Most advice about paying abroad stops at “use a card with no foreign transaction fee.” That misses the more expensive question, which is who does the currency conversion, because that is usually where the money goes.
Everything below comes from PayPal’s own United States User Agreement, which is the binding document rather than marketing copy.
The spread is the real cost
PayPal’s transaction exchange rate includes a currency conversion spread that PayPal applies and retains on top of a base exchange rate.
That is the fee that does not look like a fee. A service can advertise no transaction charge and still make its margin here, so comparing headline fees between payment methods tells you very little on its own.
Paying by card: PayPal converts, not your bank
This is the part worth understanding before you travel.
When you pay with a debit or credit card through PayPal and a currency conversion is needed, PayPal performs the conversion instead of your card issuer.
If you chose that card because your bank gives a good rate on foreign spending, routing the payment through PayPal can take that benefit away. The card is still yours; the exchange rate is not.
If you pay from your PayPal balance or a linked bank account, PayPal always performs the conversion.
Sending money to friends and family
When you send money to a friend or family member using a credit card, your card issuer may charge an additional cash advance fee.
Cash advances typically start accruing interest immediately, with no grace period. Splitting a dinner bill this way while traveling can be considerably more expensive than it looks.
Buying from a seller
PayPal does not charge the buyer a transaction fee when you purchase from a seller. If PayPal performs a currency conversion on that purchase, the conversion charge still applies.
No fee and no cost are different claims.
Two smaller things that are genuinely useful
Refunds. If PayPal converted currency for a purchase and it is refunded within one day, the original exchange rate is reused. Beyond that window, you are exposed to the rate having moved.
Insufficient balance. If your balance in one currency is not enough for a payment in another, PayPal may convert from another currency you hold to cover it. Worth knowing if you deliberately keep several currencies.
Withdrawals. Funds held in a currency other than US dollars must be converted to US dollars to withdraw, at PayPal’s exchange rate including the spread.
This covers the US agreement only, not Alipay or WeChat
This covers PayPal’s US agreement only. It is not a comparison of payment methods across Asia, and it does not cover Alipay or WeChat Pay for foreign visitors, because we could not find a current official source for those that stands up. When one exists, we will write it.