When you use PayPal to convert the payments you have received or send a payment in a different currency, the Total Cost will depend on how you pay but generally you will be charged between 4 to 6 percent of the total amount being converted.
How is PayPal's exchange rate calculated?
The base foreign exchange rate at which PayPal obtains foreign currency is determined by 3rd party financial institutions, and are adjusted regularly based on market conditions. The exchange rate that PayPal then provides you also includes a processing fee above the base rate .
If you use your credit card to send a payment, you can usually opt to use your credit card provider’s conversion rate instead of PayPal's. If you choose to use MasterCard or Visa’s exchange rate, the applied conversion rate will be shown on your credit card statement, and not at the time of the transaction.
PayPal seeks to keep its foreign exchange rates competitive with credit card transactions and transferring money via banks however they are not competitive when compared to specialist on-line payment service providers such as OFX or the other FX currency converters for your country as featuring on our best rate foreign transfer calculator.
PayPal can handle payments between the following currency pairs : AUD, CAD, CHF, CZK, DKK, EUR, GBP, HKD, HUF, ILS, JPY, MXN, NOK, NZD, PHP, PLN, RUB, SEK, SGD, THB, TWD and USD.
Whenever you use PayPal to transfer money from one currency to another you will be charged a currency conversion fee.
The rate will be calculated at the time of the conversion in any of the following cases :
- If funds are transferred from one balance to another in an account, the exchange rate will be calculated and presented during the conversion
- If a payment is sent in Pounds Sterling using a credit card denominated in U.S. Dollars, the exchange rate will be calculated in the Send Money flow
- If a payment is sent in Euros and the receiver accepts the payment and converts it to U.S. Dollars, the exchange rate will be calculated before the total amount is credited to the account balance
PayPal is not a currency dealer and therefore must purchase foreign currencies from its bank. PayPal receives a quoted wholesale rate from its bank \[twice a day\], and adds a 2.5% spread above this rate to determine the retail foreign exchange rate that is applied to customers who make a transaction that involves a currency conversion (such as a payment in Euros from a U.S. dollar balance), or a withdrawal of dollars by a U.K. user to his local bank account (the dollars must be converted to pounds sterling before withdrawal).
If you click the link "Conversion options" on the Review Your Payment page, you will get a page that explains that you have two options for being charged for a currency conversion. The two options are:
- The PayPal currency conversion process - as described above
- The MasterCard and Visa currency conversion process - you will get the exchange rates negotiated between your credit card provider and your bank
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.