How to Use PayPal for International Payments: Tips and Tricks

Outcome: send or receive international payments through PayPal while keeping as much of the money as possible in the right currency. Read this and you’ll get concrete, step-by-step workflows for sellers and buyers, settings to flip, when to convert inside PayPal and when to use an alternative-so you stop paying avoidable currency-conversion markups.

Why this matters. PayPal is convenient. It’s also one of the places where hidden currency conversion spreads and cross-border fees quietly eat a few percent of every payment. That adds up. But with a few simple habits and settings you can cut those costs dramatically.

What you’ll learn

• The single most effective move to avoid PayPal conversion fees.
• Concrete seller and buyer workflows to keep payments in the invoice currency.
• How to add and hold multiple currencies in PayPal-and why that helps.
• When to convert inside PayPal and when to use an alternative (Wise, Revolut, local bank).
• Practical warnings and compliance notes.

Quick summary (read this first)

• Best practice - invoice and accept payment in the currency you want to hold, and keep a PayPal balance in that currency. This prevents PayPal from auto-converting at its marked-up rate.
• If the buyer must pay in a different currency, instruct them to choose “Pay in [invoice currency]” at checkout or pay by bank transfer in the invoice currency.
• If you frequently convert or send money between currencies, compare PayPal’s rate vs specialist FX services (Wise, Revolut) - often cheaper.

Important background on fees (brief)

PayPal applies two things that raise your effective cost when currency conversion happens: a cross-border fee (varies by countries and account type) and a currency-conversion margin built into the exchange rate. Combined, these can be several percent. Always check PayPal’s current fee pages for your country and account type before assuming a rate: https://www.paypal.com/webapps/mpp/paypal-fees

Step-by-step: Sellers (freelancers, online stores, service providers)

1. Enable multi-currency and add the currency you want to receive.
   • Go to Wallet -> Currencies -> Add a currency. (PayPal Help - how to add/remove a currency:
2. Create invoices in the buyer’s or your preferred payout currency.
   • Use PayPal Invoicing and set the invoice currency to the one you want to receive. (https://www.paypal.com/invoice)
3. Instruct your buyers to pay the invoice in that currency.
   • Add a short note on the invoice - “Please pay in EUR to avoid conversion fees.”
4. Don’t let PayPal auto-convert received funds into your primary currency.
   • When you receive a payment in a currency you hold, leave it in that balance instead of converting immediately. You can hold it until you need it or you can withdraw to a local bank in that currency where supported.
5. If you must convert, do it manually from Wallet -> Balance -> Convert currency. Compare the rate to alternatives before converting.

Why this works: If your balance already contains the currency the buyer used, PayPal does not perform an automatic conversion with its marked-up exchange rate. You keep full value in that currency until you choose how to move the money.

Practical example (simple)

• You invoice €1,000 and the buyer pays €1,000. That €1,000 sits in your EUR balance.
• If PayPal auto-converts to USD using its conversion + spread, you could lose several percent.
• By holding EUR, you avoid the forced conversion, and you can either withdraw to a EUR bank (if supported) or convert later when rates are better.

Step-by-step: Buyers (customers paying internationally)

1. When you receive an invoice or checkout page, look for the option to “Pay in [invoice currency]” or similar. Choose it.
2. If paying with a card, prefer funding from your PayPal balance or a bank account rather than a credit card-cards often add extra fees and different FX rates.
3. If PayPal forces you to convert, take a screenshot of the offered rate and compare with an external FX rate. Decide if another payment method (bank transfer, Wise) is cheaper.
4. For recurring or large payments, ask the seller to accept a direct local currency transfer or open a multi-currency invoice.

Settings and features to use or avoid

• Add and hold currency balances - add the currencies you receive often and leave funds in them until necessary.
• Block automatic conversions (where available) - check your account settings for currency handling preferences and disable automatic conversion into your primary currency if you want to hold funds. (See PayPal’s currency management help for region-specific steps:
• Request payments in your preferred settlement currency when using PayPal Checkout or Buttons.
• Use PayPal Invoicing to set currency and add payment instructions.

When converting inside PayPal makes sense

• You need local currency now and have no cheaper option. Immediate cash flow beats marginally better FX later.
• The amount is small and comparative savings from specialists don’t justify the extra steps.
• You lack local bank accounts that accept the currency you’re holding.

When to use alternatives (Wise, bank transfer, Revolut)

• For mid-to-large recurring transfers or payroll, specialist FX providers usually beat PayPal on FX rates and fees.
• If you need a guaranteed mid-market rate or a transparent low-fee conversion, compare with Wise (https://wise.com/), Revolut, or local bank transfer options.
• Use Stripe/Payoneer or local payment providers if you need payments directly into local currency accounts frequently.

Example decision flow

• Small one-off sale (< $100) - keep the convenience of PayPal.
• Regular payouts in EUR/USD/GBP - open the matching balance in PayPal, invoice in that currency, or use a specialist for bulk conversions.
• Payroll or repeated large transfers - use an FX provider for conversion and a local bank for withdrawal.

How to reduce the buyer’s temptation to let PayPal convert

• On your invoice or checkout, clearly label the invoice currency and explain the buyer saves by paying in that currency.
• Offer explicit instructions - “Choose ‘Pay in EUR’ in the PayPal window; do not let PayPal convert to your local currency.”
• For marketplaces - build the checkout so the buyer sees totals in both currencies and a note about FX costs.

Handling credit card payments via PayPal

• If a buyer pays by credit card through PayPal, PayPal may convert the currency at checkout and apply both the card processing fee and the currency conversion spread. Encourage paying from the buyer’s PayPal balance or local bank funding where possible.

Legal, compliance, and tax notes (important)

• Don’t try to ‘hide’ or bypass taxes or fees in ways that violate PayPal’s terms or local law. Avoid methods that look like deliberately misrepresenting the nature of a payment (e.g., invoicing as “friends and family” for commercial activity). That risks account limitations and legal exposure.
• Keep good records of invoices, exchange screenshots, and withdrawals for tax reporting.

Common mistakes and how to avoid them

• Mistake - letting PayPal auto-convert received funds. Fix: add the currency and hold the balance.
• Mistake - assuming card payments are cheaper. Fix: check the total cost (card fee + conversion) before accepting.
• Mistake - using “friends and family” for business. Fix: use business invoices and correct payment channels.

Checklist before sending or receiving an international PayPal payment

• Seller - have the receiving currency added to your PayPal balance? Invoice in that currency? Clear instructions on the invoice?
• Buyer - choose to pay in the invoice currency? Prefer bank funding over card? Compare the offered conversion rate?
• Both - consider whether a specialist FX provider could offer a lower cost.

Final recommendations - what I would do

• If you sell internationally regularly - enable multi-currency balances, invoice in the currency you want, and hold funds until withdrawal or conversion is optimal.
• If you’re a buyer paying occasionally - always choose to pay in the invoice currency if that option exists; otherwise compare alternatives.
• For frequent or large conversions - compare PayPal with Wise and choose the cheaper, more transparent option.

Further reading and official pages

• PayPal Fees and Rates: https://www.paypal.com/webapps/mpp/paypal-fees
• PayPal Invoicing: https://www.paypal.com/invoice
• PayPal help on currency conversion and managing currencies: https://www.paypal.com/smarthelp

Takeaway

You can keep far more of every international payment simply by choosing and holding the right currency, instructing payers to pay in that currency, and converting only when you have to-or when you can get a better rate from a specialist. Small procedural changes reduce leakage. Big impact.