posted on June 27, 2001 06:14:22 PM new
Uptil now I have been content with PayPal services and the ease of using their services. But the post about the exchange rates got me thinking. So I did some research.
I just withdrew 540 dollars to my checking account and PayPal is converting this to 594 Euro. This is 1.10 Euro for 1.00 dollar. However, the daily exchange rate for the dollar versus the Euro is 1.16 Euro for 1.00 dollar. So that means I actually get 30 Euro less then I should!
I would really like an explanaition for this. Risk factors and all are not an issue, as the Euro has been stable in it's exchange rate between 1.15 and 1.18 for months! Even the banks don't use such outrageous exchange rates.
As you may have noticed in the other post, the number displayed on TV (or other media) is the rate that banks exchange rates at (wholesale, with transactions at least of $1,000,000.00), which are different than the retail rates (that we charge, based off of the rates we get). There will be a differential in rates consumers pay versus what a bank pays.
posted on June 28, 2001 07:57:20 AM new
Hi Paypaldamon,
As I have posted in other threads about this subject of paypal exchange is a real touchy subject with me. I love the service provided by palpal but the exchage rate are the worst.
I fully understand the whole spin of "wholesale, TV rates, Interbank rates and on and on" but here are the facts:
June 26th I transfered funds from Paypal to my Canadian bank the exchange used was 1.4781. On the same day I had a Billpoint deposit the exchange was 1.4943. This is more than a 1.5 cent difference.
I am not trying to cause trouble it is just the facts.
Paypal needs to adjust the exchange rate to a competitive one.
posted on July 2, 2001 01:10:14 PM new
I am German and I have the same problem with Paypal special currency conversion. And I am also quite dissapointed how the situation changed. At the beginning of Paypal it was possible for international customers to transfer funds from Paypal towards their credit card accounts for a fee of abt. 3%.
But now you have no other choice as to accept their "free of charge" funds transfer, but with their special currency conversion.
Paypal´s practices are for my opinion easily to explain.
It´s an attempt to charge additional money from international sellers for their services.
Although I am generally content with Paypal services as a easy Payment option for international transaction, I am thinking about the relation between advantage of this service to the costs.
I try to avoid to get paid by Paypal for auctions with amounts exceeding $250, because that means to loose money.
Let me explain why: Let´s base on a $1000 final price auction. If I get a check from an US Customer I have to pay a checking flat fee of 30 DM and get a conversion app. 1% less than the daily currency exchange rate
if I cash this check at a German bank.
Based on todays exchange rate Euro(DM)/$
that would be abt. Euro 1,17.
So in this case I would get for my $1000 check Euro 1170 less abt. Euro 16 (checking fee) that makes Euro 1154.
Using Paypal I would get :
$1000 less about abt. 2,5% Paypal fees $975
$975 x 1,1043 Euro = abt. Euro 1080
Is about $75 difference or about 7%!!!!
I know what I am talking about, because I cash every week a few US $ checks, so this is not hypothetical.
It is quite simple what that means, Paypal´s rate isn´t competitive with the major banks exchange rate.
But their statement is indeed correct, you´ll never get this exchange rate, noted in the currencies markets. But mostly the difference is about 1-2% but not the discrepancy (1,184 Euro versus Paypals 1,1043 of today noon) as they want you make you to believe in their statement. Ask anybody in your bank, even for cash which has the lowest conversion rate, you would get more as for the Paypal conversion.
But the problem is they can afford to do this because there is no strong competition.
Most online Payment services are´nt available for none US citizens.
And other payment services like VISA are also still quite expensive.
The only thing I could recommend to international seller´s is to establish an US bankaccount and to transfer Paypal funds free of charge to this account.
Thank you for your comments. I have explained the issue with the information I have on hand, but I have addressed the concerns over the rates to the Product team.
posted on July 3, 2001 12:40:08 AM new
The problem of exchange rates is interesting. I travel to Canada a lot, and to Europe somewhat less often.
During all my travels I use a VISA bank-check card for as many purchases as I can.
VISA has no problem with getting very close to the correct daily exchange rate (usually less than 2-3 cents off.)
I keep a daily log of the exchange rates when I travel so I can compare them to my VISA statement (anyone may make a mistake, and it's just good policy to keep records to verify things are correct.)
I've noticed that PayPal is always on the low side of the exchange curve, even worse than the local foreign banks!
PayPal has also bitten rather deeply into my (slim) profit margin with their new service fees, which they have just raised AGAIN.
I'd like to sell cheaper, but those fees have to be paid.
So far, other than hiking fees, I've been OK with PayPal, but that may be because I allow them only access to a bank account I set up specifically for them. I keep my serious money in other pots!
posted on July 16, 2001 10:02:44 PM new
From Bankrate.com: "The exchange rates secured by Visa and MasterCard for credit card customers are based on wholesale rates offered to large banks and corporations rather than the retail rate offered to consumers."
http://www.bankrate.com/brm/news/cc/20010716a.asp
Damon wrote: As you may have noticed in the other post, the number displayed on TV (or other media) is the rate that banks exchange rates at (wholesale, with transactions at least of $1,000,000.00), which are different than the retail rates (that we charge, based off of the rates we get). There will be a differential in rates consumers pay versus what a bank pays.
So... Damon you are saying the PayPal corporation is paying a higher rate than Joe Schmoe with a Visa card????
