How To Avoid Paypal Conversion Fees & Poor Exchange Rates
A common issue many smaller (and even large) agency owners run into is always getting nailed with so many fees that really eat away at our revenue. One fee that always will get worse as you continue to grow your business is the fee taken off to convert your earnings one currency into another currency. For me being a Canadian based agency it’s typical to have a lot of US clients aka I get paid in USD for most of my jobs. I find using Paypal a great way to get paid for these jobs but not the best way to be converting my earning from USD to CAD. It’s common for me to lose 4% of my revenue just to have my money converted to Canadian currency. Well luckily I have come across a super simple way that can save you that 4% conversion fee and I will explain the steps below!
Before I get into the steps I do want to mention that I came across this method because someone in a Facebook group a while back posted about this website and I made note of the site and just recently tried it myself. So I apologize for not remembering his name to give credit too as well.
Step 1. Create an account On Transferwise
So in a nutshell Transferwise is a site that allows you to send money, receive money and exchange money all at the best rates. You can create online borderless accounts in up to 40 different currencies for free which allows you a lot of freedom when accepting and converting money. If you would like to learn more about Transferwise just visit their site at https://transferwise.com, they have a ton of great content on the site that explains how it works. If you want to support me (and yourself since you get $800 free worth of international transfer) you can sign up and visit their site with the link they sent me https://transferwise.com/u/brentg27
Step 2. Set up a borderless account
Once you have signed up the next thing you will want to do is set up a borderless account in the currency you want to convert, so in my case I want to exchange USD to CAD so I set up a USD borderless account. If you are unsure what a borderless account is you can learn more about it here. To briefly summarize a borderless account is a multi-currency account that lets you keep money in 40+ currencies, and convert between them at the real exchange rate whenever you need (pretty sweet right).
If you haven’t signed up yet for an account you can find the borderless account option here under receive money:
If you have signed up for an account and are logged in you can set up a borderless account by going to your balances tab and hitting the blue button “add balance”.
Step 3. Receive your borderless banking details & add them to Paypal.
Once you sign up for an account on Transferwise you will be asked to verify the account, once that procedure is done you will be given the banking details for your borderless bank account. You can find the banking details by going to your balances page and hitting the drop down arrow beside the account.
Once you have received those details this is the info you will add to your Paypal account. To open a new account on Paypal simply log into your account, then in the top menu click wallet.
Once on the wallet page you then want to click “Link a bank”
After you click link bank on the next page select “I have a different bank”
On the next page make sure you select the type of account you want (for me I want a US bank account) and then enter in the details from your borderless account.
Once you have set up your account Paypal will send you two verification deposits (takes about 1 day) to make sure the account is legitimate.
Step 4. Add your primary bank account to Transferwise
So in order to get your money out of Transferwise you must set yourself up as a recipient with your primary bank account. To do so in your Transferwise account go to recipients and then click add bank. Here is where you would enter in your banking info for where you would like your converted money to go (took less than 24hrs to verify my primary bank).
Step 5. Transfer your Paypal balance to your Transferwise account.
Once your Transferwise borderless account is verified with Paypal you can transfer your money into your Transferwise account. For example I take my USD from my Paypal and transfer it to my USD Transferwise account (transfer time took less than 24hrs for me), there is no fee to transfer money from Paypal to the Transferwise account. Once the USD shows up in my Transferwise account I can then convert it to CAD at the actual exchange rate (plus a small fee you are shown upfront) before it sends to my primary CAD bank account and that’s it! Check out a transfer from one of my recent payments and look at the rate I got and compare it to the exchange rate that day.
Summary
All the above steps literally took me about 40min to set up and then the entire period of time for getting verified and having the money go from account to account took about 2 days. By being able to convert my USD to CAD at the actual exchange rate can save you hundreds of dollars, for example landing a 10,000USD website build would normally cost me $400 in conversion fees but using this method I save nearly all of that. I highly suggest checking out Transferwise to learn more for yourself and see what kind of conversion rates you can get, but for me this worked great! As always if you have any questions feel free to email me at brentgodkin@gmail.com
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