Executive summary: After the new pricing changes, PayPal now kicks ass for international buyers! But for sellers the situation is still not that rosy, and don't count on those bonuses.

Updated April 11, 2002:

  • International payments now free!
  • Users in Nordic countries can now transfer money to their bank accounts!
What and Why?

PayPal has recently expanded its operations outside the United States to a surprisingly large slew of countries, including Finland. As a large number of (US-based) small companies and websites, including our beloved Everything2 and photo.net only accept payments and donations through PayPal, this finally gives us "international" (read: non-US) folks the chance to reward some of those sites we spend way too much time on as it is.

Hurdles, But No More Hidden Charges

Alas, to PayPal not all users are created equal, and those outside the US have to jump through quite a few hoops to register and also have some pretty severe limits on what they can do. PayPal's site is less than crystal clear about many of these, so this is based on my own experience.

An unverified international PayPal account can receive and send PayPal money, but offers no way of turning real money into PayPal money. Thus, if you want to make a donation to E2, you have to verify your account by registering a credit card (a hurdle in itself, as many interest-wary Europeans have only debit cards). This involves giving PayPal your card information, letting them place a $1.95 charge on it, and entering the security number from your next credit card bill, a process may take over a month depending on your card billing cycle. Once verified, PayPal credits the $1.95 back to you, but only as PayPal money.

PayPal used to have a 30c + 2.6% charge for international "non-PayPal balance payments" (read: moving money from your credit card to your PayPal account), but this has now been eliminated! So now a $20 payment shows up as $20 on your credit card, and only international merchants get slapped 1% for cross-border transactions.

Last but not least, there is perhaps the most significant problem of all: withdrawals to non-US bank accounts are either expensive (eg. UK, Germany and France at $1.50/withdrawal, and especially Japan at a whopping $7/withdrawal) or, for some countries, outright impossible. This means that any money in a PayPal account becomes mere tokens: you can buy them, receive them and send them, but you can't convert them back into cash. Thus, PayPal is pretty bad for earning money and that international merchant accounts are effectively useless in countries that do not allow local withdrawals.

Illusory Bonuses

PayPal prominently advertises its $5 sign-up and referral bonuses, but as of January 17, 2002, to qualify you (and any friends you recruit) have to make a single payment over $250 using PayPal within one year of signing up. This is quite a bit, although with the abolition of the international payment charge it is no longer the case that the transfer fees cost more than the bonus. Thus, most international users will never earn a penny this way.

But It's Still Good

Despite all this, PayPal is now definitely both the cheapest and the fastest way to send (small) amounts of money overseas. For example, the cheapest international wire transfer (outside the EU) at my bank, Handelsbanken, would cost no less than €13.50, or over $12 -- and by banking standards this is very competitive! (Sending and cashing an international money order or check is even worse.) And the receiving end will also deduct an arbitrary commission, while PayPal takes at best nothing (personal account) or at worst 30c + 3.9% (non-preferred business with cross-border surcharge), even that capped to $5. And while a wire transfer may take up to a week, a PayPal transaction is completed almost instantly (as in an hour or two at most).

Also, should you be so lucky as to receive PayPal money from someone, you can pass on the karma to anywhere in the world (but within PayPal) without paying a single cent. This is downright revolutionary, as to the best of my knowledge nobody else has ever offered completely free international transfers before.


In all, I am now a satisfied PayPal customer and a more satisfied user of E2 now that I have donated. Give it a spin!

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