Santiago Sanchez
10/4/2024If you're a freelancer or have an online business in Mexico, you've likely heard of PayPal. This is one of the most popular e-wallets in the world, used both for sending and receiving money. Despite its global presence, many people still don't know what PayPal is and even less about how it works.
For this reason, in this post, we'll give you all the details about this platform. You'll learn how secure PayPal is, what PayPal Mexico is for, its advantages, disadvantages, and the best alternative to PayPal in Mexico. Keep reading to clear up all your doubts.
PayPal is a payment platform with over 200 million users worldwide. It was launched in 1998 in the United States and is used to pay for online purchases, send and receive money between friends and family. Nowadays, it’s one of the ways freelancers receive their payments.
However, in Mexico, PayPal only functions as a payment aggregator and with transfer services. This means you can link your credit or debit cards and your bank account to make secure payments. Of course, you can also receive remittances from the United States if the other person also has an account on the platform.
PayPal in Mexico works as a payment gateway, which means it does not serve to hold a balance on its platform. So, if you want to use PayPal to receive a transfer, you have to link a bank account.
Additionally, Mexican laws and regulations require that to send and receive money using PayPal, you must have an added card. Once you have this set up, using this payment platform is very simple. We explain all of PayPal's functions below.
Before telling you how easy it is to send and receive money to and from the United States, you first need to open a PayPal Mexico account.
Here are the steps to follow:
1. Go to PayPal's official website in Mexico.
2. Choose the type of account you need to open. If you’re a freelancer, it’s best to open a personal account. If you have a business, opt for a business account.
3. Enter the email address you want to associate with your PayPal account and click Next.
4. Enter your cell phone number, click Next, and you will receive an SMS code to confirm your phone.
5. Then complete your personal information and create your account.
6. Log into your newly created profile and set up your credit or debit card.
7. Finally, verify your email address and identity by sending your passport or another document to access all the benefits of PayPal.
Remember, if you are a freelancer, the personal account is ideal for you since you can bill, send, and receive various payments. On the other hand, if you have an online or physical store and want PayPal to be another payment option for your customers, choose a business account.
As you’ll see, using PayPal to send money to another user is very simple; you just have to:
1. Log in to your account using your credentials (email and password).
2. Click on “Send & Request.”
3. Then choose between “Friends and Family” or “Pay for Goods and Services.”
4. Add the email address, phone number, or name of the user you’re sending the money to.
5. Enter the amount to send, choose the currency, and whether the money will come from a credit card or a bank account.
6. Finally, review the transaction details: exchange rate (if applicable), sending costs, and click “Send.”
Can you send money to a bank account with PayPal? In fact, yes, because as we mentioned, PayPal accounts in Mexico cannot hold a balance. So, when you make a transfer to a Mexican user, the money goes directly to their bank account.
However, if you want to make a transfer using CLABE or IBAN, SWIFT, or BIC codes, it’s not possible.
Another key point to pay attention to is the fees. PayPal has different fees for personal accounts and business accounts. If you make payments to online merchants, you’re not charged, but if you need to send money in another currency, you must pay 3.50% above the exchange rate plus VAT.
There are also charges if you make deferred payments. For example, if you choose to pay in 3 installments, the fee is 9.59%.
In addition to being able to send money to the United States and within Mexico, with PayPal, you can also receive or collect money very easily.
There are three options to do this:
This is the most common way, and you only need to share your email address with the other PayPal user to receive the money.
You can also use your phone number, and once the payment is made, you receive the money in your account in seconds.
Another way PayPal works to receive payments is by sending a request. To do this, follow these steps:
1. Log in to your PayPal account.
2. Click on “Send & Request” and then “Request.”
3. Enter the contact's information (email, cell phone number, or name).
4. Enter the amount of money you are requesting and the currency.
5. Finally, review the details, add a note if necessary, and confirm the request by clicking “Send.”
Immediately, the selected contact will receive an email with the payment link and the amount you requested.
Another option to receive payments is PayPal.Me. You just need to create a payment link and share it with the people who owe you money. Through this link, you can collect with a debit or credit card, and it’s very simple to do:
1. Go to the PayPal.Me website and click on “Create Your Link.”
2. Then go to your PayPal account and log in.
3. Edit the payment link to your convenience by adding a message that visitors will see.
4. Enter the amount and the currency in which you will receive the payment.
5. Finally, share the link with the person or people who will access it to pay you.
This is one of the safest ways PayPal works to receive money in Mexico.
Is PayPal safe? This is another question you might have when using this service, and the truth is that yes, the platform is very secure. In fact, one of its benefits is being able to request a refund from the seller.
This option is another way to receive money, and you can use it when shopping online. If the purchase doesn’t arrive, or you don’t receive what the seller promised, to get your money back, you can do this:
1. Log in to your PayPal profile.
2. Go to the “Summary” or “Details” section.
3. Locate the payment you want the refund for and click on it.
4. Click on “Issue a Refund.”
5. Enter the refund amount and click “Send.”
When the seller accepts the refund request, you will receive the total amount you paid in your bank account linked to PayPal.
Two important points:
You can request a partial or full refund.
You have 180 days to request a refund.
As mentioned above, PayPal is free for paying merchants, as long as you don’t use the deferred payment option or currency conversion. The latter has a surcharge of 3.5% on the base exchange rate used by the platform.
Now, if you use PayPal to make transactions with businesses (buy/sell products or services), it charges a 3.95% fee. Additionally, you must add a fixed fee that varies according to the currency used. If the transaction is in pesos, this fee is $4 MXN.
But if you make an international transaction, there are more charges:
Standard commission: 3.95% + VAT
Fixed fee: variable according to the currency
Currency conversion fee: 3.5%
Extra charge: 0.5%
On the other hand, there’s the exchange rate on PayPal. If you work for a foreign company and want to use your account to receive those payments, the final amount received will be affected.
PayPal has a wholesale exchange rate that is updated twice a day. But a percentage commission is applied to that rate to determine the exchange rate offered to customers. In short, PayPal’s exchange rate is one of the worst you’ll find in the market.
PayPal in Mexico and other parts of the world has many advantages, especially in terms of security. However, there are also disadvantages that lead many users to use other platforms.
Security: It has anti-fraud systems and acts as a barrier between your data and online stores. You don’t have to provide card numbers or CVV codes.
International Recognition: Many companies and online stores in the United States and Europe accept PayPal as a payment method.
Ease of Use: From the app, you can make payments with a couple of taps, request money, or create payment links.
Refunds: PayPal allows you to request a refund if you don’t receive the product or are not satisfied with the quality.
Fees: Depending on the transaction (sending or receiving money), PayPal applies fees that combine percentages of 3.5% or more, fixed fees, and VAT.
Difficulty Spending Money: Due to high fees (business accounts pay more), few places in Mexico accept PayPal. Therefore, users end up transferring their balance to other accounts or wallets.
Fortunately, for the latter, there’s a simple solution with minimal fees.
Do You Receive Payments in PayPal and Need to Send Money to Mexico? Discover the Cheapest Alternative on the Market: DolarApp.
Not only will it charge you the lowest fee for withdrawing from PayPal, but it also comes with an international card you can use both in Mexico and on your travels, without fees.
With DolarApp, everything is simple and economical. You just need to send your PayPal balance to your DolarApp account, and for a fixed fee of $3 USD, you receive the money without any issues.
For example, if you charge $100 USD and receive it through PayPal (this is considered an international payment), you’ll end up receiving around $1,620 MXN. Why? Because you have to subtract the $3.95 USD fee and the fixed fee of $0.23 USD, giving you a total of $4.18 USD.
So, for the conversion, you have $95.82 USD left. And there are still more charges.
You have to make the conversion, with PayPal you always receive a lower rate, and you only see it when you convert. Let's say today it is $17.50 MXN. So, 95.82 x 17.50 = $1,676.85 MXN. To that you apply the 3.5% conversion rate which comes to $58.69 MXN.
Doing the numbers, you are left with $1,618.16 MXN. But wait, you still have to deduct VAT, which is 16% of the commission. That is $9.39 MXN less. In the end, you will receive only $1,608.77 MXN in your account.
You can avoid all of this with DolarApp. Our app only charges you $3 USD to receive money from the United States and gives you a better exchange rate.
For example, today the exchange rate is 1 USD = $17.64 MXN. So, with us, you’d receive $1,711.08 MXN (97 x 17.64). The numbers are there, you decide which option to choose to receive money from the United States and other parts of the world.
Moreover, it will also be easier to use your money, as you can request a prepaid credit card. This card can be used at local and international merchants, and you’ll get a better rate when paying outside the country.
Additionally, with your DolarCard, you can split bills with friends, create groups, and if you join DolarApp Premium, you receive 3% cashback on your purchases. Not to mention, as a Premium customer, your money also earns interest at a 4% annual rate.
So, if you want to make the most of your money, transfer your PayPal balance to DolarApp and start enjoying all the benefits. And from now on, it’s better to have your payments sent to your DolarApp account.
Note: The exchange rates used for this article were taken on 07/16/2024.
Sources:
PayPal - Consumer Fees
PayPal - Merchant Fees
PayPal - Profile and PayPal.Me Payment Link
PayPal - How to Request Payments
PayPal - How to Receive Money
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