Currency Conversion

[aklinz]

UNBELIEVABLE !  Not only does PayPal extort large "user fees" on every transaction, they are currently adding a 8% surcharge on Canadian users !   By this, I mean the fact that PayPal currently values the Canadian dollar at 94 US cents.  EXCUSE ME ????   The bloody Canadian dollar has been at 1.02 (or above that) for over a month !  At what point are you going to "get with the program" and actually adjust your currency values ?  Maybe a year from now ? I will simply refuse to use your fraudulent company from now on ! 

In disgust,

Andrew

P.S.  With policies like these, no wonder why the rest of the world hates Americans !

[dwnkei666]

I hear'ya,just got sweater from Cali was charged like$20 s/h

Ebay conciders Canada International not sure about Paypal,when i

came onboard with Ebay/paypal it was 1us=72cents,moneorder forget it

grr.

[fitbidder]

CaygeonDave,

1. Paypal displays the CAD price before exchange fees. The reason they don't include the fees in the price is that some people might pay with an existing USD balance, or by some other method that incurs a different fee.

2. Why would you want to use your credit card as the exchange mechanism? It's well documented that credit card companies have higher exchange fees than Paypal or Canadian chartered banks...around 3.0%-3.5%.

3. Unless CAD/USD is over $1.0250, you will pay more in CAD after the exchange fee. This should be self-evident.

4. I don't work for Paypal. And I'm not their biggest fan. But their exchange rates and fees ARE competitive and up to date.

[t00nCiNaToR]

OK so I just paid $6500.00USD from my Canadian account, They took 6,546.58CAD to complete the transaction... and at todays rates that's a mere 6,732.94USD... Wow paypal, you $uck it out of me. So shove your grade 3 math, you lost my business.

[fitbidder]

For the US$6,500 amount you quoted, the 2.5% fee is nasty.

Hint: For such a large amount, you're better off going through a FOREX broker, or talk to your bank about a more appropriate exchange fee. Paypal is not the way to go for such large transactions. They definitely $ucked it out of you...

Do your own due diligence...or pay the piper.

[dwnkei666]

paypal has no intention of doing anything

other then too place these guy's here,in

other words RUN!

[CultureOfOne]

fitbidder: I'm afraid you're the one who has the math backwards.  I've been conducting cross-border business for over three decades, so I know a thing or two about exchange rates, and PayPal is totally ripping off Canadians.  But just in case anybody is lost, let's look at the "grade 3" math: assuming that the Canadian dollar is trading at $1.05USD, then that means you have to pay $1.05 USD to buy $1 in Canadian currency.  Put another way: a US item selling for $105USD should cost $100 Canadian dollars.  Unfortunately, this isn't what PayPal is offering.

Here's a real-world example: on June 3rd I made a purchase of exactly $49USD, and had no choice but to use PayPal for the transaction.  PayPal offered an exchange rate of 1 Canadian Dollar = 0.997706 U.S. Dollars, when the banks listed 1 Canadian Dollar = 1.02194 U.S. Dollars on that date (feel free to look it up).  I had to pay $49.12CDN, when I should have paid $48.89CDN.  Put another way: PayPal took my $49.12CDN and turned it into $49.23USD (at the bank exchange rate), allowing them to pocket $0.23 in pure profit (roughly 0.47% of the total transaction value).  That may not seem like a huge difference, but it adds up on high-price transactions for any individual, and for PayPal it adds up over thousands of transactions every day - think half a percentage point of every cross-border sale.  Make no mistake, they're making a tidy profit off of Canadians through this scheme.

[fitbidder]

CultureOfOne,

First:

"Put another way: a US item selling for $105USD should cost $100 Canadian dollars.  Unfortunately, this isn't what PayPal is offering."

That is not correct, and is not reflected in the math. The correct version is: A US item selling for $105USD should cost $100 + 2.5% Canadian dollars. That is what Paypal offers.

Your math is good, except you are using the spot rate. You fail to take into account the exchange fee charged by Paypal or any Canadian chartered bank, which results in client buy and client sell rates.

Now, you said:

"when the banks listed 1 Canadian Dollar = 1.02194 U.S. Dollars on that date (feel free to look it up)"

I've looked it up: no bank here in Canada is quoting what you have just posted. As an example:

http://scotiabank.com/rates/fxrates.html

The spread is over 5%. That's about 2.5% each way off the spot rate.

Please provide a link showing a Canadian chartered bank quoting its client buy rate or client sell rate about equal to the spot rate. In other words, show me a Canadian bank quoting a buy/sell rate spread of about 0%.

I've looked it up and provided an example.

Your second paragraph is noise regarding real-time fluctuations and time risk in FOREX markets versus Paypal's quoted rate with exchange fee. It does, and has worked the other way. As you are probably aware (?), banks often charge more than 2.5% (a spread greater than 5%) when the aggregate FOREX market is volatile (high beta local currencies).

As you have been conducting cross-border business for over three decades, and know a thing or two about exchange rates, I trust you know what the term high beta refers to with respect to buy/sell spread.

For example, as I write this, ScotiaBank's buy/sell spread is 5.75% (about 2.9% each way off the spot rate); specifically a 1.0075/0.9500 spread. As you are probably aware, they do so to account for periods of high beta in local FOREX markets. Have you followed the Yen since the earthquake/tsunami? The Yen has been a very high beta currency lately, although it's beginning to moderate.

http://stockcharts.com/h-sc/ui?s=$XJY&p=D&b=5&g=0&id=p37761472568

Not to mention the fact that banks are free to set their own buy/sell rates, and some are more competitive than others. For the past week, Paypal's exchange fee has been more competitive than ScotiaBank's. Go figure. Welcome to capitalism.

[amyylouise]

Paypal seems to think that US Dollars are worth more than Canadian.  The exchange rate as of today is 1.0207 http://www.bankofcanada.ca/rates/exchange/daily-converter/

Canadian Dollars have been worth more than US for quite some time now.  Why does Paypal have this so mixed up?

[fitbidder]

Paypal's USD/CAD and CAD/USD exchange rates are right on the money and competitive.

Lifted from another thread:

People continue to confuse CAD/USD and USD/CAD.

Once again, here's the simple grade 3 logic and math for you:

The CAD is worth more than the USD...so USD$1.00 buys CAD$0.98, right? That's the same as saying that CAD$1.00 buys (approximately) USD$1.02.

So USD/CAD = $0.98...and CAD/USD = $1.02.

When you exchange from a weak currency (USD) to a strong currency (CAD), you receive a lower amount in the stronger currency. Then apply the industry standard 2.5% exchange fee and you're closer to USD/CAD = $0.98 - $0.025 = $0.9550.

Again, the stronger the CAD$, the less in CAD$ you receive when you sell USD$. You benefit numerically in the OTHER direction when you buy USD$.

The 2.5% fee is an industry norm. It's the same exchange fee charged by ALL Canadian chartered banks. Here's an example from ScotiaBank:

http://scotiabank.com/rates/fxrates.html

Notice how the buy and sell rate spread is about 5%. That's 2.5% each way. Currency exchange is not a charitable service. Paypal is only charging the same rate as chartered banks, and their exchange rate is up to date and competitive.

[fitbidder]

This is also lifted from another thread:

Here's the grade 3 math for all possible transactions between USD/CAD and CAD/USD using today's approximate exchange rate:

CAD/USD = 1.0250

1. CAD/USD + Fee = 1.025 + 0.0250 = 1.0500. To buy $1.00CAD, you pay $1.05USD.

2. CAD/USD - Fee = 1.025 - 0.0250 = 1.0000. To sell $1.00CAD, you get $1.00USD.

USD/CAD = 1.0000/1.0250 = 0.9750

3. USD/CAD + Fee = 0.9750 + 0.0250 = 1.0000. To buy $1.00USD, you pay $1.00CAD.

4. USD/CAD - Fee = 0.9750 - 0.0250 = 0.9500. To sell $1.00USD, you get $0.95CAD.

The two most common scenarios for us Canadians:

a) When you transfer your USD balance to a Canadian bank account (sell $USD), use 4.

b) When you pay for a USD purchase with Canadian dollars (buy $USD), use 3.