A lot of Canadians are making money online these days. From selling virtual gaming items to selling real world things on eBay to bloggingmany Canadian bloggers are receiving payments via Paypal. The problem for Canadians however, is that they get stuck having to pay a hefty 2.5% Paypal currency exchange fee every time they convert from USD to CAD.
2.5% may not seem like a big deal but that is $2.50 on every $100 of income. $25 on $1000 and so on. Additionally, the exchange rate has been favourable to Canadians for quite some time and $1 CAD peaked at being valued as $1.06 recently. This means that on every $100 I only receive $91.50! Ouch! It all adds up and paying the Paypal currency exchange fee is not something i’m keen to do.
You may think, “lots of Canadian banks have USD accounts, why not just sign up using one”. Well, I tried that. I had a USD account set up at CIBC from when we did our new car import of our 2011 Subaru Outback from the USA last year. I had made a few attempts link this account to Paypal but the test payments Paypal sends to confirm an account exists. Paypal couldn’t tell me why it wouldn’t work, nor could CIBC. I then tried (and failed) with my BMO USD bank account. What was I doing wrong?
My error was my use of the banks I am associated with. A quick Internet search (which should have been done first - lesson learned) revealed that the accounts I was trying to use identifiers that Paypal recognizes as Canadian. Since Paypal states that we have to transfer to Canadian dollar bank accounts they could not recognize the USD accounts.
The Paypal currency exchange solution? The Royal Bank of Canada USD account(s).
What makes Royal Bank different than it’s competitors? By using a few pieces of information / information combinations you can establish a US bank account when you register your bank for Paypal withdraws. The following outlines what you need to do to transfer US funds to your Canadian based US dollar bank account and solve your Paypal currency exchange woes.
- Head to a Royal Bank branch , preferably one you can walk or bike to (may as well save gas!).
- You will ask the branch officer to open a RBC US Dollar account. This account costs $2 for 6 transactions per month. There is a second option where you can open a RBC U.S. High Interest eSavings account that has no fees if you can limit yourself to 1 monthly debit.
- You need to remember to get all the account details before you leave. You need the transit and account numbers. You will be provided a routing number but you don’t need that particular number - see below.
- Login into Paypal using your user ID and password. You will be directed to your My Accounts page.
- Click Withdraw (Transfer to Bank Account).
- In the Add a bank account page you’ll first need to change the country drop down from Canada to United States.
- The US bank account page appears and you are so close to curing your Paypal currency exchange issues. First enter in Royal Bank of Canada into the Bank Name field.
- Leave the Checking button selected if you opened a US Dollar account or Savings if you selected the High Interest eSavings account.
- This step is integral. With your account you will receive the routing number of a Canadian branch (021000021) - DO NOT USE THIS NUMBER. The number you need to use is “026004093” which is the routing number of a US Branch.
- You now enter in the account number. To accomplish this you need to answer the 5 digit transit number and the actual account number.
- With luck you’ve set up online banking. You will need to check the account for two small deposits that Paypal will ask you to confirm the deposits. Once you do this you should be able to transfer your US dollars to your Canadian based USD account.
If you have found this advice useful and are looking to exchange $5000 or more in a single transaction I highly recommend using Knightsbridge Foreign Exchange. The FX rate they offer is usually 0.50%-0.75% which is much lower than the banks (2.5%). You can call toll free in Canada or USA at (877)-355-KBFX (5239) or email [email protected]. They will ask you where you heard of their service and if you tell them SPF or sustainablepersonalfinance.com referred you we will receive a small affiliate percentage. There will be no additional cost to yourself but I am confident you will receive excellent, professional and fast service.
Have you been losing chunks of money due to the 2.5% Paypal currency exchange fee? What steps have you taken to reduce these fees?
Thanks for the awesome tip. Like you, I have been getting stung. I used to be part of the Royal Bank but I left them because I got tired of their bad service and attitude. Plus their fees were really high. If this is the only way to save on Paypal fees though, I guess I might just have to go pay them a visit. Thanks for the very valuable information.
The eCommerce account is most intriguing to me. As long as I can go to the bank once a month i’m likely OK with that account.
I will need to get the account data to XETrade and Knightsbridge to handle foreign exchange.
Great job finding a workaround! Now you can keep more money in your pocket.
That’s the plan!
Paypal fees suck, period. To have to pay an addition fee to transfer or convert each time would really suck. Glad you found a solution to get around this issue. Each dollar saved is a dollar earned.
Well done!
$2.50 actually, on each hundred.
Geez, that can really eat into your revenue! Being in the US, I haven’t been exposed to that issue, but can appreciate how that can impact you guys. That’s almost like an extra 2.5% tax right off the top for folks in Canada. Glad you’re able to find a resourceful workaround.
I’ve been hit with fees converting into US currency, so can somewhat relate.
Ya, CDNs get the short end of the stick on taxes and worse on our purchases. Our Subaru Outback cost 20+% less buying in the States than the same car here in Canada. And that was even with a close to pay, but not quite there, exchange rate.
I wouldn’t be happy with losing 2.5% on currency exchanges either. That would really add up to a massive charge over the course of a year. t seems like you have an excellent solution here.
It works IF I want to keep things in USD. I still pay a .8% to 1% f/x fee - but it still ends up less than paypal.
This is great information, SPF! 1% is better than what PayPal is charging.
Always seemed to me that Paypal charged even more than 2.5% because I always felt my credit card gave better exchange rates than Paypal. I thought I had tested this before but the numbers always favoured the credit card.
Checking their website it’s clear to see that it is listed as 2.5%. I guess you get rewards on your credit card (I’m talking for purchases) so that still beats Paypal anyday. I wonder if the spot rates they use are identical to those used by the CC companies or if they skim a little bit there somehow too?
It may - I always felt like I was paying more as well. I should sit down and do a dummy transaction and get the math done myself (not assume their posted rates are updated accurately).
Very nice! Do you know if it would work with Scotia Bank? I have always done US wire transfer with e-trade US for the company stock. I probably would have to find a US routing number …
So far, I have left everything in the PayPal account … That’s how I avoid the fees :) It’s adding up though.
I found the US routing for Scotia Bank. I just set it up. We’ll see if it works.
Please let us all know PIE!
Excellent piece of info, I as well hate those fees paid to paypal. However, I am disappointed that the solution has to pass by RBC, I just don’t like this bank and do not consider doing business with them anytime in the near future. Hopefully, another way around is found!
Lets see what Passive Income Earner discovers about Scotia …
That was a no go for me with Scotia Bank. The Swift Code worked but combining the transit and account number did not work. I am not sure if the account numbers are unique across all transit numbers though …
Thanks for following up PIE. So it seems like RBC until someone discovers another alternative.
Actually, the trick is to use a Swift Code. That’s the formal name of the code SPF found. I have used that with Scotia Bank to do US wire transfer from e-trade. You are essentially doing a wire transfer rather than a bank to bank transfer I believe.
The wire transfers are manually processed out of New York for Scotia Bank. I get a signed paper in the mail a week after the transfer. The Swift Code is international and all the banks should have it.
The key here that SPF found is how to trick the entry forms from Pay Pal :)
The thing is that I usually have a 10$ fee on a wire transfer at my bank though. I am trying it out now to see
1. if it works
2. if I will be charged a fee
Cheers.
Yes very timely read. My experience is same but have avoided some fees but withdrawing more than $150 but the exchange rate is the killer they have a hefty buffer. Fees on the way in and fees on the way out …
Glad to have helped!
So far so good….thanks have been looking for a way to save on the exchange and this has appeared to work…just waiting for the confirmation amounts.
Hope it works for you - my account is set up just fine. I’d much rather pay about 1% to a ForEx company than 2.5% to PP.
Thanks SPF, I finally set this up today and am in the process of transferring some US funds out of my Paypal account as we speak!
Awesome! It really is nice to get a break as a Canadian dealing with Paypal!
Awesome! I think it worked perfectly! My future traveling self wanting to access USD is thanking you right now!
I was able to do the whole process online because I already have an RBC account thru my mortgage, which is great!
Thanks for the great tip :)
Glad it worked for you Y&T!
You can exchange Paypal US dollars for free to Canadian dollars using coineta.com They don’t charge any fees
Interesting - I will need to check this out Verdri!
Does this work with TD Bank USD chequing?
Nope. The instruction indicate what works.
Just wanted to say again that these tips are awesome; I’m sure RBC is also happy at having a new customer. ;) They’ve been pretty good for me so far.
Does this still work? I have tried a couple of times and they keep coming back as ” bank account invalid”
This is the first I have heard it may not work. Are you using a RBC account and the appropriate routing number (U.S.)?
Yes. Last time I just put “rbc” instead of the full name but otherwise I had all the correct info. I will try again. Not sure if they lock you out after failed attempts…. I contacted the help desk via email and they said usd accounts at Canadian banks aren’t supported at this time…
Let me know how it works out when you type the full text for the bank name. As far as I know you have to follow the directions precisely. Everything else I tried to get this to work did not.
Great tip! How long did it take before you saw the money in your US account?
Thanks so much for this tip,i’ve always want to do this and did not know how till i came across this blog,i’ve open a U.S chequing account with RBC on monday this week and i added it to my papyal the same day with all the info that was explain in this blog,and today is thursday i was able to confirm my paypal account,it only take 3 days now i’m so happy i can transfer my US money to my bank account with out being charge those exchange rate fees.Thank you
Glad I was able to help. Next step is to get set up with a discount ForEx company to pay about 1% exchange rate instead of 2-3% a bank will charge you.
Great guide, I’ll be following it this week to avoid (or at least reduce) a lot of currency conversion expenses. I have an ING business account where I already do the conversions whenever I can. Currently ING is quoting $1.012 to buy and $0.983 to sell, which looks like a spread of 2.9 cents or a cost of 1.45% for a single conversion. Do you get a much better deal than that with knightsbridge or xetrade?
How did you land @ 1.45%? 2.9 cents on what is basically a dollar seems to be about 2.9%, no?
xetrade I usually see between 1% to 1.2%
knightbridge, which requires a minimum of $10k to be converted is usually around .85% or so
Just different ways of measuring. If Knightsbridge is 1/3 of that cost I need to sign up now :)
If you use large transactions knightsbridge is my choice. If you only need a few hundred bucks xetrade. Both require paper work which can be a pain, but, the companies have to do due diligence that you are not laundering money.
If you do sign up with Knightsbridge let them know Simon Boyce sent you. I get a tiny affiliate fee :) no cost to you of course!
I did that - first exchange went great and looks like it saved about $200! I wasn’t sure if it would work with accounts in a corporate name but there were no problems setting up the account and doing the transfer.
Did you do the exchange via RBC or did you use an F/X company?
Great solution and thank you for sharing. Can it be done with a BMO US account?
Nope - BMO and CIBC don’t work. TD does not either as far as I know - only RBC which has the US routing number you can use.
Thank you for your reply. I opened a USD account with RBC today, however when I entered the information on paypal as you so kindly instructed, I did not get a confirmation from paypal that they sent the deposits. Is it normal?
Also, there’s no option to enter the Trans No. It just asks for Account # and routing #. And at the end a message saying it requires additional review,provide an ID, etc……
Any suggestions?
thansk
Can you send me a screenshot to [email protected] please? It is hard to visualize what you are seeing …
Re: confirmation, it has been a while but I do recall it taking a few days for the small deposits to be made into the RBC account after I put the information into Paypal.
See my comment dated Dec 20, 2014 for a possible workaround for TD Canada Trust
It worked thank you. I’ll just have to wait for the American dollar to get stronger now.
I tried it - it failed the first time but worked the second time - I had put a hyphen between the two bank numbers, which causes an error - the bank returning a message that such an account number is not valid. Found some clarifying information at:
http://forums.redflagdeals.com/linking-canadian-bank-usd-savings-account-paypal-928670/#post12511885
Hi, I’m just wondering, my RBC account name is different than my paypal name. Will that matter?
Thanks
I really don’t know Mini. I have 2 emails associated with my paypal and the primary is not my actual name. The name on my Paypal account however is the same as my RBC.
My Paypal name and RBC names are different and it went through fine.
Hey, that’s great!
Just wondering though, is your name on paypal totally different or just slightly different from RBC?
I used a random nick name I use online. lol.
My paypal name is quite different - shouldn’t be a problem as long as you enter in the RBC stuff correctly, at least it worked for me.
ok thanks for your input
My recollection as well. This is a pretty easy way for folks to save some F/X conversion fees.
I checked with RBC, is it the called the RBC US High Interest eSavings® or US Personal?
For me, it was the US High Interest eSavings® , although on the statement it’s called “U.S. Personal” so go figure.
They have a link to set up an account online at: http://www.rbcroyalbank.com/products/deposits/us-e-savings.html
that’s the one I setup. Thanks
Fingers crossed1
The “high” interest @ RBC is pretty pathetic. Better than 0% but 0.15% was the “high interest” when I signed up. Doubt it has gone up more than 15% of 1%.
I have a very similar problem with Euro’s. Does anyone know if this approah using RBC will work for Euros to CAD?
It worked!! Thanks everyone. Going to transfer the money now.
I was in RBC to check this out before I read your article. They claim to have a Canadian $US account and a US $US account. I am reaching 60 so the Canadian account is free but the US account has a fee. I am assuming that you are using the Canadian account and using the US transit number. I am surprised that RBC would allow that.
Hi, i have a RBC canadian CAD & usd account and i have a RBC US usd account. Will that routing number 026004093 work with my RBC canadian usd account OR my RBC US usd account.
In other words, when entering the account number and transit number,should i enter the RBC canadian usd account or the RBC US usd account.
Just wondering how the routing number can work with the RBC canadian usd account since it is part of the canadian branch.
Thanks
It is intended to work with your RBC Canadian USD account.
Thanks for the great workaround!
Any Idea if this will work the other direction? Sending money in USD from the RBC account to a US bank?
I have no idea about this one Shawn.
Can’t believe this actually worked using a foreign routing number.
Thanks!
Does it still work?
I read on another forum that as of July 2013, Paypal closed the loophole, and banned the transit number of RBC. Is that true? Has anyone tried it in the last weeks?
I would like to know before going to RBC and opening a bank account.
Thank you!
I read this as well Maria.
I can’t validate if this method still works given I have already set up my accounts (a few years ago).
It does. Did it last month
I just tried to add the account today. The RBC us routing number doesn’t seem to work any more. I was only able to add it as a Canadian bank.
I got it to work after a few trial and errors! I had to use a US Paypal account (when registering, the address had to be in the States). I then transferred my USD from my Canadian Paypal account to my US Paypal account. And then withdraw from my USD Paypal account to my USD RBC savings account.
The RBC branch showing up with the US routing number is:
ROYAL BANK OF CANADA
4TH FLOOR
NEW YORK
10006
Hi thanks for this. Is the 2.5% fee ‘hidden’ in their currency conversion rate (Searching today I stumbled on a site implying that, I can paste the link but don’t want to spam) or is it on top of it? Reason I ask is when I tried to withdraw today and used the currency converter (on the page where you enter the withdrawal amount) it was almost exactly 2.5% less than reported on business sites.
I was wondering if the workaround is still working? Has anybody done it lately? Also, if you are indicating that the bank is in the US, does this mean the PayPal info will be sent to the IRS and what kind of tax implications will this have?
no doesn’t work now. the government found yet another way to rip us off. I guess they need the money to give to refugees and fund other countries problems
I do not think this works any longer, however, the government had nothing to do with it - the Bank or Paypal would have changed their policy.
Thanks for the feedback, disappointing as it is. Any advise on the best bank to use for small business and how to handle a business that charges in US$? Do I just have to suck up paypal’s 2.5? Would it be worth my while registering my business in the US too since I need to submit returns for the US anyway
Just a heads up to anybody still trying to figure this out: if it wasn’t working before for anybody, then I would suggest giving it another try. It’s working again.
I went through the entire process in the last couple of weeks. For a while, PayPal wouldn’t let me add a “USA” account. This past Friday, I decided to give it another shot and adding the account finally worked. I confirmed my deposits on Monday and then did a test transfer of $50 to my eSavings account. The amount showed up a few hours ago.
Thanks for the confirmation of success Kevin.
Hi Kevin. Can you confirm Paypal transfers to your RBC esavings are still working? I’d be looking to do this with a low 5 figure amount but of course want to hopefully verify the process works before opening the RBC account. Is that amount in line with what you’re transferring? Ty.
I processed a transaction vis RBC esavings in late December.
What am I missing here? Paypal’s exchange rates are better than RBCs.
As of today, USD -> CAD
xe.com: 1.12394
PayPal: 1.0954 (-2.5%)
RBC[1]: 1.0861 (-3.37%)
What’s the point of transferring those US dollars into an RBC account? If you ever want to use those funds in Canada, you’ll be charged RBC’s 3.37%.
[1]http://www.rbcroyalbank.com/cgi-bin/travel/currency-converter.pl
The RBC USD esavings account holds USD which you then convert using a fx serivce other than RBC. No fees to RBC.
If a third party service is actually required to beat Paypal’s exchange rate then isn’t that a critical part of the workaround?
What are some examples of exchange services? By how much do they beat Paypal’s 2.5%? Do these services have any additional fees?
You can walk out of any Canadian RBC branch with US cash physically in your hand and take it to any currency exchange business that you wish to deal with. There are many to choose from that beat the bank’s rates. With my RBC US account, I’m allowed one withdraw per month without any charge.
I have been using Kantor to exchange into Canadian funds.
I have been doing this monthly now for years - thanks to this article.
this article is great but works against itself. its the first thing to pop up on google when you type in “paypal exchange cad usd”, which everyone does since paypal doesnt show xchange rates on their website. so rbc or paypal will see this article and fix their loophole. time to delete this article
I’m trying the following US routing number for TD CanadaTrust - 026009593 - that is the BOA (Bank of America) number for wire transfers from the US to my TD US$ account. Then I put the branch number and account number as a single long string of digits and PayPal seemed to accept it as a US bank.
I have both a US$ and Can$ account on PayPal, I use PayPal US (.com) and not any other. I also have a US shipping address that is registered with PayPal.
So, we shall see if this works, but it won’t be until sometime next week as I wasn’t prepared to give PayPal my login info for my TD account and opted for the small deposit option. I’m doing this on a Saturday and it takes a few days to go through the system…I’ll report back if I get a chance…
This may also work for Euros - but you will have to figure out the Euro routing number, etc. on your own.
Looking forward to hearing the results John.
So did this TD Routing Number work?
I would love to know as well. Please give us an update John.
So far no success with my tests. As far as I can see I have to setup an account with TD Bank (the US physical bank ) and then figure out how to transfer the funds from there to Canada. Not as tidy as I would have liked at all, and not worth the hassle. Still, I think it should work - perhaps someone else can build from my experience, but I have to get back to my shop work.
link didn’t work - you want to register at http://www.TDBANK.COM
There is no charge to open the account at RBC. Why not open the account there? It is the only one I hold w/ RBC.
Now that the Canadian dollar value has dropped relevant to USD, I thought this would be a good time to transfer some USD to Can $. When I recently moved $1000 USD to my Canadian bank account I thought I was getting a nice exchange rate “bonus” when about $1200 showed up in my bank account. Today I looked at my paypal balance and see that they withdrew the $1200 from my balance, which does not make sense to me! Am I all backwards on this exchange thing or did I get ripped off??? Please RSVP to my email address in case i miss this if you have an answer.
you can also use a Chase Amazon.ca credit card.
They charge no additional fees for currency conversion.
The VISA exchange rates are a little higher than actual, but I’m sure they are inline with .5-.75% you mentioned in your article.
Has anyone figured out how to make this work with Scotiabank as well? I would eventually need this money in a scotiabank USD account so it would be a pain to have to transfer paypal to RBC to Scotiabank.
Also has anyone set up the RBC account with paypal lately? Reading forums it sounds like it’s been on and off.
I am fairly certain it won’t work with any bank other than RBC. I read on redflag the other day that RBC is still working.
Txs for the reply above, and this update SPF. I’ll give it a try next week and update when I find out.
An update on my Paypal withdrawal and RBC account set up. This solution worked great for a larger transfer for me, Txs Sustainable. I actually went with the US Direct Checking option that was offered even though its a few extra $s a month. I choose figuring the Canadian checking option would work, but the US one might have the best chance. It also allows me to withdrawal US $s from US basd RBC ATMs, which should balance out the extra monthly charges if I make a trip or two each year.
Another way for Canadians to save money when transferring money internationally is to open up a CANADIAN FOREX account online. You pay a flat $15 fee for the transaction (if it is under $10,000) plus the exchange rate and that is all. Clean and simple. No hidden fees. I have been wracking my brain trying to figure out how to make a $5700 USD payment to Israel for the past month. Reading blogs about loopholes on PayPal, exchange rates, international cross-border fee, commission fees, conversion fees, ETC ETC. After reviewing numerous methods posted by other people trying to save money I realized that Canadian Forex is the absolute best method. Even with a Chase MasterCard, PayPal charges the recepient or sender 3.5% + 30 cents for what they call a cross-border fee. Canadian Forex doesn’t. Just another suggestion that I hope helps you fellow Canadians save. We always get burned financially. It’s so unfair.
I believe that most Credit Cards also charge this fee but it is hidden. Look at your agreement.
The exchange rate for converting from US to Canadian funds as priced by PayPal is about the same rate you get from your bank when converting US to Canadian funds.
Try this the next time you want to withdraw money from PayPal, note the exchange rate - do a similar setup of the transaction at your bank’s online site. I think you might well find that PayPal is about the same or possibly slightly better than the bank exchange rate for converting US to CDN $.
This is not of much comfort if you want to simply move USD from PayPal to your USD Canadian bank account…
I have been charged the PayaPal Currency Exchange Fee for two decades. Imagine how much money was wasted. I will try opening up an account with the Royal Bank and registering the account with PayPal. How easy is it to transfer money from the Royal Bank account to my account at another bank? Many thanks.
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