A ton of Canadians are making money online. That’s a good thing and I am happy to say I am one of them. However, once you get into it, you realize that we get into a bit of a pickle because of two things. One, Paypal is the easiest form of payment and the majority of clients prefer it over wire transfers. Two, you will most likely get paid in US dollars.
The problem for Canadians with USD balance in Paypal
On the onset this doesn’t seem like that big of a problem. In fact, with the Canadian dollar tanking in recent months and USD worth a lot more, getting paid in USD is actually a pretty sweet deal. But then you run into a big problem that I will outline below.
Wait so what’s the point?
Some may say what’s the point of moving the money over to Canada? So here’s my argument:
- You can only shop online so much (ha ha speak for myself right?) Once you start accumulating lots of USD the money is just kind of stuck there. On top of that, only a few big retailers allow payment via Paypal. I found out that United Airlines takes Paypal but that’s pretty rare in travel retail so far.
- I travel to the US a lot and have my own USD credit card. I would much rather pay them off with USD funds than having to exchange CAD at crappy rates
- Having USD cash on hand is nice when travelling and again I’d rather not have to convert CAD -> USD unfavorably
- Most Canadian bloggers I’ve talked to just eat up the 2.5% Paypal fee and convert the funds to Canadian. Personally I think you end up losing money this way.
- If you want CAD, you can get better preferred rates at banks or currency exchange shops.
- If you’re converting USD -> CAD just to ultimately convert CAD -> USD, you end up taking the conversion hit twice. Why not just bring in the USD natively onto Canadian soil and just withdraw it as is? No loss of money.
The obvious but wrong solution
Now that you get the issue, let’s move onto the solution. At first this seems like an easy solution right? Having a USD account with your Canadian bank is pretty common nowadays. For instance, I have a US chequing account with TD Bank. All I have to do is link Paypal to this US account right? Unfortunately that’s where you’re wrong and where I ended up spinning my wheels.
The issue is this. Paypal automatically recognizes accounts that come from Canada and as a result will by default convert the money to CAD instead of keeping it as USD.
The fundamental problem is this. Canadian banks use transit numbers while US banks use routing numbers.
Surely Paypal or the banks know what to do
Wrong again! I spent weeks making calls to Paypal and TD Bank but they were completely clueless. Some thought that it was possible and made me try a few things that failed.
Without going into the details, I ended up going back and forth between Paypal and TD before realizing nobody knew what they were talking about. All the things they thought would work were completely bogus.
The solution with Royal Bank of Canada that works
Big props have to go out to Sustainable Personal Finance for their awesome article that gave me the idea about trying this little “work around”.
In January 2015, I finally got around to testing a method that some online have had success with. I was determined to see if it still worked.
This workaround revolves around having secret knowledge of an RBC routing number for their US branches that works to replace the transit number. It’s the only bank this works for. You do not need to be a pre-existing customer of RBC.
On January 9, 2015 I confirmed that this works. Two USD deposits came through and I was able to verify my RBC account with Paypal.
And that’s all there is to it. You now have the ability to move US funds from Paypal to a Canadian based USD account with no limits. Just keep in mind that the RBC U.S. High Interest eSavings account only comes with 1 withdrawal a month before fees kick in.