Why PayPal Conversion Fees Remain a Problem for Freelancers in 2025
PayPal is still one of the most widely used payment platforms in 2025, especially among freelancers working with clients from the US, Europe, and Asia. Despite its convenience, PayPal continues charging some of the highest currency conversion fees in the industry—typically 3% to 4.5% above the mid-market rate. For freelancers receiving multiple payments each month, these hidden fees add up quickly.
The good news: PayPal’s conversion charges can be avoided or minimized with the right settings, currencies, and withdrawal strategies. This guide explains everything freelancers need to know to reduce PayPal losses in 2025.
How PayPal Applies Conversion Fees in 2025
PayPal charges conversion fees in three scenarios:
- When a client pays you in a currency different from your wallet currency
- When you convert money manually inside PayPal
- When withdrawing to a bank account in a different currency
Freelancers often lose the most money when PayPal auto-converts USD or EUR into local currency at a poor exchange rate. Avoiding forced conversions is the key to saving money.
Method 1: Hold Your Balance in Foreign Currency
An important rule: never let PayPal automatically convert your incoming payments.
In 2025, PayPal allows you to hold balances in more than 20 currencies, including USD, EUR, GBP, CAD, and AUD. By storing incoming payments in the original currency, you avoid PayPal’s conversion markup entirely.
- Go to: Settings → Money → Currencies
- Add the currencies you frequently receive
- Set “Accept and keep payments in original currency”
This single change prevents thousands of freelancers from losing 3%–4% on every transaction.
Method 2: Withdraw in the Same Currency to a Multi-Currency Account
If you have a Wise, Revolut, Payoneer, or a multi-currency bank account, you can withdraw USD or EUR from PayPal directly without conversion.
This method saves the most money because:
- You bypass PayPal conversion fees
- Your multi-currency bank account converts money at a much better rate
- You keep full control over the moment of exchange
For example, withdrawing USD from PayPal to Wise USD balance avoids any forced FX fees. You can convert funds inside Wise at a real mid-market rate.
Method 3: Link a USD or EUR Bank Account to PayPal
PayPal allows linking foreign-currency bank accounts in specific regions. If you have access to a USD or EUR account, you can withdraw in the same currency.
Freelancers often use:
- Wise USD account number (ACH or wire)
- Payoneer Global Payment Service accounts
- Revolut USD or EUR accounts
Note: Availability depends on your country. Some regions restrict linking virtual accounts, but in 2025 PayPal has expanded compatibility with Wise and Revolut.
Method 4: Invoice Clients in Your Main Currency
One of the simplest ways to avoid PayPal conversion fees is to invoice clients in your preferred currency. For example, if your withdrawal currency is USD, always invoice clients in USD.
This avoids:
- Incoming FX conversion
- Double conversion on withdrawal
Clients rarely mind paying in USD or EUR—these are global invoicing standards for freelancers in 2025.
Method 5: Ask Clients to Pay via Wise or Payoneer Instead
If a long-term client is open to alternatives, suggest switching to Wise or Payoneer. These platforms offer much lower fees and real exchange rates.
Clients appreciate transparency, and many willingly avoid PayPal once they see how high its fees are.
Method 6: Avoid Card-Based Payments
When a client pays you via credit card inside PayPal, the conversion fee becomes even higher (up to 5.2%). In 2025, card payments carry the highest markup.
Whenever possible, ask clients to pay via:
- Bank transfer
- PayPal wallet-to-wallet
- Wise transfer
Method 7: Convert Money Outside PayPal
Never convert currency inside PayPal unless absolutely necessary. Instead, withdraw funds in the original currency to a platform with lower FX costs.
Converting outside PayPal is usually 4x cheaper.
Method 8: Use PayPal Business Settings for Lower Fees
PayPal Business accounts offer additional settings in 2025 that help reduce forced conversions.
- Set your primary receiving currency (USD or EUR)
- Turn off automatic conversion for payments
- Enable “Hold balance in multiple currencies”
These settings prevent unauthorized FX conversions that happen silently on Personal accounts.
When You Cannot Avoid PayPal Conversion Fees
There are a few situations where PayPal still forces conversion:
- Your country does not support foreign currency withdrawals
- Your bank only accepts local currency deposits
- You withdraw to a debit card instead of a bank account
In these cases, the only workaround is switching to a multi-currency provider like Wise.
Summary: The Best Way to Avoid PayPal Conversion Fees in 2025
To minimize PayPal losses in 2025, freelancers should:
- Always hold payments in their original currency
- Withdraw to multi-currency accounts like Wise
- Convert money outside PayPal at a real mid-market rate
- Invoice clients in USD or EUR
Using PayPal strategically instead of relying on default settings can save freelancers hundreds or even thousands of dollars per year. With proper configuration, PayPal becomes a useful tool rather than an expensive necessity.
Want more income optimization tips? Explore our upcoming guides on multi-currency banking and low-fee freelance withdrawals.
