How to Save on PayPal Fees Using Your Local Bank’s Currency Exchange Rate

By Staff Writer    06-Apr-2023 10:34 UTC+02:00

PayPal is one of the most popular payment methods in the world. The online payment system significantly reduces the fees that one would need to pay to make international payments through a bank. However, many people outside the US are not aware that when making payments, PayPal tends to charge more than a bank to convert their local currency to US dollars. We have tested this several times. Each time we selected the local bank’s currency exchange rate, we paid less than the amount quoted by PayPal. Below, we show you how to save on PayPal fees when making international payments from South Africa.

Step 1. Assuming that you have already logged in and are paying with a credit card linked to your PayPal account, click the “See currency options” link near the bottom of the payment page before making payment. In this example, we were making a payment of $3.85 from a Capitec debit card to an international recipient. According to PayPal, the amount we needed to pay, in South African rands (ZAR), was R72.52.

Step 2. Change currency to USD. After clicking the link mentioned in step 1, you will be taken to the following page, which gives you the option to change the currency to make your payment in. Select USD.


Step 3. Finally, make payment in US dollars. After changing the currency to USD in step 2, PayPal will show you the amount you will pay in USD, followed by a warning-like message informing you that “your card issuer will determine the currency exchange rate and the fees they may charge.” This message might deter some people from switching to US dollars, due to fear that the bank might add more fees. Fear not. Go ahead and make payment using the American currency and check your bank statement, at least once for testing purposes. Chances are you will pay less than the amount PayPal would have charged you.

In the above transaction, after switching the currency to US dollars, which applied Capitec’s forex rate, we paid R68.9. That is R3.62 less than the amount we would have paid had we let PayPal do the currency conversion. While this may seem little, it may be significant in the long term, especially when dealing with larger amounts of cash. However, different banks have different forex rates. Therefore, we cannot guarantee that you will save money by following the above steps. Try them at your own risk next time you make payment through PayPal and let us know in the comments how it went.

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