The Pros and Cons of Using Payoneer Vs. Paypal for Payments
Payoneer vs PayPal at a Glance
The key differences between Payoneer and PayPal lie in the transfer fees, security, network relationships. Payments through PayPal are more secure and come with lower fees than Payoneer transactions. PayPal’s larger network and international currency capabilities make it easy to send payments around the world. Transfer speeds with PayPal occur within 1-2 business days, while Payoneer transactions occur within 0-3 business days.
Whether you’re growing a small business or starting a remote team, making payments to international freelancers can be a costly process. How you pay people has a significant influence on timing, fees, and ease of use. When it comes to making global payments, you need a financial services company that will meet your organization’s needs.
Here we compare Payoneer vs PayPal and consider which one of these payment options might work best for you.
Who is Payoneer?
Founded in 2005, Payoneer is a financial services brand that’s a platform for online money transfers, digital payments, and providing customers with working capital. They are also a worldwide Member Service Provider of Mastercard. Companies that use Payoneer include Airbnb, Google, and Fiverr.
Payoneer supports over 200 countries with 150 local currencies. The financial payment service gives you the ability to directly withdraw funds with a debit card, as well as send and receive funds domestically and internationally.
Payoneer fees are slightly high at $3 per transfer but are free to receive. If you live in the United States, you can also make payments using an e-check. The Payoneer Billing Service allows you to pay other Payoneer customers with ease, and they also offer a mobile app.
The prepaid Mastercard (not Visa) the brand issues facilitates transferring funds. It can be used as a debit card for any type of transaction, including e-commerce. Payments are sent to Payoneer Mastercard, rather than going into your online account (and then transferring to a local bank account).
This means less of a hassle if you need to acquire funds quickly. The card can be used at any ATM in the world but has a maximum daily limit of $2,500. According to the fee structure, they will also charge you an average of 1% of the transaction in foreign exchange fees.
Payoneer has a help desk with a customer support system and a collection of resources to build your knowledge base. The company has offices in multiple countries and is available via email, phone, and live chat.
When comparing PayPal vs Payoneer, rates and exchange fees are higher for Payoneer. Payoneer has a minimum monthly payment requirement of $20,000. Additionally, they only allow transfers to other Payoneer accounts. There is no third party involvement. This can present a big problem if you have a customer that doesn’t want to work with the brand. You could lose the job. Private clients can only withdraw money on the platform. They can never transfer money.
Depending on the country, the platform adds a currency conversion charge of 2% to 2.75%. You are subject to Mastercard’s exchange rates if you use it in a non-listed currency. Payoneer, unlike most other money transfer services, charges an annual fee to use the Mastercard.
When it comes to branding, most payees register on the Payoneer network and are thus subject to its marketing. This includes all email communications, which come from the Payoneer and not the payer (like they should).
PayPal is not a supported payment method. This can prove a difficult obstacle when it comes to running an e-commerce site.
The reviews online complain the signup process is lengthy for Payoneer (lots of paperwork) and some people wait over a month to get their card. Not very convenient if you need to do business right away.
Complaints range from unreturned funds to blocked accounts and an absent support team. In 2018, Payoneer launched a campaign to improve its online reputation, but the brand still receives a fair share of negative feedback.
Payoneer’s Wirecard Shutdown Leaves a $2 Billion Black Hole in Prepaid Debit Card Funds from Wirecard
On Thursday, June 25th 2020, Payoneer’s prepaid debit card utilized Wirecard, filed for insolvency, having been under heavy investigation for a scandal amounting to $2 billion dollars in missing funds for their prepaid debit card users.
The FCA (UK’s regulator – Financial Conduct Authority) had frozen all Wirecard-related activities while they investigated to safeguard all funds. Therefore, Payoneer payees were unable to access their current Payoneer prepaid debit card funds for an extended period of time.
Additionally, Payoneer was unable to open new Payoneer prepaid debit cards for payees until they have a new issuing partner.
This is not the first time that Payoneer has had major operational issues. In 2010, Payoneer lost a key banking partner leading to massive service disruption, and in 2017, their FirstChoice Pay solution was also shut down.
Who is Paypal?
Most people know who PayPal is since the company has been around for decades. The platform has revolutionized financial technology and how people bank online.
After seeking an electronic alternative to paper waste, PayPal was the first to start online banking systems back in the late 90s. This platform is typically a good option simply for the ease of use and familiarity. They support 200 countries and 25 currencies.
With an low barrier to entry, the site is free for both payers and payees to use. Today, there are over 210 million active PayPal accounts in over 156 markets. The brand is known for its flexibility in integrations and partners with leading payment systems like Tipalti to optimize transactions.
PayPal is the most recognized brand in payment processing. They also integrate with many accounting and CRM platforms to automate a multitude of tasks. Since the company has been around for so long, they offer many services. This includes a Mastercard like Payoneer. Except, PayPal doesn’t charge an annual maintenance fee to use it.
By 2017, there were over 200 million active users in the PayPal system. Part of the brand’s strength lies in its age. They have reached so many companies and brands by now, that having a PayPal Mastercard is just like using a bank.
You don’t need to register an account to use PayPal. Anyone can send money and then choose who foots the bill for the fees, which is another convenient option. However, if you are going to use PayPal often, having an account is wise even if it’s just for the auto-fill on all your shopping sites.
The PayPal Payouts feature allows you to pay up to 10,000 people at once.
PayPal has payment limitations for non-verified accounts, which include a $10,000 cap on individual transactions. A payee can only send 5,000 payments per file through UI, and 15,000 using Payouts API. If a payment fails, it can also be challenging to determine why.
Another issue with PayPal is that at times, they will hold accounts without warning. This can be a challenging obstacle for small business owners and prove difficult when sending out large sums.
Transaction fees for PayPal can vary depending on circumstance. It involves things like:
- Whether you were using your bank account or PayPal balance
- Whether you used a credit or debit card
- International transfers
It should be noted that PayPal also charges currency conversion fees. If you are a customer in the USA, international sales have a 4.4% transaction fee, plus an additional fee based on the currency that is received. That being said, PayPal is generally transparent with rates.
|Transfer Type||Online||Online and phone|
|Discount||No||Free $50 coupon|
|Cost||0.005% ++4-5% approx abovemarket exchange rate||Between 0.5% to 0.9% of the transfer’s volume|
|Speed||1-2 days||0-3 days|
|Currency Conversion Routes||26||100+|
|International Payments||Yes||Payoneer Local Currency Accounts|
|Tax||Tax agreement with IRS||No tax validation|
|Mass Payments||PayPal Payouts||Yes|
A Smart Alternative
Another option to Payoneer and Paypal is the sleek payables automation solution, Tipalti. The platform makes it easy for finance departments to streamline operations and optimize the entire payment process.
Unlike Payoneer, the system partners with PayPal and has transparent pricing with stellar customer support. They are smaller than both platforms and thus have more time to cater to unique organizational needs.
Tipalti offers a variety of competitive features that include:
- Make mass payments to suppliers and partners in any country.
- Eliminate up to 80% of the AP workload.
- Assist with tax and regulatory compliance.
- Automate the entire payment management process from onboarding, to invoice processing and reconciliation.
- Cut costs and waste.
Reviewers rave about the attentive customer service Tipalti offers. This makes it a great choice on the top list of payment processors.
Ultimately, your business needs should dictate the type of service you choose. Factors that go into it include price, convenience, and ease of use. Careful research and a thorough understanding of your business structure ensures the solution you purchase will drive growth and lead to future success.