Maybe the PayPal rates are only adjusted daily or at least less frequently than the market rate (which can obviously change by the second)?

I think you'd have to record each rate over a number of days or weeks to see if the differential was constant or whether it changed. Generally speaking the PayPal rate is supposed to be the 'bank commercial rate' as used for credit card transactions, etc.

With your numbers Paypal's fee for USD conversion is around 2,6%, for GBP around 2,7%.
Not a big difference. Add to that Gostwyck's comment about timing (they may adjust their conversion rates once a day) it looks like they are taking a similar cut for both currencies.

Looking at the absolute numbers is not what you should do...

US $ - 0.7437 / 0.7638 = 2.63%

GBP � - 1.2052 / 1.2391 = 2.73%

a real doh, sorry guys

The exchange rates on XE.com are without any fees. But there is not one bank that offer these XE.com exchange rates. And the fees on Paypal on the exchange rates are one of the lowest in banking. If you were to receive a cheque in dollars and cash it out at an European bank you would pay a lot more in exchange rate fees. The other fees are for receiving money into your account. The one receiving the money on a business payment pays the fees. On a personal money transfer i.e. a gift or a loan to a friend you have the option to choose who will pay the fees. The fees are starting at 3.4% + 0.35 cent flat fee and may be lower for higher volumes. Out of the 3.4% paypal has to pay the fees to the Automated Clearing House (ACH). This is not something Paypal is controlling. All bank transactions between banks, have to go through an ACH. Only about 15% of the 3.4% fee is revenue for Paypal. The rest is to pay fees of other banks, credit card issuers and the ACH. All other competitors like Amazon and Google Wallet, etc. have the same business model. So Paypal is no different than other online payment sytems. Without the fees they wouldnt make money, you pay for the service they provide.

https://www.paypal.com/uk/cgi-bin/webscr?cmd=_display-receiving-fees-outside

https://mm.jpmorgan.com/stp/t/c.do?i=6D588-517&u=a_p*d_301789.pdf*h_2kkrp0e4
http://thebankwatch.com/2007/04/11/celebrating-paypals-centenary-paypal-business-model-analysis/

Older articles, so the numbers have changed by now, but it illustrates the picture

last time I checked paypal offered very competitive rates on USD to ASD.

Having said that,  competitive compared to the blood * leech banks.

Only way to win ! Buy bank shares with your microstock earnings.