How to avoid PayPal US$ to CAD$ convertion fees?

[vip-marketplace]

Hey guys!

So most of my sales are in US$ and I'm a Canadian seller.

I opened a US$ bank account at RBC thinking I could transfer my US$ from PayPal to this account and avoid the currency exchange rate.

It appears even with a US$ bank account and transferring actual US$, PayPal STILL REQUIRES me to first convert them to CAD$. They won't let me avoid their convertion fees...

Is there any way I can work around this?

[zee-chan-jpn-books]

I either use my USA funds to buy things in not-CAD currencies, or in donation to organizations outside Canada.

[gwrocen]

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@zee-chan-jpn-books wrote:
I either use my USA funds to buy things in not-CAD currencies, or in donation to organizations outside Canada.

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@ggmalkavian

@ypdc_dennis 

@zee-chan-jpn-books

That is a good idea if you need to purchase anything that you cannot buy locally or if you like to support organizations outside Canada. 

We prefer to convert our US$ to Canadian currency at a favourable exchange rate without paying any conversion  fees. (see post #18)

As I mentioned before, in our case, we are downsizing instead of accumulating.  Anything that we need can be purchased locally.

As for donations, we have enough organizations right in our own town who are fundraising so we prefer to spend our money to support local  organizations.  This way we know how our donation money is being spent.   For example, our community is currently raising money for a new hospital.   I would sooner donate money for this project which benefits our community than anywhere outside of Canada. 

Anyway, thanks for your suggestion.

[chrimowa-0]

As far as I know (and can tell from what I've read), there is no way to avoid Currency Conversion Fees. Even if you go to your Canadian Bank and ask to Buy US Funds, you are paying a Conversion Fee based on that day's currency conversion rate (with their hidden fees attached).

Welcome to Canada !

[gwrocen]

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@chrimowa-0 wrote:

As far as I know (and can tell from what I've read), there is no way to avoid Currency Conversion Fees. Even if you go to your Canadian Bank and ask to Buy US Funds, you are paying a Conversion Fee based on that day's currency conversion rate (with their hidden fees attached).

Welcome to Canada !

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We have never paid any "Conversion Fees" to get our US funds from PayPal to our own local bank account.  Some of the previous posters said that they have to pay "conversion fees" to get their money from PayPal to their personal accounts.   You can be sure that the "conversion fees"  from PayPal takes a much bigger bite out of your money than when you deal with just the bank and it's daily posted exchange rate. 

Once we have the funds in our own local personal US$ account we can let that money sit there until there is a favourable  "exchange rate"  posted by the bank. 

For example - today's "exchange rate" is 1.2760.   A few weeks ago the exchange rate was 1.3038.   That's a difference of .0278.  In the past year we have seen the exchange rates fluctuate between about 1.2213 to 1.3294 - a difference of 1.081.  If you let your US$ account build up to over $10,000.00 that exchange rate can amount to $1081.00  in your favour.  Now what could be wrong with that?  That's a return of 10.81% on your US$10,000.00 investment.

And the beauty is, it is possible to handle all this yourself without any middleman taking their cut. 

[chrimowa-0]

Well that's all fine and good if you are a Seller. But for us poor slob Buyers, the Exchange Rates, Fees and Postage (when not free) can be a killer if not a deal breaker.
I survive (barely) on a fixed-low-income so every penny counts. And I will certainly never have $10K in the bank .. US or CAD funds. But I hear what you are saying.

[reallynicestamps]

just the bank and it's daily posted exchange rate.

It also depends on the bank.

While most banks are pretty well the same, if you need to change cash, it's worth checking with both banks and your credit union and not to overlook currency exchange offices.

A friend who ran an exchange in Ottawa regularly sold more cash daily than any suburban bank branch and offered much better prices on US money than any of them.
He also was usually able to get other currencies faster and at a lower price than those branches. This was pre-euro, but his worst case was when he brought in a large order of Greek drachmas for a high school trip, which was then cancelled after a traumatic disaster at the school.  Boy did he have good prices on drachmas that summer.

If you are buying a large amount, exchanges are flexible about rates because they don't have to obey head office. they are head office.

But that deals with cash, not payment processing.

[vip-marketplace]

Guys...

I opened a US account with RBC in US$ which I linked to my PayPal account.

I transfered the money into it.

I opened a RBC Canadian bank account in US$. I transfered the money from my US account into it.

Now, I'm at the point where I transfer those US$ into my RBC account in CAD$.

THEY HAVE THE SAME EXCHANGE RATE AS PAYPAL!!!

WHAT'S THE POINT OF DOING ALL THIS??

Why are people saying they're not paying exchange rate with this method?? It's the same ?%$?/$ echange rate as PayPal!!!!

https://www.rbcbank.com/cgi-bin/tools/cadusd-foreign-exchange-calculator/start.cgi

That's like over 3% in fees when compared the real rate! I can't believe I went through all this for nothing.

[ricarmic]

You might want to look into XE trade their rates are low.

I am in the process of reawakening my XEtrade ID because when I did my comparison yesterday their rate, compared to the banks ("special") rate I get was 2.3% better. My TD bank "special" rate is only 1/2 a percent better than PAYPAL.

There are complications and time factors, it takes about 4 days for it to complete the process but it might be an option for you to look into....

I will advise of my experience once I've got things going again.....

[vip-marketplace]

Yes please report back once you've got this thing set up!

I'm really desperate to find a solution to these ridiculous currency conversion fees.
3% may look silly but it actually eats a HUGE chunk of my profit margins.

[mcrlmn]

The short winded version is...

Nope, no way around it.
Been there done that...
You need an account in the U.S.

Google it.

[ricarmic]

There are two challenges in receiving US$ in PAYPAL:
1. getting US$ "over the border" so to speak
2. getting a good conversion rate converting US$ to $C

ggmalk has achieved 1., they've only got to figure out how to better accomplish #2.

In the past I used XE very effectively, I stopped because our $$ fluctuated so violently I could just be patient and whittle my rate down to only a bit over a % but that is no longer the case so we'll see how reinvigorating it works out.

[vip-marketplace]

As ricarmic mentionned, I have my US$ in Canada. So this is not the issue. (I used a US bank account as you said).

My US$ are in my Canadian RBC US$ account currently.

I just need a way to convert these US$ to CAD$ without paying 3% in conversion fees.

[ricarmic]

Instead of waiting on me you might want to call XE to find out how it would work for you.

My situation is different because I'm pulling from an "in the USA" bank to my Canadian TD $C account (or at least that's what I used to do).

My observation is that different banks are wildly different for the fees they charge for stuff. The kicker will be how XE moves the money. I think in the past it was via wire transfer. Banks are likely to charge for that. I will find out this afternoon when they call me how it works today I'm hoping just an interbank transfer now, and will report back....

[ricarmic]

OK just got off the phone with them and yes they can handle a "Canadian US$ account to a Canadian $C account as well" so it is probably worth calling them!

They can do the non-wire transfer stuff now, same way as PAYPAL does so it shouldn't cost, but I would double confirm that with them when you call. (To set up an account you start the process online, (you have to do it as a business), it then provokes a live person to call you and discuss, then there's more paperwork to do to get it set up.

(PS I was joking with my CSR and told her there might be more joining because I was discussing with our chat group, and apparently they have a referral program so tell them Ron Carmichael sent you!!!)

[ricarmic]

So my XE account has already been approved.

I've been able to add both my US$ and $C TD accounts no problems. Everything looks like I can move stuff between them at the much better rate. I haven't completed the process yet though (to see if there are any charges, I don't think there will be though).

I have NOT been able to add my in the US bank account so far because of the restrictions on the account. I'm having recollections that this was a problem before as well. I have a way to get it to the Canadian US$ account which is a pain but which works.

I'll reengage my point of contact to see how to accomplish that.

I thought it worth sharing that the Canadian US$ to Canadian $C was easily set up.

[vip-marketplace]

Looks like you were lucky.

I just spend a long time setting up my account with them, uploading documents to validate my identity, address, etc.

Everything was perfect, the agents I spoke with were great and I really thought it would work.

But as soon as I mentionned PayPal, they said they wouldn't be able to help me and any account I will be creating in the future will get denied as well.

PayPal really have a long reach it seems...

[ricarmic]

They (aka you) can't pull $$$ from PAYPAL, they are not able to facilitate that.

What you are wanting to do is set up transfers between bank accounts.

In your case, you're moving money from your US$ bank account to your $C bank account. Nothing to do with PAYPAL.

If you are able to get back in touch with them, that is all you need to be doing to set it up, it has nothing to do with PAYPAL at all.

I'm not sure why the PAYPAL stuff set them off, the words PAYPAL came up in my conversation with them but perhaps because I was already familiar with the process and requirements from when I was signed up before it was not a problem.

It is too bad if that misunderstanding gets in your way of accomplishing it. Let us know if you try again. I would get back in touch with the person you talked with earlier, if possible.

[ricarmic]

As an update I now have all the accounts set up ($C and $US in Canada, and US$ in US bank). A separate linked account is required for the US based bank, so I have two linked accounts under my ID.

There have been some trials and tribulations getting things set up but it looks good at the moment.

I have a transfer in progress from my US$ Canadian account to the $C Canadian account, saving over 2% against paypal, or my banks regular rate. Note that the process takes about 4-5 working days.

I wanted to get one in before the end of the month to make sure my bank doesn't zap me with some sort of fee, but it is due to finish on the last day of January so time will tell.

I don't want to have two underway at the same time so I won't know if the US based gives me any problems until next month end.

I'll advise as there's any news.

[ricarmic]

Just an update, that I've successfully gotten things set up to move:

From Canadian US$ account to Canadian $C account.

From US Bank US$ account to Canadian $C account.

Note that I just moved money and the rates were:

XE 1.321

TD 1.301

PP 1.2945

So if one can set it up, it will save at least 2% on the conversion fees.

The process was onerous and there were some struggles getting things all set up but their support staff were great.

For sure if anyone else tries to set it up, it appears important not to talk about PAYPAL, but we all know they can't pull money from it so there's no sense anyway. I did specifically ask if they could now and they said no, and they didn't stop me from reactivating everything.

Also, they asked me many times how many times a month I'd be doing transfers and how much each time. I suspect the answer to this question might be important.

Normally I do one or two large moves a month. If one answers many times a month and smaller transactions that might not be good? I don't know that but I suspect it might be important.

[recped]

Also, they asked me many times how many times a month I'd be doing transfers and how much each time. I suspect the answer to this question might be important.

Part of the reason is because of Anti-Laundering rules, transfers over $5000 have to be reported. Another reason is risk management, once they (XE) transfer the money into your account they can't get it back.