Here’s a step-by-step guide on how to transfer USD from Paypal to a USD bank account in Canada. This is for if you get paid US dollars through Paypal but live in Canada (and have bank accounts in Canada), and if you want to KEEP your US dollars intact as US dollars.
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How to Paypal Transfer USD to a Canadian Bank
This post is for you if you don’t want be at the whim of currency conversion and exchange rates, or Paypal’s very high conversion rates (like 2.5% rates). This post is for you if you like to keep your US dollars intact so you can transfer them to your online brokerage in US dollars to buy US equities, for example. Or if you have a US dollar credit card and you shop online or you go down to the US often.
Paypal is notorious for their high fees when you transfer USD from Paypal.
I try to keep as little money in the account as possible as I have read about stories where Paypal just shuts your account down for no reason.
I have been using my RBC USD High Interest eSavings Account for over 8 years to receive money from PayPal in US dollars. It had worked until a recently and then I had to figure something else out.
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The Problem With Paypal
The problem with Paypal is that if you have a Paypal Canada account, you can technically only get paid through Canadian banks in Canadian dollars.
Canadian banks use something called a ‘transit’ number whereas US banks use something called a ‘routing’ number. Even most US dollar accounts based in Canada do not have routing numbers, except for the Royal Bank Paypal loophole which was what I was using for many years.
What’s the Royal Bank Paypal loophole? For the Royal Bank US dollar High Interest eSavings account, if you added the routing number 026004093 and your US dollar account RBC bank account information, Paypal would verify it and it would work.
You see, only banks based in the United States have a routing number, but The USD eSavings Account is based out of Canada. Somehow, though, that routing number still corresponded to the US dollar eSavings Account.
Closed RBC US Dollar Account Loophole
In recent years though, I guess the loophole closed, and I had no idea. Everything was working fine, until recently, when I tried to transfer USD from Paypal, the money bounced back. The money got redeposited back into Paypal after a few days.
I didn’t think much of it, but then realized that Paypal was deducting a $20 USD fee each time it got bounced back.
The definition of insanity is doing the same thing but expecting a different result, so I tried to withdraw a few times (namely three) and it bounced back each time. I managed to message customer service from Paypal and they informed me that this fee is called a Foreign Withdrawal Return Fee.
Even though I had the US routing number that I inputted many years ago, they were recognizing the bank as a foreign bank (a non-US bank) and the money wasn’t getting transferred. I called Royal Bank and they said nothing was wrong with my account.
Anyway, after a bit of digging around, I managed to fix things by opening up an actual cross border US dollar RBC account based out of the United States….not jut a Royal Bank US dollar account based in Canada.
So without further ado, here’s a step by step guide on how to withdraw US dollars (intact without currency conversion) from Paypal, without getting dinged any fees from Royal Bank or Paypal.
Get a RBC USD Account: US High Interest ESavings Account
If you already have a RBC US High Interest eSavings Account, you’re in luck. Just skip to the next step.
If you don’t (or don’t have any accounts already open to Royal Bank), you’ll have to go to the branch in person and bring two pieces of photo ID to open up the RBC US High Interest eSavings Account. Ask to set up online banking for this account and note your account number when you receive the information.
Given the current circumstances, you might be able to open an account without having to go in person to a physical branch through the online application here.
As a recap, the RBC US high interest eSavings account is:
- No minimum balance
- Allowed one free debt per month
- Unlimited online transfers between this account and other RBC accounts
This MIGHT still work without having to get a cross border account. You can test it out to see if it does. Take out your transit number and just include your account number. If the deposits go through, then you probably don’t have to open up a US based account.
It just stopped working for me and then I had to proceed to the next step below.
Get a RBC Bank Preferred Money Market Savings account
After you have an RBC USD high interest eSavings account, you can call Royal Bank at their Cross Border Banking number 1-800-769-2553 to add the RBC Bank Preferred Money Market Savings Account.
They have Cross Border Specialists who can set it all up for you over the phone.
Unfortunately this account doesn’t qualify for a free iPad or Apple iPods from RBC though!
Setting up the Money Market Savings Account took only 20-30 minutes over the phone. The friendly and knowledgable representative from Royal Bank in Georgia set me up with an account number, online banking access, and informed me of the routing number for this account.
A few weeks later, I got sent some documents to sign (Personal Signature Card and a W-8BEN form) and return in the mail and then you will receive your debit card.
The RBC Bank Preferred Money Market Savings Account is based out of the United States (Georgia).
The RBC Bank Preferred Money Market Savings Account is:
- $0 monthly (free) as long as you maintain a $1000 minimum balance
- You also have to have $1000 as a minimum to open this account
- You can do 6 debits/ month for free
- FDIC insured up to $250,000 per ownership category
- You can use cheques (checks haha) for your US purchases
- Transfers money from the RBC US Based account to the Royal Bank US dollar account instantly online (there’s a toggle button when you log into your Canadian portal to switch over to the US banking)
- Transfers to your RBC US eSavings account are free
- Can get cash (no charge) from 50,000 ATMs in the United States
- Available from a single sign in with RBC online banking (just click the link to toggle back and forth)
- Free eStatements
- You get a free debit card that you can use where Visa credit cards are accepted.
Here are the rates for the Money Market Savings Account. As of writing, it is 0.20%.
Alternately, you could get the Direct Checking U.S. Bank Account. This US dollar account is $39.50 USD for an annual fee. Right now there is a ‘first year free’ promotion if you sign up with a Visa Signature Black U.S. Credit Card. The Direct Checking U.S. Bank Account includes 10 debits a month.
Personally I don’t like paying an annual fee and would rather have a minimum amount in there to waive the fee.
EQ Bank recently announced an EQ Bank US Dollar Account that offers a high 3.00% rate for your US dollar deposits as of writing and free transfers between Canadian US dollar accounts. You have to have a EQ Bank Savings Plus Account first. It is $0 minimum and no monthly fee.
Go to Paypal.com And Verify The RBC (Georgia) Bank
With the Preferred MM (Preferred Money Market Account), you’ll get a routing number and account number immediately if you have access to the RBC US high interest savings account already. They will mail you a debit card you can use for travel in the United States or when you’re making online USD purchases in Canada.
- You can find this by clicking on the Preferred MM link (once you log into your RBC Banking account).
- Then click on Account Details
- Then note the routing number of 063216608
- Note your account number
Then go to Paypal.com:
- Click on settings (beside the log out button)
- Click on Account Settings
- Click on Money, Banks, and Cards
- Click Link a New Bank Account, Click Royal Bank of Canada
- Scroll down and click on “Link a U.S. Bank Instead”
- Enter your new routing number and account number details
- Make sure you click on ‘savings’
- Paypal will send you two small micro deposits in a few business days
- Once you see the micro deposits, log back into Paypal and then click on ‘verify’ beside the Royal Bank (GA)
Now you’re all set to withdraw money from Paypal and deposit it to your Money Market Savings Account.
Once it’s in the Money Market Savings Account, I transfer it to my Royal Bank US dollar eSavings account in Canada (the transfer is instantaneous). Then I can withdraw it at a Canadian ATM or go to the bank and withdraw US dollars, or I can fund my discount brokerage with US dollars to invest in US stocks.
Withdrawing from Paypal Tips
One thing I recommend doing before you transfer USD from Paypal is to use small increments first. Once you get your verification, you should be set to withdraw cash. Withdrawal of a smaller amount for example, five dollars is helpful to test whether it works, first.
Another thing to note is to make sure your Paypal address matches your bank account address. The bank will reject the withdrawal from Paypal if the addresses are incorrect and Paypal will charge you a fee for a bounced bank bank deposit. For example, if your Paypal address has a PO Box and your bank address on file doesn’t your withdrawal will get rejected.
Yes, this happened to me but Paypal customer service could not tell me this or identify it. I figured it out after scouring the Internet.
Alternatives to a US Based Canadian Bank Account
If the option of opening up another bank account let alone a new bank account in the United is too overwhelming, there are alternatives to consider when trying to withdraw money that does involve currency conversions.
These are alternatives to transfer USD from Paypal:
- One alternative is to use Transferwise. They have mid-market rates and charge you a low fee for using their services. You then transfer money to your Canadian bank account.
- Take the Paypal currency conversion rates and transfer to your Canadian bank account
- Other banks may offer cross border banking too and setting one up with them (similar to this) would be very similar if you don’t want to open up an account with a new bank.
Hopefully this post helps you figure out how to transfer USD from Paypal to your US dollar bank account.
Paypal’s high fees are painful so this should help decrease that.
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How to you transfer USD from Paypal to a USD bank account in Canada?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.