Paying in a foreign currency

We’ve all been there. You’re shopping online, find what you want but you need to pay in a currency that is not your own and the transaction occurs via PayPal. When you go to check out, the fine print contains details about the PayPal conversion fees and exchange rate and gives you choice of converting the money with PayPal or the card issuer. What it does not tell you is how much money you can lose if you tick the wrong box. It’s another reason why when it comes to anything involving international currency exchanges, we never recommend PayPal

The PayPal option: An example with eBay

Say you live in France and found an item on eBay from a seller in the US. The item is listed in US dollars. When you adding in international shipping fees, the total comes to US$212.98.

At checkout, you’re presented with this:


Below these details, PayPal offers you payment options. Say you decide to pay in Euros with your local Euro-currency card. You enter the details and PayPal displays the charge in Euros and the exchange rate.



PayPal quotes a rate of 1 euro to 1.09 US dollars. The real mid-market exchange rate on this day is 1 euro to 1.14 US dollars, which would equal 186.60 Euros. Of course, PayPal does not spell this out clearly–it just lists the exchange rate. So unless the customer actually leaves this page and enters the details to manually check how much the real exchange rate is on that day, the customer is not actually aware the total charge is actually €8.72 above what it would cost if the currency conversion was done at the real mid-market exchange rate versus PayPal’s exchange rate.

Here’s where it gets tricky. This card payment exchange rate is the default option, but if you click the blue “More exchange rate options.” you see this screen, which again defaults to PayPal’s exchange rate which has a markup of 3.5%.

If you switch this to the USD option, you’ll be charged at the currency conversion that your card issuer sets.

The bad news: most card issuer also make money from the currency conversion and charge more than the current mid-market rate, and you won’t know what that rate is until after you’ve paid.

The good news: most card issuers or banks will give you a better rate than what PayPal gives you.

In this case, a few days later the charge came through as €190.20. So in this instance, we saved €5.12.

…most card issuers or banks will give you a better rate than what PayPal gives you.

How customers can save more money with a multi-currency debit card

But we could have saved more by avoiding PayPal’s currency conversion completely by paying with a card in the local currency–in other words, in the actual currency of the item that’s being sold online, in this case, US dollars. You can do this with a number of new cards and accounts that enable people to open accounts and own cards that operate in multiple currencies. Which means that you can basically be a local customer in a number of countries across various currencies.

International bank accounts

These days, there are a bunch of international bank accounts available that offer multi-currency accounts. TransferWise’s Borderless account or a Revolut card  enable customers to pay in US dollars instead of Euros, which equals avoiding or reducing the conversion fee charged by the bank or card issuer.


The cheapest option is with TransferWise, because they literally charge you the current mid-market exchange rate, with make them stand out significantly compared to other money transfer providers. there would have been For example, if you open a TransferWise Borderless account and order a debit card, you get an account in four currencies:

  • US dollars with a US account number and routing number
  • Euros with a European IBAN
  • Australian Dollars with an Australian account number and BSB code
  • Pound Sterling with a British account number and sort code

So, in this case the Euros could have been uploaded from a local Euro account and converted into US dollars at the current exchange rate. Then, we could have used the card to pay for the transaction in US dollars. Because the card is associated with local US banking details, there would have been no currency exchange nor fees.


Another great option for reducing fees is Revolut, which offers a debit card with the ability to hold and exchange money in 24 currencies. Customers receive several accounts including a Euro account, which means you can add money using local bank details in Euros the more you can withdraw each month. If you top up with a debit or credit card that was issued in the European Economic Area (EEA), it’s totally free. And if you top up with a non-EEA issued, you’ll be charged a fee in some cases. (In our tests uploading USD from a US debit card, we were charged a 1.67% fee).

In this scenario, this is what would have happened: upload Euros from a Euro account, exchange to US Dollars and pay in US dollars with the Revolut card. Revolut’s exchange rate markup to US dollars is low–only 0.5% (compared to Paypal’s 3.5% exchange rate markup).

Plan ahead and save more money

Next time you buy something with PayPal that involves a currency exchange, take a few extra minutes and choose the right option. Or better yet, plan in advance and start saving money for all your international money transactions with a multi-currency card.