Exchange rate Advice

[ebbarnett]

Sadly I was in a hurry to do my transaction and accidentally hit the USD button and thus subject to Paypal's horrible exchange rate (normally 2 or so points worse than prevailing credit card rate). What is worse is the refund a week later was hit with the double whammy of the latest horrible rate plus some additional loading ("fees, spread" ) etc. To baseline, the original USD/GBP market rate was 1.24 on April 4, moving to 1.26 on the 12th. On the 4th PayPal used a rate of 1.294 (roughly twice or more of the spread you get from the bank/credit card conversion) then today they refund at 1.23.

So roughly I lose 6 points on a 2 point market movement so PayPal is profiting at roughly 3x market movements.

Moral of the story: NEVER do ANY foreign currency transactions with PayPal - they are uncompetitive and profit-taking. If you want convenience just ALWAYS bill in original currency to your credit card, or if sending cash use a service such as Wise. This PayPal model is the 40 year old bank model of profiting and simply old economy in this day and age

[sharpiemarker]

@ebbarnett 

Yes, refunds do not use the same exchange rate on Paul base date if refunded beyond 1 day of the purchase date. You’ll generally lose value than not. Think of it this way: PayPal makes money through their fees but also gives back through cashback’s %s on their cards, refer a friend program, interest from PayPal Savings account. There are ways for you to ‘earn’ the loss back.

[ebbarnett]

Goodness - I should get a PPL credit card or refer a friend to "earn" back an unconscionable level of exchange commission? Seems akin to encouraging someone losing money at the Vegas slots to go to the ATM! You gotta know when to hold 'em and when to fold 'em - this is a folding case. Im not sure you get my point: (1) the level of exchange rate commission is at LEAST 2x what other providers are charging in the market; (2) The "select USD" option at the PPL payment screen has minimal disclosure of what you are signing up for and uncertain jurisdictions is considered deception and misleading marketing practice.

Of course you are entirely welcome to continue to pay the premium for PPL service, but sadly for them (witness share price) the payments market has met and overtaken them and there are much more streamlined and lower cost options out there. As the incumbent non-bank payment provider they do have the ability to sell a USP of security or other use cases but at these extra premium prices they are essentially shooting themselves in the foot. At shelling out $85 for essentially a $28 currency movement I am done with PPL after 20+ years. Best of luck to them!