Aussie businesses are being hit with a new 3% PayPal fee for transferring US dollars from their PayPal accounts to bank accounts in the US, leaving many businesses that operate globally forking out thousands of dollars per year.
The fee comes on top of PayPal’s inbound transaction fee of 3.6%, meaning businesses could now face a total charge of more than 6% if they use PayPal for transactions in USD.
A PayPal Spokesperson told SmartCompany on Tuesday that the fee has been effective for several weeks and is for non-US customers to withdraw USD to a US bank account.
“Only a very small fraction of our customers in Australia use this feature. For the majority of our customers in Australia who withdraw funds in AUD, there is little or no cost,” the spokesperson said.
“The fee does not affect anyone accepting USD into PayPal,” a PayPal spokesperson added.
“It only affects those who are transferring funds from a PayPal Australia account to a US bank account — this is not a domestic transaction.”
However, TransferWise Australia country manager Tim Cameron says for many Aussie businesses that use PayPal to trade in USD, or are looking to operate globally, the spike in fees is “shocking”.
“Given the massive impact of COVID-19 on Aussie livelihoods, PayPal’s flagrant addition of a 3% fee at a time when every dollar counts, is shocking, especially since it’s a fee for a transaction where no currency conversion is involved,” Cameron tells SmartCompany.
Cameron says when anyone can send money locally between banks and other institutions in the same currency for free, there is no reason for PayPal to take a cut.
“The USD is not an exotic currency, it’s ubiquitous, especially when it comes to e-commerce, and for PayPal to suddenly charge a fee for a service that was previously free, is an egregious example of price gouging,” he says.
Cameron says the change is especially unfair for customers who circumvent PayPal’s high currency-conversion fees by sending USD to other services such as TransferWise’s US borderless multi-currency account.
These customers aren’t complaining that the fee PayPal is charging them has gone up from 2.5% to 3%, Cameron says.
“They’re complaining because it’s an entirely new fee and PayPal won’t give them a concrete answer for its introduction.”
The fee, which has been effective since November 6, is not exclusive to Australia with corresponding fees applying in more than 30 markets around the world.