Paypal conversion rates vs Bank conversion rates

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cyanide911

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I'm sort of new to cross currency transactions, so if anyone has some sort of experience in this, please answer.

I got to know that banks charge us a higher exchange rate if I buy something in, a foreign currency. I'm not sure how high, I've heard figures ranging from ~Re1 higher to 3.5% higher.
And Paypal works in a different way, and they have their own surcharge if I transact in a foreign currency.

Which one is preferable? Which one provides a better (cheaper) conversion rate?
 
I have found PayPal's rate to be marginally better than that of the bank's. For the latter, the rate is the guideline for the day the bank is charged (not the day of the transaction) + 3.5% as markup fee. Some banks charge additional sales tax on top of the 3.5% while others include it in that 3.5%.

I prefer PayPal's rate due to clarity about the INR amount at the time of transaction.
 
^ +1

And another advantage of going with PayPal's conversion is that in case of refunds, you get the exact amount that you paid refunded. But if you let the bank do the conversion, the refund will be significantly less due to the difference in the buying/selling exchange rate.
 
varkey said:
^ +1

And another advantage of going with PayPal's conversion is that in case of refunds, you get the exact amount that you paid refunded. But if you let the bank do the conversion, the refund will be significantly less due to the difference in the buying/selling exchange rate.
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Not true. Someone told me that the amount refunded was lesser. @SoulFire
 
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vivek.krishnan said:
Not true. Someone told me that the amount refunded was lesser. SoulFire
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Yes it would be lesser if you let Visa/MasterCard/Bank do the conversion ie if you are charged in the foreign currency.

But if you let PayPal do the conversion and you are charged in INR your refund would be exactly same as what you paid (max difference that I have seen is about 4-5 paise)
 
cyanide911 said:
Any source for that?
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I don't think there is any such issue now. Earlier there was some issue and but that was only in case you receive funds through PayPal for goods or a service, there was never an issue in making payments with PayPal using your credit card.

Anyway that also is fine now, and in order to comply with the RBI guidelines you need to have PAN and Bank Account linked to the account so that all payments you receive will be automatically withdrawn to your account. You can read more about it here -- https://www.paypal-apac.com/india/
 
TheIndian said:
Doubt if that will help, its about paypal not complying with Indian forex laws
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Paypal is not illegal, just that we are not allowed to pay/make transfers within India from India. Foreign transactions are allowed and completely legal.

not sent from my pc....
 
varkey said:
I don't think there is any such issue now. Earlier there was some issue and but that was only in case you receive funds through PayPal for goods or a service, there was never an issue in making payments with PayPal using your credit card.

Anyway that also is fine now, and in order to comply with the RBI guidelines you need to have PAN and Bank Account linked to the account so that all payments you receive will be automatically withdrawn to your account. You can read more about it here -- https://www.paypal-apac.com/india/
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Spot on!!
 
varkey said:
I don't think there is any such issue now. Earlier there was some issue and but that was only in case you receive funds through PayPal for goods or a service, there was never an issue in making payments with PayPal using your credit card.

Anyway that also is fine now, and in order to comply with the RBI guidelines you need to have PAN and Bank Account linked to the account so that all payments you receive will be automatically withdrawn to your account. You can read more about it here -- https://www.paypal-apac.com/india/
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PAN Card? Bank account? Can't we simply link a Debit/Credit card? Turns out I'm not sure how PayPal works exactly.
 
cyanide911 said:
PAN Card? Bank account? Can't we simply link a Debit/Credit card? Turns out I'm not sure how PayPal works exactly.
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PayPal will not allow you to create a new account without entering a PAN.

All these are in case you need to *accept* payments from others to your PayPal account. If you need to use PayPal to pay for some item then you just need to add your card and you can make the payment. Although your account will be in a limited status until you submit the bank details etc, but it will still let you make payments using your credit/debit card.
 
varkey said:
PayPal will not allow you to create a new account without entering a PAN.

All these are in case you need to *accept* payments from others to your PayPal account. If you need to use PayPal to pay for some item then you just need to add your card and you can make the payment. Although your account will be in a limited status until you submit the bank details etc, but it will still let you make payments using your credit/debit card.
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There are two concepts:

1. Out-going : You are limited to $500. Once you validate the payment vehicle bound to the PP account(debit/credit) it is removed. They hit you with a refundable $1.00 in this process.
2. In-coming : You bind a bank A/C and post verification you can start to receive funds.

What you said is perfectly fine. I just use mine for outgoing; so never had to bind my saving account.
 
^ Yes, but even if you are using PayPal only for outgoing transactions, they will still limit the account if you do not add a bank account, although they do not restrict your outgoing transactions in any way. But every time you login, they still nag you with the prompts. ;)
 
varkey said:
^ Yes, but even if you are using PayPal only for outgoing transactions, they will still limit the account if you do not add a bank account, although they do not restrict your outgoing transactions in any way. But every time you login, they still nag you with the prompts. ;)
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I have not added any bank account. Only my CC is bound (just the number + type), which is used for "pulling the money from"; when I make a payment. My limit has been removed after the token $1.00 verification. :)
 
^ I have a PayPal account in my dad's name in which I have not entered the PAN or any other details. And it is limited, although a card has been added and confirmed.

KsonX.png


As you can see, there are no restrictions for outgoing transactions but incoming transactions are not allowed.
 
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