Who makes up the money for the currency exchange difference between USD and Canada?

[collectablejeff]

When something sells in USD for $100.00 and I receive $128.00 where does that $28.00 come from? Would not the money to make up the difference come from the Canadian Government? That would be a reason to change how eBay.ca does things. And would not that tell us that things are not going to get better?

[xeposter]

Is the $28 what you changed for shipping? That would explain why you received $128...

Alex

[pierrelebel]

"Would not the money to make up the difference come from the Canadian Government?"

No the government has nothing to do with that.

You need to look at the larger picture to understand currencies.

In the USA, they use the US dollar (US$) as a currency

In the United Kingdom, they use the pound Sterling (£)

In most of Europe (France, Germany, Italy, etc...) they use the euro (€)

In Canada we use the Canadian dollar

In Australia, they use the Australian dollar

In Hong Kong they use the Hong Kong dollar

In Japan they use the Yen

Etc...etc...

Banks and large financial institutions will help companies and individuals who need to convert the proceeds of a transaction from one currency to another.  The value of each currency is based on the currency market where each currency will fluctuate in value based on market conditions (supply and demand)

Here is one currency conversion calculator available online: http://www.xe.com/currencyconverter/ 

Most financial institutions (banks, credit card issuers, PayPal, etc...) charge a fee to convert one currency into another.  For most retail transactions, the charge is about 2.0% to 3.0%.

"That would be a reason to change how eBay.ca does things."

Currency fluctuations have NOTHING to do with eBay's recently announced change of policy making eBay.ca a single currency site like all other eBay sites.  If you list and sell in Canadian dollars and your PayPal account is set up with a Canadian dollar balance and your eBay's billing currency is set up in Cdn$, you will never be charged any currency conversion fee.

Good Luck

[pierrelebel]

x.e. - the poster is talking about two different currencies - the US$ and the Cdn$ - something you do not have in the USA when you only deal with one currency.

[pierrelebel · Accepted solution]

Please allow me to demonstrate how foreign exchange conversion works.  Let's pretend I am a foreign exchange out fit.  That is all I do for a living.  To keep it simple, let us suppose I only deal in US$ and Cdn$.

On my desk, I have two piles of money.  At left is a pile of US$ while at right you find Cdn$

The current wholesale (intra-bank) conversion rate is US$1.00 = Cdn$ 1.30

Since I want to make some money for my currency conversion business, I will give Cdn$ 1.26 for every US$1.00 received and will charge Cdn$ 1.34 for every US$1.00 customers want to buy.

At the end of the day, I had many customers selling me a total of US$100,000 and asking for Cdn$; I also had many customers with a total of Cdn$ 130,000 wanting to buy US$

How did I do?

I ended the day with a profit of $4,000 on the US$ folks wanted to exchange for Cdn$ and another $4,000 profit from the folks who wanted to exchange their Cdn$ for US$.

$8,000 profit in one day and... best of all... the two piles I started with earlier in the day have the same amount of money plus $4,000 each!

All the conversion profit came to me, the currency exchanger, for the service I provided.  Nothing to do with eBay, or the government.  All to me.

[aubreyclay56]

in simple terms the canadian dollar is only worth about .70 cents compared to the us dollar,i remember in 1976 the canadian dollar was worth 1.06 compared to the us dollar and its been bouncing up and down ever since but as of late its only bouncing down. lol Thats why i cant understand ebay.ca only allowing sales in canadian funds after june first???