When you send money internationally, three costs decide how much arrives: the upfront fee, the exchange-rate margin, and any intermediate fees along the way. Most people compare the first and never see the second — yet the rate margin is usually the largest of the three. This guide shows how the big providers structure those costs and how to compare them in two minutes.
First, a rule: always compare the received amount
Forget advertised fees and headline rates. The only honest comparison is this: send the same amount to the same country on the same day and look at exactly how much lands in the recipient's account, in their currency, after everything is deducted. Ask two or three providers for that one number and pick the biggest. Because rates move daily, repeat the exercise before your next transfer — last year's cheapest option is not automatically today's.
How PayPal converts currency
PayPal is built for convenience, not for cheap conversion. When a payment crosses currencies, PayPal applies a spread on top of its wholesale reference rate — a retail markup that typically runs in the 3–4% range for many corridors, and more for some smaller currencies. On top of that sit possible fixed fees for certain transfers and, for cross-border commercial payments, additional percentage charges.
The practical consequences:
- The rate PayPal shows you at checkout is a take-it-or-leave-it quote — there is no visible breakdown of how much margin is inside it.
- For small purchases the convenience is often worth it. For a large transfer — tuition, rent, a car — a 3% markup is real money: on 10,000 units it can cost more than 300.
- If you keep a balance in the recipient's currency, or the recipient can invoice you in theirs, you can sometimes sidestep conversion entirely.
How Wise converts currency
Wise (formerly TransferWise) popularised a different model: charge a visible fee and convert at the mid-market rate — the same rate you see on Fxverter or any financial news site. The fee is shown before you confirm, usually a percentage that declines with size plus a small fixed component.
What that means in practice:
- The received-amount quote is generally close to what a pure mid-market conversion would give, with the fee being the entire cost.
- For most major corridors the total cost tends to be lower than bank wires and PayPal, especially on mid-sized transfers.
- Multi-currency balances let you hold, receive and convert later — useful if you can wait for a better rate, though waiting is a decision, not a strategy (see our guide on exchange-rate risk).
How a traditional bank wire converts currency
Banks rarely charge a dramatic visible fee for a SWIFT transfer — the cost hides elsewhere. Three layers are common:
- A wire fee for sending, sometimes another for receiving.
- An exchange-rate margin that is often 1–4% away from the mid-market rate, rarely shown as a percentage anywhere.
- Correspondent-bank deductions: international wires can pass through one or two intermediate banks, each taking a cut before the money arrives. The recipient receives less than you sent, with no line item explaining where it went.
The correspondent-bank layer is the one people discover by accident. It is also the hardest to predict, because routing depends on the currency pair and the banks involved.
The comparison in one table
| Provider type | Visible fee | Rate margin | Hidden intermediaries | Typical total cost |
| --- | --- | --- | --- | --- |
| Traditional bank wire | Moderate | Often 1–4% | Correspondent banks may deduct | Usually highest |
| PayPal | Low to none advertised | Roughly 3–4%+ | Baked into the quote | High on large amounts |
| Specialised services (Wise and similar) | Clear, shown upfront | ≈ 0% (mid-market) | None | Usually lowest |
Exact numbers vary by corridor, amount and promotions, so treat the table as a map of *where the money hides*, not a price list.
When the "expensive" option is actually fine
- Small, infrequent purchases: a 3% margin on a 30-unit payment is less than the coffee you buy while thinking about it. Convenience wins.
- Urgent transfers: when speed matters more than cost, whatever clears today can be worth the premium.
- Stable salary arrangements: if you get paid in the same currency you spend, conversion cost is zero — no service beats not converting.
A two-minute routine before any large transfer
1. Look up the mid-market rate for your pair (that is what Fxverter shows).
2. Ask each provider: how much exactly will arrive, in the recipient's currency, all-in?
3. Compute the gap between step 1 and step 2 as a percentage — that is the true cost.
4. On recurring transfers, redo the check occasionally; pricing changes.
The mid-market rate is the anchor for all of this: it is the price banks charge each other, the best rate any retail customer can realistically approach, and the reference that makes every quote comparable. Whoever quotes closest to it — after all fees — is giving you the better deal.