As discussed in previous posts, once you’re using PayPal to sell your stuff online, you will also want to eventually withdraw the money you make into your bank account so that you can actually use it. Here’s where things get a bit nasty unfortunately.
If you have a US bank account and a US PayPal account, you can stop reading right here. You’re in luck. All you have to do is attach your bank account to your PayPal account and withdraw USD from your PayPal account to your bank account. There are no currency conversions to worry about, and the transfer itself is free from PayPal’s side.
If you are the owner of a non-US PayPal account and you don’t have a US bank account, things are not so pretty.
You are given two options (depending on your home country, it might even be just one option):
- Withdraw to a debit or credit card
- Withdraw to your local bank account.
If you sell online you probably use USD as the main currency on your store and hence your PayPal balance will be in USD. What happens is that since your local credit card or bank account are not in USD, an automatic currency conversion takes place on PayPal’s end as the money is on the way out. The conversion rates are bad, to put it mildly. Hence you’re going to lose a lot of money on that conversion.
Withdrawing to Cards
In the case of cards, you can ask PayPal to switch off automatic currency conversion, and have the conversion happen on your bank’s side, which will give you a better rate. I wrote about how to do this in my earlier post on currency conversion and PayPal. There are still two inconveniences when withdrawing in this manner:
- You will be forced to convert USD to your home currency upon withdrawal.
- There is a limit per transaction of $2,500, and an associated fee per transaction.
These two points are problematic. Let’s say that your home currency is in a weak position and you would therefore store money in USD and convert later when things improve. You cannot do this as you can’t do a straight through USD-USD transfer, given that your card will be denominated in the local currency. You can open a local bank account in USD but you won’t be able to get a card associated with it. At least that’s the case with all the banks I’ve checked so far. If you find a bank that lets you do that, please leave a comment and let me know.
The limit per transaction poses some obvious problems. Let’s say you are a high volume seller and you want to withdraw $100k per month from PayPal. You will have to make 40 separate transactions and you will be charged for every single one of them. Of course, all you ever wanted to do is one transaction, if only PayPal let you do that. Apparently this limit per transaction is dictated by the card providers (for example MasterCard or Visa). Still it’s not convenient for serious sellers.
Withdrawing to a Local Bank Account
Withdrawing to a local bank account does not present any limits, so you can pull out that $100k without any problems at one go, however you will be hit by PayPal’s bad exchange rate plus currency conversion charges. It is usually easy to open a USD account with your local bank, the big problem is that PayPal will not allow you to transfer USD from your PayPal balance into your local USD account.
Real Example – Withdrawing to Card vs Local Bank Account
As an example at the time of writing this article, if you transferred $10k out of PayPal via a bank transfer to a local bank in Malta (the country where my bank is account is located in), you would have ultimately received €8,839 in the bank account. My bank does not charge any fees for currency conversion.
On the other hand, if you were to withdraw that same $10k out of PayPal to a debit/credit card linked to the same account, you would get €8,911. That amount is after deducting PayPal’s card withdrawal charge ($2.50/€2 per withdrawal, up to a max of $2,500 per withdrawal; hence four withdrawals would be needed in this case to get $10k out).
The local bank was using 0.8921 as the exchange rate between USD and EUR. PayPal, on the other hand, was using 0.8839, a significantly different rate. PayPal includes the charges within the exchange rate, so if you accuse them of having a really bad exchange rate their excuse will be that it includes the currency conversion fees.
At the end of the day then, we would be better off when withdrawing to a card by €72.
Not that small of an amount, especially if you start considering transferring higher amounts. The difference would be around €700 on a $100k transfer, which is ridiculous.
Another problem is that PayPal does not send you any kind of bill for the currency conversion fee, hence you cannot expensive it in your company’s books. It is totally hidden within the exchange rate they use so there’s nothing you can do about it from an accounting point of view.
Other Options
The difficulties detailed above affect every country in the world except for Canada. In Canada users have found a loophole that allows them to perform USD to USD transfers without any charges. See here and here. Once again I had this confirmed by a PayPal support agent, as can be seen in the email excerpt below:
While not being familiar with all of our 200+ countries’ user agreements, I am fairly confident saying that Canada is the only country we have with an exception that allows a local USD denominated bank to be added and used.
I believe this is also related to how the US and Canadian bank network is cooperating. Regardless, this is not something we offer to a Maltese account, other than if you had an actual bank account registered in the US to withdraw USD to.
There are some other options one could explore:
- Use BrainTree instead of PayPal
- Open a non-resident Canadian bank account with RBC
- Open a Canadian PayPal account connected with an HSBC bank account in Malta
- Use Payoneer
- Use Etrade
- Open a US bank account
I’ve written about BrainTree already, so you can refer to my earlier post about the service, although I don’t really consider it a full alternative to PayPal as buyers would need to use their credit card instead of a PayPal account when paying.
Opening a Canadian bank account with RBS is easier than opening a US bank account. I don’t have much experience in this area except checking if it’s possible and confirming that it is. What one would do then is use the routing number of that bank account to add it as a US bank account within PayPal and withdraw money into the RBS account. Then one would use CurrencyFair or TransferWise to transfer the funds to a Maltese bank account. I am still checking to confirm 100% whether PayPal would allow this setup on a Maltese bank account or not.
The Canadian PayPal account plus Maltese HSBC USD account is an option that I’m still checking about so I can’t make any recommendations at this stage.
Until a few months ago it was possible to open a Payoneer account and then add that to PayPal as a bank account via the routing number you are given. The idea was to then withdraw the money into your Payoneer account as you would have done with a US bank account. From then you would then be able to transfer to your local bank account or else pay using the Payoneer Mastercard or even withdraw cash from an ATM. It appears that this is no longer possible, although it’s worth monitoring this option as things may change in the future or an alternative to Payoneer might crop up.
Opening an Etrade account and withdrawing money to it is also another option that I’ve seen being discussed, and again I need to look into it in more detail.
The last option would, of course, be to open a USD account with a US bank, something that is easier said than done. Usually, a Social Security Number (SSN) is required, however some banks allow you to open an account without it when visiting the branch in the US. There might still be limitations though (for example, no bank transfers possible) which would limit the practicality of such an account for my particular desired usage. Some people have also asked me whether it is possible to open a US bank account for their non-US company. From the information I have this is impossible unless you are going to deposit a few million dollars into that account.
If you have found a solution I’d love to know how you managed, please go ahead and leave a comment!
Further reading
PayPal Steals from Its Customers with Hidden Fees – Peter Sandeen from Finland
I think PayPal hates us in Nigeria.
I’ve been a freelancers for years and I have not for once seen a good thing in using it.
To avoid story that touches, I would advice you to create a payoneer account in Nigeria, where you can get your own MasterCard delivered to you.
That’s what I’ve been using so far.
But if anybody now a possible way out to create a PayPal account that can withdraw to bank or card in Nigeria, I will be grateful because most of my clients comes from USA and they always offer to pay with PayPal.
Thanks
Still wondering if This PayPal withdrawal Method still works fine especially in Nigeria
Hi. I am actually having a hard time linking my UAE bank account in PayPal, Along with this I cannot withdraw my funds using my personal account. Can somebody help me with this one. Thanks in advance.
Hello,
I have a question regarding my PayPal account. I created an account in the Philippines. All the information in my PayPal are Philippines (address and phone numbers). I also linked my Bank in the Philippines and have been transferring money to my local bank. Now, I opened a bank account in Croatia. My question is, Is it possible to link my Croatian bank to my PayPal account and transfer money from PayPal to my Croatian bank?
So as of now, May 2019, can anybody confirm they successfully linked a TransferWise card to their EU based Paypal account and successfully transferred US$ from their EU based Paypal to their TransferWise card, and the dollars arrived without any conversion whatsoever?
If so, please share, and which country you’re in.
I’m currently in the process to try this, but have to wait for my TransferWise card to arrive yet (a few weeks, apparently). The comments that i read elsewhere on this website don’t promise any good, but i’m keeping my fingers crossed. I will share the result.
Is it possible for me to open a PayPal account with a UAE bank account and transfer the received money to a USD account or standard chartered account of a country where PayPal doesn’t operate?
Paypal isn’t allowing me to transfer dollars into my Standard Chartered bank account Ghana.
For the eager minds I propose a solution, a business model
After 15 years suffering, I mean working with Paypal I have found that’s its a necessary bad. You can’t love it or hate it but like the USD you can’t trade without it.
There can be a community of Paypal users which we can ask bid different amount in different currencies.
Say you need to withdraw your PayPal USD dollars in Malta. You can make an offer. Some guy in Malta that needs to make a payment in PayPal will purchase from you with a local bank / mobile transfer in maltas currency. You will have your PayPal USD exchanged to your local currency without actually having exchanged them at all.
Seems cumbersome and it is. But think about connecting a lot of people needing a private car and a lot of drivers needing to work. And in several countries WITHOUT ACTUALLY BEING THERE. yes this is Uber.
So. Who will lead this “Uber Paypal” initiative?
Hi, I m Mahesh Gosh, new to paypal, how does paypal considers someone as NON-USA, what if I open an account with USA address from India. Then add a Payoneer Card to paypal account. Then withdraw money from Payoneer..
Actually you can do it
Paypal has some automated tools for chasing you like IP address phone and so on
But the definitive limit is when they ask you to write the social security number SSN
and upload the document
Then you realize you are not USA
Thanks for this article Jean, there’s quite a lot of confusion in this area, tough to figure out custom work arounds for our situations, but glad to see you helping folks with your knowledge!
Not sure if this helps anyone here, but I live in Australia and operate a Shopify store that sells mainly to the USA, where my products are also stored, so I charge in USD via Shopifys c/c processor or my Australia PayPal. To keep the c/c payments in USD instead of converting to my Aus bank, I set up a US based bank account via World First and listed that as my payout bank on Shopify. (I also had to get a US mail address (virtual post mail) and EIN (US tax number) and US phone number (phone.com) so SHopify would accept it as legit, which it is.
So any USD payments form customers via credit card eventually get paid out into my US World First bank in USD (minus shopifys transaction fee, but 0 conversion fee). Then any USD PayPal payments received into my Australia PayPal are withdrawn to the US bank account too, and then all funds from there are transferred form US into my HSBC Everyday Global account in Australia that can hold USD. Paying out into the HSBC account from my Austraia paypal will always convert funds to AUD first (as it’s the master currency of the account, being Australian). So, I send it to US and initiate a transfer with World First with great transfer rates, no conversion fee and instructions to keep funds in USD. From here, I can use the debit card to pay for native USD purchases (online payments, monthly direct debits), IN USD, with no transaction or conversion fee.
It’s quite messy, and I’ve been looking into Transfer Wise Borderless as a replacement for World First, but their rates seem a little higher and more limits on quantities of money to move around. Also, isn’t there an limit to how long funds can be kept IN the alternate currency accounts? The direct debit card sounds good tho.
I certainly need to streamline this, but has been a good work around so far for my position (Australia, selling in USD, wanting to keep USD funds in USD and avoid conversion fees, so I can still pay for USD based purchases with minimal fees, inetad of going USD>AUD>USD – 2 conversions and transaction fees.)
Currently, I’m going to try paying a supplier in Asia in USD via PayPal, pulling USD from my HSBC multi currency account using the debit card. Hopefully it won’t try to pull AUD, or USD then convert to AUD before converting again to USD for the final payment.)
Crazy crazy complicated. Anyone who has any simpler advice for me here, I’m all ears. Otherwise, I hope you find this helpful.
Hello
Called PayPal Hong Kong yesterday 26 March 2019, and no change – if withdraw US$ savings available on one`s PayPal Hong Kong account, to Hong Kong bank account, will get HK$ and suffer terrible rates and fees.
Thank you Jean for this post and all for sharing your experience, in particular, Mark – all sounded great until just read today that WorldFirst is closing business in the USA – https://www.worldfirst.com/us/…
Is there an alternative to WorldFrist that does the same Job?
Anyone?
Mig
My question is a bit general which I appreciate if anyone share his experience:
1- I have a PayPal account in country A (where sending/receiving/withdrawal options are permitted by PayPal). Now can I add a debit card issued from a bank account in country B to withdraw money into?
2- Then just in case of account limiting and verification requirement, do I need to prove my residency in the country B where I have got the card from (cause I open the account there as a tourist) ? Or PayPal only needs my residential info (ID card/utility bill) for country A where I physically reside?
3- If my PayPal preferred currency is dollar, Do European banks open USD account too for getting over the PayPal bad exchange rates? Does anyone know any good European bank (opening account for tourists, less fees, fair exchange rate etc.)?
Thanks in advanced!
How about if you just open a company with a bank account in the US, connect it to a US Paypal business account, and.. that’s it? 🙂 Or am I missing something?
Yep you can do that too 🙂
Just open a Borderless Acccount with TransferWise and link it to PayPal. It’s proven and highly accessible. Besides, every Borderless Account for “business” is free and can be apply via online by anyone, anywhere. Under the said account, four sub-accounts will be automatically available for continental US, Europe, UK as well as Australia. They have good exchange rates and debit card access.
Sounds good but unfortunately it doesn’t solve the problem of USD currency conversion if the business is EU-based.
Paypal only allows to add bank accounts from SEPA countries for my business account, and if you withdraw to these, they get “mandatory” conversion to EUR on PayPal side (with a hefty 2.5% fee).
It gets worse when I need to receive money in USD to my bank account and then pay in USD again. Then we have USD->EUR->USD double conversion, 5% fee in total.
However, I found the solution with Revolut Visa card. I can receive from PayPal to their Visa in USD and also pay with the same card in USD, without any currency conversion. Officially Revolut doesn’t give corporate Visa cards (only Mastercard), but you take their Visa card from their vending machines and just connect it to a business account. And, suprisingly, it works.
Does Revolu works for individuals who just want to withdraw small amounts? Less than 1k from paypal?
Haven’t tried, but if it works for corporate accounts, it should work for individual ones as well.
The problem is that you can only withdraw $2,500 at one when you withraw to a debit or credit card.
Only withdrawing $2,500 at a time doesn’t seem such a big problem to me, if only i could do that at all… (which i doubt i will be, but we’ll see). If you have to withdraw 100000 US$ it will “only” cost 100$ on withdrawal fees. I would gladly have paid that, if only i succeeded in getting my US$ unconverted out of Paypal at all… I believe it will cost you thousands if you have Paypal convert your 100k US$ into euros with their draconian fees. I heard it’s not 2.5%, but 3% or even 3.5% now, since they changed their policy earlier this year.
In Australia, start using PayID. It works like Paypal and most banks and credit unions are now signed up to it. Anyone registered for PayID can send a payment using their email address or phone number. The payment arrives instantly, directly into your bank account from the payee’s bank account! If you sell on eBay, offer a free gift to the value of what the Paypal fee is already built-in to your listing and provide the free gift to people who use PayID, thus saving you the Paypal fee and giving the customer the benefit of the saving. It’s a new revolution sweeping across Australia.
Hello Jean,
Thanks for this informative post. I couldn’t make it all the way through the comments though, so forgive me if you have answered this already. It is something like Stanly’s question #3.
I have a French business and am starting to sell online. I believe a large percentage of my customers will be American. I have a US bank account (real, not virtual).
Questions: 1. Can I be doing business from France, but use an American bank account in my deaings with Paypal?
2.Am I better off linking my US bank account, OR its associated debit/credit card? Both in terms of fees and ease of transferring paypal payments to myself?
I am living in a country where paypal does not permit to withdraw money. I can deposit money and transfer payment but paypal forbid me to withdraw the money because of the restrictions it has with my country. So I want to know can I have other alternative to withdraw paypal money?
How can I redraw money from my PayPal in Ghana in Africa
I can help you with that if you already have funds you wish to withdraw.
YOU CAN join leopay it will help you alot… i saw it on youtube
why i cant to withdraw much more money i can only 90 usd for what can u tell me
I’ve tried withdrawing money, a non US account and it took 5-7days to transfer and a very low exchange rate!
what did you use?
I am living in a country where paypal does not permit to withdraw money. I can deposit money and transfer payment but paypal forbid me to withdraw the money because of the restrictions it has with my country. So I want to know can I have other alternative to withdraw paypal money?
Many people in your situation have friends in other countries open accounts for them, then send them the money through other channels.
I have used many times paypal but in my opinion transferwise or conotoxia are a little bit cheaper than paypal. When I have to transfer my money by conotoxia I have very good course and generally it is more profitable for me. Not so much but always something
How do you use Conotoxia in conjunction with PayPal Jessy?