PayPal Currency Conversion Strategies for International Transactions

To minimize losses from unfavorable exchange rates, consider using PayPal's built-in currency conversion feature.

PayPal's conversion rate is typically more favorable than banks, with an average savings of 1-2% on international transactions.

For larger transactions, setting up a PayPal account in the recipient's local currency can save even more money on conversion fees.

This can be especially beneficial for frequent international senders.

PayPal charges a currency conversion fee, which amounts to 3-4% of the transaction amount. This fee is in addition to the domestic PayPal business transaction fees and international transaction fees.

The total fees you may be charged for international transactions with PayPal are quite high. You may be charged up to 3,49% + a fixed fee (based on currency received) for domestic PayPal business transaction fees, plus 1.50% for international transaction fees, and 3-4% for the PayPal currency conversion fee.

To put it simply, you could be charged a total of up to 6.49% + a fixed fee for international transactions. This can be very expensive, especially if you regularly send or receive different currencies.

Here are the three types of fees you may be charged by PayPal for international transactions:

PayPal's exchange rates are not the best, and they're not transparent about their fees. You'll often find that their rates are higher than those at airports or consumer currency exchange shops.

The retail exchange rate is the rate at which PayPal purchases foreign currency, but they add a currency conversion fee on top, making their rates less competitive.

If you're buying something online, you might be able to avoid conversion fees by letting your bank or credit card handle the exchange rate instead of PayPal.

To do this, click on the small 'View currency conversion options' link and choose the vendor's currency, not your local one. This way, your card provider will determine the rate and fee, which is often lower than PayPal's.

Always check the real exchange rate, as PayPal's rates can be weak and result in higher charges. For example, a $997 purchase might be worth £736.60 at the real exchange rate, but PayPal would charge £771.74.

PayPal's currency conversion fee can be as high as 4.5% of the conversion service.

Here's a rough guide to PayPal's current exchange rates as of August 14th, 2023:

If you're not satisfied with PayPal's currency conversion rates, there are alternative options available.

You can use a currency conversion service like TransferWise, which offers more competitive exchange rates than PayPal.

TransferWise charges a flat fee of 0.5% to 1% per transaction, compared to PayPal's 2.5% to 4.5% fee.

Another option is to use a prepaid debit card or travel money card, which can be loaded with your desired currency and used for transactions abroad.

Prepaid debit cards often come with lower fees than PayPal and can be a good option for frequent travelers.

When buying from a foreign company, you might encounter foreign currency fees. For instance, if you're in Europe and buy a course from a seller in the US, the US dollar is considered a foreign currency.

To avoid PayPal currency exchange fees, you can link a card to your PayPal account. Revolut cards, for example, can be linked to PayPal without incurring additional fees.

You can use a disposable or virtual Revolut card for this purpose, as they allow direct charges and credits. Make sure to change the card's default currency to dollars, or you'll incur conversion fees.

PayPal charges a currency conversion fee, on top of a currency conversion spread. This can result in a significant difference in rates, as shown in the example of paying someone in Taiwan NT$2,120.

To avoid these fees, opt for a card that charges zero foreign currency fees. For example, the Trust card mentioned in the article has no foreign currency fees.

Here's a summary of the tips for overseas transactions:

PayPal currency conversion fees can be a real headache, but there are ways to avoid them. You can use the SWIFT network with your bank account to make international transactions, but be aware that SWIFT fees range from 3-5% of the transferred amount.

To avoid PayPal business transaction fees, you can use local payment schemes like the European SEPA or the American ACH, but you'll need local bank accounts to access these schemes.

One way to avoid PayPal currency conversion fees is to use multi-currency IBANs, which allow you to send and receive payments in different currencies via the SWIFT network. Digital financial platforms enable you to create a multi-currency IBAN on your own name, which can save you a lot of hassle.

You can also use virtual local accounts to hold foreign currencies and take advantage of local payment schemes. For example, a local US account would enable you to use the ACH network instead of SWIFT to receive and send payments.

To avoid PayPal conversion fees, you can make the purchase denominated in US dollars, the local currency of the seller. Click the "See currency options" button on the payout screen and choose the merchant's local currency, which in this case is USD.

Alternatively, you can use a multi-currency card, which can help you avoid complicated currency conversions altogether.

PayPal business transaction fees can range from 1.90% to 3.49%, plus a fixed fee based on the currency received. For international transactions, you'll need to pay the domestic fees plus an additional 1.50%, resulting in fees of up to 4.99%.

If you're buying something online and need to pay in a foreign currency, you can let your bank or credit card handle the exchange rate. This way, PayPal won't charge you any additional fees, and your bank will handle the exchange at a potentially lower rate.

Always check the real exchange rate to ensure you're not being charged a weak rate by PayPal. A 4.5% fee for conversion service can add up quickly, so it's essential to be aware of the fees involved.

Here are some payment types and their corresponding rates:

By being aware of these fees and taking steps to avoid them, you can save yourself a lot of money and hassle when making international transactions with PayPal.

PayPal's conversion rates are often significantly poorer than those of its alternatives, ranging from 3.5% to 4% worse than the mid-market exchange rate, as seen on Google.

You should always avoid converting with PayPal and choose conversions with your bank or card issuer instead, which are normally much cheaper.

PayPal's conversion rate is significantly worse than Visa's, ranging from 3% to 3.75% worse depending on the currency pair.

Similarly, PayPal's conversion rate is worse than Mastercard's, with the same range of 3% to 3.75% worse depending on the currency pair.

PayPal's currency conversion fees range between 3.5% and 4.5% above the mid-market exchange rate, making it one of the most expensive ways to exchange money.

If you're sending money overseas, you can compare money transfer services on Monito to find the best alternative in real-time.

As a rule of thumb, PayPal's exchange rate is usually worse than the bank's, although this can differ from bank to bank.