Withdrawal to bank account forces currency conversion

[mariop]

Hi all,

I was recently paid in USD and when attempting to withdraw the funds, PayPal forces me to convert them to EUR a my bank account is in EUR. Under SWIFT terms they can send in the currency I want to and not use their own conversion rate which is a rip off where my bank would do the conversion. I read other users complaining about the same issue.

This practice is a violation of the European banking and financial services law and although I sent them an e-mail through the Help center to remove this, I believe they will not. As I happen to work in the sector, I think I will not even wait for their response and will report them Wednesday to the Banking regulator here. PayPal is registered as a bank in Luxembourg and as such should abide to EU banking rules.

It is that, I really started to get tired of them. I need to speak to their support every second transaction and now or soon, newer schemes to apply such hidden charges come out. There are other payments and the recent decision of ebay to go for Paypal only will soon reflect on their financial statements. I don`t really get it - Paypal charge a substantial amount of money to receive a payment but yet they want more.

I recently had a short chat with two of their reps who, of course, did not answer my questions on the statement that a transfer takes 3-5 days (was a cancelled transaction) because my bank needs them to process it. My bank uses SEPA and is long ago under TARGET2 and any payment from anywhere within the EU I get in 10-15 minutes. The first PayPal rep tried to sell me the **bleep** they probably send to every client and when I offered them info to prove them wrong and asked again why it takes so long and are they using client funds like these to fund other purchases and gain overnight interest, I received a reply which did not answer any of these.

I believe it is time for us to step up and give a bit more info to the authorities on these practices and I am gonna make that very soon.

[savoirist]

I absolutely agree with your points, and I have the same problem.

Paypal's policy regarding this issue I might say that it is close to fraud.

My country's currency is EUR and I also opened a GBP account to directly transfer my paypal GBP balance to my GBP bank account and find better commission here in my country.

Needless to say, I cannot do that. They auto convert the GBP to EUR. One solution is to assign a credit card in my GBP account, and then paypal can manually set my credit card to receive funds in GBP. The problem is that my bank does not issue visa on accounts that are on currencies other than EUR.

One interesting solution would be to find honest paypal users with the opposite problem, and then exchange between ourselves the currencies with 0.5% commission as a friend transfer. I have begun a post seeking for that kind of paypal users.

[Whac-A-Mole]

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@savoirist wrote:

I absolutely agree with your points, and I have the same problem.

Paypal's policy regarding this issue I might say that it is close to fraud.

My country's currency is EUR and I also opened a GBP account to directly transfer my paypal GBP balance to my GBP bank account and find better commission here in my country.

Needless to say, I cannot do that. They auto convert the GBP to EUR. One solution is to assign a credit card in my GBP account, and then paypal can manually set my credit card to receive funds in GBP. The problem is that my bank does not issue visa on accounts that are on currencies other than EUR.

One interesting solution would be to find honest paypal users with the opposite problem, and then exchange between ourselves the currencies with 0.5% commission as a friend transfer. I have begun a post seeking for that kind of paypal users.

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swapping currencies with other Paypal members sound like an interesting idea if you trust each other.

But one question,if you are in Euroland and your Paypal account is in Euro ,why not ask the sender to pay you in Euro,let them pay the 3% conversion from theri currency into euro ,then you have no problem sending the euros to your bank

account UNLESS you are selling on a non euro venue say Ebay USA and you have to accept US dollars.

[Whac-A-Mole]

If I understand what your problem is -

you are in a Euro country and your Paypal account is Euro denominated,you received payment in US $ AND You want to send them to your Euro bank account as US $ AND LET your bank does the conversion.

But Paypal is doing the conversion at 3% fee?

What country are you in?

Do you think Paypal is using SWIFT to make the transfer ?

Does SWIFT imply intl wiretransfer?

The reason I ask is that as a consumer in US,when I want to wire money to my overseas vendor from my bank account using SWIFT,the fee is $45-$55.

how do Euro zone countries banks clear with each other?

[mariop]

Transfers between EU banks (as of January 2018 all should abide) are almost instant and under the current state of law, should cost the same as if they were domestic transfers. This applies to transfers in EUR only.

The currency swap proposal is really interesting but there are variables here.

First, it will be harder to setup as effectively, to guarantee that no side will face counterparty risk, a clearing system has ot be established. The only way I can think of it (straight without much brainstorming) would be through a compensation buffer so all participants in the scheme must contribute some money to capitalise it. Another method would be if we setup a PayPal account to act as a clearing house. It has to be operated by someone and can act as an escrow acount - when both sides have delivered the funds in their respective currencies, the manager of this account will then issue the desired currencies to each other. Problem is, PayPal will charge the incoming transfers to this account anyways sounless we can negotiate a better incoming transfer deduction, it will be pointless.

Second, PayPal have no interest in this and will shut the user accounts very quickly by adopting a new set of rules. They make tons of money from currency exchange rates. They are indeed worse than even airport hubs.

I would not call this practice a fraud, it is not. But it is a breach of the rules. It works like this: a math/finance engineering guy working or contracted by PayPal has estimated that until a complaint is filed and a supervisory board has reviewed it and initiated a procedure of suspension of trade, they will make more money from the breach than the cost of the fine they will get. Also, this fine will be in the future which means its intrinsic value is even lower today when they generate cash from fx. They know they will be fined but will do it until the above happens and even after the fine, they`d have generated more cash. The problem is not with the brutal exchange rate, it is with forcing clients to accept it - this is the legal issue and I will work on it with the local supervisory board to enforce authority and have this practice stop. Paypal is charging quite a lot to receive funds for what they are, they are registered as a bank but a bank charges about 2% on most incomung transfers where PayPal charge between 2-3 times this figure and they are a digital bank with much lower operating costs. Also, they bear lower risk than a comparable bank and I am absolutely confident (but have no evidence) - receive overnight interest from the 21 day withold rule. So it a pity - a service that started with the idea to increase liquidity for online purchases which was turned into a user cash black hole and that through some very questionable practices.

[Whac-A-Mole]

who said Paypal is registered as a bank?

PAYPal is a US based COMPANY and it is not a bank,it keeps US  members ' money in different us bank accounts in its name,and use the Automated Clearing House (ACH) which is part of the Federal Reserve System to clear our payments to each other when we request a bank transfer,there are 4 levels of such transfer,Paypal uses the free yet slowest level,thats why it takes so long 3-5 days,sometimes 1 day.

I will say Paypal does the same with overseas members fund,such as yours,keep it in some banks in its name,so with Eurozone countries,it does the transfer say from France to Germany like you described as domestic transfer,you said there is a fee,do you know much per transaction?

For Eastern European countries not in Euro Union,it clears thru VISA Europe and pay VISA a fee .

With other countries such as Cambodia,Vietnam,Philipines,there are often problems,I dont know how it clears.

The discount rate which Paypal charges us under goods and services raneg from 2.9-4.4%,yes,it is higher than your own merchant account ,in US,you can get it at 1-2%,but there are commitements though,like monthly,annual fee,higher chargeback fee,but lower than 30 cents transaction fee.

Paypal rate is higher to compensate for the risk involved,anyone can sign up and start accepting and sending money,if you browse this forum,70 % of the threads have to do with fraud either from buyer or seller,in some cases,under Paypal buyer and seller protection,Paypal eats the loss.

I would suggest any one who sells steadily higher ticket items and has a good record with no or few chargebacks  to apply for his own merchant account and not use Paypal.

You get better customer service.

[Whac-A-Mole]

if you decide to apply for a merchant account and accept credit card payments,bear in mind,if you sell on Ebay,there are only 3 gateways whcih wil work on Ebay,make sure yours is one of them.

transaction fee and discount rate wouldbe lower,but there could be annual fee,higher chargebck fee,reserve and minimum fee,like you have to give them somuch business per month,else you pay $25 that month.

also tiered rate,there are credit cards and there are credit cards,not all cards are created equal,those with most perks,the rate would be higher.

also when you refund your customer,this would also be a transaction and discount rate,a credit is also considered a transaction.

The bank which offers you the merchant account will deposit the sales proceeds in 24-48 hours for domestic sales and longer if overseas ,as it  access your bank account for deposit,it will also withdraw from your bank account in case of chargeback,unlike PAYPAL .

but you do get better customer service and in case of a chargeback,your bank will be able to speak on your behalf to the customer bank and relay back to you what he said and fight for you,which PAYPAL does not.

If you receive an order which is questionable ,your bank can call his cc issuer and askf or more clarification,which Paypal does not do.

[Whac-A-Mole]

21 days hold ,usually it is released in 3-7 days after tracking shows delivered,sometimes it is not Paypal ,It is Ebay which ask Paypal to do it for them,as Ebay also have a buyer/seller protection .

The problem is that while Ebay allows a buyer to file dispute in 30 days,Paypal follows credit card rules,a dispute or chargeback can come in within 180 days,thats 6 months.

My personal opinion is that the credit card industry has t o shorten this 180 days business to 90 days,or 120 days,180 days is 6 months,how many of us reallly go back that far to find a dubious transaction?

No everyone has a hold,read Ebay and Paypal policy on withholding,I do not have any hold,but I have been on Ebay since 1990s and Paypal since 2000,and I do not transfer fund from my Paypal account to my bank account until it reaches a certain amount.

Does Paypal make money on 21 days hold,thats interesting,you can study its annual report and find out,it is now a publicly traded company on NASDAQ.

[mariop]

What you say is correct but if it relates to PayPal US - the parent company fo PayPal Europe. Now, let` have a look at their license and you can even get it from the PayPal Europe website:

"PayPal (Europe) S.à r.l. et Cie, S.C.A. is duly licenced as a Luxembourg credit institution in the sense of Article 2 of the law of 5 April 1993 on the financial sector as amended and is under the prudential supervision of the Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier, with registered office in L-1150 Luxembourg."

Now, as a credit institution they have to abide to bank supervision norms issued under the EU banking and financial services law. Your input on the subject is valued but change your perspective to European point of view, not US. I don`t care about Paypal US, I care about the deeds of the entity that delivers legaly business to me in Europe and this is PayPal Europe Sarl.

[catad83]

This just happened to me too. On all other withdraws, when I asked for X USD, I always got (X-2.5$ fees) but Today, it converted to local currency using a crappy exchange rate and lost quite some money.

Did you solve this eventually? How?