Unaccountable variance between merchant's payment and amount received. Why?

[SuSun]

I'm new to Paypal as a vehicle for transferring money internationally from my client to myself:  GBP to EUR.  I see the fee, clearly identified in the transaction details.  But what doesn't compute is the amount that PayPal show the merchant transferred at the outset.  The merchant transferred 450 GBP yesterday.  With yesterday's exchange rate, this would be 495.57 EUR.  What PayPal say was transferred is 489.30 EUR.  It's only a 6.27 EUR difference.  But I want to understand the principle/logic of the transaction before larger amounts are transferred.   Can anyone help?  

[sharpiemarker · Accepted solution]

@SuSun 

PayPal has their own exchange rate which includes a % currency conversion fee so it will never match the exchange rate you find on the internet. Go by the exchange rate PayPal uses in the transaction.

”How we convert currency

Other than as set out below and on the Fees Page, if PayPal converts currency, it will be completed at the transaction exchange rate we set for the relevant currency exchange.

The transaction exchange rate is adjusted regularly, typically between 5pm and 7pm Eastern Standard Time (EST) (in New York City, USA) on every Business Day and those changes will be applied immediately.

You can access a "Currency Converter" tool to see what transaction exchange rate may apply for certain currency conversions. Any rates shown using the Currency Converter tool indicate the applicable rates at the time you use the tool and are subject to change. Subject to other provisions of the user agreement, when you complete a transaction, the transaction exchange rate applying to the transaction will be shown to you so you can decide to make your payment at that rate or not. In certain circumstances, that transaction exchange rate may apply to the payment for the transaction whenever it is processed; or that rate may be valid only if transaction is processed by the seller within a limited time, as stated prior to the initiation of the transaction. After that limited time, we may use the transaction exchange rate in effect at the time the transaction is processed by the seller, or not perform the currency conversion.

If you have authorized a payment under a billing agreement, and we perform a currency conversion for that payment, we will use the transaction exchange rate in effect at the time the payment transaction is processed by the seller. Therefore, the transaction exchange rate for each payment under a billing agreement may vary.

If you are a seller and you have agreed that you will bear the transaction exchange rate rather than the buyer, or if you have a business account and you convert currency in your PayPal account that does not form part of a specific transaction into or out of your account (e.g. converting your balance to another currency), the transaction exchange rate will not apply. Instead, you will pay a currency conversion fee applied on an external base exchange rate, as described on the Fees Page. The external base exchange rate is based on rates within the wholesale currency markets on the conversion day or the prior Business Day.”

Invoice in EUR so the currency conversion is performed at the sender end (they can choose who does the conversion (PayPal or client’s debit or credit card) and you'll receive EUR and receive what you invoiced.

[SuSun]

@sharpiemarker.  For completeness and the good order of this thread, I note that my reply (thank you again) to you has been removed, or is not currently visible.  Do you know why that would be?  To come back to my question and your reply, your suggestion to use PayPay's Wallet/own exchange rate, I had already done and factored in before sending my question.  The other information doesn't really account for the variance. So for me, the question is still open.  I notice that PayPal_JonK has marked the question as solved.  Interesting!  I'll observe this with further transactions.