Why is the exchange rate on paypal so much worse than the real exchange rate?

Question

Surely they earn enough money off people with all their fee's without making the exchange rate so bad - is it legal for them to do this?

Answer 1

Why? Greed + monopoly power..... a.k.a. shrewd business judgment:-)

Certainly it's legal. If you want some of my pounds I can ask for as many of your dollars as I feel like. It's up to you to choose yes or no to the deal.