PayPal fee options

By Jim Gray
This item appears on page 24 of the October 2015 issue.
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In planning upcoming trips, I have been surprised how often payments can be made using PayPal.com; it’s common when booking tours. Planning for a trip that would begin in July 2015, I used PayPal to pay for the Blue Line Ferry from Ancona, Italy, to Split, Croatia, and to pay for a tour in England that would include a visit to a home in the Cotswolds for lunch.

Be aware that if you choose to use PayPal, there will be a 2.5% currency-conversion fee when making purchases not in dollars*. 

Sometimes you will be given the choice of using your own credit card on the PayPal site (I use the Chase Sapphire Preferred card, which charges no foreign transaction fee), but even if you use a credit card that charges no foreign transaction fee or currency-conversion fee, you will discover, when using PayPal, the currency-conversion fee still will be added.

For the Cotswolds tour, the payment page seemed to give me a choice between PayPal and my credit card. I chose my credit card. However, PayPal still charged the percentage.

I will point out that the currency-conversion fee is disclosed on PayPal’s website. It is no big secret. However, how many people really read the fine print to that extent?

JIM GRAY

Upland, CA

*ITN sent PayPal a copy of Mr. Gray’s letter and received the following statement from a PayPal spokesperson.

PayPal lets our customers pay in many ways. When paying with a PayPal account, a customer may be charged a foreign-exchange fee if he purchases something in a currency other than the currency that is in his PayPal account balance or associated with the credit card or debit card tied to his PayPal account. 

To avoid exchange fees, before making a payment in a foreign currency, a customer can choose to hold a balance in his PayPal account in that currency and pay from his PayPal balance. 

He also can pay with a no-transaction-fee credit card by linking the card to his PayPal account. During a purchase, to avoid the [PayPal 2.5%] currency-exchange fee, he also will need to choose “Other Conversion Options” when checking out and to select to be billed in the seller’s currency. When this option is selected, the credit card issuer will waive any foreign-transaction fees, if applicable.

The spokesperson provided a website screenshot showing the checkout options when purchasing through PayPal in a currency other than the one associated with the purchaser’s credit card tied to his PayPal account.

Users are given two options. The first states, “Use PayPal’s conversion process to complete my transaction using my card’s currency — Both the original transaction currency and the converted amount that I will be charged are disclosed for my convenience. I understand that MasterCard and Visa have a currency conversion process. I have chosen not to use the MasterCard and Visa currency conversion process…”

The second option reads, “Bill me in the currency listed on the seller’s invoice — I will not know which foreign exchange rate has been applied to this transaction until I receive my card statement from my card issuer. I acknowledge that by choosing this option, my card issuer will determine the foreign exchange rate to apply to this transaction, and that I will not be informed of the foreign exchange rate or any additional foreign exchange fees applied until I am billed by my card issuer.”

Choosing the first option incurs PayPal’s 2.5% currency-exchange fee, while the second option allows the purchaser to, instead, use his credit card’s currency-exchange rate (which can be more than 2.5%), and he will be charged his card’s foreign transaction fee, if any such fee is normally incurred.

Please login or subscribe to ITN to read the entire post.

In planning upcoming trips, I have been surprised how often payments can be made using PayPal.com; it’s common when booking tours. Planning for a trip that would begin in July 2015, I used PayPal to pay for the Blue Line Ferry from Ancona, Italy, to Split, Croatia, and to pay for a tour in England that would include a visit to a home in the Cotswolds for lunch.

Be aware that if you choose to use PayPal, there will be a 2.5% currency-conversion fee when making purchases not in dollars*. 

Sometimes you will be given the choice of using your own credit card on the PayPal site (I use the Chase Sapphire Preferred card, which charges no foreign transaction fee), but even if you use a credit card that charges no foreign transaction fee or currency-conversion fee, you will discover, when using PayPal, the currency-conversion fee still will be added.

For the Cotswolds tour, the payment page seemed to give me a choice between PayPal and my credit card. I chose my credit card. However, PayPal still charged the percentage.

I will point out that the currency-conversion fee is disclosed on PayPal’s website. It is no big secret. However, how many people really read the fine print to that extent?

JIM GRAY

Upland, CA

*ITN sent PayPal a copy of Mr. Gray’s letter and received the following statement from a PayPal spokesperson.

PayPal lets our customers pay in many ways. When paying with a PayPal account, a customer may be charged a foreign-exchange fee if he purchases something in a currency other than the currency that is in his PayPal account balance or associated with the credit card or debit card tied to his PayPal account. 

To avoid exchange fees, before making a payment in a foreign currency, a customer can choose to hold a balance in his PayPal account in that currency and pay from his PayPal balance. 

He also can pay with a no-transaction-fee credit card by linking the card to his PayPal account. During a purchase, to avoid the [PayPal 2.5%] currency-exchange fee, he also will need to choose “Other Conversion Options” when checking out and to select to be billed in the seller’s currency. When this option is selected, the credit card issuer will waive any foreign-transaction fees, if applicable.

The spokesperson provided a website screenshot showing the checkout options when purchasing through PayPal in a currency other than the one associated with the purchaser’s credit card tied to his PayPal account.

Users are given two options. The first states, “Use PayPal’s conversion process to complete my transaction using my card’s currency — Both the original transaction currency and the converted amount that I will be charged are disclosed for my convenience. I understand that MasterCard and Visa have a currency conversion process. I have chosen not to use the MasterCard and Visa currency conversion process…”

The second option reads, “Bill me in the currency listed on the seller’s invoice — I will not know which foreign exchange rate has been applied to this transaction until I receive my card statement from my card issuer. I acknowledge that by choosing this option, my card issuer will determine the foreign exchange rate to apply to this transaction, and that I will not be informed of the foreign exchange rate or any additional foreign exchange fees applied until I am billed by my card issuer.”

Choosing the first option incurs PayPal’s 2.5% currency-exchange fee, while the second option allows the purchaser to, instead, use his credit card’s currency-exchange rate (which can be more than 2.5%), and he will be charged his card’s foreign transaction fee, if any such fee is normally incurred.