Long story short, they charge you 2.5% to use money you have sitting in your PayPal account for foreign transactions as a buyer. They hide it in the exchange rate. It says in the Legal section it is supposed to be free unless you use a card or financial institution linked to your PayPal account, which I did not do.
Go to PayPal's site and on the bottom right of the page, click on legal and check it out.
Please, hold all obvious questions until I do the formal write-up. It will clarify a lot and I will go into why the associate "justified" the 2.5% ("free" services).
The unfortunate part is that many foreign websites only accept paypal
I am going through something similar...I bought something from a japan website but was told by the retailer a day later that the item was out of stock. So they refunded my money, and it is sitting as a balance in my paypal account. Upon going to purchase another item I realized paypal wanted to charge another fee to make this new purchase.... scammers.
And then when making international transactions, pay with your credit card and have the transaction be billed in the international currency (so that Paypal passes it through instead of giving you a bad exchange rate). Credit card companies will give you close to a spot rate (I actually think that the rate comes from the Visa / Mastercard / American Express network). The only catch is that some credit cards charge a foreign transaction fee. Mine doesn't...
I may be deluding myself but I'd like to think that Paypal makes a little less on the transactions to credit cards given that they have to pay a credit card transaction fee and collect only the 3%-4% from the seller. I think that this is why they always make the default payment option your bank account... And on my side, I get the credit card reward points in addition to a decent exchange rate.
I never trusted Paypal but they are convenient and the only / most convenient option a lot of the time.
Glad it's helpful. Worthwhile to check with your CC if they will charge you a foreign transaction fee though. Many do...Cracker wrote:Thank you for this advise, I some how always have about a grand on my paypal account, and that exchange rate PayPal charges was always outrageous. I'll use my CC next time linked to my account.
My situation is a bit unique though as I travel a ton for work and stay about 150 nights a year in hotels... The reward points do add up and I haven't paid cash for a vacation in over 5 years... The card does have an annual fee but I can cover it with reward points.
I guess the only thing ill add is this. 4 different associates tried telling me the exchange rate was "live" and real-time. I told them the Paypal exchange rate was lower than it was in the past 365 days. The last associate I talked to looked it up and was short of words all of a sudden. I then told her where the Paypal exchange rate came from (current rate x 0.975). She then said "well, that 'charge' cover Paypal Buyer Protection and Return Shipping." I then explained how those are supposed to be FREE services. She then cut to trying to repay me what they charged from their exchange rate. I then said I'd feel a lot better if they used the real rate and just say they are charging 2.5% for the exchange. I said I wanted email traffic on the solution and I haven't seen anything yet.saoulons wrote:We never heard ccass' story
$5.02 is not worth 2 hours of my life but there are a lot of people on this site who use PayPal to buy their "enthusiast" tackle from Japan. That adds up to a lot of money.
Best solution for me remains to use a CC with no foreign transaction fee and to use Paypal to charge to credit card using the foreign currency. They make it annoying for you to do so (none of these options can be set as default).
There is a reason why the default option is always to take money directly from your bank account (and no way to change that default option). It's cheaper for them. I won't fault a business for trying to make money but they go a little too far for my taste.