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How to Save on Paypal Currency Exchange Rates

Posted by inFlow InventoryLast Updated July 30th, 2021
— 2 minutes reading

If you’re a business based outside of the United States but use Paypal to collect US dollars, Paypal might be double-charging you.  First, you pay the usual Paypal fees.  Second, you’re probably paying Paypal another 2.5% to exchange your money from USD to your local currency.

You’d think that if you have a US dollar account with your local bank, you could just have Paypal deposit it to your US dollar account.  But they won’t; they’ll only deposit US dollars to US-based banks.  They won’t send you a cheque either.  They’re making easy money by skimming 2.5% off the exchange rate, and they like it that way.

Here’s how we got around it in Canada.  You might be able to do something similar in other countries as well.

First, we looked for a bank based in the US that would let us set up a business account with them.  If you’re a sole proprietor, you might be able to set up a personal bank account, which is a little easier.  We used Harris Bank.

Then, we looked for a good foreign exchange (forex) business to exchange our US dollars to Canadian dollars.  Most offered us rates that had a markup of only around 0.5 – 1 percent off the mid-market rates.  This meant that we’d save about $200 each time we exchanged $10,000.  We’re planning on donating this extra money to charity.  We chose Calforex, which is reputable, convenient, and offers competitive rates.

After setting those up, here’s how we transfer money:
1.  Withdraw money from Paypal into our US bank account (at Harris).
2.  Write ourselves a cheque from Harris to our local US dollar bank account.
3.  Arrange a trade with Calforex to convert our US dollars to Canadian dollars.

This takes some extra time to set up, but it’s worth it if you have sufficient volume or you’re annoyed with Paypal.