PayPal fees

A few weeks ago I figured out that PayPal fees for payments in other currencies are higher than I had thought. I realized that the seller got about 4% fewer euros than I sent, but I hadn't factored in that I got about 4% fewer euros for my dollars than the mid-market exchange rate.

So, I wrote to CoinTalk about it (here) and now I put up a web page repeating those comments on why I prefer TransferWise (There are other, similar, firms) to PayPal:
http://augustuscoins.com/TW.html
(The text of the page in its entirety is in this CoinTalk post at the end, below the horizontal line ____________ .)

If you have used PayPal to pay in some other currency than your own, consider responding to this post after figuring out the actual exchange rate they gave you. Compare it to the published exchange rate for that day, and let us know.

Here is how. Find the amount they took in your currency (say, in dollars) from your account (PayPal tells you). Find the amount you entered to pay (say, in euros). Divide the first by the second to get what you are actually paying for a euro. Compare that to the published value of a euro (google it). Then, reply to this post. Let us know about that hidden fee above and beyond the 4% or so that it obvious. (I give an example below.)

My new page is next:
_______________________________

Why you should use TransferWise for payments in currencies other than your own.

PayPal charges a much higher fee than they claim for international sales by sneakily using a poor exchange rate. The seller gets about 4% less than you send, which is the expected fee. But you also pay for euros at a higher rate than the listed "mid-market" exchange rate. So, when I paid in euros Dec. 8, 2019 and the day's exchange rate was given on websites as $1.106, the actual rate PayPal gave me was $1.154 (dollars subtracted divided by euros I sent). That's an additional 4% that PayPal takes.

For example, the seller asks 100 euros and accepts PayPal and knows he will only get 96. That looks like 4%. But wait. I buy 100 euros in dollars (at $1.154/euro) so I pay $115.40. $115.40 really buys (in bulk at $1.106/euro) 104.35 euros. So, PayPal gives out 96 and gets in 104.35. That works out to a 8% take. I'll bet you didn't think the fees were 8%!

If you are in the US and pay abroad with PayPal, I invite you to compute the ratio of the PayPal deduction from your account in dollars to the number of euros or pounds or CHF sent. Then google the price of that currency that day and see how they compare. Any excess you pay goes into PayPal's pockets, and that is not counting the fee of about 4% to the seller.

That's way I now pay abroad with TransferWise (Their site: https://transferwise.com/ . Their Wikipedia link). They give a much better rate and much lower fees. By the way, TransferWise incurs no "wiring fee." Auction firms will remove any charge for that (often 12-20 euros) from your invoice. TransferWise takes a while to set up, but once I have paid a particular firm the second time is very easy. I feel good about giving the seller the full amount and not giving so much to the financial services industry.

 

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I have noticed this in my purchases from europe - kind of frustrating.

 

I discovered those fees a few years ago but didn’t leave Paypal. Why? My #1 reason is not the security—even if it’s very important— but their “purchase protection”. If I don’t receive my coins ; let’s say the seller is a crook or the package got lost in the mail, I’ll be refund. I did test it and it works (up to 180 days after you bought the item). Also if the coin is not as expected or a fake, they’ll pay the shipping back to the seller; I tried it too with success. But as you wrote, I’m paying for this protection; I guess nothing’s free in this world...

 

I remember you introducing me to TransferWise and also remember it working very smoothly.

 

I use transferwise for all international purchases now. Great service with the best rates I’ve seen..

 

Yes Wire transfer when I can , I was surprised when I found the feature is offered on my phone as an app from my bank.

 

I learned about Transferwise here, probably from Valentinian.

It is the only way I pay for foreign invoices today. It is cheap, super easy to use especially once you’ve set up a recipient, and as reliable as the sun coming up in the morning.

Plus, I like giving the one fingered (or two if your British) salute to the big banks with their obnoxious exchange rates and fees.

 

I would double check that , my last one cost I believe $5.00 via chase. Cheap and easy, I had to send that way for a polish auction.

I just checked, it was $5.00 , the amount was under 1k but the transfer was cheap.

 

PayPal has a default option where you allow them to make the currency conversion. But there is one more option when paying at least for me. I can chose my card issuer / bank to do the currency conversion instead of PayPal (even though the payment goes through PayPal). For me, my bank charges little under 1% which Ill gladly take over the 4-5% added from PayPal when converting.

 

I’ve checked extensively.

The cost of an international wire transfer at my bank is $35 (absurd) and they routinely provide an exchange rate that is 4% worse than spot. I would be willing to bet that your $5 transfer fee with Chase was well subsidized by a poor exchange rate.

There are 2 ways the banks take advantage of you, as Valentinian pointed out. One is the transaction fee, but the other is the exchange rate which is easily overlooked and obfuscated. I’ve found Transferwise to be virtually at the spot FOREX rate.

 

I have noticed a steady increase in charges and costs with this hobby across the board over recent years.

I use Tranferwise where supported but predominately use PayPal as this is more widely accepted.

I have seen a steady increase in shipping costs too.

I am based in the UK and can no longer afford to buy any books from North America as the shipping for books now generally exceeds the value of the books being shipped. I am averse to paying $20-40 shipping for a $50 book.

I have seen a steady increase in shipping costs and the "handling of customs charges" for low value coins, which is generally what I buy. I will give an example. I saw a coin for sale that was familiar as it had been part of my collection back in 2004 and was part of a forced down-sizing at the time. The photos didn't do the coin justice and I would be happy to be reunited with and the bidding was at $20 (I sold this coin for $100 back in 2004) but the shipping was $16 and they were going to charge me over $11 import charges as part of the Ebay Global Shipping Program. VAT rates in the UK are set at 20% but these charges are leveed at over 50 here. This often means that I simply cannot buy my low end coins from North America any more. Many European dealers are now charging Eur 15.00 to ship to the UK and I have been informed by a few small dealers in Germany that I have had dealings within the past that that new legislation means that they are no longer shipping ancient coins to the UK (I haven't been able to find out what this legislation is yet).

It is generally getting harder for me to collect.....

 

Please note i am not trying to be rude, i am just trying to let people know there are cheaper and convenient options. In this hobby anyone who does auctions has to wire transfer once in a while for the old timer businesses that dont accept cc.

I do not work for a bank, i am just pointing out what works for me and i only started using it last year. Your right a wire transfer use to cost 35 bucks when you go to the bank but that is no longer the case. Just use your bank app an the exchange rate was fair, i did check.

I have not used the the program everyone is talking about, so i looked it up. It costs more than the bank and it also a app..

I obivously took this info from the web site.

International wires with Chase®Global Transfer

• Take advantage of real-time requests for foreign exchange (FX) rates1 Footnote with our rate calculator and know how much foreign currency (FX) you’re sending before you set up the payment
• Online wires sent to a bank outside the U.S. in foreign currency (FX) have no Chase wire fee for amounts equal to $5,000 USD or more or only a $5 Chase wire fee when less than $5,000 USD2

It was done overnight , the exchane rate was right and i did it from my phone.

I was stressing about getting a wire transfer done when i was overseas for work. One of my bosses who does wire transfers regularly told me about it at a cocktail party, i had the info so i did it right there.

I know this is not global info but if you are in USA check your banks app, The world is changing. If Chase is doing this the other are too.

 

It's also worth noting that TransferWise avoids interbank transfer fees. Because you're effectively transferring within the same bank. Wire transfer doesn't.

 

Today, as an experiment, I paid an invoice in pounds using my PayPal balance in US dollars. PayPal gave me the rate of 1.360 dollars per pound. Currency exchange says 1.299 dollars per pound. That's a 4.6% hidden fee, above the obvious 4.5% that the firm charged for using PayPal.

One may like PayPal for the possibly of claiming a refund. But, that is a very high insurance rate, especially if the seller is reputable.

 

Like several others, I use Transferwise exclusively now for non-USD transactions. Setting it up was a little confusing and time-consuming but once done it is simple to use.

Related:

I never will forget when I bid and won in a Nomos auction (2014) without first checking the accepted methods of payment. As it happened, I had to wire the money. My bank in the Virgin Islands charged $50 for the wire! If a coin costs thousands of dollars or more that's not a big deal, but with lesser coins it is a significant percent of expense. I think the auction house also charged a fee to accept the wire. I bid too much for the coin in the first place. By the time the buyer's premium was added, plus solo shipping, plus exchange rate, plus wiring fees... it became an unexpectedly expensive coin . Those memories have a negative impact on my enjoyment of the coin. My fault though-- should have thoroughly understood the terms and procedures before participating in that auction.

 

The real problem is not with the sellers but with postal services. Forum has a list of dozens of “lost” or stolen coins mailed from these countries : USA, UK, France, Austria, Poland, Belgium, Brazil, Germany, Spain, Ukraine, Switzerland...so my calculation is I never take the super expensive insured with tracking number shipping but rather waste my money with PayPal !

 

I didn’t take it that way I see my response could have been taken as a bit terse, which I didn’t mean to be either. All good.

I’m glad we can share this kind of information.

 

Yesterday I was given the option of paying an invoice for 347 euros with PayPal for an additional 4.5%. Last time I used PayPal they gave me an dollar-to-euro exchange rate about 4% worse that the publicized mid-market rate, which is now 1.081. So, to pay that bill it would have cost me about 347(1.045)(1.081)(1.04) = $407.67.

I used TransferWise instead and paid $380.20. The difference to me is over $27! The effective rate, including fees, was $380.20/347 euros = $1.0956/euro (instead of 1.081). Not bad!

PayPal has a type of insurance that TransferWise does not. That could be a reason for using PayPal, especially with eBay. I grant you that.

I just read that PayPal is now valued at 140 billion dollars. They are worth that much because people let them take a big cut to move money around. But, there are much cheaper ways to move money now. If you are still using PayPal to pay reputable auction firms (not eBay sellers) across currencies, I encourage you to rethink whether you really want to give PayPal that much money when other firms will do it for far less.

 

I'll add my vote for Chase. The $5 flat fee is a no brainer if you're used to paying auction houses. It's also $5 if you pay through Paypal using the friends and family option. However, you have to clear it with the recipient first. The few auction houses that take Paypal tend to slap percentage fees by default.

I know that switching banks just to avoid transaction fees wouldn't make a lot of sense but if you did have Chase you'd drop TransferWise like a hot rock.

Rasiel

 

My TransferWise fee for 347 euros was $4.09, using a good exchange rate. I'm not sure Chase beats that with their $5 fee.