PayPay will charge more money on transactions involving currency conversion. Effective September 3, 2019, the currency conversion spread will rise to 3.75% for transactions that involve a PayPal currency conversion when paying for goods or services or sending money. The spread will be 3% for all other transactions involving a PayPal currency conversion.
In addition, merchants who use PayPal through Website Payments Pro and Virtual Terminal will pay a currency conversion spread of 3%.
(The currency conversion spread is what PayPal charges on top of the base exchange rate, which is based on rates within the wholesale currency markets.)
PayPal also made another change to its currency conversion policy recently. Effective July 9, 2019, reported in EcommerceBytes Newsflash, “If PayPal performs a currency conversion for your purchase, and the purchase is refunded at a later date, PayPal will perform a currency conversion for the refund at the transaction exchange rate in effect on the date of the refund.” Presumably that reduces risk for PayPal since exchange rates fluctuate up and down.
Interestingly PayPal had amended its User Agreement in May to change the currency conversion spread to 3.25% for senders, as we noted in EcommerceBytes Newsflash. (It also changed the “friends and family” rate for sending money from flat-rate pricing to a variable fee.)
PayPal has information on how to find currency exchange rates on the PayPal website.
It’s interesting to take a look back at 2017 to get a sense of how the spread has changed over time. The March 29, 2017, Amendments to the PayPal User Agreement stated: “We are changing the currency conversion spread from an additional 2.5% over a wholesale exchange rate to an additional 3.0% over a wholesale exchange rate in situations where you are a sender of money in a PayPal transaction. The currency conversion spread remains unchanged at 2.5% over a wholesale exchange rate for all other currency conversions.”
You can find the policy update page describing the September 2019 changes on the PayPal website.