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11.01.2014 admin
By default, Paypal really wants to do the foreign exchange for you because they make a few percent off your purchase like most other banks and credit cards. These bastards screwed me with double convertion fee where my card was in USD and invoice in USD but thanks to PayMore my USD invoice was converted to national currency and then taken from USD card where it took another fee. When shopping overseas, a merchant may ask you if you would like to convert your credit card transaction from the local currency into U.S. Generally, when overseas merchants make this offer, they will use a conversion rate that is far higher than the actual going rate – as much as 7 percent higher – and pocket the difference as a fee.
Some customers incorrectly assume that if they do the currency conversion this way they can avoid the foreign transaction fee that 90% of credit cards charge. By avoiding Dynamic Currency Conversion and using a credit card without a foreign transaction fee, you can save yourself an extra 10 percent (7 percent from DCC + 3 percent foreign transaction fee) on each of your purchases. Below you can find more details about Dynamic Currency Conversion as well as tips for minimizing your expenses when traveling abroad. As a customer, you are entitled to full disclosure of DCC, conversion rates, final costs and any other fees charged for the transaction.
Still, a version of this practice persists: Many merchants automatically will select DCC without the customer’s consent when processing a transaction, though the customer will still see the conversion rates on the sales slip.
PayPal uses its own nomenclature (PayPal Conversion Rate) to refer to DCC, but the two essentially are identical. Before you finalize a transaction, PayPal will display the amount you wish to transfer expressed in the foreign currency and below it the amount converted to your home currency. In the “Payment Method” section is also a link to “Other Conversion Options,” the first of which is PayPal’s own conversion process and the other Visa’s and MasterCard’s.
If you choose the PayPal method, a message gently assures you that it immediately will disclose “Both the original transaction currency and the converted amount” you are to be charged “for your convenience.” On the other hand, should you select the credit card issuer’s currency conversion process, PayPal cautions you that that the applicable foreign exchange rate will be withheld from you until your credit card billing statement arrives. But choosing the credit card network’s conversion method can save a customer about 2.5 percent on each transaction. If a customer selects the PayPal conversion and wants to know exactly how it was calculated, PayPal posts the transaction details with the math on the customer’s “History” page. There are multiple ways to guard against the dangers of Dynamic Currency Conversion and protect your wallet. The best way to minimize your spending while traveling abroad is to get a no foreign transaction fee credit card.
While it’s tempting to see your transaction in a familiar currency, you should always refuse DCC and use a card that doesn’t charge foreign transaction fees.
If you want to make sure you aren’t getting duped at the checkout counter, download a currency converter app on your smartphone.
You’ll always need cash for certain purchases when traveling abroad, so it’s a good idea to bring a low or no foreign fee debit card with you.
PayPal Currency Converter Tech Guides About Us Work 04 Apr 2008 PayPal Currency Converter When you withdraw money from Paypal in a foreign currency, they will levy a 2.5% conversion fee on the retail foreign exchange rate.
Dynamic currency conversion is an aspect of the international currency market that is relatively new and masquerades as an easy way to pay more for goods and services abroad.

The only real benefit to dynamic currency conversion is that it allows a customer to immediately see how much their transaction will cost in their home currency rather than estimating or trying to do the math on the spot. You’ll notice that PayPal has calculated the amount you will send using the exchange rate of $1 = 0.741238€. In addition to the PayPal rate, there is another option: to be billed in the currency of the seller. One interesting way to see this in action is to download a currency conversion app on your smartphone (my personal favorite is the free one from XE). The bottom line is, Dynamic Currency Conversion is good for merchants but not consumers, so though it’s nice to know how much a charge will show up as on your credit card statement in your own currency ahead of time, it’s not so nice when it’s 2-7% higher than what it would be if you’d just made the charge in the foreign currency of the country you’re visiting.
Below I explain the steps required to avoid these fees.  In summary, it involves you signing up for a credit card with little to no forex fees, and following some steps to make sure that when you add a credit card to your Paypal account, you are being charged in the seller's currency, not your local currency converted by Paypal at a fee. The problem is that such cards tend to have relatively hefty yearly fees which can easily surpass whatever little difference PayPal’s forex markup might be.
If you only make a the occasional small purchase on eBay or something, then you are probably better off just letting your card company do it’s normal bank-customer forex rate (either way, it’s the same result since PayPal’s rate is usually higher than the bank’s). On the contrary, the credit card company will generally charge the foreign transaction fee in addition to the merchant charge related to Dynamic Currency Conversion.
But customers who are unfamiliar with DCC often won’t second-guess why the charge appears in their home currency. For some time before making the suggestion, ABECS had received mounting complaints from Brazilian consumers who received confusing credit card statements that listed their purchases in dollars rather than reals, Brazil’s local currency. When the transaction details appear, you’ll find under “Payment Method” the prevailing “PayPal Conversion Rate” to be used in the conversion listed as well. When transferring money, customers often end up with an unfavorable exchange rate if they select the PayPal conversion method. If customers select the alternative, PayPal still displays the amount using its conversion rate to make it appear as if the same rate would have applied anyway. PayPal claims to offer “competitive” conversion rates based on the “most current exchange rate data” but doesn’t explicitly disclose any service fees. With such a card, you can save up to an extra 10 percent (7 percent DCC fee plus 3 percent foreign transaction fee) on each transaction. With an app like XE, you can draw current market exchange rates while you’re connected to a WiFi source or a cell network.
In essence, it capitalizes on the fears and ignorance of a casual traveler that they do not know just how much of their own currency they are spending.
Much of this goes directly into the seller’s pocket, and in fact, many companies that provide this service for merchants even tout the additional commissions in their promotional materials (see CyberSource’s Dynamic Currency Conversion resource) when selling them to merchants.
With this option, your card issuer makes the conversion, and it will always be at a better rate.
With XE, you can input up to 10 currencies and pull current market exchange rates (when connected to WiFi or a cell network, of course). Then, politely ask to be charged in pounds, use a card with no foreign transaction fees, and walk out of the shop as an informed consumer, satisfied that you just outsmarted the dynamic currency conversion trap.

Essentially you’re wiping out any savings from using a card that doesn’t incur foreign transaction fees, so just say no. The credit card company is simply charging the customer for a transaction made abroad, not for the actual currency conversion. If you refuse DCC at the point of sale but the charge later appears on your bill with an inflated currency conversion rate, you can dispute the charge with your issuing bank. Other merchants will falsely claim that their POS terminals automatically converted the purchase price to the customer’s home currency. In other words, they try to convince customers that they might as well have opted for the PayPal service in the first place. Make sure you apply for a no foreign fee card before you book reservations or depart for your travels. More and more, when you are out of the country and use a credit card to charge a purchase – anything from clothes or a meal to hotel rooms, you are asked whether you want to be charged in US dollars or the local currency. My stay, breakfast, and airport transfer was going to cost 180€, and I was asked to send the money via PayPal. And while it may sound like an enticing offer, this conversion is very expensive for the cardholder and should be avoided. If a merchant selects DCC without your permission (your receipt will display your total in your home currency and the local currency), you should ask the merchant to void the initial transaction before signing your receipt and run it again in the local currency.
Paying in dollars is almost always a bad deal, though, so always choose the local currency. In this case, just as in the case with a local merchant, you are asking PayPal to make the currency conversion for you, and they are adding a fee in the process.
I went through the exact same process as above, and PayPal indicated that my payment would be $238.89. Just type in the amount of the foreign currency and the app will calculate the cost in dollars (or any other currency). In doing so, you avoid the pitfalls of the phenomenon (and money-making scheme) known as dynamic currency conversion. You pay with a no foreign transaction fee credit card, but you just unwittingly spent more than you should have spent.
To get the currency into that of the seller, in the next window click "Other Conversion Options" as shown:8. Fortunately, this bug doesn’t come into effect when PayPal performs the actual currency conversion but you may still want to confirm that.

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