There are many services these days which provide a very convenient way of sending money using internet. Some of the most popular ones offers more sophisticated options and also provide their integration with the E-commerce website systems.
Most of us heard about PayPal – if you’re the person who’s using Ebay or making purchases on-line – than you know that this is one of the most common ways of paying for your products or services.
Many people who have their accounts with PayPal or any other similar service provider don’t even bother to check the rates they charge for the service – which can truly disappoint you eventually.
If you’re sending money abroad – to the account which is assocaited with the different currency than the one you’re holding, then the conversion rate can also appear to be very unfortunate.
In this post I will try to give you an overview of two major service providers: PayPal and Moneybookers.
PAYPAL
PayPal (www.paypal.com) has been around since the on-line payments became available and is – not surprisingly, one of the major players in this sector.
They provide many services which include sending money on-line, merchant services for integration with the e-commerce websites, credit cards etc.
Here’s the PayPal’s Fee Structure (you can also see the latest update here):
Personal Transfer
Send money and Receive money It’s free when you use your PayPal balance or your bank account linked to your PayPal account. There is a charge of
3.4% + £0.20 GBP for debit or credit card payments (either the sender or recipient can pay this fee).
Cross-border and multiple currencies
If your transaction involves a currency conversion, it will be completed at a retail exchange rate determined by PayPal. This rate includes a 2.5% spread above the wholesale exchange rate at which PayPal obtains foreign currency.
A cross-border fee of 0.5% may apply. This fee is waived for UK sellers who are registered with PayPal in a European Union country and who receive payments in Euros from other EU countries.
This basically means that if you are receiving payments from someone in the same country using debit or credit card then you will be charged £3.4% + £0.20 which in case of say £100.00 would be £3.6.
If you are receiving payment from someone in other country – say USA – then the fee is higher and I really tried to calculate it in many ways – I couldn’t guess how they calculate it.
Basically to receive the payment of £300.00 I’ve been charged £11.90, for £20.00 = £0.98 and for £5.00 = £0.40.
If you know how they calculate this – please let me know, as I’m really finding this a bit confusing.
Here’s the explanation which I have received from PayPal support representative by email, after asking why I have been charged so much to receive the money:
There are now two different types of payments that can be sent using PayPal – Purchase Payments and Personal Payments.
Purchases (Commercial Payments): These are the payments we traditionally have always offered, where there is a commercial relationship between the sender and the recipient of funds. For example, a person pays for a purchase of an item on eBay.
Personal Payments: These payments are designed as payments between individuals for no commercial reasons, i.e. made for the purpose of either your personal, family and/or household affairs. For example, a person living in Australia is sending money to his brother to buy their parents a gift.
When using the ‘Send Money’ tab, customers will be presented with the two different options to send either a Purchase payment or a Personal payment. As a result of the introduction of this new payment revamp, our fee structure has changed to accommodate these two new payment types.
Fees for each funding type are now charged as follows:
Payment funded with PayPal balance or bank account: PayPal will not charge sender or recipient regardless of their account type.
Payment funded with a debit or credit card: PayPal will apply the normal receiving fees. Therefore, Personal account holders may start to incur PayPal receiving fees. Please note however that the sender will have the option of paying the fees for that payment instead of the recipient.
For Purchases/Commercial Payments there will be no changes in the way fees are charged. The recipient of funds will always be charged the normal receiving fees (or merchant rates for approved merchants reaching the minimum volumes).
MONEYBOOKERS
Next on the list is Moneybookers (www.moneybookers.com).
Moneybookers is the UK company and also has been around for quite a while.
They provide similar services to PayPal – sending money on-line, merchant services etc.
Their fee structure looks as follow (you can also see it here):
Send Money Transactions
Sending Money: 1% (up to GBP 0.50)
Receiving Money: Free
Upload Funds
Bank transfer: Free (2-5 days)
Maestro / Solo (debit cards): Free (Instant)
Cheque: Free (10 days)
Visa / MasterCard / Diners / Amex / JCB (credit cards): 1.90%
Withdraw Funds
Bank transfer: £1.70
Cheque: £3.20
Visa: £1.70
I didn’t have any major problems with Moneybookers except the exchange rate when you’re doing international transfers – it’s really poor.
Several times has happened that I had to top up the difference in the next payment because Moneybookers exchange rate was too low.
Another thing worth to mentioned is that with Moneybookers, due to anti-money laundering regulations, if you are uploading funds to your moneybooker account using Bank transfer – you have to make sure that the bank account is in your name (or your moneybookers account name) – no third party deposits – otherwise you will be charged all banking and administrative costs to return the payment back to your bank account.
If you have some experience with these two or any other service providers – share it with us – we appreciate your feedback!
