How To Reduce Paypal Conversion Fees

How To Reduce Paypal Conversion Fees, June 2021

PayPal and its services have taken the world by storm in recent years due to everything it has to offer and ease of use. Founded in 1998, the company has not only stuck around for that long, but has been one of the top companies when it comes to ecommerce.

There is a strong chance that you have seen “Pay with PayPal” on a website that you are doing business with.

In fact, many websites turn towards PayPal for online payments if people want another method that does not involve their credit card directly.

With how easy it is to buy or sell one or multiple items, PayPal at one point had a firm grasp over the internet sales.

All these services don’t come for free however and we are sure you have also run across your fair share of annoying charges that are a part of Paypal fees.

As they continued to grow and evolve their services, these fees also became more complex based on what you were doing.

Not only are we going to talk about the current PayPal fees, we are going to talk about ways that you can go about reducing them.

An area where people find they encounter the most fees are when they are working with conversions. PayPal does take some money if you are attempting to convert from one currency to the other.

While this might not be ideal, it is one of the few websites that has such a gigantic international reach, making it the top choice for businesses that are looking to work globally.

Unfortunately we are going to say now that with many of these fees, there is not much you can do as dodging them will require lying about how you are using the platform.

That in itself is illegal activity and we cannot endorse that in any way. We can give you a few tips on how you can reduce PayPal fees in ways that are completely legal.

Fixed Conversion Rates

Conversion rates are constantly fluctuating throughout the day and at any given moment they are going to be changing.

When making a payment on PayPal that is moving from one currency to another, take a look at the rate of exchange that they are listing.

From there, we would recommend opening up a new tab and searching what the current exchange rate is on something like Google or another financial website.

Because PayPal has fixed conversion rates that don’t move with the currencies, you are often paying a higher rate than the currencies are currently trading for.

While this is not a PayPal fee per say, it is another way that you are losing money that you should not be losing.

Further into this article when talking about how to avoid PayPal fees, we will also be addressing these conversion rates and how you can go about reducing these as well.

You can have a million transactions, but it does not matter if you are losing a ton of the money that you made to a poor conversion rate. A wise person once said, “It’s not about how much you earn, but how much you save”.

Foreign Transaction PayPal Fees

As mentioned earlier, PayPal is one of the top companies in the world when it comes to facilitating international transactions, however that can come at a cost. There are two possible fees that you are going to incur when using the website.

Cross-Border Transaction Fee

If you are a company that is situated in the United States and you do business with someone who is out of the country, not only is there going to be a fee for the transaction, but there is also going to be a 1.5% fee for it being cross-border. This is one of many Paypal fees, and can result in the cost of products going up.

In most cases, the buyer is the one who is absorbing this cost so if you are buying goods from the U.S and you live in another country, be prepared to have to shell out some additional money to cover the costs.

For example, if you have made a U.S purchase using a Canadian card over PayPal, expect to be paying roughly 4.2% in cumulative fees.

Currency Conversion Fees

The PayPal fees don’t stop there however. If the buyer is purchasing from you and they are using a currency that is different from your accounts, PayPal is going to charge you 4.0% to convert this fee and then add it to your account.

This percentage is subject to change and was recently raised from 3.0% to 4.0% only a few months back.

Make sure you are reading up on PayPal when you are going to make a payment to see if the rate has changed further. 

When it comes to who pays this Paypal conversion fee, it will depend on the bank of the customer.

If they are going to be handling the charge, then you do not have to worry. However, there are going to be times where the bank does not cover it, leaving you to pay the PayPal fees.

Now that we have an understanding of the conversion fee and how it applies to the seller and the buyer, it is now time to look at how we can either reduce these Paypal fees altogether, or find a way to reduce it. Any money that you can save will go a long way towards helping your business.

How To Avoid PayPal Conversion Fees

Now that we have determined that we are going to be buying or selling an object and dealing with another currency, we have to think of ways that we can beat the system and save a few dollars.

As we mentioned earlier, we do not condone any illegal activity to dodge PayPal fees, but there are a few things that you can do to save some cash.

Deal In Their Currency

The best and easiest way to reduce Paypal conversion fees is to simply deal in the same currency.

If you are buying a product from someone who is European, see if you can convert your money into euros beforehand, add it to your PayPal and then make the transaction. 

You are going to be charged with the transaction fee as you normally would, but because now PayPal doesn’t have to convert your money, you won’t be hit with that expensive 4.0% conversion fee.

When it comes to selling goods, you will have to talk to your customer and see what can be arranged. You might not be in the position to accept their currency, so in that case you will want to talk to them and find out if they can convert towards yours. 

If you are dealing in a popular currency like EUR or USD, this is generally recommended anyways.

If they are able to do this, once again, you will be hit with PayPal fees in the form of the transaction, but you will be unscathed by that 4.0% conversion fee.

Generally speaking, you should always ensure that your buyers are paying you in your native currency, therefore making the transition easier for everyone who is involved.

Create A Borderless Account Elsewhere

If you are looking to avoid these PayPal conversion fees and save your money, it is highly recommended that you take the time to create a borderless bank account on a third party website and then transfer that money to PayPal once you have converted it.

This is generally one of the best things to do as it can save you plenty of money.

Do not think this will allow you to entirely escape conversion fees, however they generally will give you a much better rate than what PayPal is offering, and also won’t charge you nearly as much when converting the money over. 

Once you have the currencies converted, you can then move it into your bank account or towards your PayPal. Finding ways to avoid having PayPal convert your money is the best solution towards avoiding those heft PayPal fees.

PayPal’s Conversion Fees Vs. Other Websites

The next thing we are going to do is look at PayPal’s current transaction and conversion fees and see how they stack up with other websites.

This will help to give you an idea on how much money you are going to be saving or spending and what service you want to use.

We won’t jump into PayPal because we’ve already discussed the 4% fee so instead let’s briefly view some other websites and the fees that they charge.


In terms of fees, Wise is able to beat PayPal with a variable transfer rate that is between 0.33%-3.56%. Even at its highest, it is still lower than what PayPal has to offer. There is a small fixed fee to pay for the transfer as well but it is so low it is almost insignificant.


Revolut is another up and coming international banking service that many people are using. When it came to researching their conversion fees, it was difficult to get a solid answer.

Revolut states that they are using the same exchange rates that the banks get with a small fee attached. After some investigating, you can expect to see a 0%-2% conversion fee, however you should investigate for yourself.

The Pros And Cons of PayPal

Let’s jump back to PayPal now and look at the many reasons why you would look to use their service for currency conversion and some reasons why you would look to move somewhere else.

At the end of the day, there is no wrong with doing business and absorbing PayPal fees might be the least of your worries.


The biggest pro to simply absorbing the PayPal fees would be ease of use and speed. While you might not be too happy with the Paypal conversion fees, at the end of the day the transaction is getting done quickly and you are getting your money. 

The minute you require currency to be offloaded to another account, converted, and then added back, you are looking at wasted time.

Not only that, but there are fees for moving your money to and from websites and this might end up being as much as the PayPal fees itself.

If you are looking for speedy transactions without much hassle or extra work, paying a 4% Paypal fee won’t be the end of the world.


4% is 4% and it is money that you can be saving if you are willing to put a little bit more money in. If you are willing to do research and look at other websites out there, you could find something that has lower fees than PayPal.

Closing Thoughts

As we mentioned, it is totally up to you whether or not you want to absorb this 4% conversion rate fee or not. There are no ways to lower your PayPal conversion fees, but there are ways to completely negate it and continue to do business.

The first thing you need to do is make sure you are only accepting one currency. The less times you have to convert money, the better it will be for you.

If you do have to make conversions however, you have a decision to make based upon all of the research at hand.

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