I did some more research into these changes. It seems that the relevant User Agreement change went into effect on September 23, 2019. But the actual implementation of the "inability to opt out of currency conversion" is rolled out on a country-by-country basis. So, it might not be effective yet for all countries (apparently it is already effective for Russia and UK, but not for US). What's happening here is that PayPal now forces a feature called "Dynamic Currency Conversion" (DCC) for some countries. For POS (in-person) purchases - there is a Visa/MasterCard requirement that the merchant offers a way to opt out of any DCC conversion and use bank conversion instead. However, there is no such protection for online purchases, so PayPal is now leveraging that option for extra profit. Here is the change (relevant parts in bold) : --- https://www.paypal.com/ga/webapps/mpp/ua/archive-policies-full Updates to the User Agreement for PayPal Services – Effective Date: 23 September 2019 We’re making the following substantive changes to our terms: Exhibit A – Fees: We are changing the Currency Conversion Fees applied to transactions that involve a PayPal currency conversion. These Fees are set out in the sub-section on “Currency Conversion” in section 4 “Additional Fees”. <table of currency conversion fees follows> Where a currency conversion is required, it will be completed at the transaction exchange rate we set for the relevant currency exchange. The transaction exchange rate is adjusted regularly and includes a Currency Conversion Fee applied and retained by us on a base exchange rate to form the rate applicable to your conversion. The base exchange rate is based on rates within the wholesale currency markets on the conversion day or the prior business day; or, if required by law or regulation, set at the relevant government reference rate(s). The transaction exchange rate applicable to your conversion may be applied immediately and without notice to you. You may have the option (depending on the country/region you are residing in and the type of funding source) to Opt Out of currency conversion before you complete the transaction by selecting Other Conversion options on the Review Your Information page during checkout. --- So, in short, they now provide the opt-out capability only to select countries/funding sources (and are probably reducing that set of countries over time). However, for in-person purchases made with PayPal (point-of-sale transactions, very rare use case), PayPal *does* provide the opt-out capability, which is clearly stated in the User Agreement. This is because opt-out capability for DCC currency conversion is mandated by Visa/MasterCard for point-of-sale purchases.
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