The Great PayPal Currency Conversion Rort. How to Avoid It? (US Dollars Paid into PayPal Account)

GnarlyKnuckles on 10/07/2019 - 00:04
Last edited 10/07/2019 - 10:20 by 1 other user

On odd occasions I have US dollars (USD) paid into a PayPal account. Whenever I transfer these funds to an Australian bank account, I notice that PayPal surreptitiously applies a clearly fictitious/opportunistic conversion rate ‘from their end’, i.e. BEFORE they transfer my USD to my Australian bank account. They essentially ‘cream off/misappropriate’ about 4% or 5% of the total amount of the transfer by applying an outrageously/blatantly fictitious conversion rate. They certainly do not inform me that they are ‘cavalierly profiteering’ by doing this at the time that I make a transfer, but digging through their (extensive) ‘TCs’ I note that buried in there in proverbial fine print is what essentially (by my reckoning) amounts to an admission that they make money by routinely applying fictitiously low conversion rates to most (all?) of the international transfers they ‘handle’ that involve currency conversion.

Has anyone found a good/effective way to get around this PayPal conversion rate rort? I tried solving the problem by acquiring one of those CitiBank accounts that allows you to have multiple ‘sub-accounts’ associated with the main AUD account, each in a different foreign currency. One of my CitiBank sub-accounts is designated to receive USD. After some considerable shadow-boxing with PayPal and the tireless efforts of an extremely diligent and capable Filipino call-centre CitiBank employee over the course of about a month, I WAS able to get that ‘USD-dedicated’ sub-account linked to my PayPal account. I thought I would finally see an end to PayPal opportunistically profiteering from me (essentially, ‘nicking’ about 5% of my money per transfer) via fictitious conversion rates.

Sadly this was not so. Outrageously/tellingly, PayPal now inform me that even though the CitiBank account I have at last managed to ‘link’ to my PayPal account IS dedicated to receiving USD, they will still convert my USD that they hold in my account at their end to AUD (using a fictitiously low conversion rate), THEN they will transfer that AUD amount to my USD account; then Citibank will need to ‘convert it back’ to USD.

Has anyone out there managed to solve this problem of PayPal blatantly profiteering by applying ridiculously fictitiously low conversion rates to money transfers from their own PayPal account to their own bank account?

I would dearly appreciate any advice on this.

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Comments

  • Amaris on 10/07/2019 - 00:15

    A large popcorn!

  • foxmulder on 10/07/2019 - 00:25
    +3

    If you are buying things with USD best to use that USD from your balance rather than withdrawing.

  • Meho2026 on 10/07/2019 - 01:12
    +4

    What about this
    https://transferwise.com/au/borderless/
    You’d get a virtual US bank account

    • flux on 17/07/2019 - 09:42

      can you withdraw money overseas from this account in anyway?

    • nightflyer00 on 16/05/2020 - 11:51

      Thank you Meho2026. I've just signed up for one of their debit mastercards. Seems like this will get me a much better rate on some upcoming US purchases.

  • penguincat on 10/07/2019 - 01:31
    +2

    Aren't the rates on TV and sites like XE meant to be taken with a gain of salt as they are 'businesses wholesale' rates?

    • GnarlyKnuckles on 10/07/2019 - 10:55

      I made no reference to 'the rates on TV and sites like XE'. I simply want a decent/realistic rate, i.e., something akin to what normal banks in Australia use. Not a rate that leaves me about 5% worse off than those rates.

  • josetann on 10/07/2019 - 03:16
    +1

    https://www.paypal.com/us/cgi-bin/webscr?cmd=_profile-mercha…

    Click on "Conversion Options" for the credit card(s) in question. Should work on any Visa or MasterCard. Does not for Discover. Not sure about American Express. Won't work for bank accounts (it would for a debit card).

    • EightImmortals on 10/07/2019 - 06:30
      +1

      So we can get scammed by the CC company instead of Paypal? Or is one better than the other?

      • josetann on 10/07/2019 - 08:02

        I misread. My link is for keeping PayPal from "helpfully" doing the conversion when paying, instead of letting the credit/debit card handle it (it's almost always better letting the bank handle it, I haven't seen a case yet where PayPal charged a lower fee, though I guess it could happen).

        If you're receiving USD, you want a US PayPal account. Unless you're often paying for things in USD, in which case you should be able to just use the USD balance in your PayPal account. I haven't linked my Transferwise account to PayPal, but I think that'd work. It's certainly the best way to convert funds that I've found. Just transfer the money into the Transferwise account, convert, then transfer out.

        • EightImmortals on 10/07/2019 - 08:48

          Thanks for that. Yeah I'm just trying to avoid the scalping. I do buy stuff from the USD just using PP linked to my CC. Even though PP does the conversion I still get hit with an 'international transaction' fee on my CC. Must use 28 Degrees more methinks. :)

        • GnarlyKnuckles on 10/07/2019 - 10:59

          Re 'If you're receiving USD, you want a US PayPal account.', I don't know what you mean by that. I have USD sitting there in a PayPay account…

          • josetann on 10/07/2019 - 11:44

            @GnarlyKnuckles: How do you get it out though? That's the issue. If you're spending as much (or more) in USD as you're receiving in USD, it's a moot point. But if you want to deposit those funds into an Australian bank account in AUD…you get hit with PayPal's conversion fee.

            So the work-around is to have a US PayPal account. Withdraw those funds into a US bank account (Transferwise "should" work for this, but I haven't actually tried, as I have an actual US bank account). Assuming Transferwise works, you can then convert directly into AUD, then transfer to an Australian bank account.

            A quick google shows that people have been able to use Transferwise on their PayPal accounts, the withdrawal is flagged for a fraud review and needs an extra 24+ hours to process (again, I can't comment on this, as my Transferwise account is not directly linked to PayPal). Also, you can only transfer FROM PayPal TO Transferwise, not the other way around.

  • garetz on 10/07/2019 - 03:32

    You need 2 accounts, one that is only usd, the other only aud, and use appropriately.

    • GnarlyKnuckles on 10/07/2019 - 11:03

      The problem seems to be that PayPal opportunistically always converts any USD transferred to any account based in Australia to AUD, even if that account is in fact 'in' USD. Presumably they maintain this policy for the specific purpose of making bulk cash by ripping off the 'client' about 4 or 5% of their money when each and every transfer is made. I will check-out this 'Transfer-wise' suggestion, perhaps that will be a viable option.

  • ssquid on 10/07/2019 - 04:05
    +1

    Guessing this is your only experience converting currency?
    You always get a lower rate than what you see on XE etc. Paypal is a little bit higher than average (~5% instead of ~3%) but that's what you get for using a fake bank.

    • GnarlyKnuckles on 10/07/2019 - 11:07

      Guessing this is your only experience converting currency?

      Not at all, I have 'experienced'/engaged in currency conversion in numerous different contexts. Never have I been so blatantly ripped off as I am by PayPal. The honest thing for them to do would be to use a standard conversion rate, and charge a clearly specified fee. Instead though, they pretend there is no fee, then slyly profiteer by applying a scandalously fictitious conversion rate. They must be making millions out of this racket, every day.

  • dazfire on 10/07/2019 - 08:19

    As said already https://transferwise.com borderless accounts available for 40 countries. oh and a debit card coming for aus.

  • Ocker on 10/07/2019 - 08:26
    +1

    Simples - if you don't like the PayPal rates just close your account.
    Then have your USD sent to your $A bank account and they will charge you about 3%-4% in the FX rate, PLUS about $30 transaction fees.

    • GnarlyKnuckles on 10/07/2019 - 11:09

      Simples - if you don't like the PayPal rates just close your account.

      Erm… not so 'simples'. Some international employers only pay internationally recruited staff via PayPal.

      Do you have any 'less simples' suggestions?

  • geek001 on 10/07/2019 - 09:40

    Is it possible for you to just get a US Paypal account and a Transferwise borderless account?

    • GnarlyKnuckles on 10/07/2019 - 11:10

      As stated above, I am not sure what you mean by 'a US PayPal account'. Is there such a thing? Does it require being a resident of the US? If so, then the answer is no; I do not have any way to 'become a resident of the US.

  • wannagrababargain on 10/07/2019 - 10:29

    Are we talking large sums of money? Can they pay you in AUD instead? Getting paid through Paypal is more of a convenience factor for your "customers" than as a an efficient way to transfer funds between currencies. Paypal actively discourages transferring back and forth because they don't want people/bots to use their platform for currency speculation. They do this by charging 1-2% above a retail conversion ratio. You could always just leave the funds in Paypal in USD and go spend them as USD in online shops.

    • GnarlyKnuckles on 10/07/2019 - 10:52

      1. Yes, many thousands.

      2. No, I cannot simply be paid by certain employers 'in AUD instead' (hence my problem).

      3. Re 'more of a convenience' etc.; that is simply not so. Many international employers now pay staff recruited from other countries via PayPal; in USD.

      4. Re '1-2%' that is equally false, at least as far as conversion from USD to AUD is concerned. It is much higher than that; and they do not 'divulge' this at the time of the transfer, they simply note a dramatically fictitious conversion rate in very fine print at the bottom of the page. The fact that they actively profiteer/make money by applying drastically fictitious conversion rates is divulged in their TCs, but it is somewhat hard to find.

      5. Re '… leave the funds in PayPal in USD and go spend them as USD in online shops'; see point #1 above. This is simply not applicable.

      • wannagrababargain on 10/07/2019 - 11:59
        +1

        I did say 1-2% ABOVE "retail" with retail meaning 3% in most cases. "Receiving money on odd occasions" was quite vague, didn't know your employer paid you via Paypal. Sorry just trying to be helpful.

        • GnarlyKnuckles on 10/07/2019 - 12:16

          No apology required Wazza, any and all comments/suggestions are most welcome and much appreciated.

  • Illian on 10/07/2019 - 12:31

    I just made a transfer the other day and it literally said clear as day that they add their own 3% or whatever on top as a fee. Like, the information is right there clear as day, maybe pay more attention? I just spent literally 5 seconds finding it, here's the quote:

    "Buying around the world.
    Many international sellers accept Australian dollars. If you’re buying from one that doesn’t, we can convert the currency for you.

    To US or Canadian dollars 3.5% above the exchange rate
    To all other currencies 4% above the exchange rate
    Within your PayPal account (not as part of a purchase) to any currency 2.5% above the exchange rate"

  • R1ngSt1nger on 11/07/2019 - 21:43

    As already stated a couple of times in here… TransferWise.

    You get a US bank account which you then link to your Aus PayPal account.

    Then you can withdraw the USD from PayPal to TransferWise without a fee.

    You can then use TransferWise to convert USD to your AU bank account for a very reasonable fee.

    I do this on a weekly basis and it works perfectly.

    • GnarlyKnuckles on 12/07/2019 - 00:09

      Yeppers, I have taken heed of this Saz-Caz, and I am trying it. So far I have successfully transferred a reasonable sum OUT of my PP account INTO my TW account (all in USD of course) at no charge/fee/no conversion involved… I am now poised to instigate the next step; which is transferring that money into my (Australian-based) 'CitiBank' account. Am I missing something, or is it a bit hard to find the correct tabs/processes to use to actually transfer money TO YOURSELF via TransferWise? All the searches etc. I try on the site throw up endless information about how to transfer money to someone else… I have not located anything about 'linking my own Australian bank account' to my global TW account, transferring money from that TW account to that Australian bank account etc.

      Or should I simply proceed and make a 'transfer to myself' via the standard channels/processes described by TW on their site, just as though I was transferring it to someone else? My initial impression is that that would incur a fee…

      • R1ngSt1nger on 12/07/2019 - 10:23

        Yo Gnarles, on the TransferWise website, just click on Recipients, then 'Add your bank account' and punch in your BSB and acc number.
        Then click on the 'Activity' on the left-hand sidebar, then press the green 'Send Money' button up the top and follow the process.

        It'll give you a guaranteed rate including the fee taken out.

        When it asks what bank account, just select 'Myself'

        Let us know how it goes :-)

        EDIT: Yes, it does apply a fee, but it's much smaller than what any other place would charge you.

        • GnarlyKnuckles on 15/07/2019 - 12:35

          Re

          It'll give you a guaranteed rate including the fee taken out.

          That is not what I wanted to do. What I wanted to do was transfer my USD from my Paypal account into my USD CitiBank account with no conversion involved. I wanted my USD to be sitting there in my Australian CitiBank account (still in USD); not in PayPal's greedy little hands. I have at last worked out how to do this, but it is not quite as simple as the instructions you kindly provided above. What I had to do was set up a 'new recipient', who was in fact myself, but could in fact have been anyone. For that recipient's bank details I had to enter the CitiBank 'SWIFT' code (which for my purposes is evidently CITIAU2X), then my CitiBank account number, without the BSB; i.e. just 9 digits. Only that way can I avoid the USD being 'automatically converted' into AUD along the way. I did a Transferwise transfer of 2K as a test, then I did a 'mock'/simulated PayPal transfer of 2K straight after (didn't confirm it at the final 'confirm transfer' step), and the comparison is astonishing.

          Transferwise charged me a total of $4.33 USD (~$6.17 AUD) in fees, resulting in my CitiBank account receiving $1995.67 USD. Citibank assures me over the phone that if I transferred that $1995.67 USD from my USD Citibank account into my AUD Citibank account, they would apply the 'CitiBank BUYS' rate (as opposed to the substantially lower 'CitiBank SELLS rate) which is currently 1.45; resulting in me 'achieving' a total of $2894.52 AUD, sitting in an Australian bank account ready to be used/transferred/withdrawn from an ATM in cash at no charge.

          In contrast, if I transfer that same 2k USD directly from my PayPay account into my CitiBank account, even the CitiBank account that is in USD, PayPal will 'automatically' convert it to AUD first (at an abysmal/profiteering/opportunistic/fictitious/totally unjustified) conversion rate. That route (or should I say rort) would have resulted in $2775 AUD being deposited into my CitiBank account directly by greedy PayPal; and presumably CitiBank would have dutifully 'converted it back' into USD, bacause that is the currency that particular account is held in. LOL

          So, PayPal -> TransferWise -> CitiBank = $2894.52 AUD 'cash'.
          PayPay -> Citibank = $2775 AUD 'cash'.

          It seems to be the combination of services currently offered by TransferWise and CitiBank here in Australia that makes it possible to avoid the blatant profiteering PayPal is opportunistically engaging in; no doubt simply because they know that many users will have no choice/cannot dictate how they are paid by their international employer.

          Transferwise and Citibank should be warmly congratulated/patronised, and PayPal should be ashamed.

          • Techefy on 28/11/2020 - 05:30

            @GnarlyKnuckles: Hi, I used the same way last year. Have you tried it recently? Now paypal is charging an extra fee of 3% from withdrawing USD balance to USD bank account.

            • GnarlyKnuckles on 29/11/2020 - 05:23

              @Techefy: Really?!? PayPal is now charging 3% to shift your own USD from your PayPal account your own USD bank account?

              That is ludicrous, and given the ever rising surge of competition in this space, it suggests that PayPal is on some sort of weird 'self-destruct' mission. Peeps are already abandoning PayPal in droves because of their 'fictitious exchange rate' scheme/scam, given the numerous better options now available (WorldRemit, TransferWise, etc.).

              The last bastion of relevance for PayPal seems to be their enduring affiliation with Ebay (AKA 'FeeBay') … which is a dubious 'cornerstone' on which to hang their hat. In that capacity they continue to run their 'worldwide exchange rate scam' with any buyer who is not savvy enough to pay directly with a credit card that uses their own exchange rates instead (such as 'CitiBank').

              I strongly encourage anyone and everyone to avoid using 'PayPal' to the greatest extent possible, for numerous reasons. There are way better options out there that apply honest/real exchange rates, and don't blatantly profiteer at every opportunity.

              • Techefy on 29/11/2020 - 13:09
                +1

                @GnarlyKnuckles: I agree that Paypal is in the process of killing themselves in this competition. But buyers still prefer using Paypal as it is believed that Paypal is the safest way to pay online, and from the buyers' side it makes sense. I'm also totally frustrated with this new 3% fee, but it is not easy to give up PayPal due to the above reason. Therefore I'm finding other ways to convert USD to AUD with a reasonable exchange rate, rather than giving PayPal to convert it. I'm still looking into few ways like going through a forex site for the currency conversion. Seems like Paypal's chargeback system is not favorable to many forex/stock/crypto sites, which makes them try to avoid PayPal. Will update if I could find a better workaround.

  • BuilderBob on 01/11/2019 - 04:20

    Sorry to hijack an old thread, but I'm in a similar boat, but with EUR instead of USD. Since Paypal can't transfer to European banks (only AUS/US), Transferwise doesn't seem to be an option. Is there an alternative out there?

    • GnarlyKnuckles on 01/11/2019 - 15:09

      Check out XE.com

      Let me know if you have any joy.

      • BuilderBob on 01/11/2019 - 17:28

        Ah, sorry if this wasn't clear, but I've got a EUR balance sitting in paypal - not sure if I can use xe to get it out?

        • GnarlyKnuckles on 01/11/2019 - 23:48

          BB, you need to clearly describe your situation, then clearly state your exact aim/s, then ask specific/focused questions about how to achieve those aim/s.

          So far, all I know is that you 'have Euros' in PayPal, and you 'want to get them out'. There's any number of ways to do that. Are you looking to minimise fees? Optimise the exchange rate applied? Achieve the transfers in the fastest time? Transfer the Euros to someone other than yourself? Something else?

          Without any idea of what your primary aim/s are, no one can advise you.

          Cheers

          • BuilderBob on 04/11/2019 - 15:41

            @GnarlyKnuckles: Specifically, I'm trying to move my EUR paypal balance into my Australian bank account while avoiding Paypal's rather ludicrous 4% spread. Based on my current knowledge of what platforms are out there, I'm not sure whether this is even possible which is why my initial query was rather vague - more a "hey anyone done this successfully?" rather than a request for step-by-step instructions! :)

            So I'd say my objective is to minimise fees/spread and end up with the most A$ at the end of the day - even if it takes a little longer to do so. In my research, I did see a service called Xoom, owned by Paypal, which would have fit the bill (as you're using paypal balance for international bank transfers)… but it seems to be open to US/Canadian residents only.

            • GnarlyKnuckles on 07/11/2019 - 00:12

              @BuilderBob: Note that with TransferWise, Aussies can quite legally/legitimately have a bank account that is based in the US, and 'operates' in USD. Will this perhaps satisfy "Xoom"'s requirements re US/Canadian… erm… '… ness'?

              • BuilderBob on 07/11/2019 - 13:40

                @GnarlyKnuckles: Will give that a try, thanks.

                • GnarlyKnuckles on 08/11/2019 - 14:06

                  @BuilderBob: OK cool, and drop a comment back here to let us know how it goes/if it solves your problem. Transferwise is really good re exchange rate. ALso, I have now managed to drop 'CitBank' out of the above process, and I just transfer my PooPal USD to TransferWise for 0 cost/fee, then transfer the USD to my Australian Bank account in AUD… TransferWise applies a great exchange rate, and only charges a really small fee.

                  TransferWise also now issues a debt card to Australians on request. I received mine very rapidly after requesting it. I haven't tried it yet, but I suppose I could do an 'internal transfer' of some USD into AUD, then spend using the card here in Australia. I reckon this TransferWise card might be useful to have while I'me travelling… I did note in the 'fine print' though, that they charge a transaction fee for withdrawals that are over a certain (pretty low) amount.

                  Anyways, TransferWise rocks, and PooPal sucks crap. That's the moral of the story.

            • namanuu on 22/08/2020 - 14:59

              @BuilderBob: im in this exact same position .. how did you go?

    • CacheHunter on 02/11/2019 - 00:49

      Since Paypal can't transfer to European banks (only AUS/US),

      Your exact situation is unclear. PayPal.com.au accounts can't transfer to EU Banks, but PayPal Germany or France certainly can.
      Use a different email address, a VPN and EU address to setup the account with PayPal in your preferred European country.
      I've not tried the above for the EU, but it works with the US, so I don't see why it wouldn't for the EU.

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