Over the past few years, many fields have evolved in the digital market, and manual processes have been replaced by automation. Due to the easy accessibility of the web and technological innovation, most people prefer performing the required tasks through their smart devices. From buying your favorite products to transferring funds to your friends or families, every transaction can take place online without physically visiting banks or outlets. Most of the banks these days have online payment systems, but they impose several restrictions, and people have to face several intricacies when it comes to international transactions. However, this nuisance has been eliminated from people’s lives since the inception of PayPal, which is an online payment system that allows you to send or receive money from any corner of the world.
The introduction of PayPal has reduced the usage of paper methods for making transactions, such as checks and money orders. With a couple of taps on your device, you can perform the required payment with PayPal. The rising popularity of this electronic payment method has raised the question of whether PayPal is killing the domestic payment system. Well, if you are also curious to figure it out, then you have landed on the right spot. In this blog, we will unveil both the positives and negatives of PayPal and let you know about its effect on the domestic payment system.
How is PayPal Better Than the Domestic Payment System?
There are several factors that make PayPal a much better method as compared to the domestic payment system. The major benefits users can enjoy with PayPal are discussed below.
Transferring money from one PayPal account to another is the fastest way to perform immediate transactions around the world. These transactions barely take a few minutes to send money between PayPal accounts. If you’re looking forward to transferring money to a bank account through your PayPal account, the transaction will be processed within the next business day. However, things are different with the domestic payment systems. Banks usually take two or more business days when it comes to transferring money internationally. The transfer speed through bank accounts varies from bank to bank, and your account type also plays a major role in deciding how long it will take to transfer funds.
Advance Delivery Methods
PayPal provides you with multiple delivery methods. You can send money from your PayPal account to another PayPal. This online payment method also allows you to transfer funds to a bank account as well. In contrast, bank accounts only allow you to transfer money to other bank accounts. They don’t provide you with the facility to transfer money to any PayPal account. Hence, if some platform only receives money through PayPal, you won’t be able to make the transaction with a bank account.
Better Exchange Rate
While Transferring money internationally with a PayPal account, you can enjoy a better exchange rate as compared to bank transfers. PayPal takes a mid-tier exchange rate and charges a 2.5% margin on the exchange rate it offers to customers. However, most of the banks charge a higher profit margin from their customers on exchange rates. With PayPal, you can enjoy competitive exchange rates in comparison with the rates offered by local banks.
Is PayPal Killing the Domestic Payment System?
No doubt, when it’s about receiving payments online internationally, PayPal stands out from all other methods due to the reasons discussed. However, it’s unfair to say that the domestic payment systems are being killed by PayPal. Even though PayPal is offering several advantages to its consumers, people still rely on local banks to make various transactions. The domestic payment system cannot be eliminated entirely due to PayPal, as there are factors where PayPal falls short of them.
One such factor that makes people reluctant to use PayPal is the commission it charges on each transaction. Besides the transactions taking place within the US, the consumers have to pay a commission that varies depending upon the amount being transferred. If someone is confused about determining an accurate PayPal fee to pay for a single transaction, it’s better to use the PayPal fee calculator. After making this calculation, you can compare it with the amount charged by your local bank for the same transaction. This analysis will allow you to make an effective decision between choosing a domestic payment system or PayPal.
PayPal tends to offer better exchange rates, delivery, and payment methods to its users, which makes it a better option as compared to local banks. However, it doesn’t mean that the need for a domestic payment system has been entirely eliminated by PayPal. Several transactions can only be processed through banks, as many sectors are still not welcoming payments with PayPal.