If you regularly receive payments via PayPal in a currency other than your native one, you may have noticed that the exchange rate PayPal offers is always significantly lower than the official exchange rate, or the one you would be offered by a bank or travel bureau. Some people may say this is daylight robbery, but PayPal is a very swift and convenient way to pay, and PayPal have to make their money somewhere, so this difference in exchange rates is one of the ways the company claw back some of the cash from you for using their free service.
There are a few things you can do to combat this.
Number one is always going to be Keep track of exchange rate trends. The Dollar/Euro/Pound market is constantly fluctuating, so just waiting a few days can make quite a difference to larger PayPal withdrawals that require currency exchange. Just type exchange rate into Google and a widget will pop up that not only shows current exchange rates for any currency you like, but will give you a graph showing recent trends. Try and set a sensible target exchange rate and wait until that graph hits it before considering moving any foreign funds from your PayPal account.
Another tip is to let someone else do the converting, by transferring the money our in it’s original currency and then changing it into your native currency using your bank. Be careful though, some banks are worse than PayPal for adding fees and giving poor rates, but if you shop around for the right bank account, you should be able to find one that suits your needs. PayPal will try and make this difficult for you, but the way round it is to change the default currency on your paypal account to whatever your most common payment currency is, so if you get paid a lot in USD, you change your PayPal account to a USD account in the setting section. Some have reported issues with this, where PayPal notices that the bank account you transfer into is not your native currency and still tries to apply a currency conversion, but in my experience transferring USD to GBP this has not been the case.
Finally, if you use PayPal for business and have a lot of overseas customers, consider charging them in your native currency, that way they will worry about PayPal fees and exchange rates, not you. PayPal now includes a free invoicing service that allows you to request funds in any currency.
Remember, every penny, or cent, or euro counts, so make sure it’s you counting them and not PayPal.
[image via Russ Payne]