How much does it cost to pay in foreign currency with PayPal?

Paying with PayPal in Foreign Currency: What You Need to Know

PayPal is a popular platform for online payments, but its foreign currency conversions can come with a hidden cost. While convenient, using PayPal to pay in a currency different from your account’s default can lead to higher expenses due to markup applied to the standard exchange rate.

Understanding the Markup

PayPal charges a percentage markup on the standard exchange rate, meaning you’ll pay more than the current market value for the currency conversion. This markup varies depending on the specific currency pair. For example, transactions involving Euros, Hong Kong dollars, Hungarian forints, and Israeli New Shekels typically carry a 4% surcharge.

Finding Out the Exact Cost

It’s important to note that the markup percentage isn’t static and can fluctuate. To avoid surprises, always check the exact exchange rate and any applicable fees before completing your transaction. You can find this information by:

• Reviewing the PayPal transaction summary: This will display the final amount charged in your local currency, reflecting the markup.
• Using PayPal’s currency converter: PayPal offers a tool for converting currencies before making a payment, allowing you to see the final amount you’ll be charged.

Alternatives for Minimizing Costs

If you frequently make international payments, consider these alternatives to reduce costs:

• Use a credit card: Many credit cards offer competitive exchange rates and no foreign transaction fees.
• Transfer money directly: Sending money through a bank transfer or a specialized service like Wise (formerly TransferWise) can offer lower fees than PayPal.
• Pay in the local currency: If possible, choose to pay in the currency of the merchant or service provider to avoid any conversion charges.

In Conclusion

Paying in foreign currency with PayPal can be convenient, but it’s crucial to be aware of the potential markup on exchange rates. By understanding how PayPal’s currency conversion works and exploring alternative payment methods, you can make informed decisions and save money on international transactions.