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How to Save on Paypal Currency Exchange Rates

by inFlow Inventory | Last Updated: July 30th, 2021 | Uncategorised | 8 comments

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.

inFlow Inventory

inFlow Inventory


  1. inFlow Inventory

    Paypal has improved a little recently in Canada, and you can get exchange rates better than 2.5% if you apply for Merchant Rates. But they still won’t be as good as the rates you could get using the above method. More info here:

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  4. prateek

    Know any method for converting US$ to INR ?? Will Bank of America do any work???

  5. RandySea

    Here’s a US customer’s perspective:

    I just ordered a product from a Canadian vendor’s website. Total incl shipping to US was $20.34 CAD. The Paypal charge would have been $21.12 USD, while the posted bank exchange rate was .98822.

    Instead of using PayPal, I charged the purchase to my US bank debit card which has a 1% foreign currency fee. They charged me $20.37 USD. If I had used PayPal’s conversion, it would have paid 3.7% more.

    I have no idea how this works from the vendor’s standpoint. But from a customer’s standpoint, it’s a no brainer.

  6. Jessica Weber

    Thanks for the tip, I’ve been looking for a way around this for months! It’s still very inconvenient, but I’m sick of loosing money.

    Currently I just track the daily exchange rate and any time it goes above a certain number I convert some more money into Canadian 😛 not the best system, but I’m still saving a few hundred bucks by being on the ball.

  7. Paul

    Rules to maximise your return: NEVER let paypal convert your money for you. They stitch you up more than anyone else I’ve ever come across: and I’m talking corner money changers in Bangladesh, currency houses in Peru, and banks and credit card companies. Paypal are running a scam. The best way to deal with it is set up a US bank account – still possible, with some yelling and screaming and lots of documentation – and use the debit card for that account to take the cash in your currency from that account at an ATM machine. Very simple once you’ve established a US bank account.

  8. RICK

    paypal for international payments is certainly rudely expensive the only redeeming factor is security i have a visa debit card which i could use to pay in us currency exchanged from nz dollars and id get a better rate BUT then the BANK HITS ME WITH A FOREIGN CURRENCY FEE ON TOP AROUND $8.50 so i still cant win !!!!!!!!! on smaller amounts say 150 usa which equals 180 nz dollars approx at 82c after being skimmed 2c per dollar then when you get thumped 8.50 fee onto might as well get paypal screwed at 3.5cents per dollar and stay anon lets face it the whole thing is parasitic ….. YET when my autoparts retail here at 300% higher than in the usa i get better quality more choice even tho the postage costs as much as my order !!! and travels 18,000k over 5 days its a very mental thing !!! on the bright side i like the fact i refuse to pay $125 nz for a waterpump thats sold in the usa for 23-25 bucs hmmmmmmmmmmmm ….


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