Tips for Converting Currency on PayPal Without Hassle

PayPal is a popular payment option for dealing with foreign currencies when shopping online. The service has major benefits for both buyers and sellers, from good transaction speed and easy payments to a solid reputation and transfer security. But the key advantage of this payment system is the PayPal currency conversion service, which enables global accessibility and seamless cross-currency transactions.

However, there are certain nuances associated with PayPal currency exchange. How can you convert money to a different currency? Does PayPal convert currency automatically? How to activate this service for your account? Let’s find out answers to all of this and more! Follow our guide to learn everything you need to know about currency conversion when shopping online with PayPal.

Understanding PayPal’s Currency Conversion Service

The PayPal money conversion service allows individuals and businesses to send, receive, and hold money in different currencies without having to maintain several bank accounts. To provide this feature without violating the law, PayPal has to adhere to conversion regulatory standards and compliance requirements in various jurisdictions. The company also closely observes anti-money laundering (AML) and know-your-customer (KYC) laws, allowing it to operate in a truly staggering number of countries across the globe.

PayPal’s Automatic Conversion

How to convert money to a different currency on PayPal? In fact, you won’t have to do a thing. If a transaction involves different currencies, PayPal automatically converts the sum for you. Why does PayPal convert the currency automatically? This simplifies cross-border payments and allows both parties to send or receive funds in their preferred currency. The automatic conversion will occur in these cases:

• Making a purchase in another currency.
• Sending money abroad.
• Withdrawing funds to your different currency bank account.
• Receiving payments in another currency.

Alternatively, you can hold the money in its original currency if you have several currency balances (you can find this feature in your PayPal account settings), which will let you choose when to convert.

It’s also important to remember that PayPal’s exchange rate includes not just the standard market rate, but also an additional fee charged by the service.

PayPal vs Bank Conversion

Before you try to change currency on PayPal, you should understand that it works differently from a usual bank conversion. Banks and credit card issuers typically use rates closer to the mid-market rate, with little or no markups. PayPal exchange rates, on the other hand, include a considerable fee, making them less suited for larger transactions.

You can let either PayPal or your card issuer do the conversion at checkout. So, besides learning how to change money to a different currency on PayPal, it’s worth comparing the service’s conversion rates with your bank’s. This way, you’ll be able to pick the most cost-effective option for each individual transaction.

Setting Up Currency Conversion in PayPal

How to convert currency on PayPal? Let’s take a look at the steps involved.

Create or Sign in to a PayPal Account

Go to the PayPal website and log in to your profile. If you don’t have an account yet, select “Sign Up,” choose the type of profile suitable for you (“Personal” or “Business”), enter your email, generate a password, and provide other required data.

PayPal Account Verification (If Required)

PayPal may ask you to verify your identity to prevent fraud. When registering, you’ll be asked to provide only basic information about yourself, but initiating or receiving financial transactions requires more personal data. This step is necessary to confirm that you are the owner of the financial data associated with your account.

Link a Bank Account or Credit Card to Your PayPal Account

The final step to take before you can manage currencies is to go to your profile and either link and verify your bank account or link and verify your debit or credit card.

Set the Main Currency in PayPal

PayPal lets you send and receive money in multiple currencies. For example, if you are wondering how to transfer the currency in PayPal from USD to AUD, all you have to do is change the settings in your Wallet section. There, you can add a new currency to your account, set the main one, and so on.

To add a currency, you’ll need to open your PayPal wallet, select the one you plan to use from the list (for example, USD or AUD), and choose “Add a currency.” How to change the currency in PayPal? To set the main currency for your account, select the “More” option and click on “Make Primary.”

Converting Currency in PayPal

All in all, it’s quite easy to convert currency with PayPal, but some peculiarities do exist depending on how you convert and the transaction type.

Desktop vs Mobile Conversion

How to convert currency in PayPal manually? You can do it on a computer via the official PayPal website:

1. Log in to your PayPal account.
2. Go to “Wallet.”
3. Click “More” (three dots) next to your PayPal balance.
4. Choose “Convert currency.”
5. Select the currencies you want to convert from and to.
6. Enter the amount and review the service’s conversion rate.
7. Click “Convert Now” to finalize the operation.

If you’re traveling and need quick access to funds in a foreign currency, here is how to change currency in the PayPal app.

1. Open the app and tap your balance.
2. Select “Manage currencies.”
3. Tap “Convert currency.”
4. Choose the currencies and amount to be converted.
5. Review the exchange rate and conversion fee before confirming the transaction.

While both methods are quite straightforward, the desktop interface may be easier to use if you need to compare amounts or manage multiple currencies.

Conversion While Sending vs Withdrawing Funds

When sending money, you can choose to send the funds either in your chosen currency or the recipient’s. If you go with PayPal’s rates, the service will show you the converted amount and the fee before you hit “Send.” Remember, it’s up to you whether it will be PayPal or your card provider performing the conversion.

When withdrawing money, PayPal automatically converts the amount at its current rate if your bank uses a different currency. To lock in the preferred rate, you can convert your balance manually in advance.

Tracking Transaction History and Conversion Rates

If you make frequent international payments and need to keep track of your conversion costs, you can review your past transactions and applied exchange rates directly in your PayPal Activity tab. It’s also a convenient way to compare the rates offered by PayPal with those of your bank. For budgeting, accounting, and tax purposes, you can even download your transaction history as a PDF file.

PayPal Fees, Limits, and Exchange Rates

Every time you let PayPal convert money for you, it applies a markup that varies from 2.5% to 4.5% for personal payments and up to 5.40% for business users, depending on the transaction type and region. This fee is included in the service’s conversion rate. Some regions also charge fixed per-transaction fees for certain transaction types.

PayPal exchange rates are updated frequently throughout the day to reflect real-time currency market movements. Before confirming the conversion, you’ll be shown the current exchange rate and the applied fee.

Note that while PayPal allows you to use multiple currencies, it still has specific conversion limits in place for security and legal compliance reasons. These limits depend on your account type, verification status, and country.

Tips for Optimizing Currency Conversion in PayPal

Here are a few recommendations if you are still wondering how to convert PayPal currency.

Avoid Unnecessary Conversion Steps

Each conversion with PayPal entails a markup fee, so a direct transaction in the same currency will almost always save you money. Set your preferred currency for receiving payments to match your clients’ or business partners’ currencies. When paying online, check the conversion option at checkout. Choose “Bill me in the currency listed on the seller’s invoice” if your card or bank offers better exchange rates compared to PayPal.

Minimize Fees

To reduce or even avoid unnecessary fees:

• Always check the real exchange rate and evaluate the cost-effectiveness of the conversion. If you are wondering how to change the currency to USD in PayPal without losing money, use the Currency Conversion Calculator, add the amount to be converted, and compare PayPal’s rate with other exchangers.
• Use a currency that matches your income source. If you often get paid in GBP or EUR, keep that currency in your PayPal balance instead of converting it every time. You can convert the funds later at a more favorable rate.
• Link a credit or debit card that doesn’t charge fees for overseas transfers.
• Link a multi-currency bank account with competitive exchange rates. This will allow you to avoid PayPal’s markup.
• Opt for a single large conversion instead of several smaller ones to avoid per-transaction fees.

Use PayPal for International Payments Wisely

While you can’t change the currency conversion in PayPal, there are several ways to make it more cost-effective:

• Keep several multi-currency balances in your PayPal account to accept and manage international payments. You’ll be able to convert the funds to the currency of your choice at any time, all the while avoiding additional expenses.
• Track conversion rates to stay on top of exchange rate fluctuations. Schedule your conversions for the periods when your home currency is at its strongest to get more from each transfer.
• Use PayPal’s reports for business accounts to track currency conversions, transaction fees, and payment sources. With this data, you can adjust your financial strategy for future transactions.

Troubleshooting Common PayPal Conversion Issues

Though PayPal’s currency conversion system is well-designed, various problems may arise while using it.

Conclusion

PayPal’s currency conversion feature makes international payments simple, fast, and accessible, but you should aim to understand how it works behind the scenes. Knowing the ins and outs of PayPal conversion principles, its rate-setting, and what control you have over the process will help you save money and optimize payments when using the service.