A while ago, I popped an extra $1,000 CDN$ into my paypal account. Although I have posted a few times in this blog about the rising foreign exchange rates here and here, I didn’t think much of the running balance in my paypal account.
All I do recall, is that I had about $XXXX dollars in $CDN plus $YYYY in $USD … then October 2008 $ZZZZ revenues in $USD was added to my paypal account .. and for some reason – silly me – I thought $XXXX + $YYYY + $ZZZZ = My Balance! But, I was wrong – as I found out today – I needed to pay some bloggers for the HART-Empire Network today and had to dip into the $CDN balance fund.
This is what is going on with Paypal
The *REAL* foreign exchange rate at the moment is 1.2247 rate. This means that if I had $1,000 USD I would get $1,224.70 in CDN on conversion (before fees). Conversely, the rate is 0.81653 the other way around, which means that if I had $1,000 CDN .. I would only get $816.53 in USD.
As you can see – Paypal converts my $CDN dollar monies at the rate of 0.788523, which means that my $1,000 CDN gets converted into $788.52 USD
In a single transaction – paypal just scooped ANOTHER 2.8% (0.81653-0.788523) fee from me and my money – on all conversions. This is in addition to the selling fees and/or receiving fees deducted from my account on other transactions.
Currency Conversion
PayPal launched Multiple Currencies to facilitate payments among our diverse base of international members. PayPal is pleased to offer conversion rates that are competitive with those of other consumer services.
The most readily available information on currency exchange rates is based on “interbank exchange rates”. Interbank exchange rates are established in the course of currency trading among a global network of over 1,000 banks, and are not available through consumer or retail channels. Consumers may use these rates as a reference, but should not expect to use interbank rates in transactions that involve currency conversion. To obtain actual retail rates, contact your local financial institution or currency exchange, or check the rate displayed in your PayPal transaction.
oh – wait! According to Paypal’s help, they do not really use “REAL” banking and foreign exchange rates .. they use “INTERBANK EXCHANGE RATES” …. Well – here is what the latest interbank exchange rates shows up to be .. 0.8090 … or, rather 1.6% more than what paypal uses.
So I lost a little money today in Foreign Exchange
Am I happy? Well, there’s nothing I can do about it. So, I accept Paypal’s income generating policy over and above ‘real’ foreign exchange rates. But, I’ve added a new category in this blog … the “GrrrRrRRrrrr” category.
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I understand your complaint, and I am currently in a similar situation. I have to say though that you should reread Paypal’s policy. It says that they use Competitive consumer rates. They further state that the rate that is most readily available in the interbank exchange rates. So when we go to XE.com we are seeing the interbank exchange rates and not the rates that consumers get.
I experienced this first hand when I was in Mexico. The rate on XE.com was 12.5 per 1 USD, but I was lucky to get 11.2 while I was actually there and exchanging currency at the bank.
I agree that it sucks, but it really is the banks that are taking their cut for the transaction for the service.
I have been looking for a site that published consumer rates but I have yet to find it.