Conversion charges
Thread poster: Mohammad Khan

Mohammad Khan
Local time: 07:28
English to Dari
+ ...
Nov 21, 2007


I receive money in different currencies depending on the location of the client. And I can see that Paypal charges approx three cents extra when I change any currency to my currency, Canadian dollar.

Is there any way to go around these charges or what is the best way in order to be charged minimum?



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Madeleine MacRae Klintebo  Identity Verified
United Kingdom
Local time: 03:58
Swedish to English
+ ...
All financial products are sold on a spread Nov 21, 2007

Mohammad Khan wrote:
Is there any way to go around these charges or what is the best way in order to be charged minimum?

This is the rates I just got for EUR/USD:


The first rate is what you get for selling dollar, the second what you pay for buying dollar. The difference is called a spread.

On top this so called market spread, banks and other financial institutions (including Paypal) often/usually add their own trading spread. Since they make the most of their money on this spread, some banks etc. very kindly offer "commission free" transactions.

Then we have the difference between the market rates (plural as there is no single market for currencies) and so called tourist rates. The latter, tourist rates, is what you will deal with (unless your a large business dealing directly on the money markets). The spread here is even greater.

So the rates you see published at Reuters or similar sites have only a vague correlation with the rates your bank or Paypal will use for your transactions.

As to your question - do you know anybody who works for a a bank or other financial company? If so, their employer might allow them to exchange money at the market rate. If not, include the market spread and other invisible charges when calculating your rate.

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ViktoriaG  Identity Verified
Local time: 22:58
English to French
+ ...
Alternatives Nov 21, 2007

I do not know of any way to circumvent such charges with PayPal - this is why I avoid getting payments through PayPal. I actually charge a 4% fee to clients who prefer to pay me by PayPal, since I am in the right to receive the full invoice amount and the client is liable for the payment method chosen (I also offer wire transfer and cheque).

A good alternative to this is to have a bank account in foreign currencies, in most cases US dollars. You can then direct all wire transfers and cheques to that account and reduce the fees you would have to pay for currency exchange.

However, the best alternative I have found so far is to charge in Canadian dollars. I still offer to clients to pay me in their currency, but only so long as the amount of the payment will equal the invoice amount in Canadian dollars. This, by the way, is also an excellent way to prevent losses caused by the heavy currency appreciations/depreciations we are experiencing at the moment all over the world.

All the best!

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