• Last Updated:
  • Mar 11th, 2019 3:12 pm
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[OP]
Sr. Member
Mar 13, 2009
557 posts
76 upvotes
Maple

How to reduce PayPal fees?

Hello everyone.

I'm running an online business and using PayPal for payments. Few years ago they had 2.2% fee for merchants, no matter where the sale is coming from. Then in 2017 they increased the fee to 2.9% and added 0.8% cross border fee for US transactions and 1.0% for international transactions. I'm getting a slight discount and paying 2.6%, but since most of my sales come from US and Europe, my average fee is around 3.4%.

In addition, each time I withdraw money to my bank account, I'm paying around 2.8% Currency Conversion Fee (despite the fact that the official fee is 2.5% and they mention discounts on their website).

That comes to total of over 6% of my sales.

Is there any way to negotiate and lower those fees?

P.S. re posting here as advised by one of the members.
Last edited by ak1004 on Feb 5th, 2019 8:56 am, edited 1 time in total.
48 replies
Deal Guru
Aug 2, 2010
14309 posts
4177 upvotes
Here 'n There
I assume the amounts are in your paypal account as USD. Why don't you just have them deposited into a USD bank account to avoid the 2.8% currency conversion fee?
[OP]
Sr. Member
Mar 13, 2009
557 posts
76 upvotes
Maple
I don't have US bank account. And PayPal specifically mentions that bank account linked to the PayPal account has to be Canadian bank.

They also mention that they have discounts that should bring the conversion fee to 1.5%, which is acceptable (bank won't charge you much less), but they won't honor it.
Deal Guru
Aug 2, 2010
14309 posts
4177 upvotes
Here 'n There
I process very sizeable US revenue and use a US payment processor both to avoid the cross-border fee and the currency conversion fee by having the funds deposited into the US side of my BMO Harris US bank account then I just write a cheque, deposit the funds into my BMO Canada Investorline account and use Norbert's Gambit to convert the USD to CAD at the bank spot rate. That saves me the 2.8% currency conversion fee + 0.8% cross border fee, 3.6% total, that you are paying. My US payment processor, Elavon, costs me an average of about 2.5%.

Depending on your US revenue that 3.6% for you might be a lot of coin.
[OP]
Sr. Member
Mar 13, 2009
557 posts
76 upvotes
Maple
What is Elavon? Is it something similar to PayPal? Does it have recurring payments support?
Member
Feb 18, 2014
224 posts
40 upvotes
Elavon goes to market in Canada, with a network of resellers (I’m one of them). Some are great, others...not so much. Happy to provide more info if you’d like to further discuss.
Sr. Member
Jul 13, 2016
533 posts
300 upvotes
ak1004 wrote:
Feb 5th, 2019 8:59 am
I don't have US bank account. And PayPal specifically mentions that bank account linked to the PayPal account has to be Canadian bank.

They also mention that they have discounts that should bring the conversion fee to 1.5%, which is acceptable (bank won't charge you much less), but they won't honor it.
That's false. If you have a Canadian bank account, you can add a US bank account (under "add a different bank") (just open a bank account with BMO Harris, you get free cheques). Then deposit the cheque from BMO Harris into a Canadian USD account. Or some sort of conversion service depending on your volume. There are some conversions services that direct debit from your USD account than deposit the converted amount in your CAD account. If you don't have enough volume, look at Transferwise.
Deal Guru
User avatar
Feb 10, 2007
11056 posts
2007 upvotes
LOL, you asked what elavon is, not what's your experience is.

Your first question clearly just wanted a spoonfed answer.

Your second statement is to save face.
ak1004 wrote:
Feb 5th, 2019 9:27 am
What is Elavon? Is it something similar to PayPal? Does it have recurring payments support?
ak1004 wrote:
Feb 5th, 2019 2:30 pm
Trust me, I googled it. The forum is to share a personal experience, which Google won't help with.

Thanks again for reminding me why this forum is useless.
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Sr. Member
Apr 13, 2005
607 posts
410 upvotes
Markham, ON
emilio911 wrote:
Feb 6th, 2019 9:31 am
That's false. If you have a Canadian bank account, you can add a US bank account (under "add a different bank") (just open a bank account with BMO Harris, you get free cheques). Then deposit the cheque from BMO Harris into a Canadian USD account. Or some sort of conversion service depending on your volume. There are some conversions services that direct debit from your USD account than deposit the converted amount in your CAD account. If you don't have enough volume, look at Transferwise.
This is correct.

I have a PayPal (Canada) account and I was able to add my RBC (Canada) business account and CitizensBank (US) business account.

So you can have both a Canada & USA bank account with your PayPal account.
Sr. Member
Apr 13, 2005
607 posts
410 upvotes
Markham, ON
I just transferred USD from my PayPal "Canada" account and there were NO FEES involved during the transfer to my CitizensBank US account.

That extra 0.8% foreign card transaction fee is annoying though.
Deal Expert
May 30, 2005
42407 posts
3089 upvotes
Richmond Hill
You can set to only accept CAD, so the 2.5% will be paid for by the buyer. In most cases the buyers won't care about or even know about the fee, as they are usually oblivious to the floating exchange rate at the time of purchase.
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[OP]
Sr. Member
Mar 13, 2009
557 posts
76 upvotes
Maple
Jon Lai wrote:
Feb 7th, 2019 11:33 am
You can set to only accept CAD, so the 2.5% will be paid for by the buyer. In most cases the buyers won't care about or even know about the fee, as they are usually oblivious to the floating exchange rate at the time of purchase.
Most of my customers come from US and Europe, it is not practical for me to present prices in CAD.
Deal Expert
May 30, 2005
42407 posts
3089 upvotes
Richmond Hill
ak1004 wrote:
Feb 10th, 2019 10:30 am
Most of my customers come from US and Europe, it is not practical for me to present prices in CAD.
Present the prices in their local currency, but charge them in CAD. Put a note on your website indicating that this would be the case. Paypal will do the conversion for them, the price may be slightly different than what was posted on your site, but the disclaimer takes care of that. The added bonus of this is that they definitely know they are purchasing from a Canadian company, so they will have an understanding in longer shipping times to them.
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[OP]
Sr. Member
Mar 13, 2009
557 posts
76 upvotes
Maple
Jon Lai wrote:
Feb 10th, 2019 12:55 pm
Present the prices in their local currency, but charge them in CAD. Put a note on your website indicating that this would be the case. Paypal will do the conversion for them, the price may be slightly different than what was posted on your site, but the disclaimer takes care of that. The added bonus of this is that they definitely know they are purchasing from a Canadian company, so they will have an understanding in longer shipping times to them.
I provide online service, so there is no shipping. If I present the prices in USD, how can I charge in CAD?
Deal Expert
May 30, 2005
42407 posts
3089 upvotes
Richmond Hill
ak1004 wrote:
Feb 10th, 2019 2:53 pm
I provide online service, so there is no shipping. If I present the prices in USD, how can I charge in CAD?
Not sure how your website works, but when I did e-commerce, customers can select the currency to view products in. All currencies other than Canadian dollars are automatically converted based on that day's spot price, and the shopping cart has a disclaimer saying that you will be charged in CAD, and that the listed prices in their local currency is for reference only. When they check out, Paypal will detect their local currency based on their account profile, and show them the equivalent of the CAD in their local currency.

How are your customers paying you? Are you billing them, or do you have an online checkout? If you're billing their account directly, bill them in CAD. They will be presented an option to pay their local currency equivalent automatically, just like if you were buying something on eBay from a US seller.
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