We had an interesting enquiry from a client this week. They have a membership website with a shop which uses PayPal for payments and subscriptions. As the organisation is based in the UK, the PayPal account is in UK pounds (GBP).
They have now developed an online course. There is an information page on the website, but the course runs on a specialist learning platform. This uses US dollars (USD). The plan is to use PayPal to collect payments from here as well and there was no problem setting up the connection.
My payment is “Unclaimed”?
The issue only came to light when the first payment came through, marked as “Unclaimed”. On the Activity page you get the options to Accept, Refuse or Archive. That sounds reasonable and understandable but the client wanted to know whether they were going to have to go through the process for every course they sold.
How PayPal manages different currencies
When you set up a PayPal account, you set a primary currency – in this case GBP. All payments in this currency will go through without intervention.
If you want to accept another currency, you can set this up from the Money page. PayPal will now accept the currency without intervention and show your balance for each currency and a total in the primary currency based on the PayPal exchange rate. Note that the exchange rate includes a currency conversion charge.
At any time, you can convert all or part of your balance between currencies and can change the primary currency of the account. This works in the same way as you can move money between PayPal and your bank account. You can also remove the currency from the list if it no longer needed.
You do not need to set up another currency: you can choose to convert each payment as it is made.
Setting currency preferences
Going back to the Activity page, the obvious response is to Accept. This brings up the next question: do you want to convert the payment into your primary currency (GDP) or set up a balance in the new currency, in this case USD.
If you decide to convert the payment on arrival, the next screen gives you the option to “Change my preferences for all future payments”. This is where you can either get PayPal to accept future payments, or ask each time, answering my clients original question.
You can set up your preference before receiving any payments, but the option screen is slightly hidden. You can find it in Account Settings under Payment Preferences. Look for “Block payments: Limit payments, add instructions and more.”
How do I decide what to do?
How you choose to treat other currency payments will depend upon your business. PayPal charges a fee based on a percentage plus a fixed fee. You need to read their documentation to find out what this will be for your transactions. Because of the fixed component it will normally be cheaper to carry out fewer conversions. The effect is greater for low value transactions.
Holding a balance in a currency will also benefit the business if you make payments in the currency as well as receiving them as it could avoid double conversions.