The slow processing and over regulated nature of bank international transfers has led to a rise of better payment systems such as Paypal and Bitcoin. In the past few years, the two payment systems battled for supremacy to be the best payment systems and garner the largest share of international transfers and remittances. PayPal may soon be relinquishing the title as users raise endless complaints – the latest being an overcharging of clients using the EUR and USD currencies.
Complaints have once again come to light on the 3-4% conversion rate that PayPal charges its clients to convert foreign currencies. One Redditor posted a photo accusing PayPal of charging their users $0.87 USD on the EUR while Google rates stand at $0.91 USD on the EUR.
Is PayPal overcharging its customers?
The sentiments were shared by popular financial analyst in blockchain, Tone Vays in a tweet sent out on September 2nd. The tweet reads,
“So messed up for @PayPal to charge a 4% fee on the $EUR to $USD exchange. This is why #Bitcoin will destroy your business. It's only a matter of time.”
Is Paypal Really Overcharging Its Clients?
Complaints on the conversion rate of foreign currencies has always been a topic of discussion even before Bitcoin became a real threat to the company’s existence. However, digging deep into the Terms and Conditions on US customers, the 3% conversion rate is optional and users can choose to keep the currency conversion to their card issuer.
“When your payment is funded by a debit or credit card and requires a currency conversion, you consent to and authorize PayPal to convert the currency in place of your debit or credit card issuer. You have the right to have your card issuer perform the currency conversion and can choose this option during checkout on your transaction review page before you complete the transaction.”
Selecting your card issuer sets the conversion rate at their rates, charged their set fees and you follow the conditions related to the foreign currency conversion by them.
Bitcoin A Far Back
Despite the challenges PayPal is facing, the platform remains the favorite channel for retail international payments. One key factor affecting Bitcoin adoption is the volatility of its price. Merchants and retail stores shy away from using the asset as a payment option preferring fiat payments. A $10 transaction paid through Bitcoin may end up reaching the retailer’s wallet as $9 or at times $11 USD
Bitcoin offers non censorship, no limit of transactions and a peer to peer trading but still is more expensive than PayPal – in some countries. For initial transfer fees, you’ll pay about the same amount for both PayPal and bitcoin (from Coinbase).
Bitcoin is however taking gradual steps towards being a global payment systems, as sanctioned, economically and politically deprived countries choose the pioneer cryptocurrency as a safe haven asset to hold against their depreciating fiat currencies.