4 PayPal Alternatives for Canadians

When PayPal launched in 1998, it was considered a revolutionary platform.

The fintech pioneer enabled people to make purchases, accept payments, and transfer money online fast and in a safe manner.

Fast forward to 2023, and PayPal still commands a massive share of the online money transfer market.

However, many new players have entered over the past two decades to challenge PayPal’s dominance.

As a result, there is a wide range of alternative platforms Canadians can use today based on their needs and preferences.

Transferring Funds

To transfer money in the past, you had to rely on cheques sent through the mail or pricey wire transfers.

But today, sending money is quick and convenient, not to mention more affordable than ever, both domestically and internationally.

Wise (International Payments)

Founded in 2011, Wise is a UK-based financial technology firm that facilities cheap and fast money transfers across the globe.

Wise is well-known for its cost-effective payment platform, which saves users considerable money in processing international transactions.

It also offers multi-currency accounts, allowing users to conveniently hold funds in dozens of currencies of their choice.

Pros of Wise

• Fee Transparency: Wise automatically calculates your total fees and exchange rate when you prepare your money transfer. Thus, you’ll always know your costs upfront.
• Low Fees: Depending on the currency you use, fees can be as low as 0.41%.
• Multi-Currency Accounts: A notable feature of Wise is the ability to hold funds in more than 50 currencies and send payments to over 80 countries.
• Mid-Market Exchange Rates: Wise utilizes the mid-market exchange rate to convert currencies, which is considered the fairest and most transparent you can get. There is no markup and no extra fees to pay.

Cons of Wise:

• Varied Fees and Transfer Limits: Some transactions will cost you more than others, depending on the currency you use. Strict transfer limits also apply based on your transfer destination and payment method.
• No Physical Branches: Customer service is online or by phone only. Plus, cash pickups or delivery of transferred funds are not available.
• Transfer Speed: Wise uses a multi-step process to facilitate transactions, so in some instances your money may take several days to reach its destination.

Wealthsimple Cash (Domestic)

Since its debut in 2014, the Canadian online financial services company Wealthsimple has taken the fintech industry by storm.

One of their more recent products is Wealthsimple Cash, a peer-to-peer money transfer platform.

The Wealthsimple cash app is simple to use:

• Download the app to your phone
• Enter basic personal details
• Choose a unique public username (called the Dollar $ign)
• Upload your contact list

You can then send and receive money from anyone on your contact list.

The app also provides a prepaid virtual visa card you can use to make online purchases.

And you earn 1% cash back too!

Pros of Wealthsimple Cash

• Intuitive and Convenient: There’s no steep learning curve to go through when using the app. The interface is sleek and user-friendly, and money is transferred automatically with no security questions to answer or provide.
• Affordable: There’s no minimum deposit required to open an account and no account or transaction fees to pay.
• Fast Transfers: Money that you send reaches the recipient in just a few seconds.

Cons of Wealthsimple Cash

• Lack of Stand-Out Features: Apart from swift transfer speeds, Wealthsimple Cash doesn’t offer unique features compared to online banks and other money transfer platforms.
• Low Interest Rate: You earn only 1% on funds held in your account, a lower rate than what online Canadian banks offer on their savings accounts.

Interac e-Transfer (Domestic)

Interac e-Transfer is a money transfer service that allows individuals and businesses in Canada to send and accept payments from one another.

Interac Corporations, a Canadian interbank network, currently operates the platform.

The funds transfer service works as follows:

• The sender, via their online banking account, selects the recipient and the amount of money to send and sets up a security question and answer.
• Once the sender completes the transaction, the recipient receives an email or text message with instructions to accept the funds through their online banking account.
• The recipient answers the security question, after which the funds are deposited into their account.

Pros of Interac e-Transfer

• Transfers are Guaranteed: An e-Transfer instantly debits the sender’s bank account when initiated. As a result, the transaction won’t bounce when it reaches the recipient’s account.
• Fast and Convenient Transaction Processing: When you send an e-Transfer, it takes only a few seconds to a few hours to complete. You can send funds to anyone with an email address.
• Zero or Minimal Fees: The top Canadian banks won’t charge you a fee for sending e-Transfers (within a reasonable limit). If they do, it’s minimal, usually between $0.50 and $1.50.

Cons of Interac e-Transfer

• Security and Privacy Gaps: Scammers can use e-Transfers to carry out phishing attacks against you by sending you a phony payment. Online thieves can also intercept an e-Transfer transaction, leading to lost funds. Sometimes, your bank will not reimburse you for money that gets stolen.
• Lack of Unique Features: Interac e-Transfer is a minimalist money transfer service. It lacks the nifty customization options that competing firms offer, such as Wealthsimple Cash’s bill-splitting feature.

Online Shopping

With the ever-growing trend of online shopping, consumers today expect convenient, safe, and reliable payment methods.

And there are plenty of companies who’ve responded to the demand by creating mobile payment apps that provide exactly that.

Apple Pay

Apple Pay is a mobile payment service created by Apple that enables users to make purchases on the web, through iOS apps, and in person at contactless point-of-sale terminals.

To use Apple Pay, a user adds their debit or credit card to their Wallet on an Apple device (iPhone, iPad, etc.).

They can then use the app to pay for goods and services at any merchant that accepts Apple Pay.

Apple Pay has a reputation for being a more secure payment method than credit and debit cards, thanks to features like EMV Payment Tokenization Specification, which generates unique codes to carry out transactions rather than using the customer’s debit or credit card chip and PIN.

Pros of Apple Pay

• Safer than Using a Debit or Credit Card: Apple Pay uses two-factor authentication for payment processing – Touch ID, Face ID, or a passcode are necessary to authorize a transaction. The app also generates a unique token for each transaction called a “device account number,” so merchants never have access to your card information.
• Global Acceptance: Apple pay integrates with many financial institutions worldwide, including Canada’s top banks. And over 80% of Canadian retailers accept Apple Pay as a payment method.
• No Extra Fees or Charges: As an Apple Pay customer, you don’t pay any transaction fees.

Cons of Apple Pay

• Security Vulnerabilities: Thieves can compromise your transaction if your mobile device is connected to a public Wi-fi network when completing a purchase. A research paperfrom the University of Birmingham also found flaws that allow hackers to bypass contactless limits without authorization.
• Only works on Apple Devices: Apple Pay is available only on Apple devices like iPhones, iPads, and Apple Watch.
• Personal Data Collection: To use Apple Pay, you’ll need to provide Apple with various personal details and allow the company access to your transaction history. 

Accepting Online Payments

With the advent of online payment options, cash, cheques, and money orders are slowly being phased out.

Accepting funds online today is fast, secure, and cheap.

Stripe

Stripe is a financial services company based in the United States.

It offers a wide variety of online payment processing services and application programming interfaces (APIs).

The firm’s customer base ranges from startups to large enterprises like Shopify, Salesforce, and Under Armour.

However, it’s equally well suited for sole proprietors who want an efficient, flexible, and secure way to collect customer payments.

Pros of Stripe

• Broad Array of Payment-Related Tools: Stripe provides more than just basic payment functions. It allows users to create unique billing systems, generate invoices, automate tax calculations, set up in-person card processing, and more. Here’s a detailed list of available features.
• Supports a Wide Range of Currencies and Payment Methods: Stripe accepts payments in over 135 currencies. The service also integrates with many payment methods: Visa, Mastercard, American Express, Google Pay, bank debits, and various local payment methods worldwide.
• Transparent Transaction Pricing with No Hidden Costs: There aren’t any setup fees or monthly fees to pay. And the price is the same across all cards and digital wallets.

Cons of Stripe

• More Complex: Stripe’s learning curve is steeper compared to competitors like PayPal. The open API tools may prove challenging if you have limited expertise in web development.
• High Processing Fees: Stripe charges 2.9% +$0.30 per transaction, which can quickly chip away at your bottom line.

Shopify Payments

Shopify Payments is, not surprisingly, Shopify’s proprietary payment service.

It’s the default payment gateway for merchants who sell products and services on Shopify’s platform.

By supplying an in-house payment processor, Shopify eliminates the need for merchants to set up their own through a third-party provider.

Using Shopify’s integrated payment service, merchants can also save on transaction fees, track payments in real-time, and streamline checkouts.

Currently, Shopify payments are available in 17 countries, including Canada.

Transaction costs for credit cards vary depending on the monthly pricing plan, of which there are three to choose from.

Pros of Shopify Payments

• Easy to Set Up and Use: It takes only four steps to begin accepting money from customers. Once set up, all the financial details you need are available from your Shopify dashboard. You can track your payments, review transactions for fraud, customize your checkout page, and more.
• Supports a Wide Range of Payment Methods: Your customers can pay using multiple payment methods: debit cards, credit cards, bank transfers and Google Pay.
• Transparent and Flat Rates: As a merchant, you pay a flat rate that never changes, no matter the payment method your customers use. 

Cons of Shopify Payments

• High Chargeback Fees: You’ll have to pay a $15 chargeback fee if Shopify must reverse a transaction.
• Monthly Fee for Advanced Features: You’ll have to upgrade to a higher monthly pricing plan to get the best rates on transaction costs.
• Restrictions for Some Industries:Shopify Payments won’t allow you to process payments for products and services in specific industries. These include virtual currencies, investment services, and gambling.

Frequently Asked Questions