, that gap compounds quickly.
Wise vs PayPal fee difference calculator
Quick estimate of how much extra PayPal can cost vs Wise when converting currency. (This is a rough guide — actual costs vary by currency, funding method and PayPal’s rate markup.)
How this estimate works (and why it’s not perfect)
PayPal usually makes money through an exchange rate markup (so it looks like a “better deal” because the fee isn’t obvious). Wise typically uses the mid-market rate and charges a transparent conversion fee. This calculator simply applies the percentages you choose to estimate the difference in £.
Withdrawing foreign currency to GBP
Withdrawal verdict: Wise
Wise converts at the real exchange rate and charges a small visible fee.
PayPal applies its exchange rate markup but doesn’t show a separate withdrawal charge.
In a like-for-like test withdrawing the equivalent of $1,000, Wise delivered nearly £20 more back into a UK bank account.
Again — the exchange rate is the real fee.
Debit card comparison (2026 update)
Debit card verdict: Wise for travel
Wise offers a UK debit card for a £5 one-off fee.
PayPal relaunched a free PayPal Debit Mastercard for UK personal users in late 2025.
However, there’s an important difference:
Wise card:
uses the mid-market exchange rate
no foreign transaction fee
holds multiple currencies
built for international spending
PayPal card:
free to get
linked to PayPal balance
earns PayPal+ points
still subject to PayPal exchange rate markup
If you’re spending abroad, Wise is usually significantly better value.
If you mainly spend in the UK and like loyalty rewards, PayPal’s card may appeal.
Pro tip!
If you use PayPal for buyer protection when shopping online, keep doing that.
But if you’re paying an invoice or sending money abroad, move the money to Wise first.
Staying inside PayPal for currency conversion is effectively paying a ~4% convenience tax.
Transfer speed
Speed verdict: Slight edge to Wise
PayPal-to-PayPal transfers are instant.
Wise transfers are usually completed within minutes or the same working day.
Both are fast enough for most users. Speed isn’t the main deciding factor — cost is.
Inactivity fees
Inactivity verdict: Wise
PayPal may charge an inactivity fee of up to £9 after 12 months of no activity (often around £7 depending on account terms).
Wise does not charge inactivity fees.
Overall winner: Wise vs PayPal
Overall verdict: Wise
If you:
convert £100+ at a time
receive foreign payments
travel and spend abroad
care about exchange rate transparency
Wise is usually cheaper by a significant margin.
PayPal still makes sense for:
online checkout convenience
buyer protection
marketplace selling
UK-based spending with rewards
But for international currency conversion?
Wise almost always wins on value.
Choose Wise if you want:
the best exchange rate
low transparent fees
a multi-currency account
a travel debit card
Choose PayPal if you want:
easy online payments
buyer protection
a free debit card with rewards
to stay inside the PayPal ecosystem
Ready to get started?
Further reading
If you want to find out more, why not take a look at my full Wise review?
Or why not take a look at my post on the best debit cards to use abroad?
FAQs
Is Wise cheaper than PayPal?
In most currency conversion scenarios, yes. Wise uses the mid-market rate and charges a small transparent fee. PayPal builds its margin into the exchange rate.
Which is better for international transfers?
Wise is usually cheaper for transfers over £100 due to lower effective fees.
Does PayPal now have a debit card in the UK?
Yes. PayPal relaunched a free debit card for UK personal users in late 2025, linked to its PayPal+ rewards programme.
Is Wise safe in the UK?
Yes. Wise is FCA regulated and customer funds are safeguarded, though not protected by FSCS.
