Does somebody smarter than me want to explain these PayPal changes for U.S. Paypalers?
Amendments to the PayPal Account User Agreement and the PayPal Cash and PayPal Cash Plus Terms & Conditions
We are changing the PayPal currency conversion spread to 3.75% for transactions that involve a PayPal currency conversion when you pay for goods or services or send money.
We are changing the PayPal currency conversion spread to 3.0% for all other transactions involving a PayPal currency conversion.
Amendments to the PayPal Website Payments Pro and Virtual Terminal Agreement
We are changing the PayPal currency conversion spread to 3.0% for all transactions involving a PayPal currency conversion.
We are providing the terms and conditions for our Account Updater functionality. When made available, Account Updater will allow merchants to update their U.S. customers’ eligible card data stored with PayPal to enable the seamless processing of recurring billing, recurring payments, and/or other eligible transactions.
Here is a link to the new policy.
www.paypal.com/us/webapps/mpp/ua/upcoming-policies-full
Basically when you send $ (USD) to someone receiving another currency say € (EUR) Paypal charges a “currency spread” for the convenience of the conversion. As I type this post $100 USD is worth ~€90.60. If however I were to be paying for an item that cost €90.60 I would under their new policy have to pay $103.75 as $3.75 would be going to Paypal for that service.
Currently as far as I can see they charge a “retail exchange rate set by an outside institution”. I cannot find what this number is and I am having trouble finding the last time I paid USD into a different currency. I’d imagine this new fee is slightly higher though.
If someone wants to avoid these fees there are options. One can always maintain balances in their Paypal of several currencies. This makes you the one shouldering the risk and the added tax complications of maintaining multiple currencies. One can also pay in the requested currency with a credit card that carries no exchange rates, except yep, you guessed it. Credit card companies also give you a worse exchange rate with a retail exchange rate baked in.
As Paypal notes on their site and it is a very valid thing, when you Google an exchange rate you are typically finding the interbank number. Like when the U.S. Treasury sends $1,000,000+ USD to a European central bank. It is unreasonable to expect those exact rates on small retail/consumer transactions. You can also visit your local airport or currency exchange and see how abysmal those exchange rates are to Google too.