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April 13, 2008

How much PayPal charges for currency exchange

Filed under: Java — negev @ 12:11 pm
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Today I was ordering a wireless finger mouse from Hong Kong to the UK. The only way to pay was by PayPal and the seller (usbfever.com) was billing in US Dollars. I have PayPal account set to use my UK Visa Debit card which is calculated in British Pound. At PayPal checkout page, I’ve noticed following:

Total: $40.98 USD
Visa/Delta/Electron **** £21.33 GBP
PayPal Conversion Rate as of 13 Apr. 2008: 1 British Pound = 1.92135 US Dollars

Other Conversion Options

Just out of couriosity, I clicked at ‘Other Conversion Options’ link. And it gave two options, which basically said:

  • use the above conversion rate set by PayPal. The benefit is that you’re charged in your card’s originating currency, and that amount won’t change and there won’t be any extra fees. Or
  • pay in the currency of the bill, which means that your bank or credit card company can apply its conversion rate and fee(s), plus the conversion rate may change between you place the order and when the bank or card company

So I googled for ‘VISA exchange rate’ and I’ve found http://corporate.visa.com/pd/consumer_services/consumer_ex_rates.jsp. There I’ve chosen British Pound GBP to US Dollar USD and my bank fee (which is 0%) and it displayed:

Effective: Apr 13, 2008
1 GBP = 1.97 USD / 1 USD = 0.51 GBP
That means PayPal exchange rate (GBP to USD) was 2.46% above respective VISA exchange rate. And since my building society (non-profit bank) Nationwide doesn’t charge fees for overseas non-cash card payments, I am better off being charged via PayPal in USD than in GBP. Also some UK credit card retailers (PostOffice) don’t charge those fees.
However, most UK banks and credit card companies charge about 2-3.5% fees for overseas non-cash card payments, so then it’s about the same.
The actual rate I got from Nationwide was 1.969, which can be same as the above 1.97 before rounded up.

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