Receiving money in India | Why PayPal sucks and What are the charges?

So Why is Paypal bad? No, In theory It is not bad. It is an easy mode of payment transfer when comes to my international clients. But being an Indian citizen, why I never prefer Paypal as payment mode. Let us take a look.

So, I am going to explain it with an example of payment that I received from United Kingdom.
My client sent me 103.60 GBP which at the time of transaction was equivalent to 9334.35 INR.

Stage A

Initial Fee = (4.4% + Fixed fee) * taxes as per Indian Government (Currently 18% GST)

```= (4.4% of 103.6 GBP + 0.2 GBP ) x 1.18
= (4.5584 + 0.2 ) x 1.18
= 4.7584 x 1.18
= 5.614912 GBP
= 5.62 GBP was charged```

So, my Paypal amount is now 97.98 GBP (103.6 – 5.62 = 97.98)

Stage B

Now for some vague reason, Paypal India stores money in USD as base currency, so My Paypal balance showed `131.64 USD` instead of `97.98 GBP`. The important point to note here is that value of 131.64 USD at that moment was 95.22 GBP
When I argued Paypal support guys over this conversion, first of all they did not have an answer so they assumed some different question on their own. Later on they told me:

Thank you for your reply. I know that it can be confusing when you believe that you were charged more than you should have been in fees, but I am here to help!

PayPal uses the most up-to-date conversion rates at the time that a transaction is processed, however conversion rates are fluctuating constantly, which could explain why there is a difference in conversion rates that you are seeing.

I apologize for any frustrating this situation may have caused you. -Sarah

Somebody tell me when was the last time you saw a fluctuation of 2.812% in USD-GBP index in 24hr span?
So at present scenario I am left with `131.64 USD` in my Paypal balance.

Stage 3

Now I wanted that money to sit in my bank account, so obviously I needed to withdraw in INR. I requested for a withdrawal and I was bound to acknowledge a sum credit of INR 8,242.53 (Of course 4% Fee is charged for Currency Conversion to INR)
so How much I got in Total – `8,242.53 INR!`
We had started with 9,334.35 INR and I received 8,242.53 INR at the end which means a total of 1,091.82 INR (11.697% ) was somewhere lost in between in form of fees or taxes.

Summary of Fees and Charges vs Money lost in each stage using Paypal

Remark Amt. Amount of Money leaked
What client paid 103.60 GBP NIL
PayPal Fees -5.62 GBP 5.425%
What I received 97.98 GBP 5.425%
Paypal Balance 131.64 USD 8.088%
What I ultimately received 8,242.53 INR 11.697%

Here is the reference sheet –
https://www.paypal.com/in/webapps/mpp/ua/useragreement-full#exhibit_A

Author: Harshvardhan Malpani

PHP Developer based in New Delhi, India. Working as a freelance web developer providing server deployment, website development and maintenance services.