If you’re running a business, you need to get paid. At some point, you’ll also need to pay other people, too, whether they’re contractors, vendors, freelancers, partners, or the like. And to facilitate those payments digitally, you need a payment processor. Payoneer and PayPal are just two of your many options.
Both Payoneer and PayPal are reputable and popular payment processors for businesses of every size, but these platforms offer very different services. In this article, we’ll do a side-by-side Payoneer vs. PayPal comparison to walk you through each of their features, rates and fees, and customer reviews. Then, we’ll provide you with some more guidance about which types of businesses each platform is best suited for.
Payoneer is a financial services company with one core purpose: to enable businesses to pay each other—and get paid—both domestically and internationally. Unlike PayPal or similar platforms (such as Square or Stripe), Payoneer is not an all-in-one payment service provider, nor are they a merchant account provider. That means they can’t enable you to accept payments at your point of sale, and they don’t provide a payment gateway so you can accept payments online. Their role is pretty much limited to facilitating payments through their own platform. But they perform that role really well.
Currently, Payoneer has over four million customers in 200 countries worldwide and can process transactions in over 150 currencies. Payoneer may not have the same degree of name recognition as PayPal does—probably because Payoneer doesn’t have a consumer-facing platform, and they don’t provide as many additional merchant services as PayPal does. But they boast some of the most famous clients in the world, including Amazon, Google, and Airbnb. That said, Payoneer can work equally well for freelancers and small businesses as it does for enterprise-level companies.
Good enough for Google, but is Payoneer good enough for you? Let’s get into the details.
Payoneer allows businesses to do three main things: pay other companies, receive payments from other companies, and manage their funds. Everything is facilitated through your Payoneer account, which you can sign up for and set up online in a matter of minutes. Essentially, you can use your Payoneer account in lieu of your bank account for these transactions by requesting to receive payments into your account, or by paying directly from your account. You customers can pay you via credit card or ACH direct deposit, or from their own Payoneer account if they’re a fellow Payoneer customer.
Then, you can choose to pay your contractors, employees, suppliers, partners, contractors, or any other business associate using ACH bank debit, credit card, or local bank transfer, either on a per-project basis or by setting up an automatic monthly payment. Payoneer also enables users to easily pay EU and UK VAT.
In terms of fund management, you can transfer funds from your Payoneer account into your actual business bank account whenever you want. You can also withdraw funds from your Payoneer account at ATMs, and make purchases online or in-store using your Payoneer funds. Every Payoneer account also comes with an optional, prepaid debit Mastercard (for a $29.95 annual fee), which you can use to withdraw and spend Payoneer funds.
Additionally, Payoneer has a mobile app for iOS and Android. Users can manage their funds on the app but they can’t make payments.
Most Payoneer fees are clearly listed on their website. Here’s an overview of their major fees (but not all of their fees), listed according to U.S. rates:
- From another Payoneer customer: Free
- Via receiving accounts (in USD, EUR, GBP, JPY, CAD, AUD & MXN): Free
- Directly from your customers: 3% via credit card, 1% via ACH bank debit
- Via marketplaces and networks that pay with Payoneer: Fees vary depending on the company
- Via ACH bank debit: 1%
- Via credit card: 3%
- Via local bank transfer: 1%
- Via Payoneer account to another Payoneer account: Free
- Via Payoneer account to recipient’s bank account: Up to 2%
- To your local bank account: Up to 2%
We’ve seen conflicting reports about additional fees. Some sources say that Payoneer charges a monthly account fee and an activation fee, and others say that the company might charge an inactivity fee if you don’t use your account every month. So while Payoneer gets a few points in their favor for transparently listing their transaction fees, that they leave customers in the dark about the rest of their (potential) fees is a major drawback.
Payoneer Customer Reviews
On the plus side, Payoneer fetches overwhelmingly positive reviews on major review platforms: They have 4.5 stars on TrustPilot, 4.2 stars on G2 Crowd, 4.5 stars on Capterra, and just over 4 stars on Better Business Bureau, where they have a B+ rating. Customers mostly praise the ease, speed, and capabilities of Payoneer’s services.
On the downside, some customers complain about Payoneer’s fees—some of which are hidden, as we mentioned—and some have reported frequent account freezes due to suspected fraud. Somewhat more seriously, other customers have reported security issues, including hacked accounts.
We probably don’t need to tell you what PayPal is. If you’re not already taking advantage of PayPal for your small business operations, then you’re probably using PayPal as a consumer to pay other businesses or individuals. And while PayPal boasts a number of merchant services, in this review we’ll go into greater detail about PayPal’s payment processing for businesses, which is the backbone of their business platform.
PayPal is an all-in-one payment service provider, so they enable business owners to accept payments online; in-person through PayPal Here, their mobile POS software and range of hardware; and via invoice. Customers can choose among a variety of payment methods, including their own PayPal or PayPal Credit accounts, credit card, debit card, and Venmo. PayPal’s in-person POS system also accepts contactless payments.
You can also pay contractors, suppliers, employees, and others you’re working with through PayPal Payouts, an online feature that lets you send funds to multiple people simultaneously. (Note that each domestic transaction costs $0.25 per transaction.)
Here are just a few more PayPal merchant services pertaining to payment processing:
- Smart Payment Buttons with PayPal Checkout, which allow online customers to pay at checkout with one click
- Build a fully customized checkout process with a PayPal Payments Pro account
- Integrations with hundreds of platforms, including Shopify, WooCommerce, Mailchimp, and Xero
- The option to request a PayPal Business Debit Mastercard (no annual fee)
- Payment gateway services
Basically, no matter how you want to accept payments, PayPal provides the infrastructure and the tools to do it.
PayPal has three types of fees: software costs, hardware costs, and payment processing rates.
Software fees are those attached to their various payment processing software, which include:
- PayPal Payments Standard
- PayPal Payments Pro
- PayPal Checkout
- PayPal Here
- PayPal Invoicing
- PayPal Payouts
- Payment gateway
The software you use depends on how you want to accept payments, and the capabilities and features you want to take advantage of. We go into detail about all of these rates on our comprehensive article about PayPal fees.
If you use PayPal Here to accept payments in-person, you’ll also need to pay a flat rate for POS hardware, including card readers, receipt printers, cash drawers, and the like. You can shop for PayPal Here hardware on their online store.
Finally, payment processing fees vary depending on the type of transaction you’re processing, the service you’re using to process it, and whether you’re receiving funds domestically or internationally.
PayPal’s fees are admittedly complex, but that’s really because they offer so many services and payment processing options on their platform. On the plus side, they’re transparent about their merchant fees and list them all on their website.
PayPal Customer Reviews
Interestingly, PayPal gets extremely mixed reviews online, and most of them are pretty dismal: They fetch just 1.2 stars on TrustPilot, 2.3 stars on Consumer Affairs, and 1 star on BBB. On the other hand, they’ve scored 4.4 stars on G2 Crowd and have an A rating on BBB.
The reason for these differing opinions likely comes down to PayPal’s sheer size—currently, PayPal has 286 million active users on its platform. It’s simply not possible to consistently serve that number of people perfectly. (For reference, the U.S. population is about 327 million right now.) So it makes sense that most negative reviews pertain to PayPal’s logistical processes—we’ve seen lots of complaints about long waits to access a customer service representative and technical glitches, for instance.
But that popularity also very much works in PayPal’s favor. As the “most-used digital wallet” among consumers, PayPal is also one of the most trusted and flexible. In fact, PayPal boasts an 88% conversion rate at checkout for businesses using the platform as their payment processor.
Another obvious advantage of PayPal is their range of features and services for business owners, and the fact that all of those services are supremely scalable. So if you’re seeking a comprehensive payment processing solution to last you for the long haul, this is a great choice.
Payoneer vs. PayPal: How to Choose
As you’ve likely already concluded for yourself, although Payoneer and PayPal are both payment processors, they’re actually quite different.
Payoneer is probably better suited to B2B businesses, since this platform doesn’t support consumer payments. It also works best if you often work with international clients, since they automatically handle currency conversions and support hundreds of countries. And if your business falls under one or both of those umbrellas, you’re not likely to find a more reputable or popular payment processor than Payoneer.
On the other hand, Payoneer is not the best choice if you’re seeking an all-in-one PSP that’s equipped to accept all types of payments at your point of sale, whether that’s in-person, online, or both. Ecommerce businesses, in particular, would be incredibly limited by Payoneer, since they’re not a payment gateway provider.
PayPal, on the other hand, fills in these particular gaps. It’s a pretty failsafe option for businesses of any size, in any industry, but PayPal’s scalable platform is an especially attractive option for growing businesses, ecommerce businesses, or small businesses looking for a simple way to accept payments however they want or need (or anticipate wanting or needing).
That said, Payoneer and PayPal are certainly not your only options. If you find that neither payment processing platform is right for your business, or if you just want to see what else is out there, consider our picks for the best merchant service providers as just a few alternatives.
Christine Aebischer is an editor at Fundera.
Prior to Fundera, Christine was an editor at the financial planning startup LearnVest and its parent company, Northwestern Mutual. There she wrote and edited on topics such as debt, budgeting, insurance, taxes, investing, and retirement. She has written for print and online on topics ranging from personal finance to luxury real estate.