Paypal or Xoom: Which one is cheaper for Publishers?

About 2 weeks ago, I was able to reactivate a 4-year old dormant Paypal Premier/Business Account. I’ve been using that account now to receive funds from advertisers as well as pay some online bills. Now that I have both Xoom and Paypal, I’ve been contemplating which of the two I should be using more often.

Here my quick analysis of the two:

For the purpose of illustration, let’s do a transaction with Xoom and Paypal then compare the rates and the actual amount you would be receiving. This is to make the case that when receiving ad fees from advertisers, you’d be more informed if Paypal is much more practical than Xoom.

Transaction Amount: $100PHP 5,869INR 8,475EUR 95CNY 728
Peso to $USD Rate: 45.43 = 1 (Yahoo! Finance, Sept. 25, 2007)
Peso to $USD Rate: 44.0866 = 1 (Xoom Internal Rate Card, Sept. 25, 2007)

Paypal Fees: $0.30PHP 18INR 25EUR 0.29CNY 2 + 2.9% for $1PHP 59INR 85EUR 0.95CNY 7 – $3,000PHP 176,057INR 254,249EUR 2,857CNY 21,835
Xoom Rates: 8.00 for $100PHP 5,869INR 8,475EUR 95CNY 728

The standard usual practice is that when an advertiser remits payment via Xoom, they incur the additional charges. However, on Paypal, the exact listed amount is sent then the Publisher receives a deducted amount based on the listed fees.

via Paypal:
Amount Transmitted: $100PHP 5,869INR 8,475EUR 95CNY 728
Amount Received: $96.8PHP 5,681INR 8,204EUR 92CNY 705
Fee Incurred: $3.2PHP 188INR 271EUR 3CNY 23 (3.2% on the Publisher)

via Xoom:
Amount Transmitted: $108PHP 6,338INR 9,153EUR 103CNY 786
Amount Received: $100PHP 5,869INR 8,475EUR 95CNY 728
Fee Incurred: $8PHP 469INR 678EUR 8CNY 58 (7.4% on Advertiser) + $2.86PHP 168INR 242EUR 3CNY 21 (2.86% on Publisher)

The Fees incurred via Xoom are higher since both the advertiser and the Publisher are changed. Even if advertiser shoulders the transaction fees, the Publisher takes on the difference in public exchange rates and the Xoom internal exchange rates. However, if you’re just looking at your own fees on the receiving end, Xoom is still lower than Paypal.

Let’s see if these percentages will vary if we put the transaction amount to $1,000PHP 58,686INR 84,750EUR 952CNY 7,278.

Paypal Fees: $0.30PHP 18INR 25EUR 0.29CNY 2 + 2.9% 1 – $3,000PHP 176,057INR 254,249EUR 2,857CNY 21,835
Xoom Rates: $40PHP 2,347INR 3,390EUR 38CNY 291 for $1000PHP 58,686INR 84,750EUR 952CNY 7,278

via Paypal:
Amount Transmitted: $1,000PHP 58,686INR 84,750EUR 952CNY 7,278
Amount Received: $970.7PHP 56,966INR 82,267EUR 924CNY 7,065
Fee Incurred: $29.3PHP 1,719INR 2,483EUR 28CNY 213 (2.93% on the Publisher)

via Xoom:
Amount Transmitted: $1,040PHP 61,033INR 88,140EUR 990CNY 7,569
Amount Received: $1,000PHP 58,686INR 84,750EUR 952CNY 7,278
Fee Incurred: $40PHP 2,347INR 3,390EUR 38CNY 291 (4% on Advertiser) + $28.60PHP 1,678INR 2,424EUR 27CNY 208 (2.86% on Publisher)

With this amount, the fees incurred by the Publisher between Xoom and Paypal are almost the same (2.86% vs. 2.93%), not including the fees shouldered by the advertiser from Xoom.

Take note that these computations are based on assumptions that the Paypal account is a Premier/Business account, foreign exchange rates were used for the current date and that the Publisher will be receiving the remittance in Philippine Peso.

For reference, you can look up the fee structure of Xoom here as well as their own exchange rates; a comparison between a Personal account and Premier/Business Account on Paypal is here, the main difference being Perosnal accounts cannot accept credit/debit card payments; and here is the table of Paypal transaction fees for various amounts.

On a personal note — if you only have Xoom and can convince advertiser to fully shoulder the transaction fees, try to set the payments so that you’ll receive it in dollars instead of pesos. However, transaction charges for these will also increase ($10PHP 587INR 847EUR 10CNY 73 for a $100PHP 5,869INR 8,475EUR 95CNY 728 remittance and $59PHP 3,462INR 5,000EUR 56CNY 429 for $1,000PHP 58,686INR 84,750EUR 952CNY 7,278).

P.S. I wonder how these computations would look like if you compare them to other competing services like Ikobo, MoneyBookers and Western Union.