PayPal currency exchange rates

[Ruben K.]

Has anyone noticed how paypal seems to be 'messing' with the exchange rates to their advantage?

Yesterday I bought a domain through paypal with my bank and it said:

Exchange rate: 1 euro = 1,49809 American dollars

While the current mid-market rates are far lower than that.
Today I withdrew money from my paypal to my bank account and it said this:

Exchange rate: 1 American dollar = 0,630670 euros

Which just happens to be the exact mid-market exchange rate.
The result is that whenever I send money, I have to send more money to get the proper USD value. But when I withdraw money I get less money back than their reverse exchange rate implies

Has anyone noticed this?
Is this legal?

[shadowbox]

Paypal's exchange rates are generally very poor - I would assume it's usually cheaper to arrange transfer of unconverted funds to your local bank account and have your bank use their own exchange rates to convert to your native currency (or transfer to a dedicated foreign currency account and exchange when needed).

As for purchasing in foreign currency, well I've never seen any credit card company offer reasonable rates, plus they'll usually add a fixed fee on the conversion. And no matter where you go, you'll get a different 'buy' and 'sell' rate. For example, my merchant provider (HSBC) will use (for example) an exchange rate of say 0.50 GBP to 1USD when converting USD transactions into sterling, but when they calculate my transaction charges on the same transaction, they'll use an exchange rate of say 0.51.

Another thing you need to watch out with when using Paypal is their fee structure is different for 'cross border' transactions - they are 0.5% greater. So combined with the poor exchange rate, Paypal is usually quite a poor deal for international commerce IMO. Also for UK merchants, fixed fees are much greater in comparison to US merchants, and no interest paid on your balance.

[dvduval]

Yes, I just did a transaction yesterday that was "off" by at least a few percent, and cost me $5-10.

[Fergal]

Thanks for the heads up on this. I suppose it is good business for PayPal. I'd imagine lots of PayPal customers, like myself, don't consider PayPal exchange rate. Probably because I use PayPal for transferring relatively small currency amounts. If I was transferring a larger amount I'd shop around my local retail banks for the best exchange rate.

[rj2kix]

i'm not sure abotu that, but i do know they charge 4.9% incoming on canadian transfers, gets to be a ***** when its $xxxx+

[Kailash Badu]

PayPal charges 2.5% if your transaction involves currency conversion and that cost is reflected in PayPal's exchange rate. I keep loosing money when I receive payments in say Euro and Pounds and have to convert them to dollars. If you wish to save every penny, and rightfully so, it's best to withdraw the foreign currency as is into your bank account and have your bank convert it to the local currency.