However, it is also huge the amount of public that hardly knows the commissions who adopts this application for taking steps such as, for example, changing currency. With which, below we are going to give you some keys in this aspect in order to lose as little money as possible when you materialize a currency exchange.
What is the PayPal currency exchange rate?
The first of all is to know what an exchange rate is, this being the difference between what one currency is worth and another or, to put it another way, the amount that a currency needs to buy another that is different. This is an essential aspect when a conversion between two currencies is required.
The average exchange rate is the one used as a reference by all banks in the world. This is a security that has been previously negotiated and that is always based on the law of supply and demand. It is completely fair and equitable.
On the other hand, PayPal never applies the average exchange rate, but rather uses one of its own with the goal of making a profit. Such a circumstance can cause the cost of sending money outside of our borders to be significantly high.
What commissions are used?
The banking transaction application usually charges commissions for currency exchange that are around 3% and 4% for the vast majority of payments. Such percentages for performing a currency conversion mean that paying with this type of tool has a moderately high cost.
For example, in the case of the US dollar the commission stands at 3%, but if we go to the euro it is 3.5%, while in the Japanese yen it is 4%.
Thus, one of the keys to achieving a lower commission is to convert the money from the balance deposited in the account to the currency that you want to achieve instead of allowing PayPal to carry out this management automatically. With this, the commissions will be less for all the currencies that are used.
How do I remove dynamic conversion from PayPal?
The dynamic conversion of PayPal is a utility that gives the user the green light to carry out transactions through their own currency. At first glance, it may seem like a totally excellent idea, since it lets us know the exact amount that we are going to be charged for the payment of a product or service.
However, this is actually a problem as it is the application that performs the currency conversion using your own exchange rate, which is never beneficial to the customer. Therefore, and as we have mentioned before, the money that is lost varies between 3% and 4% of the amount paid.
The only way to remedy this annoying problem is suppressing dynamic conversion and using methods to pay without any hidden commission behind. Right here below we will explain how it is done:
- When paying for a product or service in euros (or any other currency), a button appears at the bottom of the screen where you can read “Currency conversion options”. By pressing it, it takes us to another location where we have to select how we want to carry out the transaction, whether in our own currency or in the currency of the destination country. We choose the latter. Finally, we can state that the currency exchange will be practiced by our bank and not PayPal, at the same time that a message appears that states the following: “The card issuer will determine the exchange rate and the rates that may apply”.
Consequently, from this moment on, it will be the bank itself that will apply the relevant commissions in transactions made through PayPal that involve a currency conversion. This will lead to quite considerable savings in our day to day.
Cards with a good exchange rate in PayPal
But we also have to say that if we enter the number of a traditional card in this online transaction application, we will continue to be charged commissions of around 3% each time we change currency.
However, there are cards that are specifically designed to be used outside the euro zone and that allow us to pay in practically any type of currency. without losing money thus. Of course, they can be used in PayPal, making us save a lot in our checking account.
These cards work by loading them with money little by little, they are prepaid and their exchange rate is usually the interbank. Some models are Revolut, BNEXT or N26.
In short, if we intend to carry out a currency exchange within PayPal and we want to save all the commissions incurred and because there is, what we have to do is deactivate the dynamic conversion of the application itself and use a card that does not charge us for the transactions that we perform outside our borders.