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Not really, what you are seeing is simply the included fees for the privilege of have them handling the conversion for you, just like any bank would. it's something like 3% I think. 
"Why is it when selling an item the money exchange rates are so different between ebay and paypal"
It is a bit like comparing apples and oranges.
On eBay, the information given for exchange conversion is based on the wholesale rate in effect at the beginning of the day. It does not include any spread or fee for converting one currency into another. That applies to all eBay stotes in all currencies.
For example, if you look at the British site (ebay.uk) you will see the price in Sterling and the approximate value in Canadian dollar if viewed on eBay.ca and in US$ if viewed on eBay.com. The value is approximate at the time and may vary from the actual transaction amount.
in PayPal, it is different. The foreign currency is converted into local currency based on the then wholesale price (it fluctuates often during the day) and a 2.5% conversion fee is charged. If you are a buyer, 2.5% is added to your bill; if you are the seller, 2.5% is deducted from your proceeds.
That 2.5% fee charged by PayPal is competitive with most credit cards issuers (there are a few exeptions) and Canadian and foreign banks.
"1 Canadian dollar is worth 0.95 us we should get that deal. "
You are misunderstanding the exchange rates.
Currently a Canadian dollar is only worth US$0.95 while a US$1.00 is worth Cdn$ 1.05
This chart shows you the changes in the value of the Canadian dollar in relation to the US dollar in the last five days:
http://finance.yahoo.com/q/bc?s=CADUSD%3DX+Basic+Chart&t=5d
This chart shows you the changes in the value of the Canadian dollar in relation to the US dollar in the last year (from above parity to about five percent below):
http://finance.yahoo.com/q/bc?s=CADUSD=X&t=1y&l=on&z=l&q=l&c=
Now, when converting currencies - any currencies - you have to pay a conversion fee built in the rate paid to you or charged to you by the financial institution converting the money for you (bank, PayPal, credit card issuer, etc...).
Currently, if you want to purchase US$ 100.00, you will be charged about Cdn$ 107.50
If you want to sell US$ 100.00, you will receive about Cdn$ 102.50
The difference (about $5.00) is approximately 5% or 2.5% each way for buying and selling a currency.
Keep swinging away Pierre. The "I want what I want" crowd will not here you.
What they lose focus is on, that when the dollar is dead equal, we cannot excahnge one for one, the bank needs their profit margin.
From when the Loonies topped out around $1.04 to now, I am making a difference of 10%. Compared to then, that is paying my fees.
For everyone that wants the posted exchange, open up a money changing booth. Do NOT charge a commision. How long before you go broke? Money and precious metals have the thinnest profit margins. Be thankful you are not paying my margin of 93%.
"Perhaps they are the "I don't understand how this works" crowd and just want clarification."
That is correct with a lot of posters.
We also have those who simply misunderstand how things work. It is always easier to deal with those who do not understand and want to learn than those who got it wrong but refuse to accept or admit it.
Then there are the others..... * * *
"So the buyer and seller pays 2.5% exchange rate?"
That is correct.
For example, if you go to the bank give the teller Cdn$ 200.00 and ask for the amount to be converted into US$.
If the current wholesale exchange rate is US$1.00 = Cdn$ 1.05, the teller will give you about US$ 185.00 (US$190.00 for the conversion less about $5.00 (2.5%) conversion fee).
Now take the same US$ 185 you just received and ask the teller to convert into Cdn$. The teller will give you Cdn$ 190.00 ($195 for the conversion less $5.00 (2.5% conversion fee).
You start with $200 you end up with $190 for a net loss of $10.00 or 5% which is 2.5% of each side of buying and selling.
"I know ebay and paypal are different, but it should match up"
Obviously they cannot match up as they represent different values, the eBay approximate amount does not include any conversion fee (buying or selling).
So if a buyer looks at the approximate eBay conversion, one should add 2.5% conversion fee. If the seller looks at the approximate eBay convertion, one should deduct 2.5% conversion fee to determine how much would be deposited to the sellers Canadian bank account once the transaction is completed.
"Paypal is not a bank, and they even state this in their policies/statements somewhere, so why are they able to charge a higher USD exchange rate?"
Canada Post is not a bank. Yet, if you buy a money order in US$, they will charge you 3% conversion fee.
If you cash a US$ money order (USPS international) they will deduct 3% conversion fee.,
Canada Post works on approximately 6% spread (3% each buying/selling) compared to 5% for PayPal and most credit card issuers (banks).
At all airports, you will find businesses exchanging currencies. they are not banks. They generally charge a lot more than banks or PayPal to convert a currency into another.
