Originally Posted by
tmiw
Actually, the spread seems to be decreasing, not increasing.
According to
https://www.paypal.com/uk/webapps/mp...onversion-fees:
Fees for converting your balance or payments that you receive into another currency: 2.5% above the Base Exchange Rate††
†† For more information on how the Base Exchange Rate is set, see the User Agreement.
And according to
the user agreement:
The base exchange rate is based on rates within the wholesale currency markets on the conversion day or the prior Business Day; or, if required by law or regulation, set at the relevant government reference rate(s).
I read "based on" as Paypal taking the rates from the wholesale currency markets and possibly doing something with the rates (for example adding undisclosed fees). In other words, the total fee is unknown and could vary depending on the currency pair, when you make the conversion and other things. It doesn't say if the base exchange rate is the same when buying a currency as when selling the currency.
This is generally a problem with the DCC scam: a merchant claims a certain fee (or no fee), but the merchant's base exchange rate contains an undisclosed fee, so the customer can't rely on the fee stated by the merchant but has to obtain a fair exchange rate from a different source and calculate the fee manually instead. The European Union recently fixed this by requiring merchants to state the fee relative to the most recent reference rate published by the European Central Bank, but this only works within the EEA and only if the merchant thinks that the card's native currency is an EEA currency.
The spread is the difference between the buying and the selling rates. Paypal adds a fee of 2.5% when buying currency and also 2.5% when selling currency. In total, this gives a difference of 5% between the buying and selling rates, plus whatever difference there is between the buying and selling base exchange rates. In other words, the spread is 5% plus whatever is hidden in the base exchange rate.
The page you found states that the spread will be changed to 4%. As the current spread is at least 5%, this means a lower currency conversion fee. Also, since Paypal gives the spread directly, Paypal loses the opportunity of hiding additional fees in a base exchange rate.