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🧐 Are You Losing out from PayPal’s Exchange Rates?

Last updated: June 27, 2020114 Comments

This post is also available in: Spanish

currency conversion

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.

Short aside: If you are using PayPal to transfer money abroad and change from one currency to another, consider using TransferWise instead. It’s what I’ve been using for years now and it is infinitely better than PayPal for this purpose.

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

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.

  1. How to Time PayPal Withdrawals to Get the Best Currency Exchange Rate
  2. 🧐 Are You Losing out from PayPal’s Exchange Rates?
  3. πŸ€” Which PayPal Account is Best for You?
  4. πŸ’Έ Changing Your PayPal Withdrawal Currency
  5. Accepting Credit Card Payments via Braintree in Europe
  6. Braintree vs PayPal Fees, Which One is Cheaper?
  7. πŸ’Έ Understanding PayPal Cross Border Fees
  8. PayPal Now Allows Withdrawing Money to Bank Accounts in Malta
  9. πŸ’³ Withdrawing Money From PayPal for Non-US Accounts
  10. Which PayPal E-Commerce Checkout Service Should You Use?
  11. πŸ€” Should You Open Separate PayPal Accounts for Each of Your E-Commerce Stores?
  12. πŸ†š PayPal VS TransferWise Borderless
  13. πŸ’³ Linking Virtual Bank Accounts and Cards to PayPal (Revolut, TransferWise etc)
  14. How to Check the Instant Payment Notification (IPN) History in PayPal
  15. Should You Withdraw From PayPal to Credit Card or Bank Account?
  16. PayPal Stiffs Sellers With Changes in Refund Policy
  17. How to Change Ownership of a PayPal Account

Filed under: Business

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About Jean Galea

Jean Galea is a dad, amateur padel player, host of the Mastermind.fm podcast, investor and entrepreneur.

Comments

  1. Tanya says

    December 10, 2020 at 9:45 pm

    IHas anyone found a way to minimize PayPal withdrawing fees?2020

    Reply
  2. Ryan N says

    November 21, 2020 at 12:39 pm

    I am in Australia. This does not work anymore.

    I received payments in USD. Then link a USD Transferwise account. Then transfer out, Paypal charges 3% fee to withdraw USD to that Transferwise US account!!!

    This is ridiculous! Bye bye Paypal. I am looking for some others to receive USD payments. Any suggestion?

    Reply
    • Cha Thi says

      November 28, 2020 at 3:08 pm

      I was doing the same up until now. When I try to withdraw USD in my Australian PayPal account, I also encountered this 3% charge today. I landed here while searching for solutions to this one. Anyone has any workaround please let us know. It will be a life saver πŸ™‚ Thank you

      Reply
  3. Tom says

    October 19, 2020 at 9:08 pm

    Tip!

    If you want a good exchange rate from, for example, USD to euros, do the following:

    – create an account on Etoro and deposit your USD here.
    – after deposit you withdraw the money to your PayPal account in EURO, costs 5 dollars, however, with larger amounts, this is a considerable saving.

    Example:

    Etoro rate is 1.176
    Paypal rate is 1.1342

    refund costs Etoro are 5 dollars, but this is definitely worth it!

    at USD 2500 quickly earned a dinner for two! πŸ™‚

    Reply
    • Cha Thi says

      November 28, 2020 at 2:56 pm

      Hi, This is interesting. I tried to do this. I deposited USD in my Australian Paypal account to eToro account and tried to withdraw it to the same Paypal account (hoping to get AUD to my Paypal). But there is no place to select the currency to withdraw from. It only shows $ mark and I believe it is USD. Any suggestions on this. Thank you very much!

      Reply
      • tom says

        November 29, 2020 at 9:39 am

        Australian dollars are not supported I think. USD/EURO/GBP are supported.

  4. Jorge David says

    May 14, 2020 at 1:07 pm

    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.

    Reply
    • Andrei F says

      May 19, 2020 at 5:39 pm

      That’s exactly what they told me too.

      Reply
  5. arran says

    May 9, 2020 at 6:20 am

    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,

    Reply
  6. Mark says

    March 31, 2020 at 4:05 pm

    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

    Reply
  7. Saurabh pakhad says

    March 22, 2020 at 4:14 am

    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

    Reply
  8. Bruno Leal says

    February 28, 2020 at 6:33 pm

    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

    Reply
    • Stefan says

      March 26, 2020 at 12:12 pm

      I have the exact same issue!

      Have emailed Paypal a few days back but still waiting on an answer. This is simply outrageous.

      Reply
  9. Matteo says

    November 22, 2018 at 9:27 pm

    hi Jean,
    I live f Malta wkoll πŸ˜€ 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

    Reply
    • Jean says

      November 24, 2018 at 6:30 pm

      None of them do unfortunately.

      Reply
      • anton says

        January 20, 2020 at 3:35 am

        Paypall ripps you off especially with the conversion rate I lost about 3-7 % in each transaction. Bye bye Paypall

  10. Constantine says

    October 22, 2018 at 10:17 am

    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

    Reply
  11. GJ Gads says

    October 9, 2018 at 1:39 pm

    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,

    Reply
  12. Alex Brian says

    June 4, 2018 at 7:35 am

    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,

    Reply
    • Jean says

      September 16, 2018 at 3:15 pm

      Welcome Alex.

      Reply
  13. Eugene says

    June 1, 2018 at 12:14 pm

    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.

    Reply
    • Jean says

      June 1, 2018 at 12:45 pm

      They only allow withdrawals to a USD account based in the United States, if you’re an EU based business or individual.

      Reply
  14. FactualRealist says

    June 1, 2018 at 4:59 am

    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.

    Reply
  15. Craig Boylstein says

    May 21, 2018 at 6:30 am

    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.

    Reply
    • Jean says

      May 21, 2018 at 12:43 pm

      Yep that’s typical PayPal for you.

      Reply
  16. Eugene says

    April 12, 2018 at 7:35 pm

    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.

    Reply
  17. Enrico says

    February 7, 2018 at 10:19 am

    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???

    Reply
  18. pamela pelser says

    December 28, 2017 at 5:27 pm

    Hi is it possible to make a western union payment via paypal

    Reply
    • Jean says

      September 16, 2018 at 3:14 pm

      I don’t believe so.

      Reply
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