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Paypal currency exchange rate different than official rate ?!

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OGsoundFX
Contributor

Paypal currency exchange rate different than official rate ?!

Hello,

I just converted some USD to Euros within my paypal account with a paypal conversion rate of 0.8669. but the official rate today is 0.89 !

That is a 11.56 Euros difference, it's huge ! How is that possible ?

I couldn't find any explanation anywhere for such a huge difference between official rates and paypal rates...

 

So every time I get paid with paypal in USD (which is almost always), they take a commission, plus they take another commission when I convert my USD to EUR ? In the end, paypal is becoming my biggest expense in my professional activity !

 

If someone could clarify this exchange rate issue, this would be very much appreciated.

Best,

Olivier <removed>

1 ACCEPTED SOLUTION

Accepted Solutions
kernowlass
Esteemed Advisor

Re: Paypal currency exchange rate different than official rate ?!

@OGsoundFX 

 

The actual rate to rate exchange rate is not the rate you pay if you buy currency to go on holiday etc as the business supplying you those currencies have to make a profit...same as paypal. 

 

https://www.paypal.com/uk/smarthelp/article/how-does-paypal-calculate-currency-conversion--exchange-...


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15 REPLIES 15
kernowlass
Esteemed Advisor

Re: Paypal currency exchange rate different than official rate ?!

@OGsoundFX 

 

The actual rate to rate exchange rate is not the rate you pay if you buy currency to go on holiday etc as the business supplying you those currencies have to make a profit...same as paypal. 

 

https://www.paypal.com/uk/smarthelp/article/how-does-paypal-calculate-currency-conversion--exchange-...


Advice is voluntary.
Kudos / Solution appreciated.

View solution in original post

OGsoundFX
Contributor

Re: Paypal currency exchange rate different than official rate ?!

That actually makes sense. So paypal takes a commission, but in any case, if I want to convert my dollars into euros I would pay an equivalent commission.

OK, thanks !

Jbsm77
Contributor

Re: Paypal currency exchange rate different than official rate ?!

Well PayPal are not giving a fair rate. You can get the interbank rate (the good rate) by using modern banking apps (eg Revolut etc). Link your card to PayPal and then you can transfer in USD or EUR on that card rather than using the PayPal exchange rate. You’ll basically save a lot of money. Unfortunately PayPal give a horrid rate, anything beyond making a profit.
usernumbernine
Contributor

Re: Paypal currency exchange rate different than official rate ?!

No, it's not about simply making a fair profit for a real service. Customers know that paypal needs to make a profit from each transaction, but this is different, because paypal labels it an "exchange rate," not a fee or markup, and says it's for the benefit of "locking in" a set (but artificial) exchange rate. In my case, it was over 5% higher than the mid-market rate (for British pounds)--most credit card companies markups, for example, are between 1 and 3%. The claim is that by the time the transaction goes through, the current exchange rate may be different, so it's like offering you insurance against this possibility.  But major currencies rarely change much over the course of a few days (and it could just as easily change in your favor). But they know that most people don't know this, nor understand that they're about to pay an inflated exchange rate.

 

I've seen some of the less reputable airlines using this scheme when you buy airline tickets, and they don't explain it either, but at least they give you the option to decline it--I didn't see any option to decline this wonderful offer in the checkout process, so instead I declined to use paypal.

Sher-13
Contributor

Re: Paypal currency exchange rate different than official rate ?!

This is helpful..but maybe they should just be truthful and fourthcoming about their double dipping and faux exchange rates in the first place. Keep the lies,false truths for profit out of it altogether. I'd much rather appreciate the truth then being lied to, and left feeling I've become victim of theft. They set fire to their client relationships this way. Absolutely disgusting!
Jbsm77
Contributor

Re: Paypal currency exchange rate different than official rate ?!

Ya sadly paypal are ripping customers off and being sneaky about it. Could report them to the regulator

Sher-13
Contributor

Re: Paypal currency exchange rate different than official rate ?!

Tell me more, I will gladly do this! It seems this is the ONLY way a drunk giant like this has their power taken away...I consider this to be financial abuse. Telling us one thing,(our exchange rates are on par with bank-"they send it to us TWICE/day") ,then while my attention is averted take me for all they can. It should be illegal. Perhaps of more ppl were aware they are being this sneaky, they would STOP! PAYPAL , in my personal opinion is too drunk with power at this point.
mian11224
New Community Member

Re: Paypal currency exchange rate different than official rate ?!

There is a difference between exchanging and converting currencies. You pay a commission when you exchange cash either at a bank or an exchange bureau, correct. However when you make a purchase using a credit card, the bank coverts the amount into you currency at the interbank rate (the commission that your bank may charge is different, some bank don't charge anything). PayPal adds its commission even when you use it to pay for the purchase. I made several purchase in one day. The credit card exchange rate was 1 = 1.096, i.e. I paid $1.096 for 1 euro. PayPal exchange rate for the purchase using the same card the same day was 1 = $1.18+ .

Their claim "Our currency exchange rates are competitive with conversion rates used by banks" is ridiculous

Jbsm77
Contributor

Re: Paypal currency exchange rate different than official rate ?!

Not sure who I’m replying to here now because PayPal is jumping all over the place.