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GDPR Compliance Risk

PayPal is a US-based service subject to the CLOUD Act. EU organizations using this service risk non-compliance with GDPR data transfer requirements.

PayPal logo

GDPR-Compliant Alternative to PayPal

🇺🇸PayPal Holdings Inc. · US-based · Subject to CLOUD Act

PayPal is a digital payment platform that allows users to send and receive money online securely. It supports transactions in multiple currencies, enabling users to pay for goods and services, transfer funds to friends or family, and manage their financial accounts. Users can link their bank accounts or credit cards for easy access.

Why You Need a GDPR-Compliant Alternative to PayPal

Since the landmark Schrems II ruling in 2020, transferring personal data to US-based services like PayPal has become a significant legal risk for EU organizations. The US CLOUD Act gives American authorities the power to access data held by US companies, regardless of where that data is physically stored — even if it's in an EU data center.

While the EU-US Data Privacy Framework (DPF) adopted in 2023 provides a new legal basis for transfers, privacy experts and legal scholars have raised concerns about its long-term viability. The framework could face the same fate as its predecessors (Safe Harbor and Privacy Shield), both of which were struck down by the Court of Justice of the EU.

For organizations that want to eliminate compliance risk entirely, switching to a European-based payment & fintech is the most straightforward solution. Below are the best GDPR-compliant alternatives to PayPal, all headquartered in Europe with data stored in EU data centers.

CLOUD Act Exposure

US authorities can access your data stored by PayPal, even if servers are located in Europe.

GDPR Fine Risk

Non-compliant data transfers can result in fines up to 4% of annual global revenue under GDPR Article 83.

EU Alternative Available

1 GDPR-compliant European alternative available with full EU data residency.

1 GDPR-Compliant Alternative to PayPal

European services with full GDPR compliance and EU data residency

Wise logo

Wise

🌍

by Wise PLC

Wise by Wise PLC is an online money transfer service that allows users to send and receive money internationally at low fees. It uses real exchange rates to provide transparent pricing and enables users to hold multiple currencies in their accounts. Ideal for individuals and businesses looking to manage cross-border transactions efficiently.

GDPR CompliantEU-Based
freemiumMigration:●●●

Why switch?

  • Wise offers low transfer fees, averaging 0.5% to 1% per transaction.
  • Real exchange rate used by Wise, unlike PayPal's markup on rates.
  • Multi-currency account allows holding 50+ currencies in one place.

Consider

  • Migrating accounts and funds may require time and effort.
  • PayPal's buyer protection is not available with Wise transfers.
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Visit Wise

Quick GDPR Compliance Comparison

ServiceHQ LocationGDPR NativeEU Data CentersCLOUD Act FreePricing
🇺🇸PayPal
United StatesNoPartialNofreemium
🌍WiseGBYesYesYesfreemium

Frequently Asked Questions

Is PayPal GDPR compliant?

PayPal is a US-based service operated by PayPal Holdings Inc.. While it may have some GDPR compliance measures, as a US company it is subject to the CLOUD Act, which allows US authorities to access data stored by US companies regardless of where the data is physically located. This creates a fundamental conflict with GDPR requirements for data protection.

What are the GDPR risks of using PayPal?

The main GDPR risks include: (1) Data transfers to the US may lack adequate protection since the Schrems II ruling invalidated Privacy Shield, (2) US authorities can demand access under the CLOUD Act, (3) Your organization may face GDPR fines up to 4% of annual revenue for non-compliant data transfers, and (4) User consent may not be sufficient to legitimize transfers given the systematic access by US authorities.

What are the best GDPR-compliant alternatives to PayPal?

The top GDPR-compliant alternatives to PayPal include Wise. These European services store your data in EU data centers and are fully subject to GDPR protections.

How do I migrate from PayPal to a GDPR-compliant alternative?

Most migrations involve three steps: (1) Export your data from PayPal using their data export tools, (2) Create an account with your chosen EU alternative, and (3) Import your data into the new service. We provide detailed migration guides for each alternative to make the switch as smooth as possible.

Can EU companies legally use PayPal?

Since the Schrems II ruling (2020), EU organizations face significant legal risk when using US cloud services like PayPal. While the EU-US Data Privacy Framework (2023) provides a new legal basis, its long-term stability is uncertain. Many EU data protection authorities recommend using EU-based alternatives to avoid compliance risks entirely.

Other GDPR Alternatives in Payment & Fintech

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Related Pages

Migration Resources

Some links on this page are affiliate links. We may earn a commission if you make a purchase, at no extra cost to you. This helps support our mission to promote European alternatives. Our recommendations are based on objective criteria.

Last updated: January 29, 2026