Why an $11 book costs $50 on eBay

Why an $11 book costs $50 on eBay
TheStar.com - Business -

April 12, 2008 Ellen Roseman

John Sacke got a surprise when he bought an item online at eBay for $27.99 (U.S.).
After charging it to his PayPal account, linked to his CIBC Visa card, he got a message from PayPal saying he would pay $29.92 in Canadian dollars.

Just after his email arrived, I heard from Ray Ho with a similar complaint. Not only did PayPal convert his eBay purchase into Canadian dollars, but he found an extra markup once he checked his credit card statement.

If you check PayPal's website, you can find information about its fees for Canadian users.
Here's what it says about currency conversion:

"The exchange rate is the retail foreign exchange rate as determined by PayPal at the time a transaction is completed. The exchange rate is adjusted regularly, based on market conditions, and includes a 2.5 per cent fee above the rate at which PayPal obtains foreign currency. The 2.5 per cent fee is retained by PayPal. This fee only applies when PayPal performs the currency conversion."

You're usually given the choice of using PayPal's currency conversion or your credit card company's conversion.

So, check with the credit card issuer to see whether it has a foreign exchange fee – most do – and whether it's less than 2.5 per cent.

The other difference is that when PayPal converts the currency, you can see the rate at the end of your transaction.

If you were making a U.S. dollar purchase yesterday, you would have seen PayPal's rate as $1.05 (Canadian) for $1 (U.S.).

If you don't use PayPal's conversion, you won't know how much you will be charged until you check your credit card statement.

Is there a way to avoid such fees? I had to track down someone in San Jose, Calif., to get an answer.

"PayPal customers have the ability to add a U.S. bank account to their Canadian PayPal account," says Sara Gorman, a spokesperson for PayPal, which is owned by eBay.

"So, if a Canadian customer wants to make a payment in U.S. dollars, there would be no currency exchange fee for payments originating from a U.S. dollar account."

Just in case you're confused by the last sentence, she's saying you have to open a bank account in the United States – not a U.S. dollar account at a Canadian bank.

If you buy occasionally at eBay, you may find it's not worth the trouble. But check with your Canadian bank to see if it's affiliated with a U.S. bank and if it can help.

Personal note: As an occasional eBay buyer, I made a winning bid last month on a 1,000-page book, How to Cook Everything Vegetarian by Mark Bittman.
I won it for $11 (U.S.), compared to the Canadian list price of $41.99.

My glee disappeared when I got an invoice from the seller, located in Michigan, for $47.70 (U.S.).
That included shipping and handling via U.S. first class mail ($26.20) and shipping insurance ($10.50).

I asked the seller if there was a cheaper way to ship the book and she said no. "All of this was explained in the listing," she said.

I hadn't seen any such details – and if I had, I wouldn't have bid for the item. But not wanting to get negative feedback, I went ahead.

My cookbook arrived last week, packaged beautifully. The final bill was $50.31 (Canadian) after using PayPal's currency conversion.

The lesson: Always ask about shipping costs to Canada. And find a local source if you can, especially for heavy items.