Wise vs PayPal for International Client Payments

January 19, 2026 Maxwell

International payments are the “silent tax” of freelancing. Most solopreneurs focus on the invoice amount, ignoring the fact that between the moment the client pays and the moment the money hits your local bank, you can lose 3-8% of your revenue to fees and bad exchange rates.

This article ignores the “banking for everyone” marketing. We analyze the operational reality of getting paid across borders as a business of one.

If you bill $5,000 to a client in London, you don’t care about “ease of use.” You care about how much of that $5,000 actually lands in your pocket. PayPal is the convenient giant that charges a premium for its ubiquity. Wise (formerly TransferWise) is the specialized surgeon that cuts fees but adds friction. Choosing the wrong one isn’t just a minor annoyance; it is a direct hit to your profit margins.

Comparison Table

A snapshot of your money in transit.

Tool	Best for	Friction (Client)	Cost to You	Breaks when…	Main Limitation
Wise	Profit Maximization	3 (High)	$	Client is lazy	Requires client to send Bank Transfer
PayPal	Client Convenience	1 (Low)	$$$	Volume increases	“Exchange Rate” markup eats 4%+

Operational Deep Dive

Wise (formerly TransferWise)

Wise isn’t really a “wallet.” It is a multi-currency bank account.² When you open a Wise Business account, you get local bank details (IBAN, Routing Number, Sort Code) for the US, UK, EU, Australia, and more.³

The Reality: This is the most financially efficient way to work. You give your UK client a UK Sort Code. To them, it looks like a local transfer. They pay £0 fees. You receive Pounds. You convert it to Dollars at the real market rate (mid-market) for a tiny fee (usually ~0.4-0.6%).4

The Friction: You have to teach your clients. Old-school clients who want to “pay by card” or “click a button” will find Wise annoying. You are asking them to perform a bank transfer, which feels “manual” to some corporate accounts payable departments.

Best for: Retainers, large invoices ($1k+), and recurring payments.
Not ideal for: One-off $50 gigs or selling digital products to consumers.
Verdict: The CFO’s choice.

PayPal

PayPal is the path of least resistance.⁵ Everyone has it. Clients love it because they can pay via Credit Card or Balance instantly without setting up a new payee in their bank.

The Reality: PayPal charges you for the privilege.⁶ If you receive international money, you get hit twice:

Transaction Fee: Usually around 4.4% + fixed fee for international commercial transactions.⁷
The “Hidden” Spread: When you withdraw that money to your local bank, PayPal often forces you to convert it using their exchange rate, which is typically 3-4% worse than the real rate.8
Total Loss: You can easily lose 5-8% of your invoice value. On a $5,000 project, that is $400 gone.

Best for: Small, quick transactions where speed > cost.
Not ideal for: High-value contracts or primary income streams.
Verdict: The convenient thief.

When These Tools Stop Being a Good Fit

PayPal breaks when you scale. Losing 5% on $500 is annoying ($25). Losing 5% on $100,000 is catastrophic ($5,000). That is a nice vacation you just donated to shareholders.
Wise breaks with corporate bureaucracy. Some massive companies have rigid “Approved Vendor” systems that only cut physical checks or use archaic wire systems that don’t play nice with fintech virtual accounts.
PayPal breaks on “Risk Triggers.” PayPal is famous for freezing funds for 180 days if their bot suspects “unusual activity” (e.g., a sudden large payment). Wise is a regulated financial institution and is generally more stable, though not immune to KYC checks.⁹

Hidden Costs Most Reviews Ignore

It’s not about the advertised fee. It’s about the Operational Drag.

The “Exchange Rate” Illusion: PayPal says the transaction fee is 4%. They don’t tell you the exchange rate is padded.¹⁰ If the USD/EUR rate is 0.92, PayPal might give you 0.88. That gap is pure profit for them, pure loss for you.
Client “Training” Time: With Wise, you often have to email the client: “Please use these bank details, it is a local transfer for you.” You spend social capital explaining how to pay you.
The “Hold” Anxiety: PayPal holds funds aggressively.¹¹ Waking up to a “Your funds are on hold for 21 days” email is a rite of passage for freelancers. This kills your cash flow.

Strategic Note: Always bill in the Client’s Currency if using Wise (they pay local, no fees). Bill in Your Currency if using PayPal (force them to eat the conversion cost, though PayPal may still ding you on the incoming fee).

The 3 “Silent” Factors

Operational nuances that impact your daily life.

The “invoice” Factor:
- Wise is just a bank account. You still need to generate an invoice (using Xero, Wave, etc.) and paste your Wise details on it.
- PayPal is the invoicing tool.¹² You can send a “PayPal Invoice” directly. It looks professional and includes a “Pay Now” button. This reduces friction for the client significantly.
The “Batched” Payment:
- If you hire subcontractors, Wise allows “Batch Payments” (upload a CSV and pay 50 people in 20 currencies at once). PayPal’s Mass Pay is a nightmare to get approved for.
The “Digital Wallet” Utility:
- Money in PayPal is “trapped” until you withdraw it, but you can spend it on eBay/software.
- Money in Wise sits in a real account with a Debit Card attached.¹³ You can spend your Euros while in Paris directly from the account without conversion fees.

FAQ

Which is cheaper?

Wise. Almost always. The transparency of the exchange rate alone saves you 3-4% per transaction compared to PayPal.

Can clients pay via Credit Card on Wise?

Yes, via the “Request Money” feature, but the fees are higher (similar to Stripe/PayPal). The magic of Wise is in Bank Transfers, not cards.14

Is Wise a bank?

Technically, no (in most regions). They are an “Electronic Money Institution.” Your money is “safeguarded” but not necessarily insured by FDIC/FSCS in the same way a savings account is. Do not store your life savings there; use it as a transit hub.

Why do freelancers still use PayPal?

Because clients demand it. Sometimes, landing the client is worth eating the 5% fee. Convenience sells.

Real-World Workflow Failure

Consider “Elena,” a web developer. She used PayPal for her first $10,000 project to make it “easy” for the client.
The Scenario: The client paid instantly.
The Shock: PayPal took a transaction fee (~$450). Then, when Elena withdrew to her local currency, the bad exchange rate cost her another ~$300.
The Failure: She effectively paid $750 to process one payment.
The Fix: She switched to Wise. The next $10,000 payment cost her roughly $60 in total fees. She gave herself a $690 raise just by changing software.

Final Recommendation

Your payment gateway is a leaky bucket. Plug the holes.

For Recurring/Large Clients: Force them to use Wise. Send them your local bank details. The savings are massive. For One-Off/Small Clients: Use PayPal. The “Pay Now” button convenience is worth the fee to close the deal quickly. The Hybrid Strategy: Put both on your invoice. “Pay via Bank Transfer (Preferred)” and a small link for “Pay via PayPal (3% Surcharge applies).” Let the client choose if they want to pay for the convenience.

Best of luck, and see you around. We are Nexus. We Explore.

Wise vs PayPal for International Client Payments

Comparison Table