In the fall of 2019, PayPal increased their currency conversion fees, hiding the new terms in a user agreement update.
Before September, there was a fee on currency conversions, which was 3.25% to 3.75% for cross-currency payments, and 2.5% to 3.75% for simple balance conversions.
Now, the starting point for cross-currency payments is 3.75% and there’s no explicit cap, only “or such other amount as may be disclosed to you during the transaction.”
The base percent for balance conversions was raised to 3%, and again there is no cap. They’ve also added another fee which is a percentage of the total amount converted.
It’s difficult to avoid these fees, since they are quietly shifted under consumers’ noses. Since the changes, there has been a need to find a better option for sending money, or at least strategies to prevent these fees. The great thing is a lot of financially-minded people have been working towards solutions, so you can keep more money in your wallet! Here are our suggestions:
1. You can disable currency conversion on PayPal so that they will charge you in the currency listed on the seller’s account. This won’t completely eliminate fees, but the banks will likely do the conversions at lower rates than PayPal.
2. If you do a lot of moving of money across currencies, you can look into multi-currency travel cards. For instance, Transferwise has a borderless account and travel card that still charges fees, but they are very low for major currencies. Getting a card like this will keep you able to travel and work across multiple currencies without getting bogged down in fees. Then you can add that card to your PayPal account.
3. Find an alternative to PayPal! Monito offers a helpful transfer comparison tool that allows you to see how much money will actually get through conversion fees based on countries and tool used.
No surprise that the dirt bag company owned by eBay is continuing to raise fees on digital transactions that have very little overhead. This is simply a money grab for a company that has held a tight grip on their industry by buying out any competitor that has had any success having bought out Bill Me Later, Braintree, Venmo and Xoom.
Please stay independent Stripe!
Do you use PayPal a lot? You may find it hard to keep track of all the comings and goings of your money. Use a budget tracker like this to keep track of your spending. You can even add a category specifically for your PayPal spending and earnings.