This post is also available in: Spanish
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.
If you have a PayPal account that you regularly use for collecting payments, and your main home currency is not US dollars, you would do well to read on.
Not too long ago, I had written about biding your time to get the best exchange rate possible when transferring your money from PayPal to your bank account. Soon after that, I discovered that there is another area of optimization which we should be aware of.
My home currency is the Euro, so my bank account uses Euro by default. Online I collect payments in USD since that’s the de facto currency on the web. That means that when it’s time to get the gold home I am subject to conversion rates when changing from USD to Euro. This is precisely where many people lose a good chunk of money, so you have to be careful.
Since your bank account is in Euro and your PayPal account is in USD, a conversion needs to take place. Now it’s a well-known fact that PayPal currency conversion rates aren’t the best; they incorporate quite a healthy profit for themselves here. So it might actually be better for you to let your bank handle the conversion at their exchange rates.
All you need to do is check out your bank’s exchange rates, make your calculations on how much Euro they would give you for a given amount of USD, then compare it to what PayPal would give you via their currency converter.
Beware also that some banks charge an extra fee for currency conversions. My bank charges around 1 Euro each time there is a conversion.
If you establish that it would indeed be beneficial for the bank to handle the conversion, you can change your PayPal account from being Euro-based to USD based via this link.
Setting the currency to use when withdrawing money
On a related note, you can check the net amount you will receive from a PayPal money transfer via this PayPal fee calculator. Sadly, it appears that the calculator’s formulae are a bit out of date as the net amounts didn’t exactly correspond when I tested it on my account.
Note that if you have a Europe-based USD bank account, you will not be able to send USD directly from PayPal to that USD bank account. There will always need to be a conversion happening on the bank’s side, and the money will then go to your Euro account. You can try your luck with linking a multi-currency account like TransferWise Borderless to go around this issue, but it doesn’t always work.
As a test, I made a few transfers of $2,500 to my Euro-based bank account just to test the difference in money between using PayPal’s exchange rates and those of the bank.
Here are the results:
- $2,500 converted to Euro by PayPal: €2,171.92
- $2,500 converted to Euro by my bank: €2,216.06
Crazy huh?
More than €44 difference on each transaction!! That’s around 2% more added cost on each transaction. Keep in mind that PayPal is already charging you $2.50 per transaction as a fixed fee.
It definitely works better for me to use USD as my PayPal account currency, then withdraw directly in USD to my credit card. Note that changing your withdrawal currency has to be done manually by following my guide.
Timing Your Withdrawals Right
Make sure you choose the right time to make the withdrawals, I show you how to do that on this post.
I tried. Doesn’t work. Paypal allows u to change primary account to USD but then still forces u to convert to GBP when I tried to WD. What a waste of time.
That’s exactly what they told me too.
to paypal ….your shop takes my money and receive less after order cancelled through ebay,it only $16.02nz ,but id save to buy a turbine ,but i guess paypal and ebay work together and im just a stepping stone,so if ive lost my money through this transaction then i will no be using palpay ever again as you riped my off safe money transfer maybe for the big stores using it and you get your commission and i loose not fare,
Hi to all, today I have situation, frined who live in Germany have paypal in euros in Germany, I live in Croatia and my bank card(Visa) wich is in euros is link to paypal and it is in euros, this is the story. Friend send me 77€ as “friends and familly option”to my paypal accout, somehow paypal converted that to 83.54$ and after that again converded to my paypal balance wich is in euros, but I got 70,31€. I can figure it out why, why is in dollars when I do not have any connection with dollars, why they change it from euros to dollars and back to euros, that is dont have any sense. How to remove dollars from this story, it is insane.
Cheers all
Mark
Hi I am selling on eBay US from last 2 years.I wanted to know there are any other payment option other than PayPal on eBay.because when I am send money via PayPal exchange rate was 78.00 but at a time of withdrawal the exchange rate was 71.00. but at time current exchange rate was 75.00. Many complaint I am doing with PayPal. but they don’t get any response. so please how this problem can be solved
By any chance do you know how to complain to the EU regulator against this PayPal practice?
Basically I got USD paid into my PayPal account and want to transfer to my USD Revolut bank account as I’m travelling soon to US and want to spend USD.
PayPal requires me to transfer the USD to EUR (paying their conversion rate, etc.) and then converting those EUR back to USD in Revolut.
How can this be even legal?
Thanks,
Bruno
I have the exact same issue!
Have emailed Paypal a few days back but still waiting on an answer. This is simply outrageous.
hi Jean,
I live f Malta wkoll 😀 Gozo actually and like you I am also an online entrepreneur, and I am losing a lot of money with the PayPal exchange rate
I just got my maltese bank account in USD, I called PayPal and they told me that they can change the currency on VISA Cards only, and they cannot change the currency of any bank account :/ unfortunately
Mela, I would like to ask you if you know some Maltese Bank able to issue VISA Cards in USD
None of them do unfortunately.
Paypall ripps you off especially with the conversion rate I lost about 3-7 % in each transaction. Bye bye Paypall
Hi Jean, I have set my paypal account to see it in Euros. I receive $ payments from a Chinese company. Should i convert to see my account in $ as i am getting ripped off.
e.g.
i am getting ripped of at conversion from USD to EURO , then i am getting ripped off at Paypal fees,
total amount is 558.00 USD
Gross Amount
464,49 EUR
PayPal Transaction Fee
-25,43 EUR
Net Amount
439,06 EUR
Hi! I want to ask my client paid me in USD but it appeared in my local currency (PHP). Now I thought it was automatically converted, but days passed and the value of my funds went down. But the USD value shown below is still the same. Is it because of exchange rate? I thought it was automatically converted,
Thank you so much for writing this amazing article on PayPal Currency Exchange Rates. I just wanted to exchange $$$ into Pakistan’s PKR and your article did a lot help in this regard!
Regards,
Welcome Alex.
PayPal have a pretty crappy customer support team who don’t seem to be aware of the details of their TOS. I made numerous phone calls and they insisted there was no issue withdrawing US dollars to an EU based dollar account. After going to the trouble of setting up the account, I eventually discovered this isn’t possible without a double conversion fee. They don’t seem to be able to work out fees either.
They only allow withdrawals to a USD account based in the United States, if you’re an EU based business or individual.
I’m pretty sure your experience is specific to USD balances. If you have a EUR bank account and have non-EUR, non-USD income in your PayPal account, then you are screwed. Even if you have another bank account in another country which could accept the funds without converting, PayPal won’t let you.
Just purchased something in Austria from USA. Current USD to Euro rate is .85.
Paypal set it as .81.
Ended being apprx a 5% charge. What should have been a shade under $500 cost $524.67.
Yep that’s typical PayPal for you.
Just rang PayPal and they insist there’s no double currency conversion when withdrawing a dollar balance to a non-US based dollar account. However I have an issue at the moment with their system recognising an IBAN.
I tried withdrawing to a CC but it still converts and it adds 1€, maybe because it was less than 100$. I did the thing in the settings but nothing. Anyway, i pay 1,7% when i buy something in usd or gbp so its not a great save. I get money from shutterstock turbosquid and the like, is there NO way around this robbery???
Hi is it possible to make a western union payment via paypal
I don’t believe so.