Almost 90% of the internet users are well aware about the PayPal and 100% of the International Business men are highly aware about the PayPal. But only a very few are aware about the action rendered by PayPal during the settlement. These many days, my office team use to manage the Finance and operations, for an event I was mapped for the PayPal. And, as usual am highly lazy enough to manage it in real-time. I happened to see the reports couple of days ago.
This particular event was billing in GBP and all the settlements to India happens through INR as per the Reserve Bank of India policy. So, PayPal charges 4.4% of the transaction value along with 0.30$ for every transaction performed using their gateway. This is the open statement of PayPal, but there is a hidden structure in it which is very dangerous.
The conversion rate is highly threatening us. On an average day 1 GBP = 1.7549 USD and then 1 USD = 59.45; 1 GBP = 104.32 INR. When we perform a RM calculation the value of 1 GBP = 1.7549 USD = 104.32 INR. Here comes the secret how PayPal will swindle your wallet and how it did to me.
As per the calculations of PayPal, 1 GBP = 1.3822 USD and then 1 USD = 56.12 INR and no direct GBP value provided by PayPal. So, now calculating with this basis 1 GBP = 77.5690 INR. Now, for 1 GBP I am losing 26.751 INR.
Now, will see a total loss calculation on this perspective. If am receiving 100 GBP from my client, 4.4% of the total amount will be deducted as their fees, now am left behind with 95.6 GBP. Again a fee is levied on this which counts for 0.2 GBP; now am left behind with 95.4 GBP. Now, the conversion process begins and I get 131.8618 USD after conversion. Thank god, there is no conversion or mark-up fee at this point. Again, the USD to INR conversion process happens with their currency values and I get 7400.09 INR. Instead of getting 10432 INR, am getting only 7400.09 INR where the deficient amount 3031.91 INR.
Actually after their gateway charges for 100 GBP, I should be actually getting 9972.99 INR if they are perfect. But I lose 2500 INR for every 100 GBP with these people’s profit calculation.
Speaking out of the box, PayPal is highly good for start-ups and freelancers. But going Professional into it will surely endup in loss.
