Xoom Review: Hidden Charges You Should Know
A comprehensive guide to understanding the real costs behind Xoom's money transfer service and how to avoid unnecessary fees
Table of Contents
- Introduction to Xoom
- Understanding Xoom's Fee Structure
- Hidden Charges Revealed
- The Real Cost of Using Xoom
- Case Study: Sending $1000 Abroad
- User Experiences and Reviews
- Comparing Xoom With Alternatives
- How to Minimize Xoom Fees
- Pros and Cons of Using Xoom
- Conclusion: Is Xoom Right for You?
- Frequently Asked Questions
Introduction to Xoom
Xoom is a digital money transfer service owned by PayPal that allows users to send money, pay bills, and reload mobile phones across more than 130 countries worldwide. Founded in 2001 and acquired by PayPal in 2015, Xoom has become a popular option for international remittances, particularly for transfers from the US, Canada, UK, and Europe to countries around the globe.
While Xoom advertises itself as a convenient and fast way to transfer money internationally, there are several hidden charges and fees that many users aren't aware of until after they've initiated a transfer. This comprehensive review dives deep into Xoom's fee structure, the hidden charges you should know about, and how to make informed decisions when using their service.
Understanding Xoom's Fee Structure
Xoom's fee structure is multi-layered and can be confusing for first-time users. The total cost of using Xoom typically consists of three main components:
Xoom's Fee Components:
-
Transfer Fee: This is the upfront fee that Xoom charges for processing your transfer. This fee varies based on:
- The amount you're sending
- Your payment method (bank account, debit card, credit card)
- The destination country
- The delivery method (bank deposit, cash pickup, home delivery)
- Exchange Rate Markup: This is the hidden charge that most users overlook. Xoom adds a margin to the mid-market exchange rate, which means you get fewer foreign currency units than you would at the actual market rate.
- Third-Party Fees: These include fees charged by your bank, credit card company, or the recipient's bank, such as cash advance fees for credit card payments or receiving bank fees.
Xoom offers a fee calculator on their website, which helps you determine the transfer fee for your specific transaction. However, it's important to note that this calculator only shows the upfront transfer fee and doesn't account for the exchange rate markup or potential third-party fees.
Important Note:
Xoom clearly states on their website: "In addition to the transaction fee, Xoom also makes money when it changes your send currency into a different currency." This is their acknowledgment of the exchange rate markup they apply.
The Real Cost of Using Xoom
To understand the true cost of using Xoom, we need to consider all fee components together. Let's break down what happens when you send money internationally with Xoom:
Total Cost Formula
Total Cost = Upfront Transfer Fee + Exchange Rate Markup + Third-Party Fees
The complexity of this fee structure makes it difficult for users to calculate the exact cost of their transfer beforehand. This is particularly problematic because:
- The exchange rate markup varies by currency pair and is not explicitly disclosed
- Third-party fees are not controlled by Xoom and may not be communicated clearly
- The combination of these fees can significantly reduce the amount received, sometimes by up to 5-7% of the total amount sent
Common Fee Patterns
- Bank account to bank account: Lowest transfer fees but slower transfer times (2-3 business days)
- Debit card to bank account: Medium transfer fees with faster delivery (often within minutes)
- Credit card to any method: Highest transfer fees plus potential cash advance fees from your credit card issuer
- Any method to cash pickup: Usually incurs additional fees compared to bank deposits
From analyzing hundreds of Xoom transfers and user reports, we found that the total cost of using Xoom typically ranges from 3% to 8% of the transfer amount, depending on the factors mentioned above. This is significantly higher than the advertised transfer fee alone, which may be as low as $4.99 or even "free" for certain transfers.
Case Study: Sending $1000 Abroad
To illustrate the real cost of using Xoom, let's examine a scenario where you want to send $1000 USD from the United States to a major corridor like Canada, the UK, or Europe:
| Payment Method | Delivery Method | Upfront Fee | Exchange Rate Markup (estimated) | Third-Party Fees (estimated) | Total Cost | Percentage of Amount |
|---|---|---|---|---|---|---|
| Bank Account | Bank Deposit | $4.99 | $20 (2% markup) | $0-10 | $24.99-34.99 | 2.5-3.5% |
| Debit Card | Bank Deposit | $30.49 | $20 (2% markup) | $0 | $50.49 | 5.0% |
| Credit Card | Bank Deposit | $30.49 | $20 (2% markup) | $30-50 (3-5% cash advance fee) | $80.49-100.49 | 8.0-10.0% |
| Debit Card | Cash Pickup | $35.99 | $25 (2.5% markup) | $0 | $60.99 | 6.1% |
As you can see from the case study, the total cost can vary dramatically depending on your choices. Using a credit card for a cash pickup could cost you nearly 10% of your transfer amount, while a bank account to bank account transfer might cost closer to 2.5-3.5%.
Important Finding:
According to our analysis, Xoom's exchange rate markup tends to be higher for less common currency pairs. For example, sending money to countries in South America, Africa, or certain parts of Asia often involves a higher markup than sending to major currencies like EUR, GBP, or CAD.
User Experiences and Reviews
To provide a balanced view of Xoom's services, we analyzed hundreds of user reviews from multiple platforms including Trustpilot, Consumer Affairs, and Reddit. Here's what real users have to say about their experiences with Xoom:
Trustpilot Score: 1.6/5 (as of 2025)
Based on over 23,000 reviews, Xoom has a concerning rating on Trustpilot. While 88% of users gave 4-star and 5-star ratings praising the speed and ease of transfers, the negative reviews highlight significant issues with hidden fees, transfer delays, and account restrictions.
"I have used Xoom for over three years and found their service exemplary! Some (or many) people have had disappointing experiences. But apparently, those with positive experiences don't bother with writing reviews."
— Jhinuk Chowdhury
"I was just told by a Xoom representative that I could no longer send money to a friend and someone who works for me located in India. He said I can only use it to send money to friends and family. Well Xoom, he is also a friend, yet you still cancel all my sent payments."
— User review from Consumer Affairs, May 2025
Common User Complaints
1. Hidden Fees and Poor Exchange Rates
The most frequent complaint from users centers around unexpected costs. Many users report only discovering the exchange rate markup after completing their transfer, feeling misled by the advertised "low fees" or "no fees" promotions.
2. Transfer Delays and Processing Issues
Despite Xoom's promise of fast transfers, many users report unexpected delays, particularly with bank account-funded transfers that were expected to be completed quickly.
3. Account Restrictions and Verification Problems
Numerous users reported having their transfers canceled or accounts restricted without clear explanation. While these measures are part of Xoom's security and compliance protocols, the communication around these issues appears to be a pain point for many users.
4. Customer Service Issues
Many negative reviews mention difficulties in resolving problems through Xoom's customer service, with reports of long wait times, unhelpful representatives, and challenges in getting clear answers about fees or transfer issues.
"Xoom says that if the money is in PayPal it is free but in the last step it asks to pay the fee.... Has this happened to anyone?"
— Reddit user, November 2023
Comparing Xoom With Alternatives
To determine whether Xoom offers good value, it's important to compare it with other major money transfer services. Here's how Xoom stacks up against its main competitors:
| Service | Fee Range | Exchange Rate Policy | Transfer Speed | Countries Supported | Trustpilot Score (2025) |
|---|---|---|---|---|---|
| Xoom | Variable (complex structure) | Includes markup (1-4%) | Minutes to 3-5 days | 130+ countries | 1.6/5 |
| Wise | 0.4-1% of amount | Mid-market rate (no markup) | 1-2 business days typically | Worldwide coverage | 4.3/5 |
| OFX | 0.4-2% of amount | Includes markup (0.5-2%) | 1-5 business days | Worldwide from select countries | 4.4/5 |
| Remitly | Variable by country | Includes markup (1-3%) | Minutes to 3-5 days | 50+ countries | 4.0/5 |
Key Differences
Xoom vs. Wise
The most significant difference between Xoom and Wise is the exchange rate policy. While Xoom adds a markup to the exchange rate, Wise uses the mid-market rate and charges a transparent fee. For many currency pairs, Wise works out cheaper overall, especially for larger transfers. However, Xoom may offer faster delivery for cash pickup options that Wise doesn't provide.
Xoom vs. OFX
OFX specializes in larger transfers (above $7,000) where their fee structure becomes increasingly competitive. Their customer service is highly rated, with personal support for transfers. Xoom, on the other hand, has lower minimum transfer amounts and offers cash pickup options that OFX doesn't.
Xoom vs. Remitly
Both Xoom and Remitly offer similar services including cash pickup and home delivery options. However, Remitly often has a confusing array of fees that vary by destination, while Xoom's fee calculator makes it somewhat easier to understand costs upfront. Remitly may offer better rates for certain corridors, particularly to South Asian and Latin American countries.
Pro Tip for Comparing Services:
When comparing money transfer services, always calculate the total amount that will be received in the destination currency for the same sending amount. This is the only accurate way to compare the true cost of different services.
How to Minimize Xoom Fees
If you decide to use Xoom for your money transfers, here are some strategies to reduce the fees and hidden charges:
Choose the Right Payment Method
Whenever possible, fund your transfer from your bank account rather than a debit or credit card. Bank transfers typically have the lowest fees, though they may take longer to process.
Potential Savings: $25-30 per transfer
Avoid Credit Cards
Never fund a Xoom transfer with a credit card unless absolutely necessary. Not only will you pay Xoom's higher credit card processing fee, but you may also incur cash advance fees from your credit card issuer.
Potential Savings: $30-50 per transfer
Send Larger Amounts Less Frequently
Since Xoom's fee structure often includes a fixed component, sending one larger transfer instead of multiple smaller ones can reduce your overall fees.
Potential Savings: $5-15 per month
Compare Exchange Rates Before Transferring
Always check the mid-market rate before confirming a transfer with Xoom. If the markup is particularly high on a given day, you might want to wait or use an alternative service.
Potential Savings: 1-2% of transfer amount
Verify Account Levels for Better Limits
Xoom has different account levels with corresponding sending limits:
- Level 1: Up to $2,999 daily, $6,000 monthly, $9,999 per 6 months
- Level 2: Up to $10,000 daily, $20,000 monthly, $30,000 per 6 months
- Level 3: Up to $50,000 daily, $60,000 monthly, $100,000 per 6 months
By verifying your account with additional documentation, you can increase your sending limits, which may help you consolidate transfers and reduce overall fees.
Important:
Always ensure all your information and documents are up to date with Xoom to avoid transfer delays or cancellations, which can result in additional fees if you need to make an urgent transfer through another service.
Pros and Cons of Using Xoom
Pros
- Fast transfers when funded with debit or credit cards (often minutes)
- Extensive global coverage (130+ countries)
- Multiple payout options (bank deposit, cash pickup, home delivery)
- Additional services like bill payment and mobile reloads
- Integration with PayPal for users with existing accounts
- User-friendly mobile app and website interface
- Ability to track transfers in real-time
- Strong security measures and fraud prevention
Cons
- Hidden fees through exchange rate markups
- Higher overall costs compared to some competitors
- Complex fee structure that varies by multiple factors
- Potential for unexpected credit card cash advance fees
- Sending limits that may be restrictive for some users
- Strict verification procedures that can delay transfers
- Mixed customer service experiences reported by users
- Limited to personal transfers only (no business transfers)
Conclusion: Is Xoom Right for You?
After thoroughly examining Xoom's fee structure, hidden charges, user experiences, and alternatives, we can conclude that Xoom offers a mixed value proposition that depends heavily on your specific transfer needs.
Xoom might be a good choice if:
- You need to send money for cash pickup in one of their 130+ supported countries
- You value the convenience of integration with PayPal
- You need to make urgent transfers and are willing to pay extra for speed
- You need additional services like bill payment or mobile reloads in supported countries
Xoom might NOT be the best choice if:
- You're primarily concerned with getting the best exchange rate
- You make frequent international transfers and want to minimize costs
- You need to send large amounts (over $10,000)
- You need to make business-related transfers
The hidden charges associated with Xoom, particularly the exchange rate markup, can significantly impact the total cost of your transfer. For cost-conscious users making regular transfers, services like Wise that offer the mid-market exchange rate may provide better value in the long run.
However, Xoom's extensive global network, multiple payout options, and speed of transfers (when funded with cards) make it a viable option for certain use cases, especially when sending to regions with limited banking infrastructure where cash pickup is necessary.
Final Recommendation
For the most cost-effective international money transfers, we recommend comparing at least 2-3 services before each transfer. Use Xoom's fee calculator to determine the upfront fee and estimated exchange rate, then compare this with alternatives like Wise, OFX, or Remitly to see which offers the best value for your specific transfer needs.
Always calculate the total amount that will be received in the destination currency, as this is the only true way to compare the real cost of different money transfer services.
Frequently Asked Questions
Is Xoom safe and legitimate?
Yes, Xoom is a legitimate money transfer service owned by PayPal since 2015. It's regulated by the appropriate financial authorities and uses industry-standard security measures to protect transactions and personal information.
How long do Xoom transfers take?
Transfer times vary based on the payment and delivery method. Transfers funded by credit or debit cards can arrive within minutes, while bank account-funded transfers typically take 1-3 business days. Factors like verification requirements, destination country, and local partner processing times can also affect delivery speed.
Can I cancel a Xoom transfer?
Xoom offers a 30-minute cancellation window after authorizing your transaction. After this period, cancellation may not be possible if the transfer has already been processed. You'll need to contact Xoom's customer service to request cancellation for transfers that haven't been picked up or deposited yet.
Why does Xoom ask for my SSN or other personal documents?
Xoom requests personal information like SSN and identity documents to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations. This helps them verify your identity, prevent fraud, and meet their regulatory obligations as a financial service provider.
What's the difference between Xoom and PayPal?
While both are owned by the same company, Xoom is specifically designed for international money transfers, bill payments, and mobile reloads. PayPal offers a broader range of payment services. Xoom typically has different fee structures, transfer limits, and supported countries compared to PayPal's international transfer service. Xoom is generally cheaper than PayPal for international transfers but still includes exchange rate markups.
Can I use my PayPal balance to fund a Xoom transfer?
Yes, you can use your PayPal balance to fund Xoom transfers in supported countries. You can also use payment methods linked to your PayPal account, such as bank accounts, credit cards, or debit cards.
How can I avoid Xoom's fees?
While you can't completely avoid fees when using Xoom, you can minimize them by: funding transfers from your bank account instead of cards, sending larger amounts less frequently, comparing exchange rates before confirming transfers, and verifying your account to access better sending limits.
