Paypal foreign currency exchange fee

[barnfindparts]

Good day,

This is to any Canadian sellers out there who sell worldwide and accept payment via Paypal. Has anyone figured out how to avoid the Paypal foreign currency exchange fee when funds to Canadian dollars. I find it excessive on top of the 4 % they already charge in sales fee. 

Furthermore these new US state sales fees are taking another bite. I've noticed when ebay assesses their final value fees they include the new state sales taxes which is not fair. Same with paypal and their transaction fees. 

These fees & taxes are starting to add up 

Ebay FVF 10%

Paypal 4%

Pay pal foreign con. fee 3.5%

State sales tax 7.5 %

GST 5%

PST HST

When does it end???????  

[reallynicestamps]

If you are paid from a Canadian account you pay 30 cents non-refundable,  plus 2.9% of the payment as PP's processing fee.

If you are paid from a non-Canadian account you pay 30 cents non-refundable,  plus 3.7% of the payment as PP's processing fee.

(Our US colleagues pay 4.4% for non-US payments, but most non-US sellers have more American customers than domestic or overseas customers. so there's that.)

The "internet sales taxes" are charged by all the larger* online venues.  It is a pass through and tyler@ebay  has assured us that we are not being charged any eBay fee on this money.

However, Paypal is charging their fees on the sales tax.

So if we sell a $100 item to a state that has a 5% sales tax, the buyer will be billed $105. which he pays by Paypal.

And Paypal, which processes $105, charges us  3.7% of that $5 (18.5c) for their service.

And 30 c (non-refundable) and 3.7% of the $100 as well, of course, on the payment we really received.

Apparently no one at eBay thought this might come up as a problem.

Has anyone figured out how to avoid the Paypal foreign currency exchange fee when funds to Canadian dollars.

Yes, but it may be more expensive than paying Paypal.

You need to open an account in an American bank with Canadian ties.

RBCBank and TDNorth are the two I know.

Then you need an account in either the Royal Bank of Canada or TDCanadaTrust, depending on which US bank you chose, held in US dollars.

These US accounts are being advertised in Canadian branches now as snowbird season approaches.

You transfer any payments in US dollars to the US bank.

Then when you build up enough US dollars in your US bank  (or when the exchange rate looks favourable) you transfer them to your Canadian US-dollar account.

So far, the banks have charged you no foreign exchange.

Then, so you can actually spend the money at the grocery store, you transfer from your US funds account to your Canadian funds account. At this point you will pay foreign exchange.

Note that there are THREE accounts in play here.

Note that charges in US banks can be quite high.

We did this when we had our B&M shop and did a lot of business with US collectors in US dollars. Well worth it.

I did it on my private website, but found it too expensive. Paying the PP fees was cheaper.

Unless you are registered to collect GST and PST, you should not be doing so. If you are exporting your item, there should be no GST or PST charged, and in fact, in some cases you may get a rebate on your monthly remittance. Consult your tax accountant.

*larger than mom'n'pop

[ypdc_dennis]

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@barnfindparts wrote:
... Has anyone figured out how to avoid the Paypal foreign currency exchange fee when funds to Canadian dollars.

Paypal 4%

Pay pal foreign con. fee 3.5%

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PayPal fees for Canadians:

30 cents + 2.9% for a Canadian sale

30 cents + 3.7% for a USA sale

30 cents + 3.9% for anywhere else in the world

If you have to make a refund, paypal keeps the 30 cents. You get the percentage back from paypal when making a refund (expect this to change in 2020 or 2021 as paypal moves to making their profit margins bigger).

PayPal conversion fee of 3.5% applies when you make a transaction and conversion is done at the same time.  Save 0.5% by moving your money between your paypal currency balances first before doing anything else.

Example: depositing to your Canadian bank account with money from your US balance will have a 3.5% fee buried in the exchange.  Move money from your US balance to your Canadian balance first (3.0% fee buried in the exchange rate), then make your bank deposit.

Main way avoid exchange rate fees completely is to spend the money without converting.

I keep money my ebay.com sales in my paypal US balance (paypal allows you to setup separate currency balances). Then I use that balance to make purchases in US$ (from ebay sellers and from US companies that accept paypal).  No exchange rate and no additional paypal fee.

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