What you should know about PayPal's currency conversion fees and rates

14.02.18
7 minute read
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Over 6 billion PayPal transactions were carried out in 2016. That works out at a staggering 193 transactions per second.

There’s no doubt that PayPal has transformed e-commerce. But does it offer as good a value as other international transfer services, like TransferWise, for people who need to purchase goods and services from abroad, or send cash to their friends and family abroad? You’ll have to decide for yourself.

To give you a little heads up, in this guide you’ll find:

  • Where you can find the PayPal exchange rate used for your purchase or transfer
  • How PayPal calculates their exchange rates
  • Difference between a PayPal payment transfer and PayPal balance transfer (and which is cheaper for international transactions)
  • Other PayPal fees for international transfers
  • Who pays PayPal’s fees
  • PayPal’s exchange rates vs credit cards

Here you go, a guide to what you’ll wanna know about PayPals’ currency conversion and fees.


Sending money abroad? TransferWise could save you. A lot.

Before you get started, a word.

Banks and money transfer providers often give you a bad exchange rate to make extra profits.

TransferWise is different. Its smart new technology skips hefty international transfer fees by connecting local bank accounts all around the world. Which means you can save up to 8x by using TransferWise when you send your money abroad.

Independent research has even shown that, on average US PayPal business users can save 8x more by using TransferWise. In the UK, those savings jump to an average of 9x.

Check out how to make your first transfer with TransferWise. And give it a try.

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Now, back to what you came here to read.


Here’s all you need to know about the currency conversion fees and rates used by PayPal.

Where can I find the PayPal exchange rate used for my international purchase or transfer?

This article uses information taken from the terms and conditions, and fee structures, applied to holders of US-based PayPal accounts. Although the way PayPal works is fairly uniform across different markets, if you have a PayPal account from elsewhere, it’s worth checking the small print on your particular account. For some, it’s easier just to see a research case study on the actual costs of sending money abroad with PayPal. You can find a case study online about using PayPal business to send money abroad, and a breakdown of the actual charges incurred.

To check the currency conversion rate that PayPal will use for your international payment, you’ll have to log into your account. You can then take the following steps:

  • Click on the details button, which is displayed on the left of the screen near the account balance information.
  • This will bring up a summary of your account balance. Click on ‘manage currencies’.
  • Here you can input the sort of transfer you want to do, and the currency you want to convert from, and to.
  • The currency exchange calculator will then display the currency rate that’ll be applied.
  • If you click to continue and confirm, the transfer will be processed.

When the currency calculation is displayed, you can check if the exchange rate used is fair by comparing it to the mid-market rate, sometimes called wholesale, spot, or interbank rate.

The mid-market rate is the only real exchange rate - the one banks use to trade money on global financial markets. You can find it with a quick Google search for your currency pairing, or by using a currency converter online.

(Source 5 February 2018)

How does PayPal calculate their exchange rates?

If PayPal converts your funds, they note that there’s a mark up applied to the wholesale exchange rate - that’s the rate that they get from a third party when they convert currencies.

This mark up means that the recipient receives less than you might expect if you’ve been looking at the mid-market rate. (See the previous section for more about what that means.)

On top of the wholesale rate, PayPal will add a 3% charge if you’re in any of the following situations:

  • Purchasing goods from a seller who accepts payments only in a specific currency which you do not hold in your PayPal account.
  • Sending money to a friend or family member in a currency that you do not hold at the time of the transaction.
  • Sending money using PayPal’s Payouts or MassPay products in a currency that you do not hold at the time of the transaction.

And PayPal will add a 2.5% charge if the following applies to you:

  • Receiving money either from a buyer or from a friend or family member in a currency that your PayPal account is not configured to accept.
  • Converting your PayPal balance from one currency to another, not in connection with any transaction.
  • Withdrawing funds from your PayPal balance held in a currency other than U.S. dollars to the bank account linked to your PayPal account.
  • If you sold something and the transaction must be refunded or reversed, and you do not have the correct currency available in your PayPal balance at the time of the refund or reversal.

To see a real-life example check out this business case study on the cost of sending money abroad through PayPal business.

(Source 5 February 2018)

What’s the difference between a PayPal payment transfer and a PayPal balance transfer?

It’s helpful to know that you have a couple of different conversion options, when it comes to exchanging your currency with PayPal. Different charges and conversion fees are applied for each option.

You can choose between:

  • A payment transfer
  • A balance transfer

PayPal payment transfers

A payment transfer is where you simply use PayPal as a means of transferring the payment, so the cash passes directly through your PayPal account without actually being held there. You don’t end up with any balance left in your account as a result of the payment being made.

PayPal balance transfers

A balance transfer is where you convert cash which is already held in your PayPal account, to a different currency within your account. You might have a PayPal balance because people have transferred cash to you and it’s still held in your payPal account, or because you’ve made a transfer into the PayPal account from your linked bank account.

It’s useful to know that PayPal uses a different exchange rate for balance transfers and for payments. If you convert money as a balance transfer within your PayPal account, you can get a better exchange rate, because the mark up added by PayPal is smaller.

Other PayPal fees

There are a few other costs involved in making an international payment with PayPal. The fees PayPal charge depend on how you fund the transfer.

If you’re using PayPal for business or creating an invoice, there’s even more you need to take into account.

Regardless, though, you’ll want to check out an in-depth look at PayPal’s international fees in America or, on the other side of the pond, PayPal’s international fees for UK-based accounts to see what you’re really paying. Or check out a real life example.

Who pays PayPal’s fees?

In most cases, the sender will pay the fees listed above. Here’s what PayPal says about who pays the costs of an international transaction:

“Generally, the sender pays the fees listed above, except that U.S. recipients from Chinese senders paying from the Classic Send Money experience may be required to pay the fee. If you send money to a friend or family member from a third party (non-PayPal) website or by using a third party’s product or service, then the third party will determine if the sender or recipient pays the fee. This will be disclosed to you by the third party before the payment is initiated.”

(Source 6 February 2018)

PayPal’s exchange rates vs credit cards

If you have a choice of completing your transaction using either PayPal, or a credit card, then it’s important to know the exchange rates offered. That way you can choose the one which represents the best value for you.

As exchange rates change all the time, you’ll have to get the most up to date exchange rate for the currency you want to convert, and for your specific card. Find them here:

Don’t forget that many credit and debit cards charge a fixed fee for spending or using an ATM overseas. The calculators above let you input this percentage fee, so you get a true figure of the costs of your transaction.

Once you have the current currency conversion rate for your credit or debit card, you’ll need to log into your PayPal account to check the exchange rate being used there.

Whether it’s better for you to use PayPal, or your credit or debit card, will depend a lot on the specific card type, and the transaction details. However, in general terms, research has shown that Mastercard tends to offer marginally better exchange rates than Visa over time - and both usually offer a better deal than the PayPal exchange rate.

(Source 5 February 2018)

Nobody wants to pay more than necessary for shopping online or sending money to friends and family abroad. You have several options, aside from PayPal, and for many customers the fees and charges levied by PayPal mean it may be better to check out other money transfer providers like TransferWise to get a better deal when making an international transfer. Just make sure, when you’re comparing the fees and total costs, to check that the exchange rate you’re offered is fair.

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content is the publication is accurate, complete or up to date.

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