Why is PayPal currency conversion different
PayPal currency conversion is different because PayPal adds a markup of about 3% to 4% to the wholesale or mid-market exchange rate, creating its own transaction exchange rate.
The difference from the real market rate comes from how PayPal builds its rate:
- Base exchange rate: PayPal starts from a base rate drawn from wholesale currency markets or government reference rates, and adjusts it regularly.
- Conversion markup: PayPal adds its own percentage on top of that base rate to set the transaction exchange rate used for your payment.
- Built into the rate: The extra cost is not listed as a separate line at checkout. It is included in a less favourable exchange rate, so it can be easy to miss.
PayPal's help centre includes a currency calculator that shows the rate it would apply, which lets you compare it with the mid-market rate before paying.
Some ways to reduce currency conversion fees on PayPal:
- Convert with card issuer: At checkout, or in the settings for automatic payments, choose to have your card issuer handle the conversion instead of PayPal. Your bank then applies its own rate, often based on Visa or Mastercard network rates.
- Hold multiple currency balances: If you regularly receive foreign currency, keep the funds in a balance in their original currency inside PayPal so no automatic conversion takes place.
Some users on Reddit have reported PayPal converting an amount even after choosing to pay in another currency, so review the final amount and conversion option on the confirmation screen before completing a transaction.