PSA: If you use PayPal to buy stuff in a foreign currency, NEVER allow PayPal to do currency conversion for you. (Reason inside)

Hi fellow bootstrappers,

I recently realized that PayPal is - through a combination of fees hidden in the ToS and some … err … interesting UX design decisions pushing people towards handling currency conversions for them.
The lucrative part is that PayPal charges 3-4% FX fee (compared to your CC that charges 0-2%).

So next time you buy something online through PayPal in a foreign currency, make sure they do not handle the currency conversion for you.

I’ve written a longer, more detailed article about it, if you’re interested in that:

P.S. I’d appreciate any shares of that article

As a Shopify app developer my business get all its revenue paid to our PayPal (Shopify pays us twice a month), and that 4% is indeed real, we pay it every time we withdraw our revenue to our local bank. I’ve paid high 4 figures in that fee over the past few years…

@pjc I recommend looking into TransferWise’s “Borderless Account”. Using them, I got our forex costs down to 0.5% (give or take a few euros each month).


Wow that’s superb. Was already planning on setting up LLC with US bank account, had no idea TransferWise’s “Borderless Account” existed.

Does it act completely like a US bank account for your intents and purposes?

Seems to. I’ve been using it for a few months, and it has been working well.

1 Like

Transferwise is the best thing happened to the bankless money management since Payoneer.

Totally recommended, it’s a lifesaver for me because local banks stuck in the 90s.

I opened the borderless account a month ago. But my EU PayPal account only allows for EU based accounts, appears that the only workaround is ask my bank for a USD account

Did you manage to link it to PayPal or just stripe?

Oh that’s interesting. I have a US reseller who pays me monthly by bank transfer (ACH). I’m not using the “borderless account” with PayPal or Stripe, and haven’t tried that.

The issue is PayPal only lets you set one bank account per account. Whereas in stripe you can have multiple bank accounts.

I also have setup botderless accounts, looks great so far.

Setting up different currency accounts in PP is one of the best moves I did. Not only can you charge people in their local currency, upping conversion rates, but you also pay for stuff in that currency without a conversion fee.

But obviously you still have to pay a conversion fee when/if you want to bring the money “back home”!

Can you link a borderless account with Stripe? Their FAQ says it’s incompatible:

@intelligentcoder , @SteveMcLeod
Do you know if you can link fastspring to transferwise?
I have Australian customers, and must pay exchange from AUD - USD - EUR. Having tranferwise handling that would be great.

1 Like

Yes, you can. I’ve done this with Stripe and Transferwise, both for USD and EUR.

Depends on where you are and your credit card. Here in Australia, my credit cards charge a 3% - 3.5% foreign transaction fee. The only exception is American Express if the merchant agrees to quote a price in Australian Dollars (like Amazon will do), and then there is 0% forex fee.

So I’d definitely encourage being skeptical and doing the maths, but there can be cases where Paypal is actually providing a service and cheaper rates.

1 Like

Hey Kohan,

I’m definitely no expert on this, but here’s a link comparing a number of cards - all with 0% FX fee:

Also, PayPal charges 3.5 - 4% FX fee in Australia, so you’d still (on average) safe some money with your current cards.

That being said, you’re right and you should check whether the advice applies to your specific situation.

1 Like

Interesting! Clearly I should follow my own advice and do the maths on the banking side too. Think I’ll be chatting to my bank to see if they can match some of those competing offers. Thanks for the extra info, and for the PSA! :smiley:

1 Like

Did that help you? Awesome!

Take your SO out to dinner and please tell him/her that this is courtesy of an unknown stranger in Germany :wink:

No seriously, very happy to help. Rock on!

Yup - here’s their page that says so:

Borderless looks awesome. What a time to be a global entrepreneur.