Costs for transfering money to Japan from the US with PayPal

For those of you who are interested in transferring money from the United States to Japan with PayPal…

I would recommend against it because of super high fees

Details of my transfer (July 2011):

Amount to receive:     88,000 JPY
Amount sent:           91,432 JPY (1,186 USD)
Market exchange rate:  79.18
PayPal exchange rate:  77.04

Transaction Charge:
When using PayPal across borders you will be charged 3.9% on transfers with a standard account. If you pump up the amount you send or do business with on a monthly basis you might be able to get a rate of 3.5% or so. Either way you’re going to be losing a LOT of money.

You can check out PayPal’s FAQ page on transaction charges for more details.

Exchange Rate:
Hard to find such an atrocious rate anywhere else on the market. With the market trading at 79.18 and PayPal buying at 77.04, I’m losing over 2 yen per dollar traded. Many of the other money transfer systems I saw out there were aiming to get within 1% of the market rate.

The worst part of the deal is that you cannot receive USD if you plan on transferring those dollars to a Japanese bank account. When withdrawing money from PayPal to a Japanese bank, you have to do it in Japanese Yen.  This means either you or the sender need to use PayPal’s exchange rates rather than the better ones offered by your bank.

How Much You Lose:

Theoretical      : 1,112 USD = 88,000 JPY

PayPal           : 1,186 USD = 88,000 JPY
Transaction Cost : 74 USD

A $74 USD transaction charge (6.7%!) on $1,100 USD has got to be higher than a majority of other money transfer options you’ll find out there.

Transferring To A Japanese Bank

At time of writing, I was still in the process of sending the money from my PayPal account to my Japanese bank account. PayPal has told me it will take 3 to 6 business days for the transaction to occur. I’ve got my fingers crossed that the transfer will come through without any issues. Otherwise I’m looking at a 300 JPY charge if the transfer fails for some reason.

I Hope That Something Better Comes Along

I’m currently in the process of giving a try to see if I can get a better deal. I also did some research on HiFX, but they seem to cater to the UK audience. CO appears to be affiliate of HiFX in the US / Canada anyway. Will write a follow up article when trading with CO when my next transfer comes through.

If you’ve had better experience using money transfer services that allow for a $1,000+ transfers, please do leave comments.