PayPal Steals from Its Customers with Hidden Fees

PayPal is stealing from its customers with hidden fees.

PayPal is stealing from its customers with hidden fees.

PayPal is used by millions. You can pay for pretty much everything from dollhouses and jumping castles to real apartments with it.

And if you run a small business, especially online, you’re going to at least consider using it to process payments because PayPal’s fees seem very reasonable.

It’s easy and free to set up. It works in most countries on this planet (I hear they’re expanding to Mars, too). And it gives you enough options to run a small business.

The transaction fees are also smaller than what you’d pay for similar services with most other companies.

But, if you look closely, and if you tally up the hidden fees, the real PayPal fees aren’t as favorable as they seem on the surface.

Simply put, PayPal steals from its customers.

“Free” just means they don’t tell you how much they’re stealing

Transferring money to your personal or business bank account by withdrawing from your PayPal account should be free—at least it’s marked as “free” everywhere you’re likely to look.

Note that since I live in Finland, some of the screenshots might look slightly different from what you’ll find.

PayPal's "fees" page

PayPal’s “fees” page

PayPal's "withdrawal fees" page

PayPal’s “withdrawal fees” page

Even when you click “withdraw” in your PayPal dashboard to make a withdrawal, the screen tells you it’s “free.”

PayPal's withdrawal page

PayPal’s withdrawal page

The information states that “additional bank fees may apply,” but that refers to fees imposed by your own bank. PayPal is clear that “withdrawing from your PayPal balance to your bank account” is free on their side.

But that’s a lie.

“Latest exchange rate” and other fairytales

When you make a withdrawal from one currency to another (in this example from USD to EUR), PayPal uses “the most current exchange rate” to make the conversion.

Or so they say.

This also applies if your customers pay with a currency other than your primary currency.


At the time of the withdrawal in the screenshot above, the actual exchange rate was 0.7551 rather than the stated 0.7331 (according to Google, Bloomberg, and Yahoo Finance). The difference, 2.5%, might seem small, but it adds up quickly.

I can understand the difference if they were just a little late with the exchange (a few hours maybe), since rates can fluctuate rapidly. But the exchange rate hasn’t been so low as PayPal claims in six months.

So much for “most current exchange rates.”

I make withdrawals almost every day, so I never lose too much with one withdrawal. But still, even from just this one withdrawal, PayPal stole 34.44€/$45.62.

At the time of this writing, that adds up to $5.000–$10.000 a year depending on how many of my transactions go through PayPal.

So, what does PayPal say to this?

“The total cost through PayPal [for currency conversion] is usually less than many international multi-currency bank transfers.”

A “currency conversion fee?”

If you dig deep enough, you’ll find a mention of it. But I’ll bet very few PayPal users ever notice it because it’s buried in the 23,000-word legalese-laden user agreement.

But okay, it’s there, and when I set up my PayPal account, maybe I ticked the box indicating I accepted the agreement. Or maybe it was ticked for me, and I didn’t notice.

However, standard business practice includes providing a receipt of fees charged for services rendered—even if the business tries to hide the charge.

If there’s no receipt, it didn’t happen. Right?

You’d think PayPal would provide a receipt for the fees they charge. Or at least note them somewhere in your account, so you can calculate those fees in your expenses or provide them to your accountant.


After 14 emails and a phone call, a PayPal service rep told me, “We don’t provide receipts or anything else you could use in accounting for those charges. We also won’t provide them to you separately.”

They did, however, offer to create an Excel sheet for me that calculates the amount of the fee. As if I can’t calculate 2.5% of the sum or compare the real exchange rate to the one they use.

And they take this one step further.


Receipt of a Withdrawal made from PayPal

You actually do get a receipt when you make a withdrawal.

Here you can see that the fee for the withdrawal is 0€ (which equals $0 no matter the exchange rate).

Maybe you’d then hope that the receipts for the currency conversion would specify the fee. They even give you two of those—efficient aren’t they?

Not a chance.

There’s no way you can deduct those currency conversion charges in your bookkeeping.

And because of that, PayPal is literally stealing from everyone who uses their services when currency conversion is involved.

It’s nice that they called to apologize.

But let’s face it: they called to apologize for stealing from me and told me they’ll keep doing it.

And as a solution, they offered to help me calculate just how much they’re going to steal.

As far as repenting goes, that’s not too convincing. I’d be more likely to trust a drunk proclaiming he’s got the solution for world peace than PayPal doing something about this problem in any timely manner.

How to protect yourself from PayPal’s stealing

EDIT: I thought I had a solution. But it turns out PayPal has blocked the way to bypass the currency conversion fee—even when there’s absolutely no reason to make a currency conversion.

My idea was to open a currency account in your bank for each currency you handle through PayPal and withdraw the funds to those currency accounts without a conversion.

You’d still pay your bank for currency conversion (I would’ve paid 1.9€ per withdrawal, which is peanuts compared to how much PayPal is stealing from me).

But PayPal has blocked this option.

I checked that the idea works with my bank and PayPal. Both clearly stated there’s no problem, and I have that on writing.

But when I tried to do it, I got an error message from PayPal. And after some more emails, they informed me that they just won’t send USD to Scandinavia.

That’s exactly what I first had asked them to confirm. Twice.

One of the basic features of PayPal is the ability to accept and move any currency you want all around the world. But when it would stop them from stealing from you, it’s blocked.

It’s not that they couldn’t do it. Obviously they could—it’s their business to move money around the planet.

They just rather steal from their customers. And they’ll keep doing it until someone makes big-enough waves about it and the mainstream media notices. So far, no luck.

I’m switching to a custom integration between InfusionSoft and a Finnish payment processor. Maybe you should do something similar?

I don’t usually write about the financial side of business.

But I know many of my clients use PayPal and are probably facing the same situation that I have dealt with. So, this exception seemed to be in order.

If you know someone who uses PayPal, let them know about this. They might be losing thousands every year.

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    Share Your Thoughts...




  1. Well that’s something!

    Being a Canada-based merchant taking orders in USD, I guess Paypal is stealing from me, too.

    Thanks for that info,


    • Peter Sandeen said:

      Hey Etienne,

      Yep they are. That is, if you withdraw money to a bank account for Canadian dollars…


  2. [...] PayPal is stealing from its customers with carefully hidden fees (with no receipts). You can lose thousands of dollars a year if you don't protect yourself.  [...]

  3. JeF said:

    How come I didn’t see anybody talking about that before ? Now that the world is so small, everybody / every company with a Paypal account is concerned.
    Thank you for the report of your investigations !

    • Peter Sandeen said:

      Hey JeF,

      I guess most people in the States don’t have this problem because it only comes up with the currency conversions… And they’ve hidden the fee pretty well ;)


  4. Laure said:

    I usually don’t read the “numbers’ side of business ( I know I should) but your headline was too tempting. I’m appalled by what you’re writing and documenting. Transparency is a value shared by their small business clientele so such a sheme tarnishes their reputation, affects the brand and the relationship.
    I guess they need more competition. If even banks are less greedy – it says it all!
    Thanks Peter for writing this post about behind the curtains business problems.

    • Peter Sandeen said:

      Hey Laure,

      Glad to hear it was interesting enough ;)

      Maybe my bank is an exception. I’m quite sure they are. But I’m also quite sure all banks provide the necessary receipts of such fees even if they charge them.


  5. Faisal said:

    Thanks Peter,

    For highlighting. Was wondering if there is any competitor to Paypal, one can use instead ?


    • Peter Sandeen said:

      Hey Faisal,

      There are plenty of competitors, but only a couple work as globally as PayPal. I’m in Finland, so my options are very limited… But if you’re in the States, you have plenty to choose from (I’ve heard good things about PayLeap, though I haven’t tried them myself).


  6. Ken said:

    It’s not just PayPal. Everywhere there is an opportunity for currency conversion there is a margin and spread between the current market exchange rate and the net exchange rate. 2.5% is pretty much the norm on these sorts of transactions.

    You say Nordea doesn’t have a spread. In my experience, that’s rare. I’m an American living in Europe and the only major US bank I know of that doesn’t charge a conversion fee is Schwab. Unfortunately, they only service US residents and don’t offer business accounts.

    I’m glad you’ve found a way around (I’m assuming you’re 100% sure that you have). Others may not have such a reasonable bank as yours.

    My advice: make sure you’re 100% clear on all both fees and conversion margin rates before you move your money to another account.

    One easy way to check is to ask if you transfer $1000 from your dollar account to your euro account and then immediately transfer it all back how much will be in your dollar account.

    • Peter Sandeen said:

      Hey Ken,

      Yeah, it’s a common fee. But the problem is hiding it and not providing appropriate receipts of the charges. If they didn’t hide the fees and gave the receipts, it wouldn’t be stealing—it would be pretty standard business ;)

      I especially checked with my bank that there is only the withdrawal fee (1.9€) and no currency conversion fees. That’s what I’d expect here in Finland though…


  7. Conrad said:

    I have had this discussion with Paypal before and it works a bit differently to what you said.
    If you are not in the US, then Paypal will only transfer your account balance in the national currency to your bank account. That means they will convert your USD to EUR or CHF or whatever. During this conversion they hit you with their currency conversion rate.

    This is what happens in Switzerland – and I think it applies to you and others outside of the US too.

    If you would open a USD account in Finland, they will do this: they convert the USD to EUR anyway and transfer the EUR to your USD account. Now your bank will convert the EUR they received from Paypal to USD, using their conversion rate. So you pay twice.

    I had fees on both variations. On USD -> CHF , Paypal charged. On USD -> USD they converted to CHF anyway, plus the bank dinged me.

    Never send money to a USD account in your home country, because your bank does not get USD, Paypal still sends the home currency. At least that is what it does in Switzerland.

    The only way to avoid having paying for a conversion is to actually have a USD account in the USA. This Paypal confirmed. They only send USD to US accounts.

    Opening a US account is not so easy these days either. For one you have to go there in person. Plus, lots of banks are going to demand a Social Security number, which is going to be a problem to most people resident in other parts of the world.

    About the only way to get an account in the US, without being resident there or having a social security number, is to open a trading account at E-Trade.

    Of course, having more than one account attracts bank fees etc. so you have to balance the fees you pay against the Paypal conversion fees.

    Another issue is that of being in possession of an account in the US that you use it for trading purposes. If you travel to the US a lot, you will have to be careful about not being considered a tax resident for those business deals. At this point in time a bank account in the US does not make you liable for filing US tax returns, but who knows when and if this will change.

    Another way not to pay fees is to have your clients take the risk and have them pay you in EUR / CHF and then the transfer from Paypal will not go through a conversion, because the right currency is sitting the account.

    • Peter Sandeen said:

      Hey Conrad,

      Thank you for that. I’ll have to double-check (again). I read somewhere that the bank account’s currency is what matters… But because of a change in my business type (which should be done in a couple of weeks), I’ve avoided transferring the money to a USD account (to avoid extra paperwork).

      But yeah, I’ll have to check that.


      • Conrad said:

        Here is an extract of an email with Paypal support: …
        ” … I can confirm that you can withdraw the funds in USD to your American bank account registered in USA
        or to your local bank in CHF …”

        This was because of me trying to use a USD account in Switzerland, which they just send CHF to anyway.

        These transfers come from Paypal in Singapore and they totally disregard the currency of your bank account and just send the local currency.

        If you do not have enough funds in your Paypal account in your local currency, Paypal will convert. So having a USD account outside the US will give rise to your USD balance -> local currency (at a low rate) -> local bank converts to USD at their “sell” rate.

        The end effect is that Paypal has installed currency trading booths at the borders of all countries if you are receiving funds that are not in your local currency.

        • Peter Sandeen said:

          Hey Conrad,

          Thanks. That’s just wrong… But really, thank you for letting me know. I’ll try it once I can do it without causing a huge fee from my accountant who has to handle extra paperwork ;) But I’m losing all hope… BTW, when did you talk with them?

          • Conrad said:

            3 months ago.
            Basically they say on the withdrawal screen that the transfer in US is to US accounts, so they feel they are transparent about it. I feel it is quite clear, although this rule is frustrating.

            If you are normally resident in Finland, you can forget about circumventing this conversion by using an offshore account, since they will only transfer to a US-registered bank in your name, apart from your local currency.

            Many offshore places are not eligible for Paypal accounts anyway.

            Possibly the only way for US non-residents is to use an E-Trade account, unless you have a Social Security number.

            • Peter Sandeen said:


              Amazing what they consider fair… Thanks again for telling about this.

  8. Traian said:

    We should all switch to BitCoins, the newest scam(cough)kid on the block! :)

    • Peter Sandeen said:

      Hey Traian,

      A while ago BitCoin was the best-performing currency in the world (no joke) :) Their exchange rate exploded at some point, though it went down quite a bit afterwards… Maybe I’ll start charging in BitCoins then :D


      • Traian said:

        Peter, when you will start charging in BitCoins I’ll do a free SEO audit of the site of your choice :D

        • Peter Sandeen said:

          Thanks. But I think I’ll have to stick to a currency a majority of my clients have heard of ;)

  9. Nikki said:

    Wow! Never would’ve known this was going on because I am located in the US. Nevertheless, unfair is unfair – no matter where the act is committed.

    I hate that you had that experience with Paypal. It’s hard to deal with “the big guys” being unethical because of the legal protection they can pay for. But you’ve done an awesome job of explaining and making it clear that the word needs to be spread about Paypal’s blatant theft!

    Best of luck to you Peter. I’ll definitely share your post!

    • Peter Sandeen said:

      Hey Nikki,

      You’re lucky ;) Not only because PayPal isn’t stealing with this scheme, but also because you have lots of options. I have a couple of others than PayPal, but their fees are generally much higher than PayPal’s, so I haven’t switched yet…


  10. Dave said:

    Great article, Peter.

    Out of curiosity, however, currency exchange rates in the trading market often differ from what banks (or payment processors) use most of the time, regardless of country.

    I mean, if we walk into a bank or a money changer, their rates are often 2-4% less favourable than the trading price.

    Partly because of the multiple channels the funds have to go through as the money transfer isn’t between two (or even 3) parties only.

    Much like credit card transactions, where the merchant, the payment processor, the credit card company, the bank, and the actual store has to be paid on every swipe.

    The fees are paid somehow.

    I do agree 100% that the way Paypal reports it is shady. If they just state that they have a fee, it’ll be less of an issue as the customer is informed.

    Thanks again for the article.

    David Tong

    • Peter Sandeen said:

      Hey Dave,

      Yep, they’re pretty standard. The issue is the lack of a receipt of any kind that would be acceptable in accounting and that they hide the fee so carefully. Because of that, the money they take is as good as stolen money; it’s not an expense I can deduce…

      I know we have low bank fees here in Finland, so maybe I was expecting too much. But as far as I understand, PayPal is currently stealing because they don’t provide those receipts.


      • I agree with the no-receipt aspect of it and charges being hidden. I wonder if they operate the same way in all countries, especially those who require certain level of reporting.



        • Peter Sandeen said:

          Hey David,

          This isn’t country-specific. At least nothing points to that. I’ve talked with them a few times now, and they’ve never indicated it wouldn’t be a worldwide policy… :/ And Finland is pretty much the promised land of reporting, so if they don’t do it here (which is clearly illegal based on Finnish law), I’d be surprised if they didn’t do the same everywhere.


  11. barbio said:

    Hello Peter, I had the same problem a few months ago and I solved his issue in a different way. I started charging my clients in my currency €. With that I avoided this giving away money to PayPal. Now I only pay the 3.5% for using PayPal. And that’s already a lot.

    • Peter Sandeen said:

      Hey Barbio,

      I’ve considered that, but to some extent it creates a worse experience for them (when they’re used to paying in USD). That’s why I haven’t switched already. But I’m reconsidering it yet again…


      • Rather than charging your customers only in EUR or USD, why not offer them both options, using a fixed exchange rate that will make it more expensive for clients to pay in USD?

        Your client can still choose to pay in USD, but if he pays you in EUR *he* will get the benefit of a somewhat lower price and *you* will get the benefit of not having to pay the rip-off PayPal exchange rate.

        If your client wants to pay in USD anyway he can have that convenience — but at a price.

        The trick of course is to figure out the appropriate fixed conversion rate to use.

        Just make sure that you explain to your clients why paying in USD will be somewhat more expensive, so they won’t think that you’re trying to rip off non-EU clients.

        • Peter Sandeen said:

          Hey Jeroen,

          Thanks, that’s a good idea. I thought about it briefly at one time (months ago), but I’ll reconsider it. I’ve also considered just adding a cost to paying via PayPal at all (for bigger clients at least). Because just the basic transaction fee even is quite significant in a year.

          Peter Sandeen

  12. Hi Peter,

    I really appreciate you bringing this up. It never occurred to me that I might be paying conversion fees with PayPal even though I’ve traveled a lot and I’m aware of the usual fees when we change money (I just didn’t think of this with PayPal).

    I’m in the US, but I have clients in other countries. I’ve never seen a mention of conversion fees (it must be in the fine print somewhere). But I’m going to take a close look and see what I find. I’m also going to see what other options there might be–PayPal certainly takes a big enough chunk out with the 3% fee. Of course they need to be paid for their services, no doubt about that. It’s a business, after all, and their services are handy and easy-to-use. But if I’m already paying $15 on $500, say, what else am I paying if my client is in Australia or South Africa or wherever? And would it be less expensive some other way?

    Thanks for the heads up.

    • Peter Sandeen said:

      Hey Leah,

      As long as they pay in USD, you don’t pay for the currency conversion… Lucky you ;)

      But you have lots of other options because you’re in the States. The rest of the world (like Finland) is very limited. But I’m looking into other options.


      • I see. Tell me, if you don’t mind, if I’ve got this straight.

        I immediately assumed that the client is paying for the conversion when he or she pays me with USD. But maybe not.

        If the non-US client pays in USD (I assume that’s possible? I always–I think–get a drop down menu with currency choices) then there’s no fee. The conversion fee is incurred (as you mentioned) only when money is withdrawn?

        I’ll bet PayPal will have some serious global competition one of these days. The opportunity is there.

        Thanks for this info! Also waves above at Jeroen–Hey Jeroen! Small world :)

        • Peter Sandeen said:

          Basically you’re right. As long as you don’t charge in any other currency than USD and you don’t withdraw the money to a non-USD account, you don’t pay the currency conversion fee because it doesn’t happen.

          So, just keep sending your invoices with USD amounts and selling your products with USD prices ;)

  13. Something I wanted to know for while. PayPal was doing this hidden for our business for a while now, but we had to take their merchant services due to other service provider transaction price.
    Thanks for sharing the best thoughts about how to watch on for PayPay crime and will be be sharing this with our other PayPal users who get charged thousands annually for their eCommerce sites.

    • Peter Sandeen said:

      Hey Fernando,

      Yeah, they’re still one of very few options for people outside the US. So, to some extent, they can still steal because people have to use them anyway…

      Thanks for spreading the word :)


  14. You should check out Love how the guys are disrupting the banking/money transfer industry. (Listening to friends’ experiences on transferring money between their own bank accounts in different countries, it’s bizarre that a chunk of the money just disappears in the process and neither the sending nor receiving bank is able to tell where it went…). If you have a limited amount of project clients, TransferWise probably suits well for making the transfer across countries. Their geo-coverage is still quite limited, however, even though they seem to be expanding rapidly.

    • Peter Sandeen said:

      Hey Miikka,

      Thanks, interesting system. Definitely worth considering in some cases like bigger consulting projects. But for now, I’ll have to stick to looking at options that integrate easily with Infusionsoft, to which I’m switching in a couple of weeks…


  15. [...] the complaints against the online payment network are typically predictable (the fees are unreasonable and unclear, their customer service is severely lacking, and they have a penchant for closing and limiting user [...]

  16. Stellare said:

    Hei fra Norge! :-)

    Thank you so much for this very useful information. I am setting up a system and was thinking about using PayPal. After reading about your experiences I will find other solutions that does not include stealing. They have to make money too, but hiding their income is unethical in my book.

    So, thanks a lot Peter!

    • Peter Sandeen said:

      Hei Stellare,

      Thanks :) I’m going with WorldPay, which is almost identically priced. The setup process is a bit more complicated, but it shouldn’t be especially difficult… Maybe that would work for you, too.


  17. Ken said:

    One option, while more complicated, that might be worthwhile considering for the amount of money involved, is to establish a US-based corporation.

    You would be able establish a US business bank account to receive funds in USD. Transferring them back out again to your home country could then happen using one of the low-cost currency exchange services (search for them and read the fine print carefully).

    There is a lot to learn about this process and certain administrative requirements that are critical but if you’re moving enough money, it can be well worth it.

    Peter, I’d say your situation would be an example of where it starts to be worth the trouble. I’d hire someone in the US to do most of the admin work.

    • Peter Sandeen said:

      Hey Ken,

      That’s an option. But I’m wary of putting myself into the US legal system, which I don’t know enough of; I’d be subject to many potential (big) problems I can now almost certainly avoid completely.

      And from the looks of it, WorldPay should be a good alternative :)

      But thanks for the idea. I’ll reconsider it if I run into more trouble with other options.


  18. Bree said:

    I’m in the U.S., and even here, Paypal’s fees are frustrating. I know I’m not losing thousands of dollars a year, but I thought I should let you know about how it is for some of us U.S. freelancers and entrepreneurs, too.

    Every time I earn my usual $700-800 a month with one of my clients, PayPal takes about $20, which amounts to $240 a year (this doesn’t even cover the amount I lose when other clients pay through PayPal, either). That doesn’t seem like much compared to thousands others are losing, but for me, that would cover a whole month of health insurance or groceries.

    Any American readers of yours might want to consider Freshbooks (which is ironically based in Canada). Freshbooks gives you the option to only lose 50 cents per PayPal transaction. That’d mean you’d have to do 40 transactions with clients over the course of 1 month to even get anywhere near losing the $20 I am, and most of us don’t do that many transactions in the first place! So it’s a really good deal, especially when you can get this 50 cent charge even with their free account level — the only thing to note is that you must be based in the U.S. and clients have to pay through PayPal using a U.S. bank account, and cannot pay with a credit card (at that point, you need to shell out $20 a month for a premium-level Freshbooks account, which could still be worth it depending on how much you’re losing per year).

    I realize PayPal is open about these transaction fees even in the U.S., but for a company making millions off of other people’s work and money, it’s extra low of them to cheat non-U.S. citizens out of cash.

    • Peter Sandeen said:

      Hey Bree,

      Thanks for this. Even though PayPal’s basic transaction fees are quite low, they still add up and are really frustrating. It’s just difficult to sometimes avoid them.

      I haven’t looked into Freshbooks lately. The last I checked, I didn’t notice the deal with PayPal; they were more of an add-on than a way to process the payments. But great if they’ve become an even better option :)


  19. [...] PayPal Steals With Hidden Fees (and how to protect yourself) (Peter Sandeen) [...]

  20. Thanks for this, Peter, and I am so saddened that things are coming to this world-wide. Thanks for the double-dose of a follow-up and for your clearly understandable explanation of the trouble. I am amazed that more are not making this clear. I hope you find better service at WorldPay.
    Question: Would you recommend making this change to someone who deals only with US funds, or who is handling only smaller amounts? I am in that situation and almost feel I should switch, just on principles

    • Peter Sandeen said:

      Hi Katharine,

      If you only use USD (and you have a bank account in the US), then you shouldn’t have problems with the currency conversion fees. That said, they’re known to, for example, freeze people’s accounts because their relatives owe something for PayPal. In other words, they blackmail people (or have done so in the past).

      And there are plenty of stories of how they’ve suddenly frozen an account and kept all the money in it (though I haven’t seen this happen to anyone I know well).

      So, it’s unlikely that you’ll have any trouble with them, but it’s possible. And at least I want to switch just because of principles. …but now I’m hearing worrying stories of WorldPay as well, so I need to do even more digging :/


  21. I had the same experience. My clients pay me in USD and my account is in Can. $. I had noticed that the exchange conversion was exaggerated but had not taken the time to check it out. Thank you for pointing it out so clearly. I will look for other options.

    • Peter Sandeen said:

      Hey Aline,

      In Canada you have plenty of options. But from what I’ve heard, it’s really worth the time to look for complaints because they often tell more than anything else about a company’s reliability…


  22. Kerrianne Edwards said:

    Thanks Peter, this was a timely eye-opener as I searched for a merchant provider that would be compatible with 1shoppingcart. I ended up deciding on SagePay – a good rate and happy to pay $US into a $US account. I’m in the UK so I don’t know if it would work in Finland but it might be worth checking out.

    • Peter Sandeen said:

      Hey Kerrianne,

      Great :)

      I need a solution that works with InfusionSoft. And I’m now talking with a Finnish company, though it’s getting more and more complicated the more I talk with them… I might check out SagePay, thanks :)


  23. Hammad said:

    Yes I agree with you on all this.Stealing $4.59 on $96 transaction is like we earn for them rather than for oneself.Its like they barge into ones right without even considering ones consent.Concealing a steal as merchant fee and of this magnitude on a personal account (Had to look that one up)!

    Totally senseless bullshit money making tactics

    • Peter Sandeen said:

      Hi Hammad,

      I think they “only” steal 2.5% from currency conversions. The rest is their normal fee (which might be considered high, but at least they’re straight about it). But as can be seen from the post, I don’t like how they do business…


      • SYED said:

        Thank you peter for giving us this info.. their is not like hidden charges and they dont charge 2.5% commission their current commission rate is 4.4% + 0.30 per transaction.. :(

        • syed said:

          Thats why hammad you got to pay $4.59 for a $96 transaction.. it would be $96-4.4% ($4.22)+ $0.30 its $4.52 approx which you’ve paid!!!

        • Peter Sandeen said:


          Sorry if I misunderstood what you meant, but though you’re right about their official commission rate, this post is about the hidden currency conversion fee, which is 2.5% (at least in Finland), and they don’t show that to you anywhere…


  24. [...] from it: How many can you sell? How much can you charge? How much will your payment processor take (or if you use PayPal, remember to count how much they steal on top of the normal fee)? Will there be refunds (and how much do they cost you)? Will you pay for advertising? Are there [...]

  25. Interesting article – I wonder if they allow USD withdrawal to Canada as most Canadian banks offer USD accounts.
    Definitely going to look into this (and WorldPay too)
    Thanks for the heads up!

    • Peter Sandeen said:

      Hi Lorraine,

      I’m guessing they don’t allow that. But it’s worth asking about :)

      Actually, my plans have changed. I won’t use WorldPay because they couldn’t keep their prices consistent (the sales person said something, the pricing page something else, and the application form yet different prices)… I’ll use a custom integration instead :)


  26. Tony said:

    I know all about these terrible exchange rates as I have been doing business online for quite a while. I am so tired of them stealing our money with nearly every single transaction and it doesn’t matter that you send it as a gift to someone, they will still hit you with their made up exchange rates. I just got hit by it, that is how I found this, I wanted to see if anyone was talking about it because I am fed up with it. They also hit you with fees for an invoice, some people don’t realize it. I just paid my Japanese contact, he sent me an invoice, he got hit with about 2750 yen for 70300 yen and I was hit with about $35 or so on the same amount because of their exchange rate. I checked the rates at the time on and it was $1 USD = 99.222 Yen, while PayPal showed the rate at 96 Yen, nice. I think if we start a petition on this, might be able to do something. I know that we are not a lone. I am working on finding a better method and I will check out the site you posted in this article. Thanks!

    • Peter Sandeen said:

      Hey Tony,

      I hadn’t even thought of the currency conversion in that case… I’ll update the post at some point and add a mention of that, too.

      Let me know if you have any questions I can help with.


  27. [...] charge you a commission. That might sound like a good thing, right up until you realise PayPal exchange rates are shockingly different to the ones you’d see on a forex site like [Hat tip to Peter Sandeen for pointing out [...]

  28. sadam said:

    I noticed it too I bought something on ebay and used paypal. the exchange rate was .358169 compare to the banks rate of .3704

    • Peter Sandeen said:

      Hey Sadam,

      I’m afraid we’re one of the few who actually check it :/


  29. Ashish said:

    I am a working freelancer and i get all my payments in USD through paypal. First Paypal takes fee when someone trasfers to my paypal. Which is quite high. Also when i withdraw money to my bank account it gives less conversion rate. today it was 1USD = Rs. 61.40… But i got it as 59.4 from paypal… It is pure stealing

    • Peter Sandeen said:

      Hi Ashish,

      Yep, that’s their business—taking a supposedly unnoticeably small cut from everything you do :/


  30. Benedict Lee said:

    Thanks Peter,

    Yes I have been trying to find a solution for the same problem, then I came to this article by searching at google. I am from Hong Kong and have a small ‘fast-retailing’ online business which margin is low and ‘shelf lives’ are short. The kind of retail business which a lot of the stocks keep coming in while a lot of stocks keep being sent out but only make a little money from each deal. If I sell US$10,000 of stocks per month and then all the costs except that paypal conversation fees is US$9,000. My net profit could have been US$1,000. However with that lousy exchange rate I loss US$280 to just that. A whooping 28% of my net profit.

    Yes I struggled to find a solution to go around that. The possible thing I can think of – To find a supplier that accept paypal and charges me USD.

    • Peter Sandeen said:

      Hi Benedict,

      PayPal really doesn’t sound like the “ideal” solution for you. Have you looked into the options where you pay a monthly fee but the transaction costs are fixed and almost non-existent? You might end up with a better net profit…


  31. Duong Do Hoang said:

    I use both Paypal and Skrill (Moneybooker)
    Paypal always steal money through currencies exchange (with very very low rate) to my VND bank account and do not allow me to withdraw to my USD bank account
    Skrill (moneybooker) allow me to withdraw in EUR/USD directly to my bank account.
    and Skrill (moneybooker): transfer fee is more lower
    Paypal is very stupid thing, but eBay accept only Paypal, the other they accept but hard to configure.
    It is not fair, both Paypal and eBay are shit

    • Peter Sandeen said:

      Yep, the way PayPal does business is unethical. I don’t use eBay, so can’t really comment on that…

      • Great article,
        I live in Greece and our national currency is Euro. I accept payments in US dollars too.
        I use my US Dollars Balance to pay my suppliers and my Euro balance to withdraw my profits. I know it is not a 100% solution but i am avoiding currency convertion.

        • Peter Sandeen said:

          Hey Pavlos,

          I’ve been doing something quite similar to avoid losing as much. But I can’t avoid significant losses even though I do what I can…


  32. Leonardo said:

    I have a paypal GBP balance because i’m paid by a UK site in that currency, and when withdrawing to USD paypal is paying 1.58-9 when the current rate is 1.64-5 as of jan-2014, that’s 4.4%, not sure how much a bank would generally charge but paypal charges too much!

    • Peter Sandeen said:

      Hey Leonardo,

      Yep, that’s a big difference. I think it shouldn’t be that much (they have a fee table hidden deep into their site, but you can find it if you really put your mind to it). If they really take that much, it might be a good idea to check what the fee should be in case there’s something you could get back.


  33. aaron said:

    If bitcoin becomes mainstream then this whole problem can go away.

    Receive bitcoin for a very small percentage (.5-1%). Convert the bitcoin into local currency for 1-3% fee. A few companies already do this.

    • Peter Sandeen said:

      Hey Aaron,

      Interesting idea. I’ve heard of some companies that do it, but I think it’s going to be a “while” before it catches on in the main stream :)


  34. BiYaGo said:

    Hi Peter,

    Yes, it is correct. Today, I noticed it. :’(

    Please reply on my email, if you have solution for Indians.


    • Peter Sandeen said:

      Sorry, don’t have a clue what would be a good solution for you. Generally the higher-end options result in lower costs, but only if you have enough sales to justify monthly costs etc.


  35. Nikos Antoniou said:

    Dear Peter,

    As I know Paypal give the option of billing you in the currency listed on the seller’s invoice.

    So, instead of Paypal let your bank handle the conversion at market rate..

    There is any trap in that way?

    Thanks for the article,


    • Peter Sandeen said:

      Hey Nikos,

      The issue is that you don’t necessarily want to bill your clients in your native currency. For example, I almost always bill people in US dollars because most of them are more used to dollars than euros. Otherwise your idea is exactly what you should do :)


  36. Dhrumil said:

    Hi Peter,

    I am agree to you. But how we can stop it???…

    Is there any legal way to deal with this?

    • Peter Sandeen said:

      Hi Dhrumil,

      I think you could win a legal case. At least in Finland it would be an obvious win. But the time and money it takes to go against a company like PayPal… I’m not going to.


  37. Carthage said:


    Great article. I know I am a bit late to the discussion but I am looking at Stripe here in Ireland and having read your article, I checked to see if it is available in Finland. I seee that it currently in Beta and marked as coming soon (whenever that may be). I do not now how good they are but it will be another option for you.



    • Peter Sandeen said:

      Hey Carthage,

      Thanks for mentioning that :) I’ve looked into it a long time ago, but didn’t realize it would work in Finland (maybe it didn’t even have a beta then). I’ll check it out, but I already have a custom integration almost working, which will take over at least most of my payment processing.


  38. PyaPal has a high fees when it comes to currency conversion without mention cross border personnel transactions, plus its differences between a country and another.
    US and Candada have the lowest fees for cross border personnel transactions:
    2.9% + $0.30, but other countries it can up to 7.4% + $0.30, Brazil as example.
    If you are confused or wondering how the fees work, you can read PayPal user agreement for your country, I also built an online calculator for that(currently its n beta) based in what they say in their user agreement.

    • Peter Sandeen said:

      Hey Beladel,

      Great tool :) Could you make it so that when you put in the information, you’d see how the different options compare?


      • What do you meany by “you’d see how the different options compare?”, can you explain more?

        • Peter Sandeen said:

          I mean that if the user could just input the numbers and click a button to see what the costs would be in each of the different options.

          • Very nice suggestion, I will inform you when I add it to the calculator.

  39. ad said:

    I agree

    in india same they charge heavily on the exchange rate

  40. mehmet said:

    Hi Peter,

    Paypal exchange rates are pain in the nose. May be TransferWise solves your problem.

    Good luck.

    • Peter Sandeen said:

      Hi Mehmet,

      Thanks, but I’m already developing a custom system, which will solve my issue :)


  41. Jamie said:

    I’m in Australia and finally got sick of being ripped off by all the PayPal fees. Since most of my clients are in the US and pay via credit/debit card the fees were insane.

    This is what I was paying for almost every transaction:
    Transaction fee of 3.4%
    Fixed fee of $0.30
    Credit/debit card fee of 3.9%
    Conversion fee of 2.5%
    “Latest conversion rate” that was always 2-3% in their favor

    So overall I was losing 12-15% of my payments to PayPal.

    For any freelancers or small businesses handling international transactions I HIGHLY RECOMMEND using Payoneer. There is a 1% currency conversion fee, ATM withdrawals are $3.15, and there is an annual fee of $29.95 for the mastercard.

    If you use this affiliate link you get $25 added to your account for free, pretty much taking care of the annual fee for you.

    If you use any other PayPal alternatives let us know!

    • Peter Sandeen said:

      Hi Jamie,

      I’ve heard good things about Payoneer. I think it’s not (or wasn’t) available in Finland when I looked, or maybe there was some other issue with it, so I didn’t sign up…


  42. Aaditya said:

    Hey friend,
    If I open account but don’t use it much, do they charge monthly or yearly rent???

    • Peter Sandeen said:

      Hey Aadiatya,

      They don’t have monthly or yearly fees.


  43. Rauno said:


    Thanks for the read. Landed on your site from Google searching for paypal exchange rates. Searching, because just noticed the same thing you are experiencing. I´m from Estonia by the way and usd to eur is something i have to deal with daily. No matter how you look at it, it is stealing and i really hope we have a chance to use an alternative to PP in the near future.


    • Peter Sandeen said:

      Hey Rauno,

      Yep, I’m looking forward to having an alternative. And if things go well, I should have one in a few days… But it’s a custom integration, so hardly a widely applicable replacement for PayPal :/


  44. B said:

    Dude…. Im not saying paypal is that great or anything, but the conversion rate you are ultimately getting with them is slightly better than the majority of places. You keep quoting “the actual exchange rate” you google, and find on financial site like bloomberg or where ever you are looking. That is what is the called “interbank” rate. Only big banks have access to that rate, no one else. So you always pay a premium somewhere, the banks are mostly to blame. Paypal did not necessarily steal from you because they most likely have to pay above the interbank rate themselves… Really all I am saying you can call it stealing by pay pal and repeat it over and over and over again. Learn about the interbank rate and how trading currency actually works. If you are looking for the best rates you should be using a forex broker that does international transfers. A massive industry for remittances has sprung up just because of the fees bank charges (the spread) above and below the interbank rate. Forex brokers can you closest you will ever get to that interbank rate and even they have to take a cut..

    • Peter Sandeen said:


      Just to be clear, I’d pay <2€ per currency conversion for my bank if PayPal allowed me to transfer my PayPal balance to my USD account in Finland. And I’m not a bank ;)

      And I call it stealing because they don’t provide any kind of a receipt of a charge they make. That’s technically stealing no matter how many ways you slice it.

      Sure, I’m not saying they shouldn’t be allowed to charge for a currency conversion. They should just provide the legally necessary documentation of such charges, so that business owners could include those charges into their accounting. And I think it’s just a giant middle finger to their customers that they’ve blocked the ability to transfer into currency bank accounts (which would allow me and others to bypass the currency conversion charge PayPal charges).

      So, rather than implying that I haven’t done my homework, why don’t you read the article first?


  45. B said:

    *****Really all I am saying you CANT CALL it stealing by pay pal and repeat it over and over and over again****

    • Peter Sandeen said:

      To reiterate, if a business (e.g., PayPal) charges for something (e.g., currency conversion), they have to, at least when requested, provide a receipt for the charge. If they don’t, to my best knowledge, it’s technically stealing (or maybe it’s “fraud” or some other technical legal term—but the point remains that they “steal” from their customers when they refuse to provide receipts).

      So, really all I am saying is that you should read the article before commenting… When you don’t, you just appear to be too stupid to understand the argument made in the article, which doesn’t seem to be the case based on your writing.

  46. zzlangerhans said:

    This is a little off-topic but US banks do the same thing on international wire transfers. They force conversion of USD into the local currency at an unfavorable rate even if the local bank accept US dollar transfers. In that case, what will happen is the person on the other end withdraws USD minus the 5% hidden fee (or embezzlement, as I call it) from the currency conversion. I used Bank of America to transfer $14000 to China, and my recipient was given $13300 in cash. $700 dollars was kept by Bank of America (or their “external vendor” for Chinese yuan, as they claimed).

    • Peter Sandeen said:

      I’ve heard of that, too. Sounds like a crazy idea to me… :/

      Thanks for sharing and for the details.


  47. Mike said:

    In Canada:

    Will there still be any currency exchange fee if my account is set up for USD and accept I am willing to accept US bills.

    And if I pay using USD with a Canadian Account, is there another fee attached? (Convent CA to USD to buy the product and then still have to pay the Government import tax fee w/o S/H)

    There should be an open to have both USD and CAD on same account since my bank allows it.

    Thanks for the informations,

    • Peter Sandeen said:

      Hey Mike,

      I’m not a PayPal rep, so can’t be quite sure (though their reps consistently give wrong info, too), but at least I have to pay the conversion fees both ways. So, you most likely pay them too :/


  48. Rosse said:

    Paypal has bad exchange rate until now!

    • Peter Sandeen said:

      Hi Rosse,

      When you said “until now” do you mean they’ve changed something in the last week or so?


  49. Keri said:

    It’s really not that hard to read Paypal’s User Agreement to see what their fees are. Not hidden, not stealing. After all, they are a business that needs to make money too.

    Try reading Section 8 – Fees and Currency Conversion.

    For example, converting USD to CAD or vice-versa, there is a 2.5% fee on the amount. When tested, it is, indeed, 2.5%.

    Before creating a Paypal account, you did click ‘I agree’… maybe read through the agreement before agreeing next time.

    • Peter Sandeen said:

      Hi Keri,

      You didn’t read the post then?

      I specifically mention that it’s probably mentioned in the terms of agreement. But that’s not what makes it stealing—not providing a receipt of the fee is what makes it stealing. Or more specifically: they provide two receipts of each currency conversion, but they both specifically state that there was no fee even though there was.

      So, maybe read through the post before commenting next time. …as you suggest I do with agreements?


  50. Rookie said:

    Thats a good read, sad you’re a victim of Paypal too. I’m from India and I work online and receive payments thru Paypal. My payments are sent once per year in USD to Paypal account and Paypal steals almost a half month’s salary from me with their hideous exchange rates. For example, assume 1 USD costs 60 INR at the current exchange rate; Paypal will give me 58 INR per USD when I withdraw money to bank; and if I buy something using Paypal the same day in USD (hosting,domain etc.), then Paypal would charge me at 64 INR per USD, so I have to pay a lot more than expected. When withdrawing a lot of money at once from another currency to our home currency, we are loosing a lot of money to Paypal’s exchange rates..

    • Peter Sandeen said:

      Hey Rookie,

      Yep, it’s sad. I’d be fine with the currency conversion fee if they provided a receipt of it and didn’t hide it so well (i.e., providing receipts that specify $0 conversion fee).


  51. Jan Gregory said:

    You wrote

    ““The total cost through PayPal [for currency conversion] is usually less than many international multi-currency bank transfers.”

    That is just a flat-out lie. A total untruth. PayPal conversion rates are always more than any international bank charges for exchange rates on an Electronic Funds Transfer>

    In 2014, how can we have no many government bodies protecting consumers and have a scam like this right out in the open?

    You commented that “it doesn’t seem like much… but it adds up.”

    Does it ever… PayPal is making billions annually and the only overhead is providing a “secure network” for electronic funds transfers

    They are not providing a service, they are doing what all thieves do… placing themselves as the primary gatekeeper to commercial transactions that should be free enterprise where business has a choice amongst banks

    There is not a single reason why banks are not working together internationally to provide merchants these services at competitive rates. The banks operate on a level playing field with open currency exchanges… why aren’t they providinhg needed services to merchants.

    • Peter Sandeen said:

      Hey Jan,

      I agree :) Though, with small transactions, banks often charge a fixed fee on top of the currency conversion fee. And then the total cost can get higher than PayPal’s fees. But at least those bank charges are legal, and you get a receipt.



  1. [...] PayPal is stealing from its customers with carefully hidden fees (with no receipts). You can lose thousands of dollars a year if you don't protect yourself.  [...]

  2. [...] the complaints against the online payment network are typically predictable (the fees are unreasonable and unclear, their customer service is severely lacking, and they have a penchant for closing and limiting user [...]

  3. [...] PayPal Steals With Hidden Fees (and how to protect yourself) (Peter Sandeen) [...]

  4. [...] from it: How many can you sell? How much can you charge? How much will your payment processor take (or if you use PayPal, remember to count how much they steal on top of the normal fee)? Will there be refunds (and how much do they cost you)? Will you pay for advertising? Are there [...]

  5. [...] charge you a commission. That might sound like a good thing, right up until you realise PayPal exchange rates are shockingly different to the ones you’d see on a forex site like [Hat tip to Peter Sandeen for pointing out [...]

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