How Much Is PayPal Stealing from You?

PayPal Currency Conversion Fees

First things first, any self-employed person, online or offline, who intends on making more than six-figures annually or who plans on being a major player should open a US bank account (assuming he isn’t from the US). Believe it or not, it isn’t that hard to open a US bank account as long as you research, contact, confirm and gather the right paperwork before heading over there. Yes, there will be travel expenses, but you must think long-term about the benefits of having a US bank account which include:

  • A commercial/banking presence connected to a global power
  • Significant savings on exchange rates
  • An easier path to making U.S. and global online purchases
  • Ability to establish a credit history in the States without a U.S. social security number
  • Ability to transfer funds with minimal hassle
  • Access to competitive and often lower banking fees and rates

TransferWiseSecondly, many online platforms use PayPal for payments, transfers, commissions, and royalties, for instance, LinkShare sends commissions to my PayPal account. PayPal provides many fantastic services, and fund movement is free as long as money remains in the same currency, but they fail miserably when currency conversions are involved. The problem is PayPal’s conversion fees are ludicrous, and they’ll erode your income and wealth.


  1. Ebay sends you proceeds from a sale through PayPal in US dollars, which you then transfer to your non-US bank account e.g. CIBC in Canada or ANZ in Australia.
  2. PayPal will charge you a minimum currency conversion fee of 2.5%, and they’ll convert at terrible exchange rates for a further loss of 1% to 3%. According to PayPal, “The exchange rate is determined by a financial institution and is adjusted regularly based on market conditions.” Thanks for the lack of transparency PayPal. As a result, each time you convert your money, you’ll pay a minimum of 3.5%+/- on your money transfer (that’s $350 per $10K).


  1. With a US bank account, you would send money from PayPal to that account for free (where country specific PayPal websites exist, you can also enjoy free fund movement, for example, within Canada using, Canadian banks, and Canadian currency).
  2. Then, you would use a low fee exchange rate service such as TransferWise to send money from your US bank account to your domestic bank account for a fee of less than 1%.
PayPal2.5% - 3.5% + unknown exchange rates determined by a 3rd party
TransferWise0.5% to 1% in most cases + mid-market exchange rates

I’ve been using TransferWise for several months, and I’m enjoying their service immensely. Also, I don’t mind taking the extra step to preserve my wealth. They’re a far better option than getting robbed by PayPal.

On a separate note, let’s remove PayPal from the equation altogether. Let’s say that you often exchange currencies for the sake of travel, living or business. For example, you divide your time equally between the US and Mexico or purchase inventory from overseas. You’re still better off using TransferWise over most banks and money services for foreign exchange transactions.


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