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RWL

Paypal And Currency Exchange

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I discovered that if send your payment in the currency of the seller, the buyer pays the currency exchange, which seems to be 2.5% Maybe this is old news to those who have been buying and selling, but factor it into your offer. This one caught me by surprise.

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I discovered that if send your payment in the currency of the seller, the buyer pays the currency exchange, which seems to be 2.5% Maybe this is old news to those who have been buying and selling, but factor it into your offer. This one caught me by surprise.

 

But if you send it in your own currency, how can you insure that the seller gets the right amount? I don't think this is so much about how you do it, but about the fact that those who convert the currency take a percentage -- the buy-sell spread -- as their way of making a profit.

 

Different agents, though, may work with different spreads. When transferring money between American banks and my Danish one, I always have the Danish bank do the conversion, because their spread is about half that of the American banks. (Maybe because they do so much more converting?)

 

But for some, there can be an additional expense with PayPal. Unless they've changed their rules (I haven't used them in years), they will not handle any transactions except conversions in any but their standard currencies (dollar, pound, euro,...). E.g., no direct transfers in Danish crowns. I.e., if someone else in Denmark sends me a payment, PayPal first converts it into one of their standard currencies (taking their cut,) and then after effecting the transfer between accounts they convert it back (again taking their cut). Ouch!

 

In addition, although I can have a dollar-valued account at my Danish bank, PayPal won't allow payments either to or from that account in dollars, but only in Danish crowns, which they then must convert (taking their cut). Nor will they allow me to use my account in an American bank for PayPal transfers, because the associated address is Danish. Catch 484 (22 squared)!

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Take a look at Transferwise. It is a new currecy exchange service with some significant limitations, but much much cheaper than banks or PayPal.

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I would have saved about $45 with Transferwise. It is less expensive.

Edited by RWL

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I have used Transferwise several times from UK to Germany. Very happy with it so far. But I use Paypal if it's offered, still cheaper than my bank and lazier.

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I would have saved about $45 with Transferwise. It is less expensive.

I've just looked into using this service - much cheaper than my bank.

 

Thanks for the tip.

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