3 tips to always get the best exchange rates for your transfers

If you are used to send money abroad you are probably familiar with the notion of exchange rate and, like me, you might be obsessed with always getting the best exchange rates for each of your transfer. Here are some tips to make sure you always get the best exchange rates for your transfers.




What “best exchange rates” mean?

If you need to transfer money frequently you probably know that the notion of “best exchange rates” does not make much sense in itself. Indeed, exchange rates fluctuate all the time depending on the demand on the foreign currency market or because of extraordinary events such as Trump election or the Brexit referendum. Thus, these fluctuations indicates that there are moments when the exchange rates are better than others and that it is important to make sure you know about them. The notion of “best” is quite dependant on a notion of time. Indeed, when we talk about best exchange rates, we need to define a period of time. Is the best since 30 days, since 2 years etc.

The important thing to keep in mind here is that when sending money abroad, you need to monitor the exchange rate to make sure that you do not get the worst.


3 tips to get the best exchange rates

First of all, make sure you get alerted whenever the exchange rate fluctuate significantly. Some people like spending time watching graphs displaying exchange rates variations. I personally hate graphs and do not have time for that. Therefore I recently subscribed to exchange rate notifications to make sure I am aware of any change. This is a good way to optimize your transfers: waiting for the best exchange rates.


Then, make sure you compare the money transfer providers before making your transfer. As exchange rate is one of the main aspect in a foreign money transfer, some actors, such as banks, are applying a markup on it. Using a comparison platform will help you see exactly which exchange rate will be apply on your transfer, provided that you’ll do it instantly (remember exchange rates fluctuate).
Finally, make sure you do not get lured by shiny, doubtful advertisements that offer you the best exchange rates for you transfers. This might seem obvious but it is more and more common to see operators offering you “free transfers at the best rates”, but unfortunately such things do not exist! Make sure you read all conditions before doing anything.

Does Paypal offer the best exchange rates?

Now that everybody knows Paypal it would seem fair that Paypal would be free. Moreover we would assume that if so many people are currently using it should be because Paypal does not cost too much. The answer is far different. Even though they recently bought Xoom for almost 1 billion dollars, Paypal is one of the most expensive financial money transfer service in the world. The reason why people are using it is because it’s convenient and many times there is no other choice. No choice means huge cost. Too often. Let’s see why.

Paypal recently acquired Xoom and should be able to offer the best exchange rates in the market

Even though Paypal recently acquired Xoom Paypal does not offer the best exchange rates?


Paypal’s fees are like this:

  1. Processing fees: around 3.5%
  2. Variable exchange rate hidden fees: around 3.5%
  3. Total fees: around 7% of the amount sent


Xoom’s fees are like this:

  1. Processing fees: around 2%
  2. Variable hidden fees: up to 5%, depending on the country you send money to


With 2 systems which now are the same, and with both having huge costs you can’t expect to have a cost-effective one as a result. So sad.


Paypal does not offer the best exchange rates because there are many hidden fees

Why are there so many hidden fees when we use Paypal? The answer is simple. Let’s take a look at Airbnb, Amazon or Uber when you pay with a foreign credit/debit card: the exchange rates provided are not the best. Those services take up to 10% hidden fees on the exchange rates. Why? Because credit/debit card processors are taking 3%, and the services are adding costs for handling everything. Let’s imagine they would charge an administrative fee? In this case we would refuse and we would consider it not fair. So they charge hidden fees. Almost nobody knows about them… Paypal is the same as AIrbnb, Uber and Amazon, the service is not specialized in the best exchange rates so it adds exchange rates hidden fees. That’s it.




Paypal acquired Xoom but it doesn’t change anything about their costs because both services have always been expensive. People living abroad and paying expenses abroad don’t realize there are so many fees because they are hidden.