Paypal or Xoom: Which one is cheaper for Publishers?

About 2 weeks ago, I was able to reactivate a 4-year old dormant Paypal Premier/Business Account. I’ve been using that account now to receive funds from advertisers as well as pay some online bills. Now that I have both Xoom and Paypal, I’ve been contemplating which of the two I should be using more often.

Here my quick analysis of the two:

For the purpose of illustration, let’s do a transaction with Xoom and Paypal then compare the rates and the actual amount you would be receiving. This is to make the case that when receiving ad fees from advertisers, you’d be more informed if Paypal is much more practical than Xoom.

Transaction Amount: $100
Peso to $USD Rate: 45.43 = 1 (Yahoo! Finance, Sept. 25, 2007)
Peso to $USD Rate: 44.0866 = 1 (Xoom Internal Rate Card, Sept. 25, 2007)

Paypal Fees: $0.30 + 2.9% for $1 – $3,000
Xoom Rates: 8.00 for $100

The ~~standard~~ usual practice is that when an advertiser remits payment via Xoom, they incur the additional charges. However, on Paypal, the exact listed amount is sent then the Publisher receives a deducted amount based on the listed fees.

via Paypal:
Amount Transmitted: $100
Amount Received: $96.8
Fee Incurred: $3.2 (3.2% on the Publisher)

via Xoom:
Amount Transmitted: $108
Amount Received: $100
Fee Incurred: $8 (7.4% on Advertiser) + $2.86 (2.86% on Publisher)

The Fees incurred via Xoom are higher since both the advertiser and the Publisher are changed. Even if advertiser shoulders the transaction fees, the Publisher takes on the difference in public exchange rates and the Xoom internal exchange rates. However, if you’re just looking at your own fees on the receiving end, Xoom is still lower than Paypal.

Let’s see if these percentages will vary if we put the transaction amount to $1,000.

Paypal Fees: $0.30 + 2.9% 1 – $3,000
Xoom Rates: $40 for $1000

via Paypal:
Amount Transmitted: $1,000
Amount Received: $970.7
Fee Incurred: $29.3 (2.93% on the Publisher)

via Xoom:
Amount Transmitted: $1,040
Amount Received: $1,000
Fee Incurred: $40 (4% on Advertiser) + $28.60 (2.86% on Publisher)

With this amount, the fees incurred by the Publisher between Xoom and Paypal are almost the same (2.86% vs. 2.93%), not including the fees shouldered by the advertiser from Xoom.

Take note that these computations are based on assumptions that the Paypal account is a Premier/Business account, foreign exchange rates were used for the current date and that the Publisher will be receiving the remittance in Philippine Peso.

For reference, you can look up the fee structure of Xoom here as well as their own exchange rates; a comparison between a Personal account and Premier/Business Account on Paypal is here, the main difference being Perosnal accounts cannot accept credit/debit card payments; and here is the table of Paypal transaction fees for various amounts.

On a personal note — if you only have Xoom and can convince advertiser to fully shoulder the transaction fees, try to set the payments so that you’ll receive it in dollars instead of pesos. However, transaction charges for these will also increase ($10 for a $100 remittance and $59 for $1,000).

P.S. I wonder how these computations would look like if you compare them to other competing services like Ikobo, MoneyBookers and Western Union.

Abe Olandres

Abe is the founder and Editor-in-Chief of YugaTech with over 20 years of experience in the technology industry. He is one of the pioneers of blogging in the country and considered by many as the Father of Tech Blogging in the Philippines. He is also a technology consultant, a tech columnist with several national publications, resource speaker and mentor/advisor to several start-up companies.

https://www.yugatech.com

16 Comments

Nico says:

17 years ago

I used my paypal to transfer some funds on my xoom account, which is stored in 3 banks of mine which is only here in the philippines… i dont have any banks in the us… maybe in the future
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Andre Marcelo-Tanner says:

17 years ago

If you’re just using your account for receiving and not really selling anything its best to have a Personal since you can receive as much as you want and not get charged. Personally for me Xoom is so expensive, its dollar exchange rate is atleast 1-2Pesos less than the market rate, also with PayPal its free to transfer to your bank account, which usually have better rates even with an international ATM withdrawl fee. Just look at what it costs for someone to send $2500 (max with xoom per day), $60 if you pay via paypal, $80-100 if you want it received in dollars and via CC/PayPal payment, $40-60 if you send via Bank Direct Deposit. How much does it cost for PayPal to send $2500 or $10k (max per transaction). Costs nothing. If you have a premier/business account and the sender also has one, you can get them to send you a mass payment which costs $1 for sending a transaction up to $10k.
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Maying says:

17 years ago

“Take note that these computations are based on assumptions that the Paypal account is a Premier/Business account, foreign exchange rates were used for the current date and that the Publisher will be receiving the remittance in Philippine Peso.”

Hi Yuga, very nice article. But medyo naguluhan ako coz we know for a fact Philippine Paypal cannot receive payment from other Paypal users, right? So first question : When you say ADVERTISERS, are you referring to ADVERTISERS THAT USE THEIR PAYPAL ACCOUNT to pay you through YOUR Paypal account? Second question : Regarding that part where you said “that the Publisher will be receiving the remittance in Philippine Peso.”, di you mean receiving the Paypal funds through another online facility like XOOM that can send accept Paypal payments and send these to local Philippine bank accounts?
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Jon says:

17 years ago

Lovely Pinoy, as far as I know, you can only send money but not receive through paypal.
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JC John SESE Cuneta says:

17 years ago

Moneybookers works for me.

Xoom and iKobo are 2ndary, the fee is almost the same.
It’s better to have different payment gateways for your services.
Google Checkout, not sure, haven’t tried receiving money, only outgoing so far.
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Sam says:

17 years ago

I’ve been getting my monthly cash via xoom. I have no idea how you can manage to remit cash via Paypal since Pinoy membership in Paypal in very limited. Using a third party paypal user to get your money I believe is againts Paypal condition?

Sam
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kates says:

17 years ago

I’ve been happy with moneybookers. I don’t know exactly how much the sender shoulder but on the receiver end the fee is somewhere around 1%. The good thing about moneybookers is that you can have the money deposited to your dollar account. I’ve had trouble with xoom regarding dollar accounts.
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Lonely Pinoy says:

17 years ago

Pwede na bang makareceive ng payment sa paypal ang mga taga-‘Pinas?
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My Name Is Daaviiiid... says:

17 years ago

I canâ€™t withdraw the funds to a local bank

And there’s the rub. Until PayPal finally allows that ability for Philippine-based users, sending it through Xoom is a price to pay.
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Abe Olandres says:

17 years ago

This was thru a trusted friend. Before, the account was suspended because I was accessing it in the Philippines, which was still prohibited that time. Now that we are able to access Paypal in the Philippines, we re-activated it and use it to receive funds.

I can’t withdraw the funds to a local bank but since I have regular online monthly bills, I use the same Paypal account to pay those.

@arn: sure! hehehe. email me.
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dennis says:

17 years ago

Check this service as well

http://www.payoneer.com
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My Name Is Daaviiiid... says:

17 years ago

Are you able to withdraw to your Philippine-based bank account or do you still have to remit to Xoom?
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Dexter says:

17 years ago

Abe paano ka nagkaroon ng paypal. Do you relatives at US or other countries approved by Paypay.. Or special dahil sa Premier/Business Account ?
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arnold says:

17 years ago

Abe, may paypal ka pala. I-negosyo mo sa mga Pinoy bloggers. Added income din yan. Ako una mong customer. hehehe
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