Using PayPal for Foreign Transactions

[Hobie-Wan Kenobi]

I had a big elaborate write up on a recent PayPal transaction (bought a reel from Japan). Once reviewing the post, i clicked on the photo and it brought me away from the page and I lost everything. I will do another write up after work.

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).

[jpmoney]

I have had several issues with paypal - they are criminals and do many shady practices that take advantage of people on transactions mostly in the form of outrageous fees.

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.

[saoulons]

The one way around it is to transfer any Paypal balance to your bank account as soon as it hits your Paypal account.

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.

[Cracker]

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.

[saoulons]

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.

Glad it's helpful. Worthwhile to check with your CC if they will charge you a foreign transaction fee though. Many do...

[Cracker]

What is your CC by the way?

[saoulons]

My main CC is the Starwood American Express.

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.

[JerryC]

Dont charge anything direct from your bank account in paypal, use a CC through PayPal, its safer that way. My bank calls me when I accidentally use my bank account through paypal when i buy in japan...

[Dr_Dropshot]

This is good information! Thank you

[saoulons]

We never heard ccass' story

[Hobie-Wan Kenobi]

We never heard ccass' story

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.

$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.

[saoulons]

Thanks. Yeah, I guess they figure it's a few bucks here and there, people won't waste time chasing this... And it adds up big time for them. Really bad business that they would try to weasel out of it vs. owning it. Says a lot about their corporate culture and business practices.

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.