Look up the current "real" rate on Google or XE (e.g., 1 USD = 0.85 EUR).
Typically 3.0% – 4.5% for consumers. Default set to 4.0%.
Mid-Market Value (No Fees):–
PayPal Estimated Rate:–
Total Amount Received:–
Total "Hidden" Cost (Spread):–
How Does PayPal Calculate Exchange Rates?
If you have ever transferred money internationally or paid for goods in a different currency using PayPal, you may have noticed that the final amount charged is often higher than what you calculated using a currency converter on Google or XE. This discrepancy exists because of how PayPal calculates its transaction exchange rates.
PayPal does not use the mid-market rate (the rate banks use to trade with each other) for consumer transactions. Instead, they apply a calculation model that includes a profit margin.
To fully understand the cost of your transaction, you need to break down the two main factors in PayPal's calculation:
The Wholesale Rate: This is the base exchange rate derived from the live financial markets. It fluctuates constantly throughout the day. PayPal receives a quote from their bank which serves as the baseline.
The Currency Conversion Spread: This is the markup PayPal adds to the wholesale rate. For most personal accounts, this spread ranges from 3.0% to 4.5% depending on the currencies involved and whether you are sending money to a friend or paying for a purchase.
Example Calculation
Let's say you want to convert $1,000 USD to Euros (EUR).
Assume the current mid-market rate is 1 USD = 0.90 EUR.
If you traded at the mid-market rate, you would receive:
1000 × 0.90 = €900
However, PayPal applies a spread (let's assume 4%). The calculation changes to:
0.90 × (1 – 0.04) = 0.864 (This is your effective PayPal rate)
The amount you actually receive is:
1000 × 0.864 = €864
In this scenario, the currency conversion cost you €36 in the form of a worse exchange rate, even if the transaction fee line item listed "$0.00".
Where to Find the Rate
Before completing a transaction, PayPal typically displays the effective exchange rate on the review page. It is crucial to check this specific number rather than relying on external currency converter tools, as the external tools do not account for the PayPal markup.
Tips to Reduce Costs
When paying for goods internationally, PayPal often gives you the option to pay in the seller's currency or your own currency. Always choose to pay in the seller's currency. If you choose your own currency, PayPal performs the conversion at their rate. If you choose the seller's currency, your credit card issuer performs the conversion, and many credit cards offer better exchange rates (often closer to mid-market) than PayPal.
function calculatePayPalRate() {
// 1. Get input values by ID
var amountInput = document.getElementById("sourceAmount");
var rateInput = document.getElementById("midMarketRate");
var feeInput = document.getElementById("paypalFeePercent");
var resultDiv = document.getElementById("resultsArea");
// 2. Parse values
var amount = parseFloat(amountInput.value);
var marketRate = parseFloat(rateInput.value);
var feePercent = parseFloat(feeInput.value);
// 3. Validation
if (isNaN(amount) || amount <= 0) {
alert("Please enter a valid amount to convert.");
return;
}
if (isNaN(marketRate) || marketRate <= 0) {
alert("Please enter a valid market exchange rate.");
return;
}
if (isNaN(feePercent) || feePercent Buying Target)
// Formula: Effective Rate = Market Rate * (1 – (Fee% / 100))
var margin = feePercent / 100;
var ppEffectiveRate = marketRate * (1 – margin);
// Calculate Totals
var trueValue = amount * marketRate; // What you would get at mid-market
var receivedValue = amount * ppEffectiveRate; // What you get with PayPal
var totalLoss = trueValue – receivedValue; // The cost of the spread
// 5. Update HTML Output
document.getElementById("resTrueValue").innerText = trueValue.toFixed(2);
document.getElementById("resPPRate").innerText = ppEffectiveRate.toFixed(4); // Rates usually need 4 decimals
document.getElementById("resReceived").innerText = receivedValue.toFixed(2);
document.getElementById("resLoss").innerText = totalLoss.toFixed(2);
// 6. Show results
resultDiv.style.display = "block";
}