Why is ebay charging 3.7 % instead of 3% to exchange my moneys canadian to us funds.

Why is ebay charging 3.7 % instead of 3% to exchange my moneys Canadian to US funds.

It's the principle of it not the money. Purchase price was  4.38 US which is 5.63 ca (rounded to the higher) at XE Currency Converter. (which was the same as ebay) I was charged 5.84 Canadian.

5.63 x 3 %    = .17     5.63 +  .17= 5.80 I thought it should have been.

5.63 x 3.7% = .21     5.63 + .21 = 5.84 This is what I was charged.

Like I said it isn't the moneys in my case because it is only 4 cents but if this was thousands of dollars I would be a little put off.

Is there another fee that Ebay charges that I am not aware of?

I wonder how they got this.

 

Thanks in Advance

No is the price of money I checked XE very reputable and Ebay did have the same figure.

Accepted Solutions (1)

Accepted Solutions (1)

xe.com gives a mid-market rate.

Not the retail rate you would get at your bank.

It is a matter of convenience, sometimes. For example, when I was doing travel expenses for government officers (up to the cabinet minister level) we used xe.com as the standard exchange, not what the officer actually paid on her credit card or in cash.

Like the 'notional penny' , the simplicity of the arrangement made up for the occasional loss or gain.

Also, the mid-market rate, which reflects the costs of buying or selling currency  by large financial institutions, fluctuates constantly, several times a day or even several times an hour with some very volatile currencies.

That's why the financial news covers those fluctuations. There are those who make their living buying and selling currencies.

 

Here's a fun exercise.

Take $100 CDN and ask how much USD you can buy with it at your own bank.

Now go across the street and ask at another bank.

Now go to a credit union and ask therre.

And finally, go to a foreign exchange shop and ask there.

Don't be shocked to  get four different prices.

And if you do the same tomorrow, you may well get four more different prices.

 

Also, the PP exchange includes both exchange and fees.

Now if this was thousands of dollars I would be a little put off.

And you would get yet another four prices from the various financial institutions.

The service fees are usually fixed, but the rate will vary, and it is often lower for very large transactions.

 

PP is generally considered to be about the same cost as using a credit card to buy and sell cross-border, in terms of rates and fees.

Answers (11)

Answers (11)

tobyshitzu
Community Member

If you are buying in foreign curency get yourself a Canadian issued credit card that doesn't charge any premium on currency conversion and save yourself that 3%.  Like the no fee Home Trust visa.  paypal hides the option of have the foreign currency charged directly to your card, but its there.    No reason to pay any premium on foreign exchange 

mcrlmn
Community Member

And let's not forget it's going to cost you additional transaction fees if you use your credit card to make those purchases.

(To avoid currency conversion fees, shop Canadian.) 

Hello Everyone,

Due to the age of the thread, it has been closed to further replies. Please feel free to start a new thread if you wish to continue discussing this topic.

Thanks for your understanding!

@kih-leslie

ZOMBIE THREAD FROM 2018!

For CAD <-> USD, eBay is currently charging 0.7045. 

While the market mid rate is 0.7534. (xe.com)

 

So eBay is charging roughloy 500 pbs or 5% on ONE side of the transaction.

By comparison, credit card companies are usually around 2.5 - 3%.

 

eBays rates are about on par with corner store Foreign Exchange shops, and airport.

Basically a rediculous markup.

 

So eBay charges an additional 2-2.5% more than credit cards.

if you need to exchange funds, do it through your credit card.

 

eBay (and many other firms) offer this as a "Convenience" to customers.

However, it is a huge profit centre.  Capitalizing off clients who dont know.

 

Consider in an average day (and I am making up these numbers just to explain)

If:

Canadians buy $2m worth of US items.  eBay earns $100k.

If Americans buy $2m worth of CDN items, eBay earn $100k

 

Do they go to the bank and exchange any of this?  No.

Because all this FX nets out to ZERO

Its 100% profit. Very little risk.

 

(BTW - I used to run a foreign exchange desk for major company.  Did this all day long for years)

 

OK

The example above is a bit too perfect, because the buys & sells will never offset perfectly.

 

So assume a real life scenario:

CDNs buy $2m, ebay earns $100k

Americans buy $1m, ebay earns $50k and is left with $1m to convert.

Their rate, at the bank is about 20-50 bps (0.2 - 0.5%) on $1m.  so their expense is ~$5k

 

So:

Revenue: $150k

Expense: $5k

 

Its awesomely profitable business.

Very few businesses that generate this kind of ROI

ZOMBIE THREAD FROM 2018

 

The problem with zombie threads is that information in them is often out of date and incorrect.

 

 

I'm trying to understand the same thing.
Did you find anything in regards to the currency exchange fees charged by eBay MP?

I still haven't seen my invoice since I converted to MP.
There could be information about it on the invoice

 

https://www.xe.com/currencyconverter/convert/?Amount=1&From=USD&To=CAD

 

This is the xe.com site.

Notice the 90 day Quick Look, with a range of about  7% in prices.

And the USD to CDN chart that shows the range over the past year.

 

 

marnotom!
Community Member

@girlytoo wrote:

Why is ebay charging 3.7 % instead of 3% to exchange my moneys Canadian to US funds.

It's the principle of it not the money. Purchase price was  4.38 US which is 5.63 ca (rounded to the higher) at XE Currency Converter. (which was the same as ebay) I was charged 5.84 Canadian.

5.63 x 3 %    = .17     5.63 +  .17= 5.80 I thought it should have been.

5.63 x 3.7% = .21     5.63 + .21 = 5.84 This is what I was charged.

 


As @femmefan1946 pointed out, XE.com (and by extension, eBay), uses "mid-market" exchange rates.  Currencies actually have official "buy" and "sell" rates which are different.  XE.com just splits the difference.  The 3% is likely being applied to the market "buy" rate, which would be different than the mid-market rate quoted by eBay and XE.com.

Ebay is quoting you the market value of the currency; paypal or your credit card is doing the conversion. There is a fee for that conversion: to convert funds to foreign currencies that is above and beyond the posted market rate.