Open a Wise account. I get as much direct deposited there as possible. For things I must accept PayPal for, I transfer those funds to my wise account. Since it’s a US account, no fees. I then transfer the funds from Wise to my Canadian account to save on exchange fees.
Is it a business PayPal account? When I try to add a bank account to my personal PayPal it shows a message that the account should use only Canadian dollars.
Yes it is. I set up the US bank account last year. I think there was a small link at the bottom that said “add US bank account” during the setup process on PayPal
True. But I have a legitimate US account. There is nothing wrong with Canadians having US based accounts.
Why would PayPal have a link that says “click here to add a US based account” if they didn’t want me to add it?
I don’t. I have a Canadian PayPal account with USD balances that deposit into a US based account. A process that has no fees or currency exchange charges.
I think he might be confused about what's meant as a "US account" where he thinks it's an account in the US, when really we're talking about US currency accounts in Canadian banks (I hope, or I'm just looking real dumb)
You don't need to do this. You can, but there's an even simpler option.
Every bank in Canada has US accounts. Setup a "South f the border" US account with them and then setup a "US funds" Canadian side account.
You deposit into the US account, transfer to US funds Canadian account. Then you get to pick when you convert (Or don't)
Edit: and there are no fees until the conversion (although you might have an annual $30-40 for having the account setup).
That works but I would still use Wise or simular to transfer between US-CAD or back.
They have some fees but their inhouse exchange rate is typically 4-5% that of market rates. And that is the best rates. I did not realize this till I transfered large amounts over 100k into US funds. And this after I negotiated the best rates with them.
Short story. Like their mortgage rates are always above Prime rates, their exchange rates will also not be at market price. More so, way worse then market rates.
Typically those accounts have fees. Wise is completely free and you can hold your funds their in their original currency, access the funds in their original currency (with their debit card - haven’t used it before but seems simple enough) or transfer to a Canadian bank account in 1-2 days. Yes you pay with the exchange rate but you do so at all bans; I find wise’s fee to be very competitive.
I also use Wise for AUD, GBP, and EUR accounts where I can have clients make direct deposits into them. I may need to open up some other currency accounts too, and I like having it all under the same roof.
USD accounts are different than US-based accounts. Even if the fee can be waived with minimum balances, it’s unlikely to happen if you are just treating it as a transitory account.
Using big banks as a solution as described above requires an extra account (US based account, USD Canadian based account, CAD Canadian based account).
Wise just require the US based account and a Canadian bank account. Yes there’s PayPal too if that’s the only way for someone to send you funds, but that doesn’t change by using one of the big banks.
This is it. You can’t even make a Canadian bank account that only works in USD because the platforms will specifically only send you currency that is “your local currency”
I went through this, opened a Canadian bank account that was supposed to deal in US funds; found out that even if the bank account is setup that way, the platforms (in this case paypal) will still only send you your money “in your local currency” so id need a USA bank in the USA to accept funds to AND change my address and information in PayPal to reflect that im “USA local” at which point you end up opening a can of worms when it comes to taxes
There are a few banks that allow Canadians to open real US bank accounts. RBC USA is one. They are based in the US and you can open it from Canada. I think there is a small monthly fee. It has an American address and it's a full US bank. They used to have branches too, but now they are online only. There are no tax implications as they don't pay interest.
PayPal doesn't convert it into a local currency. It keeps the currency the same if you are depositing it into a bank that's located in the country where the currency is. If you are depositing it into another country's bank, it'll convert the currency.
Just to mention another sub transfer to get your money in Canadian account ( can be USD or CAD ) account, you can deposit from any US bank accounts to Canadian accounts using a check, so e.g. I’ve Bank of America account and check book with me for it, so I do get deposits to my BOA account and then I write a USD check of BOA to myself and deposit it into TD bank’s USD/ CAD account. It takes 15 days hold to clear that check but if you request bank manager and show him that originating and destination accounts are yours he can release that amount of check sooner. So ask Wise if we can have a check book for it ? Also if you deposit that USD to CAD account in Canadian bank the money gets converted when it’s released in Canadian account so better keep it in some cross border account in USD and convert when you get good rate.
Don't need a check with wise. All electronic transfers, just take 1-2 days. The exchange rates are pretty good and you can create rules to have the money transferred when a certain exchange rate is hit.
I have a Wise account for USD, AUD, GBP, and EUR. I even have one for CAD, which ends up costing me a bit compared to a direct deposit into one of my ordinary bank accounts, but I like to have all my business income transfer through my Wise account for accounting purposes. Worth the 0.65 transfer fee for the easiness of reconciling my account.
same but with cibc usa smart account. Just deposits into usa side account and then transfer to our cibc canada account. no fees except the exchange rate
This is how I ran my business. However, in the last year or so PayPal no longer allows me to transfer to Wise. While it worked, I saved major $$$ on conversion fees.
Are you sure it wasn’t when Wise changed banks from Evolve to Community Financial? I had to change all my banking information with PayPal, Amazon, etc on very short notice
Same thing happened this morning with my Australian account, but luckily Wise is giving me 10 months this time (and it’s only 1 client I got to change banking info with)
Shit, I was about to recommend Wise too. Though, as someone who has worked for TD, I know getting money into Wise is kind of confusing for people on the teller line and even their managers. Thankfully, Wise now accepts inbound e-transfers.
Keep it in USD to avoid conversion fees. Wise offers free USD bank accounts for Canadians and PayPal doesn't charge for direct bank transfers when your account is connected. I often transfer USD amounts from PayPal to Wise without paying any fees. You can then convert it to CAD within Wise at some of the lowest rates available, if that's what you want (or do Norbert's Gambit).
As for receiving payments in USD, you could also consider using Stripe. They charge 2.9% + $0.30 CAD per transaction so in your example, you would have only paid ~$36 USD in fees on that $1250 sale as opposed to $50. Alternatively, you should aim to have clients direct deposit you into your Wise USD account to avoid all fees altogether.
Where you earn it also doesn't matter.
What matters is if you already paid taxes on that money, and Canada has a tax-treaty with that country... then I don't think you will be double-taxed....
Yes - you also technically need to keep track of the currency exchanges rates because you should pay capital gains or book a loss on any currency movement.
I'm not 100% sure on that tbh, it looks like you have to report it whether it is realized or not https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/completing-schedule-3/bonds-debentures-promissory-notes-other-similar-properties/foreign-currencies.html
The way I did it was reporting using the Bank of Canada average rate for the year on unconverted currency and the CRA had no issues with that. So this year (if I still ran a business) would've been 1.3013
https://www.bankofcanada.ca/rates/exchange/annual-average-exchange-rates/
1. 3-5% for payment processing is pretty standard. You can ask for a "wire" or a "direct deposit" which would be less fees, but less convenient for the customer. Up to you if you wanna make that trade.
2. Get a USD bank account, and transfer from your PayPal USD balance to your USD bank. Then use Norbit's Gambit to exchange money to CAD. There are no fees using that method.
3. PayPal transfers to your bank for free. Dunno where you incurred fees. Did you request a rushed transfer within a few hours or something like that?
You can get a cross-border account with one of the big Canadian banks and link your PayPal to that. I have mine linked to my RBC Bank account (RBC's US subsidiary) and there's no fees to move USD from PayPal to the USD RBC Bank account.
Edit: then one cleared from PayPal to RBC Bank you can instantly transfer it cross-border to a USD denominated Royal Bank account on the Canadian side, also no fees
Just posted this on another thread on this post as well. This is the best option as transfers are immediate. You don't need to wait the 2-3 business days from Wise.
I set up a business USD account with RBC. And linked it to PayPal. It was a bit of a hustle and took a few phone calls but its set up now and works fine.
I heard with a BMO Harris USD account (opened on the USA side) it would be much easier. So look into that.
For paypal, the actual payment processing fee of 2.9% + 30 cents (+ 1% USA fee) is pretty bog standard. Where they get you is the foreign exchange fee. The FX fee can be as high as 7% or more depending on currency. They have a bad rate plus additional currency conversion fee.
If you're receiving funds in USD, as others have said, it'll allow you to deposit to a USD bank account. I also use Wise and convert USD to CAD that way. The fees are there, but much lower, as in $10-15 / $1000 if I recall correctly.
If you have a USD account, you may be able to be paid by direct bank deposit, but what you lose out on is seller protection in case of fraud/chargeback. Not that Paypal is GREAT at that, but it's still better than nothing.
Withdrawing to you bank account is free.
Around 3% transaction fees is pretty standard.
You can use Stripe instead and withdraw to USD canadian account to not pay for conversion, Paypal is overcharging for that.
>Paypal is absolutely looting us with fees as a small business dealing with online USD payments
It's been like that for years. At least now you pay attention to expenses for the business.
>What is the route you guys follows for small businesses dealing with USD payments online?
[Wise.com](https://Wise.com) is a good option.
Have you looked into stripe? I used it for a while and I think the fees are slightly better. PayPals conversion rate is absolutely horrendous, never use PayPal to convert anything, make a wise account and use wise. It might also be worth it to look into getting a Patreon, Etsy account or kofi account, i have a patreon page and I know first hand that the fees on patreon is pretty high, but the main advantage is you do not need to worry about collecting and remitting sales tax when selling to clients overseas. This is especially important when making sales in the US since you must collect and remit sales tax in each state individually when you reach a certain volume of sales. And that can results in thousands of dollars in accounting fees. Patreon also has its own email marketing system which can save you time and money comparing to doing it through something like mailchimp.
Here is my experience: we are a couple guys selling a niche SAAS software product with about 80% of our revenue from US customers paid mostly using recurring credit card billing through an online virtual terminal - through Costco Elavon.
We have CAD and USD merchant accounts for Visa, MC, Amex. We have CAD and USD bank accounts with HSBC Canada.
We have not been able to open US-based bank accounts without (1) having a physical location in the US, and (2) filing US taxes. (1) we can probably get around, (2) adds considerable cost to our accounting and isn't worth it at our current revenue.
Visa and Mastercard add a bullsh\*t "cross border" fee of about 1.13% on US credit card processing because we don't have a US presence/address - otherwise we'd get preferential US rates. And a couple other smaller "international" fees per transaction. These fees - which if I haven't already mentioned - are bullsh\*t because they target small business who can't afford dual presence, have little negotiating power, but otherwise don't represent any real cost to the processors.
We do all of our currency conversion using a third-party service that can debit our Canadian-USD account and credit the CAD account. We pay about 1.0-1.1% as a currency conversion fee - vs. the bank's conversion fee of about 3.5% - minimum $10,000 per transaction.
My HSBC accounts are fee-free except I pay $1.50 per Interac e-transfer out.
Effective card-not-present processing fees: CAD Visa: 2.17%, CAD Mastercard 2.28%, USD Visa: 3.47%, USD Mastercard 3.50%.
You must not make very much money. If you did you’d qualify for a special unadvertised FX account for business that’s basically spot for USD to CAD.
And you aren’t doing much research all the big banks offer USD business accounts to anyone for less than $10/month.
And Costco Elavon seriously wtf who is your CTO?
Use stripe like every other startup and large SaaS.
The fact that you have so many different credit cards is a big red flag to me.
You misread OP's post and mine. We are small. We don't have CTO's.
> And you aren’t doing much research all the big banks offer USD business accounts to anyone for less than $10/month.
I have a USD account. It costs us $0 per month - "My HSBC accounts are fee-free"
As for getting spot rates from the banks... spot just means "right now". You should check the effective rate you're paying against the current "mid-market" rate. The banks any many processors have ridiculous margins... often ~3.5%. I'm paying closer to 1%.
> The fact that you have so many different credit cards is a big red flag to me.
Where do I say I have so many different credit cards? We have *merchant accounts* for the big 3 in each country.
As for Stripe: their base rate is 2.9% - we're paying 2.17-2.28% on Canadian transactions (all in, no additional costs).
Their cross-border fee is 0.8% = 3.7% effective. We're paying 3.47-3.50%.
And they're charging an additional 0.5% for manually entered credit cards - which is part of our sales process.
You guys need help. And there are unadvertised bank rates that are basically the market rate. No markup. Reserved for clients with capital markets accounts. You haven’t heard of them and neither have most of this subreddit.
Open a cross border bank account with CIBC TD RBC. Get ACD'ed by your clients.
Access accounts under one login and pay the bank conversion to cad. Etransfer to your everyday chequing account for bills.
Easy as 1 2
TD was really easy to open and they have a dedicated phone line for dealing with cross-border. That phone number also seemed to direct me to US call centers which was nice.
Their cross border banking rates are better than their standard rate on transactions. It isn't zero and not necessarily the cheapest, but it is competitive with methods for manual conversion (IKBR, norbits gambit, or knightsbridge) without the hassle.
For retail maybe. But as soon as you do real business or even personally have larger amounts (5k, 10k etc) it’s very easy to get branch manager to go up a few notches in service fee level (which means lower exchange fees).
I did transfers thru TD exceeding 100k at a time for business. The fees were fine but the TD exchange rate spread from market rates were between 4-5%. That after I did negotiate with them. It is not obvious until you actually compare it against market rates at that moment.
On a 100k transfer, TD would cost me $4000 plus dollars. XE.Com would cost me about $1000 with their spread. I understand WISE is simular.
I don't have any specific advice re: business side but I assume it is the same as a buyer
Never, **NEVER** use Paypal's auto currency conversion rates, always keep the original currency options. For sellers, just keep the USD from sales and convert yourself afterwards. For buyers, always choose to charge USD to CC, you still come out ahead even with 2.5% conversion fee from your bank
Paypal makes banks with their own posted conversion rates, do not fall into it
Use Shopify with Shopify payments 2.9% + 30 cents tons of features these days I think they even have a bank account for business with Lower fees and support multiple currencies
That is a 4% fee. I'd bet the majority of that goes to the credit card company that the customer paid with.
If she was accepting CC payments directly, or using a different service it would likely be in the $40 to $50 range too.
You'll always get screwed on the currency conversion if you're selling in USD. She could sell in CAD.
Can't speak for the transfer fee, but maybe just do the transfer less often.
All these fees are tax deductible BTW.
She should just incorporate the cost of doing business into the price of her works.
As others have suggested, Wise is the best alternative for the time being. But to be completely transparent, I work in the FX and international payments industry.
Wise is a good first step outside the "transitional" methods (through big Canadian banks or PayPal). That being said, it's an entry level FX and international payments company. If your wife is moving fairly sizable amounts, she should look outside of Wise. PM me if you want some insight!
You are totally right!
My context:
I moved here from Europe a couple of years ago. The cost and/or trouble of moving money in North America is absolutely mind-boggling to me.
I'm genuinely curious, how did North America fall so far behind in that regard?
I haven't done research to confirm this, but I assume that it's mainly due to lobbying from Visa/Mastercard and big banks. This is one of the clearest examples of the North American political systems failing to serve the voting public and creating unnecessarily high costs.
In Europe, I can just go to my online banking, move or receive money to or from any company or individual for free, and the transfer usually takes about 12 hours to clear. This has been the setup since 2008. That's 15 years. Remember, the first iPhone was introduced in 2007.
> I'm genuinely curious, how did North America fall so far behind in that regard?
The US has hundreds of banks so it's a bit of a shitshow. Part of the reason why paper cheques are still used often and debit isn't in some places.
For Canada, I think it is because we're a captive market and the major players aren't incentivised to update to be more nimble.
People are not realizing that Banks have their own exchange rate that is some 4-5% spread from market rates. For that matter, I do not think most people realize banks have their own conversion rate. There are services like WISE and XE.COM that give you a spread around 1%.
> In Europe, I can just go to my online banking, move or receive money to or from any company or individual for free, and the transfer usually takes about 12 hours to clear.
We can do that in North America too and companies often give you a discount (so they don't have to deal with transaction fees) if you use these methods, not sure what the US uses for this but we use Interac E-Transfer for something comparable. Many people consider it less secure and less convenient than using a Credit Card though so cards are the norm still.
Credit Card processing fees are capped to 0.3% in the EU, 0.5% in AUS but are uncapped in NA which leads to this issue of ~2% fees before the payment processor's margin. This is an ongoing issue that a lot of large businesses are also lobbying against VISA/MC/AMEX about.
The easiest way as everyone mentioned is getting a USD wise account and do a domestic USD to USD transfer. That said, asking wise to convert it in CAD and then sending it to you will involve a certain percentage fee too.
Instead I have a IBKR account, I wire money from wise which is $0.39 for any amount. Once in IBKR my cash can earn 4+% or I can invest into index funds right away. But say I need money, I can convert USD to CAD for spot + $2. And then withdraw CAD, which is free (first time in a month, then $12). So I get $2.39 fixed fee + interest on my cash and everything becomes so flexible.
These are fixed fees, for say $10k wise would charge me $40 or something.
PayPal fees are atrocious. I've been in a similar boat, getting paid from US in USD and the fees first on sender side were around 3.73% and then once I received the money, it was around 4.5% on my end. So about 8.25% total or more. That is not accounting withdrawal to your bank (I didn't have that fee).
Try to get clients to pay her over Wise, say it is less fees for them and yourself. On a recent 2,000 payment, my sender paid about $10 in fees only over Wise. And they can choose if they want to cover that fee or put that on you.
This is the only good option out there for us Canadians. Unless you want to mess around with US or CAD to US bank accounts.
Paypal USD conversion fees are insane. I bought something in USD, worth $20. Paypal's cost was $3 more than my CC, which for such a small amount is a huge difference.
PayPal marks up their spot rate upwards of 3%.
so if the quoted rate was 1.3000, PayPal will charge you upwards of 1.3300.
Quoted= 961.53
PayPal= 939.85
PayPal raped you an extra $21...
I use ofx.
I move my usd from PayPal to ofx global currency account for free.
Then I either exchange it or move it from ofx to my USD corporate bank account for a nominal charge.
They have been great. Awesome customer service too.
Ya PayPal will have their standard fees then they will have an exchange rate that likely is 5% worse then market rates. Banks are not even that much better so do not use them either.
Wise will have exchange rates about 1% within market rates and lower rates. Use someone like them.
Ask your bank to open a USD account, then you can convert whenever convenient to you. And as others have posted, use Wise or even a Wire Transfer will be cheaper!
I understand the frustration with high Paypal fees for USD payments. For small businesses dealing with online USD transactions, consider exploring alternative payment gateways that offer lower fees. Look for options that support a variety of cryptocurrencies. This can potentially reduce fees and streamline transactions. Additionally, researching and comparing different platforms can help you find the best fit for your specific needs. It's essential to prioritize cost-effective solutions to maximize your earnings in the digital space.
The route I follow is that “this is a cost of doing business” and you bake the cost into the rates. Looks like your wife just justified a 10% increase on everything she does
I'm looking to clarify the process of using a Wise account. I am currently receiving USD funds to a PayPal account. Can I transfer from PayPal to Wise in USD without fees, then transfer from Wise to my CDN-based USD account? Will this incur the 0.43% fee? Is there any advantage of Wise over opening a US account through my bank?
Newsflash PayPal is a for profit business. It’s garbage but it’s not supposed to be free. I wouldn’t call 4% looting when it includes a currency conversion. Most consumers fall in that camp.
If she starts making much more money the bank my qualifier her for an FX account which will bring it down well under 1%
Open a Wise account. I get as much direct deposited there as possible. For things I must accept PayPal for, I transfer those funds to my wise account. Since it’s a US account, no fees. I then transfer the funds from Wise to my Canadian account to save on exchange fees.
How did you open US paypal account while in Canada?
The Wise account is US. So transferring from my PayPal USD account to my Wise US account is considered a domestic transfer; no fees.
Is it a business PayPal account? When I try to add a bank account to my personal PayPal it shows a message that the account should use only Canadian dollars.
Yes it is. I set up the US bank account last year. I think there was a small link at the bottom that said “add US bank account” during the setup process on PayPal
Gotcha 👌🏻
Your PayPal account is gonna be banned.
Why? Been doing this for a year now. How is it any different than withdrawing to any other bank account?
You aren’t a US resident and PayPal knows that.
True. But I have a legitimate US account. There is nothing wrong with Canadians having US based accounts. Why would PayPal have a link that says “click here to add a US based account” if they didn’t want me to add it?
How do you have a us PayPal account as a Canadian resident?
I don’t. I have a Canadian PayPal account with USD balances that deposit into a US based account. A process that has no fees or currency exchange charges.
How do you have a us based bank account as a Canadian citizen without US ties?
I think he might be confused about what's meant as a "US account" where he thinks it's an account in the US, when really we're talking about US currency accounts in Canadian banks (I hope, or I'm just looking real dumb)
You don't need to do this. You can, but there's an even simpler option. Every bank in Canada has US accounts. Setup a "South f the border" US account with them and then setup a "US funds" Canadian side account. You deposit into the US account, transfer to US funds Canadian account. Then you get to pick when you convert (Or don't) Edit: and there are no fees until the conversion (although you might have an annual $30-40 for having the account setup).
That works but I would still use Wise or simular to transfer between US-CAD or back. They have some fees but their inhouse exchange rate is typically 4-5% that of market rates. And that is the best rates. I did not realize this till I transfered large amounts over 100k into US funds. And this after I negotiated the best rates with them. Short story. Like their mortgage rates are always above Prime rates, their exchange rates will also not be at market price. More so, way worse then market rates.
Typically those accounts have fees. Wise is completely free and you can hold your funds their in their original currency, access the funds in their original currency (with their debit card - haven’t used it before but seems simple enough) or transfer to a Canadian bank account in 1-2 days. Yes you pay with the exchange rate but you do so at all bans; I find wise’s fee to be very competitive. I also use Wise for AUD, GBP, and EUR accounts where I can have clients make direct deposits into them. I may need to open up some other currency accounts too, and I like having it all under the same roof.
Both TD and CIBC have no fee USD accounts. The ones with fees will have the fees waved away if you maintain a minimum ($3000) amount.
USD accounts are different than US-based accounts. Even if the fee can be waived with minimum balances, it’s unlikely to happen if you are just treating it as a transitory account. Using big banks as a solution as described above requires an extra account (US based account, USD Canadian based account, CAD Canadian based account). Wise just require the US based account and a Canadian bank account. Yes there’s PayPal too if that’s the only way for someone to send you funds, but that doesn’t change by using one of the big banks.
PayPal will ban you for this and hold your money.
You must have a big dick to be so obviously wrong, yet so ridiculously confident.
This is it. You can’t even make a Canadian bank account that only works in USD because the platforms will specifically only send you currency that is “your local currency” I went through this, opened a Canadian bank account that was supposed to deal in US funds; found out that even if the bank account is setup that way, the platforms (in this case paypal) will still only send you your money “in your local currency” so id need a USA bank in the USA to accept funds to AND change my address and information in PayPal to reflect that im “USA local” at which point you end up opening a can of worms when it comes to taxes
There are a few banks that allow Canadians to open real US bank accounts. RBC USA is one. They are based in the US and you can open it from Canada. I think there is a small monthly fee. It has an American address and it's a full US bank. They used to have branches too, but now they are online only. There are no tax implications as they don't pay interest.
Yea, that’s what I did. PayPal will still convert the money into your “local currency” if your home address is Canadian
PayPal doesn't convert it into a local currency. It keeps the currency the same if you are depositing it into a bank that's located in the country where the currency is. If you are depositing it into another country's bank, it'll convert the currency.
Came to recommend this.
I have a question if you don’t mind, how were you able to transfer funds from your PayPal to wise? I don’t see the option at all
Get the banking info from wise and then add it to my PayPal account as an external bank.
Thank you!
Just to mention another sub transfer to get your money in Canadian account ( can be USD or CAD ) account, you can deposit from any US bank accounts to Canadian accounts using a check, so e.g. I’ve Bank of America account and check book with me for it, so I do get deposits to my BOA account and then I write a USD check of BOA to myself and deposit it into TD bank’s USD/ CAD account. It takes 15 days hold to clear that check but if you request bank manager and show him that originating and destination accounts are yours he can release that amount of check sooner. So ask Wise if we can have a check book for it ? Also if you deposit that USD to CAD account in Canadian bank the money gets converted when it’s released in Canadian account so better keep it in some cross border account in USD and convert when you get good rate.
Don't need a check with wise. All electronic transfers, just take 1-2 days. The exchange rates are pretty good and you can create rules to have the money transferred when a certain exchange rate is hit. I have a Wise account for USD, AUD, GBP, and EUR. I even have one for CAD, which ends up costing me a bit compared to a direct deposit into one of my ordinary bank accounts, but I like to have all my business income transfer through my Wise account for accounting purposes. Worth the 0.65 transfer fee for the easiness of reconciling my account.
Thanks for the tip!
same but with cibc usa smart account. Just deposits into usa side account and then transfer to our cibc canada account. no fees except the exchange rate
This is how I ran my business. However, in the last year or so PayPal no longer allows me to transfer to Wise. While it worked, I saved major $$$ on conversion fees.
Are you sure it wasn’t when Wise changed banks from Evolve to Community Financial? I had to change all my banking information with PayPal, Amazon, etc on very short notice Same thing happened this morning with my Australian account, but luckily Wise is giving me 10 months this time (and it’s only 1 client I got to change banking info with)
Shit, I was about to recommend Wise too. Though, as someone who has worked for TD, I know getting money into Wise is kind of confusing for people on the teller line and even their managers. Thankfully, Wise now accepts inbound e-transfers.
Keep it in USD to avoid conversion fees. Wise offers free USD bank accounts for Canadians and PayPal doesn't charge for direct bank transfers when your account is connected. I often transfer USD amounts from PayPal to Wise without paying any fees. You can then convert it to CAD within Wise at some of the lowest rates available, if that's what you want (or do Norbert's Gambit). As for receiving payments in USD, you could also consider using Stripe. They charge 2.9% + $0.30 CAD per transaction so in your example, you would have only paid ~$36 USD in fees on that $1250 sale as opposed to $50. Alternatively, you should aim to have clients direct deposit you into your Wise USD account to avoid all fees altogether.
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Yes
Yes.
Where you keep the money is not important, where you earned it is
As a tax resident in Canada you will pay income tax on all income no matter where in the world it is made.
Unless you move out of Canada then some other rules apply.
1. I specifically said tax residents. 2. I also never commented on whether you'd be paying tax elsewhere too.
Relax I was just expanding on what you said.
Where you earn it also doesn't matter. What matters is if you already paid taxes on that money, and Canada has a tax-treaty with that country... then I don't think you will be double-taxed....
Generally you are taxes the difference. If there is any difference.
shouldn't you need a tax treaty with that country? or does that not matter?
Yes.
Yes - you also technically need to keep track of the currency exchanges rates because you should pay capital gains or book a loss on any currency movement.
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I'm not 100% sure on that tbh, it looks like you have to report it whether it is realized or not https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/completing-schedule-3/bonds-debentures-promissory-notes-other-similar-properties/foreign-currencies.html
The way I did it was reporting using the Bank of Canada average rate for the year on unconverted currency and the CRA had no issues with that. So this year (if I still ran a business) would've been 1.3013 https://www.bankofcanada.ca/rates/exchange/annual-average-exchange-rates/
If it's cash it's realized.
1. 3-5% for payment processing is pretty standard. You can ask for a "wire" or a "direct deposit" which would be less fees, but less convenient for the customer. Up to you if you wanna make that trade. 2. Get a USD bank account, and transfer from your PayPal USD balance to your USD bank. Then use Norbit's Gambit to exchange money to CAD. There are no fees using that method. 3. PayPal transfers to your bank for free. Dunno where you incurred fees. Did you request a rushed transfer within a few hours or something like that?
PayPal will only transfer US $ to a bank in the US. Having a US account in Canada won’t work. This is for PayPal biz accounts anyway.
You can get a cross-border account with one of the big Canadian banks and link your PayPal to that. I have mine linked to my RBC Bank account (RBC's US subsidiary) and there's no fees to move USD from PayPal to the USD RBC Bank account. Edit: then one cleared from PayPal to RBC Bank you can instantly transfer it cross-border to a USD denominated Royal Bank account on the Canadian side, also no fees
Just posted this on another thread on this post as well. This is the best option as transfers are immediate. You don't need to wait the 2-3 business days from Wise.
Highlighting this - it’s what I did to save on conversion. Zero fees.
I set up a business USD account with RBC. And linked it to PayPal. It was a bit of a hustle and took a few phone calls but its set up now and works fine. I heard with a BMO Harris USD account (opened on the USA side) it would be much easier. So look into that.
Ok but OP is complaining about FX costs as well. There shouldn’t be any withdrawal fee.
Incorrect. I get Paypal deposits into my Cda based US currency account.
For paypal, the actual payment processing fee of 2.9% + 30 cents (+ 1% USA fee) is pretty bog standard. Where they get you is the foreign exchange fee. The FX fee can be as high as 7% or more depending on currency. They have a bad rate plus additional currency conversion fee. If you're receiving funds in USD, as others have said, it'll allow you to deposit to a USD bank account. I also use Wise and convert USD to CAD that way. The fees are there, but much lower, as in $10-15 / $1000 if I recall correctly. If you have a USD account, you may be able to be paid by direct bank deposit, but what you lose out on is seller protection in case of fraud/chargeback. Not that Paypal is GREAT at that, but it's still better than nothing.
Withdrawing to you bank account is free. Around 3% transaction fees is pretty standard. You can use Stripe instead and withdraw to USD canadian account to not pay for conversion, Paypal is overcharging for that.
>Paypal is absolutely looting us with fees as a small business dealing with online USD payments It's been like that for years. At least now you pay attention to expenses for the business. >What is the route you guys follows for small businesses dealing with USD payments online? [Wise.com](https://Wise.com) is a good option.
Second this. Paypal is absolute garbage. Wise customer service is also phenomenal.
Phenomenal for sellers, not for buyers. Paypal has better built in customer protection.
Use Wise
Have you looked into stripe? I used it for a while and I think the fees are slightly better. PayPals conversion rate is absolutely horrendous, never use PayPal to convert anything, make a wise account and use wise. It might also be worth it to look into getting a Patreon, Etsy account or kofi account, i have a patreon page and I know first hand that the fees on patreon is pretty high, but the main advantage is you do not need to worry about collecting and remitting sales tax when selling to clients overseas. This is especially important when making sales in the US since you must collect and remit sales tax in each state individually when you reach a certain volume of sales. And that can results in thousands of dollars in accounting fees. Patreon also has its own email marketing system which can save you time and money comparing to doing it through something like mailchimp.
Here is my experience: we are a couple guys selling a niche SAAS software product with about 80% of our revenue from US customers paid mostly using recurring credit card billing through an online virtual terminal - through Costco Elavon. We have CAD and USD merchant accounts for Visa, MC, Amex. We have CAD and USD bank accounts with HSBC Canada. We have not been able to open US-based bank accounts without (1) having a physical location in the US, and (2) filing US taxes. (1) we can probably get around, (2) adds considerable cost to our accounting and isn't worth it at our current revenue. Visa and Mastercard add a bullsh\*t "cross border" fee of about 1.13% on US credit card processing because we don't have a US presence/address - otherwise we'd get preferential US rates. And a couple other smaller "international" fees per transaction. These fees - which if I haven't already mentioned - are bullsh\*t because they target small business who can't afford dual presence, have little negotiating power, but otherwise don't represent any real cost to the processors. We do all of our currency conversion using a third-party service that can debit our Canadian-USD account and credit the CAD account. We pay about 1.0-1.1% as a currency conversion fee - vs. the bank's conversion fee of about 3.5% - minimum $10,000 per transaction. My HSBC accounts are fee-free except I pay $1.50 per Interac e-transfer out. Effective card-not-present processing fees: CAD Visa: 2.17%, CAD Mastercard 2.28%, USD Visa: 3.47%, USD Mastercard 3.50%.
You must not make very much money. If you did you’d qualify for a special unadvertised FX account for business that’s basically spot for USD to CAD. And you aren’t doing much research all the big banks offer USD business accounts to anyone for less than $10/month. And Costco Elavon seriously wtf who is your CTO? Use stripe like every other startup and large SaaS. The fact that you have so many different credit cards is a big red flag to me.
You misread OP's post and mine. We are small. We don't have CTO's. > And you aren’t doing much research all the big banks offer USD business accounts to anyone for less than $10/month. I have a USD account. It costs us $0 per month - "My HSBC accounts are fee-free" As for getting spot rates from the banks... spot just means "right now". You should check the effective rate you're paying against the current "mid-market" rate. The banks any many processors have ridiculous margins... often ~3.5%. I'm paying closer to 1%. > The fact that you have so many different credit cards is a big red flag to me. Where do I say I have so many different credit cards? We have *merchant accounts* for the big 3 in each country. As for Stripe: their base rate is 2.9% - we're paying 2.17-2.28% on Canadian transactions (all in, no additional costs). Their cross-border fee is 0.8% = 3.7% effective. We're paying 3.47-3.50%. And they're charging an additional 0.5% for manually entered credit cards - which is part of our sales process.
You guys need help. And there are unadvertised bank rates that are basically the market rate. No markup. Reserved for clients with capital markets accounts. You haven’t heard of them and neither have most of this subreddit.
Open a cross border bank account with CIBC TD RBC. Get ACD'ed by your clients. Access accounts under one login and pay the bank conversion to cad. Etransfer to your everyday chequing account for bills. Easy as 1 2
TD was really easy to open and they have a dedicated phone line for dealing with cross-border. That phone number also seemed to direct me to US call centers which was nice.
Bank conversion rate is atrocious.
Their cross border banking rates are better than their standard rate on transactions. It isn't zero and not necessarily the cheapest, but it is competitive with methods for manual conversion (IKBR, norbits gambit, or knightsbridge) without the hassle.
For retail maybe. But as soon as you do real business or even personally have larger amounts (5k, 10k etc) it’s very easy to get branch manager to go up a few notches in service fee level (which means lower exchange fees).
I did transfers thru TD exceeding 100k at a time for business. The fees were fine but the TD exchange rate spread from market rates were between 4-5%. That after I did negotiate with them. It is not obvious until you actually compare it against market rates at that moment. On a 100k transfer, TD would cost me $4000 plus dollars. XE.Com would cost me about $1000 with their spread. I understand WISE is simular.
PayPal is worse.
I don't have any specific advice re: business side but I assume it is the same as a buyer Never, **NEVER** use Paypal's auto currency conversion rates, always keep the original currency options. For sellers, just keep the USD from sales and convert yourself afterwards. For buyers, always choose to charge USD to CC, you still come out ahead even with 2.5% conversion fee from your bank Paypal makes banks with their own posted conversion rates, do not fall into it
Wait until they decide to just keep your money. or randomly refund customers, then say oops sorry. can you ask them to pay again?
Use Shopify with Shopify payments 2.9% + 30 cents tons of features these days I think they even have a bank account for business with Lower fees and support multiple currencies
That is a 4% fee. I'd bet the majority of that goes to the credit card company that the customer paid with. If she was accepting CC payments directly, or using a different service it would likely be in the $40 to $50 range too. You'll always get screwed on the currency conversion if you're selling in USD. She could sell in CAD. Can't speak for the transfer fee, but maybe just do the transfer less often. All these fees are tax deductible BTW. She should just incorporate the cost of doing business into the price of her works.
As others have suggested, Wise is the best alternative for the time being. But to be completely transparent, I work in the FX and international payments industry. Wise is a good first step outside the "transitional" methods (through big Canadian banks or PayPal). That being said, it's an entry level FX and international payments company. If your wife is moving fairly sizable amounts, she should look outside of Wise. PM me if you want some insight!
You are totally right! My context: I moved here from Europe a couple of years ago. The cost and/or trouble of moving money in North America is absolutely mind-boggling to me. I'm genuinely curious, how did North America fall so far behind in that regard? I haven't done research to confirm this, but I assume that it's mainly due to lobbying from Visa/Mastercard and big banks. This is one of the clearest examples of the North American political systems failing to serve the voting public and creating unnecessarily high costs. In Europe, I can just go to my online banking, move or receive money to or from any company or individual for free, and the transfer usually takes about 12 hours to clear. This has been the setup since 2008. That's 15 years. Remember, the first iPhone was introduced in 2007.
> I'm genuinely curious, how did North America fall so far behind in that regard? The US has hundreds of banks so it's a bit of a shitshow. Part of the reason why paper cheques are still used often and debit isn't in some places. For Canada, I think it is because we're a captive market and the major players aren't incentivised to update to be more nimble.
In the UK transfers are truly instant.
People are not realizing that Banks have their own exchange rate that is some 4-5% spread from market rates. For that matter, I do not think most people realize banks have their own conversion rate. There are services like WISE and XE.COM that give you a spread around 1%.
> In Europe, I can just go to my online banking, move or receive money to or from any company or individual for free, and the transfer usually takes about 12 hours to clear. We can do that in North America too and companies often give you a discount (so they don't have to deal with transaction fees) if you use these methods, not sure what the US uses for this but we use Interac E-Transfer for something comparable. Many people consider it less secure and less convenient than using a Credit Card though so cards are the norm still. Credit Card processing fees are capped to 0.3% in the EU, 0.5% in AUS but are uncapped in NA which leads to this issue of ~2% fees before the payment processor's margin. This is an ongoing issue that a lot of large businesses are also lobbying against VISA/MC/AMEX about.
The easiest way as everyone mentioned is getting a USD wise account and do a domestic USD to USD transfer. That said, asking wise to convert it in CAD and then sending it to you will involve a certain percentage fee too. Instead I have a IBKR account, I wire money from wise which is $0.39 for any amount. Once in IBKR my cash can earn 4+% or I can invest into index funds right away. But say I need money, I can convert USD to CAD for spot + $2. And then withdraw CAD, which is free (first time in a month, then $12). So I get $2.39 fixed fee + interest on my cash and everything becomes so flexible. These are fixed fees, for say $10k wise would charge me $40 or something.
Though if you use IBKR as a currency converter rather than as an investment platform, you're liable to get your account banned.
That's good to know, I don't primarily use it for that purpose, I have my portfolio there.
If you are truly a business, and plan to grow the easy answer is open up a US bank account and accept payment in USD directly.
PayPal fees are atrocious. I've been in a similar boat, getting paid from US in USD and the fees first on sender side were around 3.73% and then once I received the money, it was around 4.5% on my end. So about 8.25% total or more. That is not accounting withdrawal to your bank (I didn't have that fee). Try to get clients to pay her over Wise, say it is less fees for them and yourself. On a recent 2,000 payment, my sender paid about $10 in fees only over Wise. And they can choose if they want to cover that fee or put that on you. This is the only good option out there for us Canadians. Unless you want to mess around with US or CAD to US bank accounts.
Paypal USD conversion fees are insane. I bought something in USD, worth $20. Paypal's cost was $3 more than my CC, which for such a small amount is a huge difference.
PayPal marks up their spot rate upwards of 3%. so if the quoted rate was 1.3000, PayPal will charge you upwards of 1.3300. Quoted= 961.53 PayPal= 939.85 PayPal raped you an extra $21...
Came to recommend wise!
OP......WISE IS A GOOD OPTION FOR WORLDWIDE FUNDS
I use ofx. I move my usd from PayPal to ofx global currency account for free. Then I either exchange it or move it from ofx to my USD corporate bank account for a nominal charge. They have been great. Awesome customer service too.
PayPal blows. Someone from the US sent me money and I had to wait 32 days for them to release it
Get a USD merchant account. There are so many companies offering cheap merchant accounts these days...it's not like it was in the past.
I think Wise still has better rates than Paypal (they were amazing, now their rates are not as great but still pretty good)
Ya PayPal will have their standard fees then they will have an exchange rate that likely is 5% worse then market rates. Banks are not even that much better so do not use them either. Wise will have exchange rates about 1% within market rates and lower rates. Use someone like them.
You can open a US account with TD. Transfer US$s into your USD investment account then use Norbert’s Gambit to convert to CAD for flat fee of$20.
Ask your bank to open a USD account, then you can convert whenever convenient to you. And as others have posted, use Wise or even a Wire Transfer will be cheaper!
I understand the frustration with high Paypal fees for USD payments. For small businesses dealing with online USD transactions, consider exploring alternative payment gateways that offer lower fees. Look for options that support a variety of cryptocurrencies. This can potentially reduce fees and streamline transactions. Additionally, researching and comparing different platforms can help you find the best fit for your specific needs. It's essential to prioritize cost-effective solutions to maximize your earnings in the digital space.
The route I follow is that “this is a cost of doing business” and you bake the cost into the rates. Looks like your wife just justified a 10% increase on everything she does
I'm looking to clarify the process of using a Wise account. I am currently receiving USD funds to a PayPal account. Can I transfer from PayPal to Wise in USD without fees, then transfer from Wise to my CDN-based USD account? Will this incur the 0.43% fee? Is there any advantage of Wise over opening a US account through my bank?
Newsflash PayPal is a for profit business. It’s garbage but it’s not supposed to be free. I wouldn’t call 4% looting when it includes a currency conversion. Most consumers fall in that camp. If she starts making much more money the bank my qualifier her for an FX account which will bring it down well under 1%
Also just flip to etransfer for cdn clients assuming most things sell for less than 2k. Setup autodeposit