Tired of PayPal’s costly fees, marked-up currency exchange rate, and frustrating withdrawal wait times? Well, you’re not alone.
Fortunately, PayPal isn’t the only online payment system out there – and it certainly isn’t the best. There are dozens of PayPal alternatives that might be a much better fit for your business.
In this post, we’ll be sharing and reviewing what we think are the very best PayPal alternatives on the market to help you to make the right choice for your needs.
Let’s get started!
The Problems With PayPal
First off, let’s talk about the problems with PayPal and why you might want to consider an alternative payment system. Here are the main drawbacks of using PayPal to send and receive payments.
There are often hefty transaction fees involved when you use PayPal for business. The cost of commercial transaction fees varies on several factors including the country you/your recipient are in but can be as high as 2-3% of the monies sent/received plus a fixed fee.
International transfer fees
If you’re sending or receiving money across borders, it gets even more expensive. There’s usually an additional percentage-based fee (up to 2%) in addition to the standard commercial transaction fee.
Marked-up exchange rate
If you thought those fees were bad enough, we’re not done yet. If you’re receiving money in a different currency, you’ll also have to contend with PayPal’s marked-up exchange rate, which can take a big chunk out of your income.
At the time of writing this, if I was to transfer USD $1,000 into GBP using PayPal’s conversion rate, I’d get just £796.77.
Comparatively, I’d have come out with £826.19 using the current market exchange rate. That’s a difference of almost £30.
Limited seller protection
Some PayPal users aren’t satisfied with PayPal’s seller protection policy as, in some cases, you may only receive limited or partial protection.
For many years, PayPal didn’t offer any seller protection for digital goods. This meant that those selling digital products or services weren’t protected from chargebacks, payment reversals, and other claims. However, a recent update suggests PayPal may have changed their seller protection policy in April 2020 to cover digital goods.
Withdrawal Delays & On-Hold Payments
If you’re a new eBay seller/PayPal user with limited transaction history, it’s common for PayPal to put any money you receive on up to 21 days. The given reason for this is to make it easier to resolve any issues that may arise and better protect the buyer, but it sure is frustrating to be denied access to your funds for weeks.
Withdrawals can also be slow and can take up to 5 working days to appear in your bank account. For some people, those timescales are unacceptable.
Some PayPal users have reported having their accounts frozen for months without warning. For example, this business owner on Reddit reports having his account frozen with no explanation for 6 months with over $70,000 locked away in his account.
While concerning, it’s worth noting that this is usually based on unusual account activity and probably doesn’t happen often. In this specific case, the PayPal user noted that the account freeze happened following a big product launch and a surge in sales, which likely triggered fraud prevention to lock his account.
There are plenty of similar account freeze stories posted online across forums. Here’s another from a PayPal user that had an account with $26,000 frozen.
Of course, there are also lots of things PayPal does really well, but it’s by no means perfect. Why settle when there are so many other payment processing options out there?
8 Best Alternatives to PayPal
And on that note, let’s take a look at some of those options. Here are our top 8 favorite PayPal alternatives.
1. Wise (formerly TransferWise)
Best for: freelancers, digital nomads, international businesses, and anyone who regularly sends or receives currencies in different currencies.
Wise is our number one recommendation for anyone with a high volume of international transactions. It’s a much more economical choice than PayPal for cross-currency conversions can save you hundreds of dollars per month on reduced fees and exchange rates.
The whole idea of Wise is to make international money transfers fairer, cheaper, and simpler. They make sure that when you have to send or receive money in another currency, you can convert it at the ‘real’ mid-market exchange rate (that’s the one you see on Google). There are no mark-ups or hidden fees to worry about.
The reason they can offer a fair exchange is that no money ever actually crosses borders. It works like this: let’s say you send $100 USD to your friend in Europe. Your $100 is deposited into the Wise American bank account. They then apply the mid-market exchange rate and send your friend the correct amount in EUR from the Wise European bank account.
Because they do it this way, international transfers can be completed much more quickly than is typical with high street banks. You can send or convert money across currencies in seconds. You can open Wise ‘balances’ in 40+ currencies.
What’s more, you can order a Wise Borderless Card that works just like a real credit card so you can spend or withdraw money from ATMs anywhere in the world at the real exchange rate. Vacations just got a whole lot cheaper!
|Real exchange rate||Limited support|
|Free to open currency balances||Less well-known|
It’s free to open a Wise Borderless account and receive money in most currencies
There may be variable fees for sending/converting money and for ATM withdrawals but these are as low as possible.
Example: the time of writing, I could convert 1,000 USD to £822.40 GBP on Wise, losing just $4.48 in fees. To do the same on PayPal, I’d currently only get £796.77 GBP (around £25 less).
Best for: Internet businesses and eCommerce stores
Stripe is a complete payment processing software solution that’s been designed specifically for internet businesses. It aims to improve on PayPal by offering more customizable, advanced development tools.
Stripe pride themselves on being a ‘developers first’ software provider and believe that most payment issues are rooted in code, rather than finance. Their simple API is easy to integrate on your website checkout pages and it supports both mobile and recurring payments.
|Powerful and highly customizable||Similar transaction fees to PayPal|
|Scalable||Additional fees for international transactions|
|Fast and simple integration|
|No monthly fees|
2.9% + $0.30 transaction fees per card charge. Additional fees for international transactions. Custom pricing packages with volume discounts are also available.
Best for: Small to medium-sized businesses
Payoneer is another solid PayPal alternative that’s popular amongst SMBs. It’s easy to set up and use, has a simple pricing structure, and offers excellent customer support. The payment gateway is especially well-designed for specific market sectors including vacation rentals and advertising.
It’s great for freelancers and cross-border transactions too and works in a similar way to Wise. You can sign up for Payoneer and request a global credit card that you can use to withdraw money from ATMs all across the world.
|Flat, predictable fees||Annual fee for Payoneer MasterCard|
|E-checks supported||MasterCard is a limited debit card|
|Payoneer Mastercard available|
|Fairer exchange rates than PayPal|
- It’s free to receive Payoneer payments from other Payoneer accounts and using the Global Payment Service.
- 3% fee on credit card payments on all currencies
- $1.50 fixed withdrawal fee to a bank account in the same currency. Up to 2% above market rate fees on cross-currency withdrawals withdrawals
- Other variable charges
4. Google Pay
Best for simplified, free payments
Google Pay is an app-based digital wallet payment system that integrates with your Google Account. You can hook up your debit/credit cards to your Google Account in order to more quickly and efficiently pay on websites, apps, and in-store.
You can use Google Pay at any store than accepts tap-and-go-payments, as well as online without entering your card details.
By integrating Google Pay on your website, you’re simplifying the payment process for your customers and creating a better, more streamlined customer experience.
👉 See our guide on: How to Set Up Apple Pay on a WordPress Site
|Free to use||Not accepted everywhere|
|Easy to set up on mobile devices||Some users may have privacy and security concerns|
|Faster, simplified payment process|
|Create custom mobile offers|
Google Pay Fees/Charges
The best thing about Google Pay is that it’s totally free to send and receive money for both customers and merchants. Awesome, right?
5. Amazon Pay
Best for businesses that prioritize fraud protection
Like Google Pay, Amazon Pay is another online payment gateway attached to a reputable brand, which helps with customer trust. Users just have to log into their Amazon account and can then use the payment details saved on their account to check out using a familiar interface on any website that accepts Amazon Pay.
You can use it to process transactions on your site by integrating it with your existing CRM. It’s available on mobile devices and desktop, comes with Amazon’s fraud protection, and has similar transaction fees to PayPal.
|Brand trust||Similar fees/charges to PayPal|
|Fraud protection||Can be difficult to integrate on your website without programming knowledge|
|Faster, simplified payment process|
Amazon Pay Fees/Charges
- 2.9% + $0.30 on domestic US transactions.
- 3.9% fee for cross-currency transactions
Best for Online and offline businesses
If you’re looking for a payment processing solution that works as well for point-of-sale transactions as it does for online sales, Square is the way to go.
Their powerful point-of-sale tools allow you to set up in-person contactless payments quickly and easily. You can use it to accept payments via card, cash, checks, or gift cards with or without an internet connection. It can also generate or print receipts, track your inventory, and more.
You can also use it as you would PayPal as a way to process online payments on your website or eCommerce store.
|Great POS software||Confusing pricing structure|
|Good customer support||Similar fees to PayPal|
|Better-integrated payment tools|
|Square Reader accepts chip & contactless payments|
Square charges different fees for different kinds of transactions, including:
- 2.6% + $0.10 for swiped and tapped POS payments
- 2.9% + $0.30 for eCommerce transactions using square eCommerce store
Best for personal transfers
Venmo is a subsidiary company of Paypal that was created to make transferring money between friends and colleagues easier. The service makes it easy to transfer to people who also have a Venmo account and it can also be used to make secure purchases online.
Venmo doesn’t charge any fees for basic services like sending, receiving, or withdrawing money. There are also no annual or monthly fees.
For people using their bank accounts and Venmo balance to transfer and make payments, almost everything is free. However, sending money from your credit cards comes with a 3% fee, and instant transfers come with a 1% fee. There are also fees for ATM withdrawals if you’re using your Venmo card.
Best for Online Gamers, Gamblers, and Traders
Skrill is an online wallet that has been designed with online gamers and traders in mind. Like Paypal, Skrill allows users to send and receive money securely online. It also helps gamers to manage their in-game purchases and account balances so that they never miss a game.
Skrill can be used to manage cryptocurrencies and has a buy and sell function that makes trading crypto a breeze.
Signing up for a skrill account is free, but there are various different fees applied to transactions. Most transfers, including international transfers, are free, but there is a fee of up to 2% for domestic transfers.
Depositing is also free except for crypto deposits, which are charged with a 1% transaction fee. The main fee to consider with skrill is the withdrawal fee, which can be up to 7.5%.
There you have it, 8 excellent PayPal alternatives to improve the way you send or receive money. Which one is your go-to payment system? Let us know in the comments!
If none of these PayPal alternatives fit the bill, check out our guide to the top 5 payment gateways for eCommerce for more ideas.