When it pays to use PayPal

FNB introduced PayPal to South Africa a few months ago making it far cheaper to do low value overseas transactions. This can be valuable to the bed and breakfast trade who typically have a low-value bookings or for independent contractors which may do ad hoc work for overseas companies.

Although technically the cost of transferring funds is not that high with the average charge by a bank at around 0,4%, it is the minimum fees which really bite and this is where PayPal scores well.

FNB PayPal charges 1,5% commission with no minimum fee no matter how much you are transferring.

For example, if you are sending $100 (about R760) from South Africa it will cost you R11,42 to use PayPal.

The banks have minimum fees of R100 or more plus a Swift fee ranging from R57 to R100. So that R750 transfer could cost as much at R200.

Money transfer service providers like MoneyGram and Western Union are cheaper than the banks at R69 and R48 respectively but still significantly higher than PayPal.

For payments received from abroad, $100 would attract a R11,42 fee from PayPal (you would need to have an FNB account). In comparison the banks’ minimum fee of around R100 still applies, although not the Swift fee so you would pay around R100 to receive about R760.

Important to note however that Nedbank has reduced its fee on incoming funds to R68 and neither Western Union nor MoneyGram charge any fees on incoming payments.

Where PayPal gets expensive is when you are transferring amounts over $1500 (R12 000) because this is when the banks’ minimum fees no longer apply and PayPal’s 1,5% starts looking very pricey compared to the banks’ fee of around 0,4%. The banks also have a maximum fee of around R600 while there is no maximum fee for PayPal.

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