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7 Factors That Affect PayPal’s Exchange Rate 

PayPal is the most extensive online payment system, with a global market share of 39.76%. That’s over 2% more than its closest competitor, Stripe, which commands 37.22% of the digital payment market.  

PayPal is also the world’s largest non-bank lender, with over $54 billion in total assets. The company attributes its success largely to its reasonable exchange rates.  

But like any financial company, PayPal’s exchange rates can fluctuate significantly across different periods depending on internal and external factors. This article highlights the seven critical aspects that affect PayPal’s exchange rates.

Prevailing Currency Exchange Rates

Foreign exchange rates are ever-fluctuating.  

One USD is equivalent to 0.78 GBP as of February 2024. The same currency pair traded at $1 = £0.8271 in January 2023, which means the Great British Pound has gained marginally against the United States Dollar within the 13 months.  

Foreign exchange rates are an external force affecting all digital (and even traditional) payment systems, and PayPal is no exception.  

The good news is that PayPal exchange rate are considered mid-market, the same rates used by traditional banks and money transfer services. The company doesn’t add mark-ups when sending money abroad. 

Currency Conversion Rates

PayPal is a global digital payment system. That means many transactions going through the platform involve many currencies besides the US dollar.  

Another implication is that millions of PayPal buyers and sellers (or payment senders and recipients) do not necessarily maintain the same currencies. And that’s where the currency conversion rates come in.  

PayPal charges a 4.5% fee for all currency conversion services, considerably higher than its closest competitors charge. For comparison, Stripe charges 1% conversion fees for US accounts and 2% for non-US accounts.  

The only way to avoid PayPal’s exorbitant currency conversion fees would be to receive your payouts in the same currency as the sender. But then again, this may be inconvenient if you prefer to transact in an entirely different currency. 

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Non-Transactional Currency Conversion Rates

Most cross-currency transactions involving PayPal often occur when a user receives money in a different currency from the one their account is configured for.  

However, there are instances where a PayPal user may decide to convert their balance from one currency to another, but not necessarily in connection with any transaction. This is common among travelers.  

If you’re planning a month-long vacation in Australia and you envision using your PayPal account for local transactions while there, it may be prudent to convert your balance from USD to AUD.  

PayPal typically charges 3% for such exchanges.  

Domestic versus International Transactions 

PayPal classifies commercial transactions as domestic or international. And as you shall find, there’s a rate applicable to each transaction type.

Domestic Transactions

The cost of domestic transactions with PayPal varies considerably with the amount of money transferred and the nature of the transaction involved.  

However, PayPal typically charges 1.90% to 3.49% for domestic transactions. Note that these rates exclude any fixed fees charged depending on the recipient’s currency.  

The best way to avoid becoming disadvantaged by the hidden fees is to insist on receiving your payment in USD or the same currency as the sender. Alternatively, opt for a currency of greater value than the greenback. 

International Transactions

PayPal’s rates for international business transactions are unsurprisingly higher than domestic transactions.  

First, all international transactions through PayPal are subject to domestic charges. Then, there’s an additional fixed rate fee of 1.50%.  

International PayPal transactions typically add up to 4.99% on the higher side. That’s 3.49% + 1.50%. However, this is exclusive of PayPal’s currency conversion fees. 

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Refunds and Chargebacks

There are many instances where PayPal buyers file chargebacks and demand refunds for services rendered. This is usually because what the buyer received isn’t exactly what they ordered, and for some reason, they feel cheated out of their money.  

Chargebacks don’t determine PayPal’s exchange rates directly. Instead, they affect the seller’s balance and access to their PayPal account.  

PayPal will usually research any refund claims before settling the dispute.  

If the case is determined in favor of the buyer (plaintiff), the seller (defendant) automatically loses the transaction value or any other amount as PayPal may deem fit. Besides, PayPal usually charges a 3% refund fee if the buyer uses a currency their account isn’t configured to accept. 


There are several exemptions to PayPal’s fees and exchange rates.  

First, PayPal charges no fees to sign up with an account. No fees are levied on sending or receiving money from friends and families living in the same country, provided the two parties have linked their PayPal accounts to their respective banks or debit cards.  

PayPal’s exchange rates don’t apply when shopping for everyday essentials at merchants who accept PayPal payments. The company is also known to waive its fees during major humanitarian crises.  

For instance, there are no fees for sending or receiving money with a Ukrainian PayPal account. That’s part of the company’s response to the ongoing Russo-Ukrainian war.  


PayPal exchange rate fluctuations are often due to internal rather than external forces. That explains why the company has remained dominant in the digital payment and lending industry.  

But should you find PayPal’s exchange rates unfavorable for whatever reason, it’s great to know that you can consider numerous alternative online payment methods. 



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