Money Matters

How I Saved Hundreds On Local and International Transfer Fees

My Paypal account is so old that I even had spaces in one of my previous passwords. (Spaces are no longer allowed).

When I first read about Paypal in PC User magazine back in 1999 I knew I wanted an account.

Send money by email? Sign me up!

It was perfect for the project I was working on. I’d planned to tour southern India with a puppet show and had collected over a thousand email addresses of people who were interested in supporting my project.

I signed up to Paypal immediately only to find out that it wasn’t yet available in Australia.


I opted for a notification to be sent to me when it would become available.

Fortunately it wasn’t long before I got the notification from Paypal letting me know that I could open up my account.

And over the years no small amount of my hard earned cash has gone to Paypal’s fees.

From selling on eBay to running an ecommerce site Paypal has been a great way to send and receive funds very quickly.

Fast-forward to the present day and Paypal is one of the most recognizable brands in existence.

The one thing Paypal has been reluctant to do is alter their fees. Sure you can subscribe for something like $25 a month and get slightly reduced rates, but Paypal has such a strong brand that they feel like they can charge those high fees and people will keep using their service.

Enter PayID

In February 2018 the New Payments Platform (NPP) was launched in Australia. This service uses the new PayID identifiers to send and receive payments. The service, owned by Bpay, is called OSKO.

Your PayID is registered through your bank. This links it to your bank account. A PayID can be either an email address or a mobile number and can only be linked to one Australian bank account.

This makes it possible to send money between Australian bank accounts and have it arrive within a minute.

You can search for your bank to find out if they have implemented OSKO yet at this site:

And the great thing about using PayID is that there are no associated costs apart from your usual bank fees which are often nil, depending on your bank. Even if you have gone over the threshold of free transfers in a month inter bank transfer fees are a fraction of what Paypal charges.

OSKO does not replace Paypal completely as Paypal still offers some benefits.

Buyer and seller protection are two things that your bank does not offer.

But there are two definite benefits to the new PayID by OSKO: speed and cost.

As soon as I heard about PayID I signed up.

And I’ve since taught many people how to use PayID. Not that it’s all that difficult. But like any new thing some people take time to get used to it.

There was one occasion where a sender got confused with the similarity between the names PayID and Paypal. They sent me the money through Paypal but used the PayID email I had given them.

Of course this was not a problem. Even though Paypal and PayID have nothing to do with each other it was easy to solve this problem.

All I had to to was log in to my Paypal account and add the same email address which I use as my PayID to my Paypal account.


So now, if this happens again, either way the money comes to me instantly.

Of course the one thing that PayID doesn’t solve is the problem of high international transfer fees. PayID is exclusively used for domestic bank transfers.

If you want money fast Paypal is still one of the best options even though it isn’t one of the cheapest.

Paypal fees do add up to quite a bit and Paypal isn’t too transparent about the exchange rate they use either. I calculated that Paypal charges a 3% commission when converting from USD to AUD.

You’re already paying 3.5% when receiving the funds, and Paypal will “offer” to charge a 1% fee if you want an instant withdrawal. No thanks. I’d rather wait a few days than pay any more than absolutely necessary.

So all in all Paypal really eats into your profits.

Six to 7% just so you can get your money. If your margins are already slim then this really hurts your bottom line.

But what’s the alternative for international payments?


I was introduced to TransferWise by H., the CEO of a US company, with whom I have had a business relationship with for close to ten years.

As their payments to me are in USD they had been using Paypal but asked me if I could set up an ACH account instead. This way they could pay me into a US based account.

ACH was not a term I’d heard prior to this so I had to look up what that meant.

I looked around and spent a little while trying to choose a provider but too often the most aggressive advertisers are the ones with the worst deals. — And the poorest customer service.

After a couple days of comparing providers I got back to H and told him I really couldn’t work out which one I wanted to trust with my business. I asked him if he had any recommendations.

He suggested I check out TransferWise.

I thanked him and headed over to TransferWise’s home page.

I liked what I saw.

I could see immediately that they have paid close attention to making it easy to use their service. I know that you shouldn’t judge a company by their website, but one thing I could see right away is that this company understands user experience.

This was such a breath of fresh air. Some of the other websites I had been looking at in the previous days were clunky, dated, and just plain ugly.

TransferWise’s site is modern and the navigation is intuitive.

You may think that this is just a superficial impression, but I have usually found it to be the case that customer-focused businesses are simply better at anticipating user needs. The interface design is the face of the company. If they get that right it shows they are paying attention to detail and understand how important the user experience is.

Setting up the account was easy and fast.

But the real icing on the cake is that their international transfer fees are tiny compared to any other comparable business I have come across.

This is the email confirmation from a transfer I initiated today:

An example of TransferWise’s transparency: Fees and exchange rate disclosed.

At the time of transfer the exchange rate used by TransferWise was the same as the exchange rate listed at

The fee was less than half of 1 percent!

Fees Compared

For a $1000 USD transfer Paypal will charge me 3.6%+30c when I receive the funds and an additional 3% when I convert the funds from USD to AUD.

Oh, I’m sorry did you think they were charging you 2.5% or 2.9%?

Some accounts do qualify for this. But by default Australian accounts get slugged with an outrageous 3.6%+30c fee.

Here’s an example of a Paypal payment made to me:

That’s 3.6%+30c, the sharks!

However if I am paid in USD then I am charged an additional 3% conversion fee!

Initial Amount$1000 USD$1000 USD
Receiver Fee (%)Paypal Fee 3.6%+30c0%
Receiver Fee ($)$35.96 USD$0 USD
Transfer Fee (%)Currency Conversion Fee 3%Currency Conversion 0.43% (variable) +90c
Transfer Fee ($)$28.92 USD$5.18 USD
Total Cost$64.88 US$5.18 US
Total Left$935.12 US$994.82 US
Get paid into your ACH TransferWise account and pay no fees.
Send money from your TransferWise account to your or to any Australian Bank account and pay a minimal fee.

How To Save When You Get Paid in USD to Your Paypal Account

Since you are setting up a US bank account through TransferWise you can actually withdraw your Paypal USD to TransferWise and then convert/send the funds in AUD to your Australian bank account.

That way you avoid the 3% Paypal conversion fee.

All you have to do is add your TransferWise account to your Paypal account just as you would any other bank account.

You can then select that bank account when withdrawing.

Yes it is an extra step as you will still need to withdraw from TransferWise to your Australian bank account, but TransferWise withdrawals are fast so the total time is equal to or less than withdrawing from Paypal to an Australian bank account.