Western Union Vs PayPal:

Background

Western Union and PayPal have both been leading companies in the money transfer industry for decades. However, bigger doesn’t necessarily mean better. In this article, we’ll be comparing these two giant companies to see which might be the better fit for customers.

A Western Union Overview

Being around for over a century, Western Union is one of the oldest and most renowned money transfers in the world. Money was still being sent on horseback when the company was founded in 1851! Since those old-fashioned days, the company has expanded to global branches as well as fully online money transfer services. The company allows customers to send money to over 200 countries on a global scale. The company is best known globally for their cash transfers through the agent network. Branches are located all over the world allowing customers to send money anywhere they want!

A PayPal Overview

PayPal is one of the first companies to use the internet to allow customers to send money internationally. Before PayPal people were using Western Union’s physical branches and banks to send money - often resulting in hefty fees. PayPal makes payments and money transfers entirely online. Their methods are quick, easy, secure, and efficient. Sometimes transactions can even be near-instantaneous.

Customers can send money quickly within their country, or globally, using a computer, tablet, or smartphone. Although PayPal may seem like the best option right off the bat, customers should consider their higher fees and additional charges before making a decision.

Western Union Payment Methods

Western Union’s five different payment methods are the following:

Daily transaction limits depend on the individual’s transaction history if they’ve sent money with the company in the past. They are also determined by the receiver’s country, the customer’s location, and how the transfer is paid for.

On Western Union’s website or app, the daily limit for most transfers is $2,999. The following day will have a limit of $500. Transfers initiated over the phone may have limits that range from $300 to $2,500 per day while sending money by initiating the transfer in person usually has none. However, some receiving countries may have limits on how much money someone can receive in a day.

PayPal Payment Methods

A few options that PayPal offers to pay for transactions include:

Recipients have three options for receiving their money:

Fees

Western Union’s Fees

Western Union often has low rates with high fees - this means that they have relatively large margins on its exchange rate markup. Sometimes, customers may need to pay up to 20% in exchange rate difference and various fees.

The fees regarding how much customers will need to pay, depend on a variety of factors including:

Bank-to-bank transactions are the least expensive option in general. This option sometimes may even be free when it comes to transferring money. However, The low price comes with a catch. This type of transaction is often slower than the others - some transfers taking up to a week.

When paying with a credit or debit card, the fees will be significantly higher - but the delivery time will be sped up. It’s a good option for customers willing to pay more for faster service. This option may also allow the customer’s recipient to pick up cash from one of Western Union’s 550,000 individual locations worldwide.

PayPal’s fees

Using a PayPal balance or linked bank account will not have any fees If money is being sent within the customer’s country. But using a credit or debit card domestically will always come with a cost.

Sending money abroad will always include a fee for all the transfers, regardless of payment method. This fee is lower when using a PayPal or bank account to complete a transfer, but will be significantly higher when using a debit or credit card. This fee will be added on top of the flat fee that PayPal charges for all transfers funded with a credit or debit card.

There are no fees for withdrawing money unless a paper check is requested. In other words, there are no fees for recipients to receive money.

Exchange Rates

Western Union’s rates

Western Union usually isn’t better than its competition. Their rates are dependent on the country where the money is being sent to and how much money is being sent. Sending larger amounts of money typically means customers will receive better rates.

When sending money to developing countries, customers can expect better exchange rates in comparison to sending a transaction to the United States or Europe.

PayPal’s rates

Exchange rates are calculated using the mid-market exchange rate. A 2.5% to 4.5% margin is subtracted from the mid-market rate. This calculation depends on the sender’s country and the receiving currency. Another factor that impacts exchange rates is how the transfer is being funded.

For international currency transfers executed with PayPal account balances, there is only one exchange rate per country. This rate is often better due to the lower mark-up charged on the transaction. Bank account, credit card, or debit card, funded transfers will be charged a different exchange rate for each method. This is due to PayPal’s higher mark-up rate.

PayPal’s higher exchange rates are not as good as competitors. Customers may be better off with other money transfer companies.

Security

Western Union’s security

Western Union’s age and history can attest to its security - especially as one of the oldest companies in the money transfer business. The company is fully licensed and is insured in many countries around the world. It is extremely well known, used, and trusted by the public.

PayPal’s security

PayPal is very secure. It is one of the most well-known and used ways to pay bills and send money online. The company’s 20 years of business have allowed them to build a reputable service that is trusted by millions. Customer’s funds are held in accounts separate from those of the company’s own accounts. This is to ensure that the money is never used to fund PayPal’s expenses. The company also has a dedicated security team that monitors all transactions to prevent theft, fraud, and phishing.

All transactions and customer data are secured with intense encryption and security measures. On top of these precautions, PayPal is regulated and monitored by various international financial agencies.

Although these measures are put in place to protect customer’s data and money, some PayPal customers have filed complaints in regard to their money being held for long periods of time due to security and compliance reasons. The majority of these complaints are not usually from individuals who send money, but from merchants doing business through PayPal.

Ease of use

Western Union’s ease of use

Western Union is extremely easy to use and very accessible. It also has over physical 550 000 locations worldwide for customer convenience and an online platform and mobile apps making the company’s services accessible to anyone with an internet connection.

Paying bills with certain retailers is another service that Western Union offers, along with prepaid cards allowing customers to send and receive money easily, or directly depositing paycheques onto the card. The card can even be used as a debit card at various retailers, allowing customers to make purchases. Western Union also provides business services. These services include paying suppliers, employees, and partners internationally. Along with accepting payments from foreign customers, and mass global payments.

PayPal’s ease of use

PayPal’s services are overall very easy and efficient to use. They have both physical locations and online platforms that are available on both desktop and mobile devices. Although PayPal may be easy to use, a very common complaint is in regards to PayPal’s poor customer service. It will be rare for something to go wrong within a customer’s transaction, but in the case that it does, PayPal may not be the easiest financial institution to contact.

Conclusion

Overall, Western Union and PayPal are both giants in the money transfer industry. Western Union is the better option between the two due to their significantly lower rates and fees. Regardless of the decision that a customer decides to make, both options are safe and reliable. Customers should also consider other options when it comes to sending money internationally:

Banks

Banks are reliable and efficient. They have been the main source of money transfers for billions of people for many years. This option may not be the most convenient method for travellers because customers have to use a specific bank branch to transfer and receive money. Banks also usually charge higher fees than other online money transfers companies. This may significantly increase the cost of a transfer.

Traditional Money Transfer Services

Despite banks, specialized agencies such as Western Union and Ria Money Transfer are often able to help customers transfer money with better rates and lower fees. These methods are usually more affordable and convenient for customers.

These services allow customers to walk into a location, hand over cash and send money to someone in another country. The recipient will then need to travel to their nearest agent store to pick up the money.

This option is used all the time because many of these companies put restrictions on users regarding how they can send and receive money and the amount that can be transferred. They may also charge additional fees for transfers, thus driving up the price.

Other Online Money Transfer Services

Using the internet to send money opened the industry to a wider group of consumers. Online money transfer services are more convenient and efficient since customers can send money without leaving their homes. They also usually offer more flexibility with a wider range of payment and delivery methods.

These options have a significantly lower overhead in comparison to banks and brick-and-mortar transfer companies. Since they do not have to pay rent or maintenance costs for buildings, nor do they have to employ thousands of people, they have the ability to charge lower fees and offer better rates for customers - making this option the most affordable for customers around the world. While the big and well-known companies such as PayPal and Western Union may not be the least expensive option, there are many start-ups and remittance services that are safe, secure, and cost less.

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