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As your company grows, you may need to rely on more than PayPal for partner transfers. Are you ready?
The gig economy is alive and well in the UK. In its wake, brands surrounding the business model have flourished. Reports show that if the gig economy keeps growing at its current rate, a significant portion of the UK workforce will be participating in it.
According to recent reports, the UK gig economy workforce has grown substantially, with estimates varying widely with the ONS estimating the workforce at approximately 2.8 million workers in 2024. This is why brands like PayPal continue to be popular as more people adapt to a freelancing society. They need a place to transact internationally and receive secure payments.
What is PayPal?
Whether you send money or receive it, PayPal is one of the most trusted online payment systems in the world. It serves as an alternative to traditional paper methods like cheques and money orders. PayPal is based on email addresses, which makes transferring money easy. The funds are pulled directly from your PayPal balance or a linked bank account. For businesses, this means you can easily pay suppliers or receive payments from customers using just an email address. For UK businesses, this means you can easily pay suppliers or receive payments from customers across the country and internationally using just an email address.
The PayPal process is based on a person-to-person transaction between account holders in the system. Both parties must have an account to move money. You cannot receive or transfer money without one.
Overview of PayPal Transfers in the UK
PayPal is one of the fastest money transfer services online in the UK. Transfers to your bank account are usually very fast, often within minutes, if you withdraw money from your Paypal balance though processing times can vary depending on the receiving bank.
There are a couple of different ways how you can utilise Paypal for transferring money:
- Domestic Transfers: Sending money within the UK using PayPal is generally free if you use your PayPal balance or linked bank account as the funding source (when no currency conversion is involved). Payments arrive fast, often within minutes.
- International Transfers: PayPal allows funds to be sent to over 200 countries and regions globally. However, cross-border payments incur a transaction fee plus currency conversion fees.
- Xoom Transfers: Xoom, a PayPal service, can send funds abroad directly to bank accounts and mobile wallets with competitive fees. Xoom has its own fee structure, which may differ from standard PayPal international transfers. It supports around 60 currencies and 160+ countries.
- Receive Card payments: Paypal also offers a card terminal for merchants to accept POS payments from customers.
Fees and Limits with Paypal in the UK
Using PayPal to send GBP inside the UK to others is generally free, but there are fees and limits involved for other transactions:
- Transfer Limits: Individual transfer limits vary according to account type, account status and funding source. Specific limits can be found within your PayPal account after linking a bank or card. While limits vary, examples might include a per-transaction limit, a daily limit, and a monthly limit. Check your account for the most up-to-date details.
- Fees: PayPal transaction fees, currency conversion charges, and cross-border fees can add up, especially for international transfers. For large transfers, services like Wise, Revolut or others may provide better rates.
- Regulation: PayPal services in the UK continue to be provided by PayPal UK Limited, which is regulated by the Financial Conduct Authority (FCA) under the Payment Services Regulations 2017. This ensures compliance with UK financial regulations.
PayPal Transfer Limits and Fees Summary Tables
For quick reference, here is a table summarising PayPal’s main transfer limits and fees applicable globally and in the UK for currency transfers:
Transaction and Currency Conversion Fees with UK Transfers
| Transaction Type | Applicable Fees |
|---|---|
| Domestic transfer in the UK funded by balance | No fee |
| Domestic transfer in the UK funded by bank account | No fee (when no currency conversion is involved) |
| Currency conversion | 4 % above the base exchange rate |
| Currency conversion (business accounts) | 3 % above base exchange rate |
Note: The information contained in the table is a selection of the main applicable UK transfer fees according to Paypal’s UK website, updated on 10, October 2024 and may not be up to date any more. Fees may change over time and different fees may apply for various use-cases so it is best to check the most up-to-date fees directly on PayPal’s UK website.
Receiving Money via PayPal in the UK
On the receiving side, PayPal offers flexibility for getting paid or accepting funds from customers and clients as a UK individual or business. Consider these tips for receiving money via PayPal:
Share Your PayPal.Me Link for Invoicing
Your personalised PayPal.me link allows anyone to quickly send money to your account. Share this link on invoices, bills, or payment requests.
Accept Payments for Goods and Services
As an online seller or service provider, you can accept PayPal payments for transactions by integrating with e-commerce platforms like Shopify, WooCommerce, or Magento, which are widely used in the UK market.
Money Goes to Your PayPal Balance
Received funds will sit in your PayPal account balance. You can then spend it online via PayPal or transfer it to a bank.
Transfer Money to Bank Fee-Free
Withdrawing money from your PayPal balance to your linked UK bank account is free. Transfers are usually complete within minutes to major UK banks such as HSBC, Barclays, NatWest, and Lloyds.
Provide Accurate Details
When being sent money, double-check that the sender has your exact PayPal registered email or mobile number to avoid errors.
Check for Holds on Large Sums
If receiving unusually large amounts, PayPal may temporarily restrict access to the funds for risk reviews before transfer. For UK businesses, PayPal may hold funds for up to 21 days if your account has a limited selling history or receives an unusual payment pattern.
By sharing your PayPal details, getting paid digitally becomes quick and convenient for services, sales, and money transfers as a UK PayPal user.
International Transfers with Xoom (a Paypal Service)
When arranging to send or receive money overseas, PayPal account holders can also use Xoom. It’s a PayPal service that is an electronic transfer and remittance provider for sending money internationally. Consumers can transfer funds, pay bills, and reload phones from the United Kingdom to popular destinations including India, Pakistan, Nigeria, and Poland, as well as over 160+ countries globally.
Xoom offers a money-back guarantee with SMS alerts for your peace of mind. The fees for the app vary by country. It won’t be the same to send cash to family in Albania as it is in Hong Kong. There’s no need to Google the exchange rate, however, because the platform does everything for you. Their pricing is completely transparent.
For UK residents, Xoom provides particularly competitive rates when sending money to countries with large expatriate communities in Britain, and you can send up to £21,000 in a single transaction depending on transaction type and level of verification.
Setting up a PayPal Account in the UK
Although setting up a PayPal account is free, you still need to provide enough personal and financial data to make it secure. This includes your contact and bank account information.
Select Personal or Business Account
Visit the Paypal UK website and choose to create either a Personal account for personal use or a Business account for business activity.
Provide Basic Information
You’ll need to add details like your name, address, date of birth, and phone number to open an account. For UK business accounts, you may need to provide additional documentation such as your Companies House registration number, VAT number (if applicable), and potentially details of your business activities.
Agree to Legal Agreements and Verify Email Address and/or Phone Number
Read and accept PayPal’s User Agreement and other legal policies and check your email inbox and phone for a verification message from PayPal to confirm your access to the email and/or mobile phone.
Link Bank Account
To fully activate your account, you need to securely link a bank account and have it verified, which takes 2-3 days. UK account holders can link their accounts using Open Banking for faster verification with participating UK banks.
Once your email, identity, and bank account are verified, your PayPal account will be operational for sending and receiving funds in the UK. Be sure to choose the right account type for your needs.
Simplify PayPal transfers in the UK with smarter payments
Automate transactions, reduce costs, and scale your business with a more efficient payment solution.
PayPal Account Types for Personal and Business Use
PayPal offers personal accounts for individual use and business accounts with advanced capabilities for companies and merchants.
PayPal Personal Account
A Personal account is suited for:
- Occasional peer-to-peer transactions
- Shopping online at PayPal-accepting sites
- Sending or receiving money from friends and family
Features are limited compared to business accounts. All name details are fully visible to recipients.
PayPal Business Account
A Business account provides:
- Extensive payment acceptance and invoicing capabilities
- Tools for managing multi-user access
- Enhanced fraud protection and reporting
- Ability to accept credit card and in-person payments
- Integration with UK accounting software like Xero, QuickBooks, and Sage
Business accounts have higher fees but include capabilities needed by companies and merchants.
Choosing Between a Personal or Business PayPal Account
When deciding between personal and business accounts, consider these key differences:
Use a Personal Account If:
- You only make transactions occasionally
- You don’t need invoicing or payment integrations
- You don’t sell goods/services regularly
- You’re sending money to family members in the UK or abroad
Use a Business Account If:
- You operate an e-commerce store or accept payments frequently
- You need multi-user access or enhanced security
- You want to keep your name private to customers
- You need to be compliant with UK VAT regulations and require proper invoicing
Assess your specific needs to determine if a basic personal account or advanced business account aligns better with your PayPal usage, income sources, and transfer volume.
Handling High-Volume Payments? Discover Why UK Businesses Prefer Tipalti
For businesses that need to make frequent or high-volume payments, manually sending transfers through PayPal can be cumbersome. Modern payment automation platforms like Tipalti, which has a UK office in London, provide a more efficient solution for British businesses.
Tipalti enables businesses to easily pay employees, contractors, affiliates, and suppliers globally in a few clicks. It automatically handles complex payee payment preferences, tax forms, compliance, and international payment capabilities.
Bulk payment processing through Tipalti saves time and money compared to doing multiple manual PayPal transfers, especially for global payouts. For UK businesses, Tipalti handles HMRC-compliant tax documentation, payment reconciliation for UK accounting standards, and supplier management that complies with UK financial regulations.
If your accounts payable workflows involve high volumes of payouts, automate payments globally through Tipalti to optimise speed, reduce operational costs, and scale your business smoothly. Contact us for a demo to find out more.
