PayPal have announced some changes that will affect their US customers, although we can also expect them to roll this out on a global basis shortly after.

Here are their announced changes. It goes without saying that sellers are livid about the latest changes, as they will start incurring significantly more fees.

• We’re removing the flat rate pricing for sending money to friends and family members who have PayPal accounts in a country other than the United States and introducing a new variable fee of 5% based on the amount you send with a minimum of $0.99 and a maximum of $4.99 per transaction. We’re also removing any variation depending on the recipient’s country. 
• We are changing the currency conversion spread to 3.25% over a base exchange rate in situations where you are a sender of money in a PayPal transaction.
• We’re changing how we treat refunds. If you refund (partially or fully) a transaction to a buyer or a donation to a donor, there are no fees to make the refund, but the fees you originally paid as the seller will not be returned to you.

As you will have noticed, the biggest issue is that when someone requests a refund (which in some businesses happens quite frequently) you, as a seller, will not be refunded the PayPal transaction fee. This is a hard hit for sellers and there are various petitions asking PayPal to reconsider.

Of course, PayPal will totally ignore those requests and go ahead with the changes. The company does not really care what its users think as the bottom line is it still has no serious competition. It’s a maddening situation but PayPal users ultimately have to bear whatever PayPal decides to implement.

 

One interesting way of saving money on conversion fees when withdrawing money from your PayPal account is to link up a virtual card or virtual bank account.

These virtual cards and bank accounts are provided by companies like Revolut, N26 and Wise.

By the way, did you know that you can now buy Bitcoin and cryptos with your PayPal account on Coinbase and eToro? Read my guide to buying crypto with PayPal to find out how.

Back to withdrawing to virtual cards and bank accounts. Let’s say your PayPal account is in Euro, but you also have several other currencies such as GBP and USD. With Revolut and Transferwise you can open accounts in these currencies too. Therefore, when you want to withdraw GBP from PayPal, you would withdraw to your Revolut/Transferwise GBP account, thus no conversion would take place.

This has already been tried and tested by several users, and I managed to link up my Revolut card without any problem myself.

However, this is not to say that PayPal approves of the practice 100%. Here’s what they said when I asked them about it:

If the system allows you to add this bank, you can use it, but also PayPal does not take responsibility in case of missing funds during withdrawals, as we cannot communicate with virtual banks in order to locate missing transactions etc.

We usually do not advise merchants to add Virtual Banks/ Cards, but technically you can if you wish.

I also asked them if they would be able to help in adding the virtual bank accounts, since not every version of the PayPal interface (depending on your country) will let you add these accounts. Here’s what they told me:

we cannot manually add any virtual bank accounts/ cards to the PayPal accounts. This is due to the risks that are associated with them, therefore if you are able to add it yourself you can, but we cannot add them on your behalf as this function is not available to us.

So the bottom line seems to be that if you’re using PayPal for personal use and are ready to take a small risk, you’re allowed to withdraw money from (or send money to) your PayPal account from a virtual bank account like the ones provided by Revolut and Wise.

As always, I welcome the sharing of experiences on this matter, just leave a comment below.

Update October 2020:

This time PayPal have not outright said that they don’t work with TransferWise, but specified that the limitation is with Mastercard for my country.

As your PayPal account is from ____, you can only complete a withdrawal to the following financial instruments:

– Bank account.
– Visa card.

Currently, MasterCards are not eligible financial instruments for withdrawals in ____.

Due to the challenges and complexities associated with the worldwide financial network, we cannot offer a firm date or timetable for expansion of specific services. We can promise you that we are working hard to enhance our service within the nations where we are offered.

Update October 2019:

TransferWise have confirmed that the debit card they provide does not allow receiving funds from PayPal. This could actually be a limitation to receiving funds from anyone and not just from PayPal. In any case, it is unusable for the purposes of linking to PayPal in order to effect withdrawals.

PayPal have also confirmed that they are unable to accept TW bank accounts:

Note: If you have any questions after reading this and the several other articles relating to PayPal on this site, please leave a comment or contact PayPal directly. Unfortunately, due to time constraints, I am unable to offer any advice over email so all emails related to PayPal will remain unanswered.