How to avoid PayPal's currency conversion fees and rates?

Adam Rozsa
18.11.21
5 minute read

Over 6 billion PayPal transactions were carried out in 2016. That works out to a staggering 193 transactions per second.

So, there’s no doubt that PayPal has transformed e-commerce. However, it is also important to know, that sending money with PayPal can also involve different kinds of fees, such as currency markup ranging between 3 and 4 percent, depending on the kind of the transfer¹.

You might be wondering, how to avoid these currency conversion fees and rates? This article will help you – we’ll show these fees, how PayPal calculates them – and how to avoid them.

For example, it may be a good idea to try out other international transfer services, like Wise. With Wise, you can save up to 6x - but more on this later.

Save with a free Wise account

📝 To give you a little heads up, in this guide you’ll find:

Where can I find the PayPal exchange rate?

This article uses information taken from the terms and conditions, and fee structures, applied to holders of US-based PayPal accounts. Although the way PayPal works is fairly uniform across different markets, if you have a PayPal account from elsewhere, it’s worth checking the small print on your particular account.

For some, it’s easier just to see a research case study on the actual costs of sending money abroad with PayPal.

You may have been wondering – does PayPal convert currency? The answer is yes: whenever you are paying for a foreign product or service, or sending money to friends and family located in a different country, PayPal automatically converts your currency to the local currency. 

Now, we're going to show you how you can check PayPal's exchange rates. First, you’ll have to log into your account. You can then take the following steps²:

  • Click on the details button, which is displayed on the left of the screen near the account balance information.
  • This will bring up a summary of your account balance. Click on ‘manage currencies’.
  • Here you can input the sort of transfer you want to do, and the currency you want to convert from, and to.
  • The currency exchange calculator will then display the currency rate that’ll be applied.
  • If you click to continue and confirm, the transfer will be processed.

When the currency calculation is displayed, you can check if the exchange rate used is fair by comparing it to the mid-market rate, sometimes called wholesale, spot, or interbank rate.

The mid-market rate is the only real exchange rate - the one banks use to trade money on global financial markets. You can find it with a quick Google search for your currency pairing, or by using a currency converter online.

paypal currency conversion rates

This is how to avoid PayPal's currency conversion fees

Banks and money transfer providers often give you a bad exchange rate to make extra profits. You might have been wondering, how to avoid these fees?

With a free Wise account, you don’t have to pay a currency conversion spread or other hidden fees. You only pay a small and transparent fee. As a result, you save a lot of money.

You might have been wondering, how do we do this?

Wise is different. Its smart new technology skips hefty international transfer fees by connecting local bank accounts all around the world.

Which means you can save up to 6x by using Wise when you send your money abroad.

See it yourself, how much you can save with free Wise in comparison vs. PayPal:

The true cost of sending USD to GBP

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Oh, and while you’re at it, check out Wise’s multi-currency account. Where you can manage and send dozens of currencies, all from the same account. With no monthly fees. You can also get the Wise multi-currency debit card, which you can use to pay for goods and services all over the world.

paypal currency conversion rates

How does PayPal calculate their exchange rates?

If PayPal converts your funds, they note that there’s a markup applied to the wholesale exchange rate - that’s the rate that they get from a third party when they convert currencies.

This markup means that the recipient receives less than you might expect if you’ve been looking at the mid-market rate. (See the previous section for more about what that means.)

Here’s a table summarizing PayPal’s currency conversion spread, depending on the type of the transaction:

Type of transactionPaypal’s currency conversion spread
  • Purchasing goods or services from a seller, paying in a currency which you do not hold in your PayPal account.
  • Sending money to a friend or family member in a currency that you do not hold at the time of the transaction.
  • Sending money using PayPal’s Payouts in a currency that you do not hold on your PayPal account.
4% (or such other amount - may be revealed during the transaction itself)¹
  • Receiving money either from a buyer or from a friend or family member in a currency that your PayPal account is not configured to accept.
  • Converting your PayPal balance from one currency to another, not in connection with any transaction.
  • Withdrawing funds from your PayPal balance held in a currency other than US dollars to the bank account linked to your PayPal account.
  • If you sold something and the transaction must be refunded or reversed, and you do not have the correct currency available in your PayPal balance at the time of the refund or reversal.
3% (or such other amount - may be revealed during the transaction itself)¹

The difference between PayPal's payment and balance transfer

It’s also helpful to know that you have a couple of different conversion options, when it comes to exchanging your currency with PayPal. Different charges and conversion fees are applied for each option – payment transfers and balance transfers.

PayPal payment transfers

A payment transfer is where you simply use PayPal as a means of transferring the payment, so the cash passes directly through your PayPal account without actually being held there. You don’t end up with any balance left in your account as a result of the payment being made.

PayPal balance transfers

A balance transfer is where you convert cash, which is already held in your PayPal account, to a different currency within your account. You might have a PayPal balance because people have transferred cash to you, and it’s still held in your payPal account, or because you’ve made a transfer into the PayPal account from your linked bank account.

It’s useful to know that PayPal uses a different exchange rate for balance transfers and for payments. If you convert money as a balance transfer within your PayPal account, you can get a better exchange rate, because the markup added by PayPal is smaller.

paypal currency conversion rates

Other PayPal fees

There are a few other costs involved in making an international payment with PayPal. The fees PayPal charges depend on how you fund the transfer.

When making a personal transfer, PayPal differentiates between three types regarding how you can fund your international transfer. This can be either paying with your PayPal account or using a bank transfer, paying by card or using an Amex Send account.

Keep in mind, that these fees are added on the top of domestic transfer fees and currency conversion markups. To summarize, here are PayPal’s international transaction fees:

Method of paymentPayPal fee
Cards5% (minimum: $0.99, maximum: $4.99)¹
Your PayPal or bank account5% (minimum: $0.99, maximum: $4.99)¹
Amex Send account5% (minimum: $0.99, maximum: $4.99)¹

If you’re using PayPal for business or creating an invoice, there’s even more you need to take into account.

📖 Want to learn more about PayPal's international fees? Read more about:

PayPal’s exchange rates vs credit cards

If you have a choice of completing your transaction using either PayPal, or a credit card, then it’s important to know the exchange rates offered. That way you can choose the one which represents the best value for you.

As exchange rates change all the time, you’ll have to get the most up-to-date exchange rate for the currency you want to convert, and for your specific card. Find them here:

Don’t forget that many credit and debit cards charge a fixed fee for spending or using an ATM overseas. The calculators above let you input this percentage fee, so you get a true figure of the costs of your transaction.

Once you have the current currency conversion rate for your credit or debit card, you’ll need to log into your PayPal account to check the exchange rate being used there.

Bottom line

The good thing is that you have several options to avoid these fees. You can always check out other money transfer providers like Wise to get a better deal when making an international transfer.

Just make sure, when you’re comparing the fees and total costs, to check that the exchange rate you’re offered is fair.

Learn more about Wise


  1. PayPal - Consumer Fees
  2. PayPal - Where can I find PayPal's currency exchange rates

All sources checked on 18 November 2021


This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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