The Complete Guide to Using PayPal in South Africa

PayPal is one of the world‘s leading online payment services, with over 426 million active users across more than 200 countries. But if you‘re in South Africa, you may be wondering: does PayPal work here and how can I best use it?

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In this expert guide, we‘ll cover everything you need to know about PayPal in South Africa. You‘ll learn how to create an account, withdraw your money, understand the costs, and get the most from PayPal as a South African user.

Let‘s get started with the big question:

Can You Use PayPal in South Africa?

The short answer is: yes, PayPal is available in South Africa and you can sign up for an account as a South African resident. However, there are a few important restrictions and differences compared to using PayPal in other countries:

No South African Rand support: The biggest limitation is that PayPal does not currently support the South African Rand (ZAR) currency. This means you can only hold PayPal balances in other supported currencies like USD, GBP or EUR. To withdraw money to your South African bank account, it must first be converted to Rand.

Receiving money only: As a South African PayPal user, you can receive money into your account but the "Send Money" feature to transfer funds to other PayPal users is not available. There are also restrictions on local South African online payments using PayPal.

Withdrawal limitations: To withdraw your PayPal balance to a local bank account, you must link a qualifying FNB (First National Bank) account. The withdrawal process also takes longer (3-5 business days) compared to many other countries.

So in summary: Yes, PayPal does work in South Africa and you can receive international payments. But the lack of Rand currency support and sending restrictions mean the service is more limited compared to other markets like the US or UK.

Now that you know the basics, let‘s look at how you can get started with a South African PayPal account.

Opening a PayPal Account in South Africa

Creating a PayPal account in South Africa is a fairly straightforward process. Here‘s a quick step-by-step guide:

  1. Go to the PayPal South Africa website and click the "Sign Up" button.

  2. Select whether you want to create a "Personal" or "Business" account type.

  3. Enter your email address and create a strong password for your new account.

  4. Fill out the required personal information, including your name, address and phone number.

  5. Agree to the PayPal terms and conditions and click "Continue" to create your account.

  6. You will now need to add a payment method to start using your PayPal account. See below for your options.

One important thing to note is that you don‘t need a credit card to create a PayPal account in South Africa. You can sign up with just your email address and personal information.

However, to make the account functional, you will need to link a payment method, which can be either:

A) A qualifying FNB bank account
B) A South African bank account + FNB online profile (for non-FNB customers)
C) A credit/debit card

Let‘s look at each of these options in more detail.

Linking an FNB Account to PayPal

If you have a qualifying FNB bank account (cheque or savings), you can link it directly to your PayPal account for withdrawing funds. Here‘s how:

  1. Log in to your FNB online banking profile at fnb.co.za
  2. Go to "Forex" from the main menu and select "PayPal Services"
  3. Click "Link PayPal Profile" and follow the prompts
  4. Log in to your PayPal account to confirm the bank account linking

Once the accounts are linked, you‘ll be able to withdraw your PayPal balance to your FNB account in 3-5 business days.

Linking a non-FNB Account to PayPal

If you don‘t have an FNB account, you‘ll first need to create an FNB online profile which can then be linked to your other bank account and PayPal.

  1. Go to fnb.co.za and register for an online profile as a non-FNB customer
  2. You‘ll need to submit certain FICA documents via email to [email protected] as part of the verification
  3. Once the profile is approved, link it to your existing non-FNB bank account
  4. Follow the steps above to then link your FNB profile to PayPal

Yes, it‘s a bit of a hassle to set up an FNB profile as a non-customer. But unfortunately that‘s the only current method to link a non-FNB account to PayPal in South Africa.

Adding a Credit or Debit Card to PayPal

Your other option to make payments through your PayPal account is to link a South African credit or debit card (Visa or Mastercard).

It‘s important to note that this will only allow you to make payments in Rand from your card when checking out online. You cannot use the card to withdraw foreign currency from your PayPal balance.

To add a card to your PayPal account:

  1. Log in to your PayPal account and go to "Wallet"
  2. Click "Link a card" and enter your card details
  3. PayPal will make a small test charge (a few cents) to verify the card
  4. Enter the 4-digit code from the test charge to confirm the card

Your credit/debit card will then be linked and can be selected as a payment option when making online purchases through PayPal.

PayPal Fees & Costs for South Africa

So how much does it cost to use PayPal in South Africa? The fee structure is quite different from other countries, so it‘s important to understand the potential costs.

Receiving money

There are no fees to receive money from overseas into your PayPal account as a South African user. However, PayPal will automatically convert the foreign currency to Rand when you go to withdraw it to your local bank account.

PayPal‘s exchange rates are typically 3-4% above the mid-market rate, so this is effectively the "cost" of receiving foreign funds. For example, if you receive $100 USD, the withdrawal amount will be 3-4% less once converted to Rand.

Withdrawing money

Once you have a Rand balance in your linked FNB or other local account (after currency conversion), there are no additional PayPal fees to complete the withdrawal. The funds should arrive in your bank account in 3-5 business days.

However, your bank may charge fees on their end for receiving the money into your account. Check with your specific bank on their PayPal withdrawal fees.

Spending money

If you use your linked South African credit/debit card to make a payment through PayPal, there are no added PayPal fees. You‘ll just pay the normal Rand amount as if you used the card directly (e.g. R500 checkout will be R500 from your card).

But if your card has foreign transaction fees, these may still apply for international purchases. Check your card‘s terms to see the potential fees for online shopping.

PayPal Alternatives for South Africa

While PayPal is a popular choice for international payments, it‘s not the only option for South Africans. Several other services offer online wallets and cross-border transfers, some with added features over PayPal:

Skrill: Skrill supports the ZAR currency and allows both sending and receiving money. Fees start at 1.9% for transactions.

Payoneer: With a Payoneer account, you can receive funds from overseas and withdraw directly to your South African bank account. Fees vary based on transaction type.

Wise (TransferWise): Wise offers international money transfers at the real mid-market exchange rate, making it cheaper than PayPal. You can send money to a Wise account and withdraw to your local bank.

Each of these services has its own advantages and limitations, so it‘s worth comparing the options to see which best fits your needs in South Africa.

Tips for Using PayPal in South Africa

Ready to make the most of PayPal as a South African user? Keep these expert tips in mind:

  1. Keep your account secure with a strong password and two-factor authentication. Avoid logging in on shared devices.

  2. Withdraw foreign currency funds to Rand promptly to avoid conversion rate fluctuations in your PayPal account. The exchange rate is locked in at the time of withdrawal.

  3. Factor in PayPal‘s currency conversion spread (3-4%) when receiving international payments so you aren‘t surprised by the final Rand amount.

  4. Only use PayPal to transact with trusted individuals and businesses to reduce the risk of fraud. Look for the PayPal Verified Seller badge.

  5. Always keep records and screenshots for receipt of any problematic PayPal transaction. This will make it easier to file and resolve disputes through PayPal Buyer Protection or Dispute Resolution.

The Future of PayPal in South Africa

As e-commerce and freelance work continue to grow in South Africa, demand for global payment solutions like PayPal will only increase.

Over 1 million South Africans already have a PayPal account, and adoption is expected to keep rising in the coming years. In 2020, in response to social distancing, PayPal also introduced QR code payments in the country to support local online stores and safe check-out.

However, some key limitations remain for South African PayPal users, especially the lack of Rand currency support and inability to send money to other users. These restrictions put PayPal at a disadvantage to services like Skrill who already offer more functionality.

Industry analysts believe it is critical for PayPal to address these gaps and expand its partnerships with South African banks if it wants to maintain its leading market position. Otherwise, the company risks losing ground to competing services and local fintech startups.

Still, with its strong brand and new features like QR payments, PayPal remains well positioned to grow along with South Africa‘s booming online economy. Savvy users who understand the platform‘s current pros and cons can leverage PayPal to more seamlessly transact with the world.