I'm in Canada and often buy things from eBay (mostly from US). I check the exchange rate. For example, C$1 equals US$ 0.76, but when I pay through PayPal or Credit Card, they apply exchange rate like CND 1 = US$ 0.72. When buying expensive items it becomes very huge difference.

Why it is, and how can we avoid this or minimize it?

3 Answers 3


Where are you checking the exchange rate? The rate you are seeing may be the rate that applies to major players: banks, corporations, governments, and professional currency traders. As with all sorts of markets, big orders typically get better prices than small orders. When you buy a box of cereal from a retail outlet, you pay a higher price per box than if you bought an entire crate of cereal from a wholesaler.

From the point of view of the credit card or Pay Pal, they are providing you a service and they deserve to be compensated for it. Because exchange rates continuously fluctuate, they are taking some risk that the exchange rate will change unfavorably for them between the time you make your order and the time they carry out the currency exchange.

You could get around this by opening a bank account in the US, deposit some dollars, and use this account to pay the sellers on EBay. Or, if the seller is agreeable, you could pay them with a money order denominated in US dollars. However, at some point you'd still have to exchange your Canadian dollars for American dollars, and you'll still get a relatively unfavorable rate, unless you have enough money to exchange that you are able to negotiate a better rate.

In fact, you may find that the rate provided by the credit card or Ebay is as good as you can do as a retail shopper. If you went to a brick and mortar currency exchange you'd almost certainly find that the rate is even less favorable. Credit card companies trade LOTS of currency, so they get very favorable rates, and they sometimes share a little of that with their customer.


You may be able to get a better rate by opening a US checking account. A bank might give you a better exchange rate than PayPal if you have both a US and Canadian account with the same bank.


You avoid it by NOT USING A BANK EXCHANGE RATE. Simple like that.

Pay via transfer from an account in the correct currency or using one of the worldwide transfer services (like trasnsferwise) that give you a better rate.

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